Shell (SHEL LN): Buy: Volatility capture and standout execution

Research evidence excerpt

Shell (SHEL LN): Buy: Volatility capture and standout execution

(expected to 52-WEEK PRICE (GBPp)

close in 3Q) and other projects. Second, Shell is positioning itself as a company that 3800

can capture volatility on both the upside and the downside via its integrated portfolio 3100

and trading capability – its strong 2Q gas trading performance in a weakening gas

price environment is testament to this. Trading’s ROACE contribution is currently 07/25 01/26 07/26

towards the top end of the 2-4% range, but disaggregating trading vs production Target price: 3650 High: 3583 Low: 2562 Current: 3319

results is challenging given the tight integration of trading with operations. Source: LSEG IBES, HSBC estimates

Distribution upside at higher prices: Shell kept its 3Q buyback unchanged at

Kim Fustier*

USD3.0bn, plus USD1.2bn of catch-up repurchases paused around the ARC deal. Senior Global Oil & Gas Analyst

Some investors may have looked for a step-up in the run-rate to USD3.5bn after a HSBC Bank plc

kim.fustier@hsbc.com

strong 2Q, but we see the decision as consistent with Shell’s stated, value-led +44 20 3359 2136

approach to buybacks. We keep our forecast of an unchanged USD3.0bn quarterly Sadnan Ali*, CFA

buyback (assuming USD70/b Brent in 4Q26 and USD65/b thereafter), implying a Global Oil & Gas Analyst

HSBC Bank plc

c42% payout ratio in 2026e and mid-40s% in 2027e, within the 40-50% framework. sadnan.ali@hsbc.com

At USD80/b, there is ample room to lift the buyback to USD3.5bn. +44 207 9910569

Ujjwal Sharma*

Maintain Buy, raise target price to 3,650p (vs 3,500p): We raise 2026-27e net Associate

Bangalore

income estimates by 9% and 8% respectively and lift CFFO by 1-2%, reflecting the 2Q

beat and stronger refining forecasts. Our revised TP implies c10% upside to the current