Shell, one of the world's largest oil companies, reported lower profits for the fourth quarter of 2025 than analysts expected. The drop came from falling crude oil prices that hit the company's earnings hard. These results came out on February 5, 2026, from the company's London headquarters, as energy firms deal with a tough market.
Background
Shell has faced a changing energy world for years. Oil prices go up and down based on global demand, supply from places like the Middle East and the US, and big events like wars or economic slowdowns. In 2025, prices for crude oil slid from highs seen in past years. This put pressure on companies like Shell, which makes most of its money from finding, producing, and selling oil and gas.
The company reported full-year adjusted earnings of $18.5 billion for 2025, down from $23.7 billion in 2024. Cash flow from operations came in at $42.9 billion, lower than the year before. These numbers show how the softer market affected the bottom line. Shell kept up strong operations in some areas, like gas trading, but overall results weakened.
Over the year, Shell spent $20.9 billion on capital projects, a bit less than in 2024. It also reduced net debt and returned cash to shareholders through dividends and buybacks. Production of oil and gas averaged 2,801 thousand barrels of oil equivalent per day, a small drop from 2024.
Key Details
In the fourth quarter, Shell posted adjusted earnings of $3.3 billion. This marked a drop from $5.4 billion in the third quarter and earlier periods. Cash flow from operating activities reached $9.4 billion, supported by good work in upstream oil production and integrated gas units.
Adjusted EBITDA, a measure of earnings before interest, taxes, and some costs, was $11.7 billion for the quarter. That was down from higher levels in previous quarters. The company saw lower realized prices for oil and gas, which cut earnings by hundreds of millions. Higher operating expenses added another drag, up by $147 million from the third quarter.
Upstream and Gas Performance
The upstream segment, which covers oil and gas production, reported adjusted earnings of $1.57 billion. This was lower than $1.8 billion in the third quarter, mainly due to tax changes and price drops. Cash flow here was $4.3 billion.
Integrated gas, including LNG trading, brought in $1.66 billion in adjusted earnings. Volumes helped offset some price weakness. LNG sales volumes hit certain targets, with production steady.
Downstream and Other Units
In marketing and refining, results varied. Products had positive earnings of $523 million, while chemicals lost $589 million. Full-year chemicals margins fell due to weak demand and trading results.
Renewables and energy solutions mostly lost money over the year, though trading offset some losses. Power sales stayed flat at 72 terawatt hours in the quarter.
Shell also took writedowns and asset charges. It booked $187 million in impairments and $127 million in losses from selling assets. Earlier, it sold a 20% stake in Brazil's Orca project and wrote down $400 million related to Namibia operations.
"2025 was a year of accelerated momentum, with strong operational and financial performance across Shell. We generated free cash flow of $26.1 billion."
- Wael Sawan, Shell Chief Executive Officer
Free cash flow for the full year was $26.1 billion, down from $39.5 billion in 2024. The company issued $2.35 billion in debt during the quarter to manage its balance sheet.
What This Means
Lower profits mean Shell and other oil majors must make hard choices. They could cut spending on new projects, sell more assets, or push harder into lower-carbon energy. The company kept its dividend steady and bought back shares, showing confidence in cash generation.
Falling oil prices tie to slower global growth and more supply. Demand from China and other big users has not picked up as hoped. This squeezes margins across the industry.
Shell aims to keep costs down. It reported progress on reducing expenses and targets set earlier in the year. Capital spending stayed disciplined at around $20 billion annually.
For shareholders, the profit miss led to stock pressure. Shares have slid with oil prices leading into these results. The company plans steady production of 920 to 980 thousand barrels per day in the first quarter of 2026.
Investors watch how Shell balances oil production with green energy shifts. Most renewables units lost money, but the company holds 6.1 gigawatts of power capacity. It swapped some oil sands assets for other interests to reshape its portfolio.
Corporate costs rose slightly, with adjusted earnings losses of $0.6 billion in the quarter. Outlook for the first quarter shows similar pressures.
The results highlight broader challenges for European energy firms. They compete with US rivals who have lower costs. Shell focuses on high-return projects and trading strength to weather the storm.
Divestments brought in $1.8 billion over the year. Net debt stood at $41.2 billion by year-end. These moves help fund returns to investors while investing in future growth areas.
