Buying energy stocks feels a lot like trying to predict the weather in London. One minute it’s sunny, the next you’re soaked. Honestly, if you’ve been watching the shell plc share price lately, you know exactly what I mean.
The stock has been doing this weird dance between "global energy savior" and "legacy fossil fuel dinosaur." Right now, as of mid-January 2026, the price is hovering around $74.35 (or roughly £27.39 for those of you trading on the LSE). But the raw number doesn't tell the whole story. Not even close.
Most people look at the ticker and see a boring utility. They're wrong. What’s actually happening under the hood of Shell—led by CEO Wael Sawan—is a massive, high-stakes pivot that is making the market very nervous and very excited at the same time.
The Sawan Effect: Why Shell is Outperforming the Pack
When Wael Sawan took the reins, he basically told the world that Shell was done being the "polite" energy company. You remember the old strategy, right? Tons of money poured into wind farms and solar panels that weren't really making a profit.
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Sawan changed that. He pivoted hard back to what Shell does best: Integrated Gas and Upstream oil production.
And the market loved it.
In 2025, Shell’s stock actually outpaced the broader energy sector. While the iShares Global Energy ETF (IXC) gained about 8.7%, Shell pulled ahead with a 10.35% return. It’s a classic "value over volume" play. By cutting the fat—closing nearly 400 underperforming retail sites and ditching the "green at any cost" mantra—the company has turned into a cash-generating machine.
The $3.5 Billion Question
If you’re holding Shell, you’re likely here for the dividends. Currently, the forward yield is sitting at a healthy 4.04%. But the real kicker? The buybacks.
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Shell just announced another $3.5 billion share buyback program. That brings them to 16 straight quarters of returning at least $3 billion to shareholders. Think about that. Even when the chemicals division is losing money—which, by the way, it is (more on that in a second)—they are still aggressively shrinking the share count to boost the value of the remaining slices of the pie.
What’s Dragging the Shell plc Share Price Down?
It’s not all champagne and profit margins.
The fourth-quarter 2025 update note was a bit of a reality check. The chemicals and products division is basically a mess right now. They’re expecting a "significant loss" in that sector. Why? A mix of oversupply, weak demand, and a massive tax headache in one of their joint ventures.
There's also the "Pennsylvania Problem."
The Monaca petrochemical plant has become something of a cautionary tale. It cost $14 billion to build—double the original estimate—and it’s struggling to reach break-even. When investors see a flagship project like that underperforming, it acts like an anchor on the shell plc share price.
- Upstream Production: Still strong (1.84–1.94 million barrels/day).
- LNG Output: On track, remaining the "crown jewel."
- Chemicals Margin: Dropped to $140/tonne from $160.
Is the Stock Actually "Cheap"?
I was reading a note from Simply Wall St recently that used a Discounted Cash Flow (DCF) model to value Shell. Their math suggested an intrinsic value of about £85 per share.
If that’s true, the current price of £27.39 is an absolute steal—a 67% discount.
But you have to be careful with DCF models. They assume everything goes right for the next ten years. They don't account for a sudden collapse in oil prices or a radical shift in UK carbon taxes. However, even if you look at simpler metrics, the case for "undervalued" is strong. Shell’s price-to-earnings (P/E) ratio is around 15.29, while some of its US peers like ExxonMobil trade at much higher premiums.
The "valuation gap" between European and American oil companies is real. Sawan is obsessed with closing it. He even hinted that if the London Stock Exchange doesn't start valuing Shell fairly, he might consider moving the primary listing to New York. That would be a seismic shift for the FTSE 100.
Looking Toward 2026 and Beyond
What should you actually do?
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If you're a short-term trader, the volatility in gas prices is going to keep you awake at night. But for the long-term income investor, the story is about the "Cash Flow from Operations" (CFFO). Last quarter, they pulled in $12.21 billion. That is a mountain of cash.
They are using that money to buy into the world's largest crude reserves in Venezuela (if the licenses clear) and expanding LNG projects in Qatar and Nigeria.
Actionable Steps for Investors
If you are looking at the shell plc share price as a potential entry point, here is how to play it:
- Watch the Feb 5, 2026 Earnings: This will be the moment of truth for the chemicals division losses. If the loss is smaller than feared, expect a relief rally.
- Monitor the Buyback Completion: The current $3.5 billion program is slated to finish by the Q4 results. Look for the board to authorize a new one immediately after.
- Check the Brent Crude Floor: Shell's strategy works best when oil stays above $70. If it dips toward $60, the dividend is safe, but the "growth" story takes a hit.
- Currency Elections: If you’re a UK holder, remember you can often choose to receive your dividends in USD or EUR instead of GBP. Depending on the strength of the Pound, this can give you a sneaky 1-2% "bonus" on your yield.
Shell isn't just an oil company anymore. It's a massive, integrated energy trader that happens to have some oil wells. The risk is there—mostly in the form of regulatory pressure and the messy transition to low-carbon—but the sheer volume of cash they are throwing back at shareholders makes it hard to ignore.
Stay focused on the cash flow, not just the headlines. The noise about "green energy" usually masks the fact that the world is still incredibly thirsty for the natural gas Shell is uniquely positioned to provide.