Oil major Shell (SHEL.L) reported a sharp fall in profits in the fourth quarter but declared another $3.5bn (£2.8bn) share buyback.

Adjusted earnings of $3.66bn in the fourth quarter were down 39% on the $6bn Shell posted in the third quarter, according to its latest results. For the year, adjusted earnings were down 16% to $23.7bn, compared to $28.3bn in 2023.

Shares in Shell were flat following the release of the results on Thursday morning.

Shell said income attributable to shareholders had fallen 78% to $928m in the fourth quarter, down from $4.2bn in previous quarter.

However, this figure was higher than the $474m it reported in the same period last year.

For the year, income attributable to shareholders came in at nearly $16.1bn, which was down 17% on the $19.4bn Shell reported last year.

Shell attributed the fall in income in the fourth quarter to higher exploration well write-offs, lower margins from crude and oil products trading and optimisation, lower marketing margins and volumes, lower liquified natural gas (LNG) trading and optimisation margins, lower realised oil prices, and unfavourable tax movements.

Despite the fall in profits, Shell declared a dividend of $0.3580 per share for the fourth quarter and another share buyback of $3.5bn. This marked the company's 13th consecutive quarter of at least $3bn in share repurchases.

Operating expenses were down 8% to $36.9bn for the year, and total debt was also down to $77bn, compared with $81.5bn at the end of its 2023 full-year results.

Wael Sawan, CEO of Shell, said: "Despite the lower earnings this quarter, cash delivery remained solid and we generated free cash flow of $40bn across the year, higher than 2023, in a lower price environment.

"Our continued focus on simplification helped to deliver over $3bn in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets."

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Shell said oil and gas production for 2024 had fallen 2% compared with last year. Concerns about waning demand and geopolitical tensions have weighed on oil prices over the past year, with brent (BZ=F) crude falling to below $76 a barrel on Wednesday.

US president Donald Trump, who begun his second term last week, called for the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices during his address to the World Economic Forum in Davos last week.

Despite a disappointing fourth quarter for Shell, Derren Nathan, head of equity research at Hargreaves Lansdown (HL.L), said: "There were also some signs of an improved performance in the current quarter, with guidance for gas production pointing upwards as well as utilisation at Shell’s chemicals and refining plants.