Activist Investor Third Point Continues Push for Shell to Restructure

Third Point said splitting the businesses would help Shell reward and keep investors amid a shift to lower-carbon energy sources. Shell is a market leader in LNG, seen as key to Europe’s energy security as it pulls back from Russian gas.

The Shell holding was Third Point’s most profitable investment in the first three months of this year, a person close to the hedge fund said. “We have continued to add to our position in Shell,” Third Point told clients in a May 6 letter, which called for “a different corporate structure” without explicitly describing its goal as a full break-up of the company. The current value of the stake couldn’t be learned.

Shell has defended its model, saying it regularly engages with shareholders and evaluates its strategy, including around renewables. Shareholders overwhelmingly supported that strategy last year in a publicly disclosed vote, and this week top executives are meeting in London with investors about Shell’s emissions targets and other climate goals ahead of the company’s annual shareholder meeting later this month.

The company and other global peers continue to navigate sometimes-conflicting investor expectations that they profit from high commodity prices while also reorienting their carbon-heavy business models toward sustainable energy such as wind and solar.

In November 2021, Shell announced plans to consolidate its dual British-Dutch structure, moving its headquarters to London, dropping “Royal Dutch” from its name and recommitting to a transition to low-carbon energy.

In early February, on a year-end results call with analysts, Shell Chief Executive

Ben van Beurden

congratulated Third Point and Mr. Loeb “for an excellent moment in which they stepped into the stock,” calling it a “very smart move.”

In the weeks since Russia’s invasion of Ukraine in late February, crude has largely remained over $100 a barrel. Shell, like major oil companies

Exxon Mobil Corp.

and

BP

PLC, has made piles of cash amid the extreme volatility, returning much of it to shareholders through dividends and buybacks rather than increasing capital investments.

Last week, Shell for the first time broke out profit from its renewable-energy business. It contributed $344 million to the company’s overall $9.1 billion in adjusted earnings in the first quarter, compared with $4.1 billion for the integrated-gas unit.

“We have reiterated our view that Shell’s portfolio of disparate businesses ranging from deep water oil to wind farms to gas stations to chemical plants is confusing and unmanageable,” Mr. Loeb said the following day in the May 6 letter to clients.