Shell enters the final week before its third-quarter report with two very different storylines running in parallel. North of Scotland, the UK government has cleared the Jackdaw gas field for development. On the trading desks of London and Zurich, meanwhile, two of Europe’s most closely watched research houses remain split on what the shares are actually worth.
JPMorgan analyst Matthew Lofting has reiterated his “Overweight” rating with a 4,100 pence price target, unchanged from before. UBS’s Joshua Stone, by contrast, sticks with “Neutral” and a 3,750 pence target. Neither house has moved its numbers.
Refining margins: off the peak, but hardly weak
The crux of the disagreement is how long the unusually generous refining environment can last. Average European refining margins have slipped more than 30% below their third-quarter 2026 level since the start of October. Lofting, however, is careful to frame that decline against the right yardstick: falling from record highs is not the same as operating in a weak market. In his view, margins remain well above the mid-cycle average.
That distinction matters for anyone holding the stock. The summer quarter’s exceptional performance and the conditions shaping the current quarter are separate questions, and bumper margins cannot simply be extrapolated into a permanent earnings base.
Stone approaches the same set of facts from a different angle. Since the latest quarterly updates were published, consensus estimates for Europe’s major oil companies have
Even so, Stone does not regard sector multiples as stretched. In his reading, current share prices discount an average oil price of $71 a barrel, assuming normalised gas and refining margins. His neutral stance is therefore not a warning about an overvalued industry — it simply leads to a different investment conclusion than JPMorgan’s constructive view on Shell.
Jackdaw: from approval to actual molecules
The UK government’s decision on Jackdaw shifts the operative question for Shell shareholders. The permit itself is no longer the story; the start of gas supply is. According to government statements, deliveries could begin by the end of October — a timeframe that turns execution into the near-term test.
The field is operated by Adura, the joint venture between Shell and Equinor held in equal parts. The approval opens a concrete operational prospect without yet confirming that first gas has flowed. Investors would do well to keep the regulatory milestone and the physical supply separate.
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Government figures suggest peak production could lift UK gas output by roughly 6%. That number describes a possible contribution to domestic production — it is neither a forecast for Shell’s group-wide growth nor a statement about the project’s profit share. Peak output and initial deliveries are also not the same thing, so the potential production contribution should be kept apart from the short-term ramp-up. The confirmation that matters would be an announcement of actual deliveries, not a restatement of approved project status.
Adding context, Shell’s production outlook from 8 October guided to 740–780 kboe/d for Integrated Gas in the third quarter of 2026. That corporate forecast is no proof of Jackdaw’s start-up; confirmed supply would be a standalone piece of news rather than the fulfilment of a quarterly estimate.
Critics, decommissioning and a double view of the North Sea
The cautious case begins with the project’s reach. The Guardian reported today on critics’ concerns that Jackdaw’s contribution to UK gas demand will be limited. That does not automatically contradict the government’s domestic production figure — demand and home-grown supply are different reference points, and the two claims should not be compressed into a single growth promise.
For Shell, the valuation risk lies in crediting the approval with economic benefit that only operations can confirm. A later-than-expected start of deliveries would weaken the near-term production picture. Such an outcome is a risk, not a reported development.
Alongside the green light, the government has formally asked Shell to submit its Brent decommissioning programme for review. That request is a procedural step, not a completed assessment. It justifies neither assumptions of new concrete charges nor the conclusion that all decommissioning questions are settled — which limits the value of looking at new production in isolation. New output and obligations at existing installations belong together.
What to watch before and on 29 October
As long as the end-of-October delivery target holds, Jackdaw can be treated as a concrete additional production prospect. If actual deliveries confirm the timeframe, the operational case firms up; a delay would call for correspondingly more caution on the near term.
The next firmly scheduled date is 29 October, when Shell reports third-quarter 2026 results and declares its interim dividend. That gives investors their next solid anchor for assessing the group — though it is no substitute for a separate confirmation of first gas at Jackdaw. Buyback volume, net debt following the ARC acquisition and the outlook for the closing quarter will all be in focus, with JPMorgan’s warning on softening refining margins providing a specific checkpoint for the refining narrative.
The split between the two brokers carries its own lesson: a still-favourable operating environment does not by itself produce a unanimous bullish verdict. What ultimately counts is how durable Shell’s earnings level looks once conditions become less extraordinary — and whether Jackdaw crosses the line from approved project to producing asset.
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