Shell to Hike Shareholder Returns After Sharp Rise in Oil Price

Ron Bousso
Wednesday, July 7, 2021

Royal Dutch Shell on Wednesday said it would boost its returns to shareholders via share buybacks or dividends after a sharp rise in oil and gas prices helped it reduce debt.

It will increase its distribution to shareholders to 20% to 30% of cash flow from operations beginning in the second quarter, the company said in a trading statement ahead of its quarterly results.

The move, which comes earlier than many analysts had expected, was due to "strong operational and financial delivery, combined with an improved macroeconomic outlook."

Shell previously said it would boost returns once its net debt dropped below $65 billion. The company said on Wednesday it would "retire" the target without specifying whether it had hit it.

"In the second quarter, Shell expects to have further reduced its net debt, although the extent of the reduction will be moderated by working capital movements," it said.

Analysts had largely expected Shell to increase distribution towards the end of the year, but a strong rise in oil and natural gas prices in recent months accelerated the timetable.

The shareholder returns increase "is an important milestone that highlights the strength of Shell's free cashflow proposition and sends an important message to the market," JP Morgan analyst Christyan Malek said in a note.

In the first quarter, the company raised its dividend after profits rose to $3.23 billion.

STICKING TO SPENDING

Shell, which is in the midst of a strategic shift aimed at lowering its greenhouse gas emissions, said it would stick to its spending plans that would remain below $22 billion in 2021.

Despite the higher oil and gas prices, Shell said its liquefied natural gas (LNG) trading operations, the world's largest, were "significantly below average" in the second quarter and similar to the previous quarter.

Oil products sales are expected to be between 4 to 5 million barrels per day, still well below pre-pandemic levels.

(Reporting by Ron Bousso; Editing by Edmund Blair and Jason Neely)

Categories: Energy Activity Production Oil Price People & Company News

Related Stories

Petrovietnam, Partners Sign PSC for Block Off Vietnam

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

MODEC and Terra Drone Renew FPSO Drone Inspection Partnership

Wood JV Gets EPC Job for Shell off Brunei

French Oil Major Acquires Interests in Multiple Blocks in Southeast Asia

Fugro Expands Geotechnical Testing Capabilities in Indonesia

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

Petrovietnam, Petronas Extend PSC for Offshore Block

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

Valeura Wraps Up Infill Drilling Campaign in Gulf of Thailand

Current News

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Woodside Agrees Long-Term LNG Supply with Petronas Unit

MODEC and Terra Drone Renew FPSO Drone Inspection Partnership

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com