Shell desires to extend shareholder returns after the oil value hike

© Reuters. FILE PHOTO: The Royal Dutch Shell logo was seen at a Shell petrol station in London on January 31, 2008. REUTERS / Toby Melville / File Photo

From Ron Bousso

LONDON (Reuters) – Royal Dutch Shell (LON 🙂 said Wednesday that it would increase its returns to shareholders through share buybacks or dividends after a sharp surge in oil and gas prices helped it reduce its debt.

It will increase its payout to shareholders to 20 to 30% of operating cash flow starting in the second quarter, the company said in a trading release prior to quarterly results.

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

Shell had previously announced that it would increase returns once net debt falls below $ 65 billion. The company said Wednesday it would "withdraw" the target without indicating whether it 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 movements in working capital," it said.

Analysts had largely expected Shell to increase sales towards the end of the year, but a sharp surge in oil and prices in recent months accelerated the schedule.

The increase in shareholder returns "is an important milestone that underscores the strength of Shell's free cash flow offering and sends an important message to the market," JP Morgan analyst Christyan Malek said in a press release.

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


Shell, which is in the middle of a strategic shift aimed at cutting its greenhouse gas emissions, said it will stick to its spending plans, which would stay below $ 22 billion in 2021.

Despite higher oil and gas prices, Shell said its liquefied natural gas (LNG) trading activities, the largest in the world, were “well below average” in the second quarter and were similar to the previous quarter.

Sales of oil products are expected to be between 4 and 5 million barrels a day, still well below pre-pandemic levels.

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