Wired News – Oil & Gas Major Royal Dutch Shell Announces Reinstatement of Cash Dividends and $25 Billion Share Buybacks
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LONDON, UK / ACCESSWIRE / November 30, 2017 / Active-Investors issued a free report on Royal Dutch Shell PLC (NYSE: RDS-A) (NYSE: RDS-B) ("Shell"), which is readily accessible upon registration at www.active-investors.com/registration-sg/?symbol=RDS-A as the Company's latest news hit the wire. During the Management Day organized on November 28, 2017, Royal Dutch Shell's CEO - Ben van Beurden made a presentation to the investors and shared the company's business strategy and future financial outlook. Sign up now for our free research reports at:
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Sharing his views on the subject, Ben van Beurden, CEO of Shell, said:
"Our next steps as we re-shape Shell into a world-class investment aim to ensure that our company can continue to thrive, not just in the short- and medium-term but for many decades to come. These steps build on the foundations of Shell's strong operational and financial performance, and my confidence in our strategy and our ability to deliver on the promises we make."
The entire presentation concentrated on three points:
- Cancellation of the scrip dividend and return to pure cash dividends from Q4 2017 - Scrip dividend is where the investors could opt to receive dividends in shares or cash. Shell had introduced the scrip dividend program in early 2015 to help preserve cash after steep drop in oil prices. The Company canceled the scrip dividend w.e.f. Q4 2017 and hence the dividend for Q4 2017 and beyond will be done in cash. The Q3 2017 interim dividend payable on December 20, 2017, will continue as scheduled with investors having the choice to receive cash or share of the Company.
- Share buyback Program of $25 billion between 2017 – 2020 - The company plans buyback of at least $25 billion shares between 2017-2020, subject to its ability to reduce debts and continued recovery in oil prices. This is as per the Company's share buybacks planned in December 2015 at the time of merger with BG Group.
- Reduction of the company's carbon footprint - The company has set ambitious targets to reduce its net carbon footprint of its energy products by 50% by 2050. This not only includes emissions from Shell's operations but also emissions from Shell's products consumed by its consumers. It would start with goal of reducing 20% carbon emissions by 2035. The company will measure the net carbon footprint in grams of CO2 per megajoule consumed and taking account of any emissions offset. It plans to keep a track of its progress and review its goals every five years to ensure that the Company is going in the right direction and as required to meet the Paris Agreement goals.
Updated Financial Outlook
The presentation also provided an update on the Company's financial outlook.
Shell has raised its cash flow outlook from $25 billion to $30 billion by 2020, assuming that oil prices are at $60 per barrel.
The Company is slowly reducing its debt and its Gearing (debt-to-equity ratio) was 25.4% at the end of Q3 2017, and it expects to further reduce to 20% Gearing after considering the recent divestment of $5 over billion. Shell has shared that delivery of new projects is on track and it is confident of delivering 1 MBOE/D (million barrels of oil equivalent per day), and $10 billion of cashflow from operations (calculates at $60 per barrel,) from new projects by 2018. The Company plans to increase the cashflow from operations to $5 billion by 2020.
Shell also shared that it is well ahead of schedule with its $30 billion divestments planned from 2016 to 2018. Out of the total divestments, $23 billion have been completed, $2 billion have been announced, and another $5 billion divestments are at advanced stages. The Company has set the pace for future divestments at an average of $5 billion annually till FY20.
Shell had aimed for annual reduction in operational expenditure of 20% from FY14. The Company has maintained its capital investment at $25 billion to $30 billion per year and continue within this range or lower. It plans to keep its annual operational expenditure below $38 billion until 2020 and use any savings from efficiencies for further reductions.
The Company is confident of growing its organic free cash flow throughout the 2020s and pay dividend to its shareholders, backed by increase in revenues, cost-cutting measures, divestments, and improving operational efficiencies to be profitable at oil prices of $50 per barrel.
Updated Business strategy
Shell plans to continue to grow its LNG, Upstream, and Downstream businesses and implement various measures to deliver strong financial performance. The future focus will be on the development of new energies division which will work on renewables and low carbon technologies. The Company has earmarked $1 billion to $2 billion per year until 2020 to accelerate the growth of this division. It plans to explore opportunities in new fuels and power and will play an important role like its Downstream and gas businesses so that these businesses will add to its existing strengths in brand and value-chain integration.
Shell has broadly distributed its seven product themes into three categories - cash engines, growth priorities, and emerging opportunities. Wherein the cash engines will include integrated gas, conventional oil and gas, and oil Products, growth priorities will include deep water and Chemicals while emerging opportunities will include shales and new energies. The Company has plans to upgrade deep water to cash engine category and shales to the growth priority category by 2020.
Stock Performance Snapshot
November 29, 2017 - At Wednesday's closing bell, Royal Dutch Shell's stock slightly dropped 0.38%, ending the trading session at $63.69.
Volume traded for the day: 2.67 million shares.
Stock performance in the last month – up 2.41%; previous three-month period – up 15.44%; past twelve-month period – up 29.82%; and year-to-date - up 17.12%
After yesterday's close, Royal Dutch Shell's market cap was at $265.54 billion.
Price to Earnings (P/E) ratio was at 24.57.
The stock has a dividend yield of 5.90%.
The stock is part of the Basic Materials sector, categorized under the Major Integrated Oil & Gas industry.
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