TOP NEWS: Shell to bump up returns as calls time on net debt target

(Alliance News) - Royal Dutch Shell PLC on Wednesday unveiled plans to lift shareholder ...

Alliance News 7 July, 2021 | 8:20AM
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(Alliance News) - Royal Dutch Shell PLC on Wednesday unveiled plans to lift shareholder distributions and said it will retire its USD65 billion net debt target.

The oil major plotted plans to "move to the next phase of its capital allocation framework" and increase total shareholder distributions to within the range of 20% to 30% of cash flow from operations. This will start with its second-quarter results announcement, on July 29. In the first quarter, Shell's cash flow from operations was USD8.29 billion, up 32% quarter-on-quarter.

Shell put down the planned increase in returns to a strong operational and financial delivery, combined with an improved macro-economic outlook.

In the second quarter, Shell expects to have further reduced net debt, though the extent of this will be moderated by working capital movements.

"In conjunction with the increased distributions, Shell will retire its net debt milestone of USD65 billion and will continue to target further strengthening of its balance sheet and AA credit metrics. 2021 cash capex will remain below USD22 billion," said Shell.

Back in April, the company confirmed plans to ramp up shareholder returns in the form of share buybacks or further increases to its dividend payments, but only once it hit its net debt target.

However, Shell on Wednesday retired the USD65 billion target, but fell short of confirming whether it had reached it or not. At the end of the first quarter, Shell's net debt stood at USD71.3 billion, trimmed from USD75.4 billion at the end of 2020.

The company also gave second quarter production forecasts. In its Integrated Gas arm, output between 900,000 and 960,000 barrels of oil equivalent per day is expected, so down from 967,000 boepd in the first quarter.

In its Upstream unit, production is tipped to land between 2.2 million and 2.3 million boepd, down quarter-on-quarter from 2.5 million.

Shell A shares were 2.8% higher at 1,500.60 pence each in London on Wednesday morning and B stock was 2.8% higher at 1,461.80p. Shell was the best performing blue-chip stock in London early Wednesday.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Royal Dutch Shell PLC B 1,513.80 GBX 1.97
Royal Dutch Shell PLC Class A 1,517.40 GBX 1.91

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