Shell returns to cash dividends after five strong quarters

The company has been on a steady diet of divestments since merging with British company BG Group more than two years ago.
By Daniel J. Graeber  |  Nov. 28, 2017 at 6:07 AM
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Nov. 28 (UPI) -- Cash flow over the last five quarters has been strong enough for Royal Dutch Shell to start returning some of that to investors, the CEO said Tuesday.

CEO Ben van Buerden said in an investment update the company would return to full cash dividends in the fourth quarter, while maintaining its regular capital investment commitments.

"We have increased our outlook for organic free cash flow, which has been consistently strong over the past five quarters," he said in his address. "We have also made significant progress with our divestment program, allowing us to reduce net debt in that time."

Total divestments for the first half of the year were $9.5 billion, compared with $1.5 billion last year. Operating expenses, meanwhile, were down 13 percent from last year at $18.8 billion for the first half of 2017.

Shell continues to scale down and reconfigure its portfolio after merging with British energy company BG Group in 2015.

Picking up from where it left off before stating it earnings, Shell in mid-November said it was taking $1.7 billion for the sale of a 64 percent stake in Woodside Petroleum, leaving its Australian subsidiary with a 4.8 percent interest in the liquefied natural gas player. The company said Tuesday that it would continue to seek a competitive advantage in LNG through the next decade.

Elsewhere, the company said it sees the deepwater part of its portfolio as a "cash engine," while shale opportunities become a "growth priority" by 2020. Annual capital investments stay the same at between $25 billion and $30 billion.

For cash flow, the company said its outlook was around $30 billion by 2020 so long as the price for Brent crude oil, the global benchmark, stays around $60 per barrel. That forecast is $5 billion more than it expected in June 2016.

Brent crude oil was around $63.25 early Tuesday.

Apart from fossil fuels, Shell said it was doing its part to align with the multilateral Paris climate agreement by committing to reduce its own emissions by around 20 percent by 2035.

"We will do this in step with society's drive to align with the Paris goals, and we will do it by reducing the net carbon footprint of the full range of Shell emissions, from our operations and from the consumption of our products," van Buerden said.

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