LONDON – Royal Dutch Shell will boost returns to shareholders through share buybacks or dividends earlier than expected after a sharp rise in oil and gas prices helped it reduce debt, the firm said on Wednesday. Anglo-Dutch energy.
Shell will increase its distribution to shareholders by 20-30% of cash flow from operations beginning in the second quarter, the company said in a commercial statement ahead of quarterly results.
The move, which comes earlier than many analysts expected, was due to “strong financial and operational execution, combined with an improvement in the macroeconomic outlook.”
London-listed Shell shares were up 2.2% at 0758 GMT, compared with a 1.2% rise for the broader European energy index.
Shell previously said it would increase yields once its net debt fell below $ 65 billion. The company said Wednesday it would “withdraw” the target without specifying whether it had reached 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,” he said.
Analysts largely expected Shell to increase distribution towards the end of the year, but a sharp rise in oil and natural gas prices in recent months hastened the schedule.
The increase in shareholder profitability “is an important milestone that highlights the strength of Shell’s free cash flow proposition and sends an important message to the market,” JP Morgan analyst Christyan Malek said in a note.
In the first quarter, the company increased its dividend after earnings rose to $ 3.23 billion.
Shell, which is in the midst of a strategic shift to reduce its greenhouse gas emissions, said it would stick to its spending plans that would stay below $ 22 billion in 2021.
Despite higher oil and gas prices, Shell said its commercial liquefied natural gas (LNG) operations, the world’s largest, were “significantly below average” in the second quarter and similar to the previous quarter. .
Oil product sales are expected to be between 4 million and 5 million barrels per day, still well below pre-pandemic levels.
(Reporting by Ron Bousso; Editing by Edmund Blair and Jason Neely)