Royal Dutch Shell is building a business with the potential to return US$125 billion or more in the form of dividends and share buybacks to shareholders between 2021 and the end of 2025, the oil supermajor said on its Management Day 2019 on Tuesday.
Shell is significantly increasing the pledge to return money to investors in its next five-year program through 2025, compared to US$52 bullion in distributions to shareholders between 2011 and 2015, and to expected shareholder distributions of around US$90 billion in the period 2016-2020.
The supermajor also expects to raise its dividend per share “when there is line of sight to the completion of the $25 billion share buyback programme,” Shell said in the update of its targets.
The company expects to have completed its share repurchase program by the end of 2020, subject to further progress with debt reduction and oil price conditions.
By the end of next year, Shell expects to deliver US$28-33 billion of organic free cash flow at oil prices at $60 per barrel. For the period to 2025, the group increased its organic free cash flow target to around US$35 billion in 2025 at $60 oil a barrel.
Shell plans to invest on average US$30 billion of cash capital expenditure (capex) a year over 2021-2025, with a ceiling of US$32 billion a year.
The group—which beat rivals and stood out among the crowd with better-than-expected results in Q1 this year—is re-focusing its business into three categories: Core Upstream, Leading Transition, and Emerging Power to go through the energy transition with a “world class investment case.”
The Core Upstream includes deepwater, shale, and conventional oil and gas, which will continue “to focus on delivery and financial performance and is expected to continue generating robust cash flow for decades to come,” Shell said.
“It has a strong development funnel of projects that offers long-life, resilient growth opportunities,” the group noted.
By Tsvetana Paraskova for Oilprice.com
