 announced on Wednesday its intention to increase shareholder payouts as the world economy continues on its path to recovery.){kind=link}
Shell confirmed that higher oil prices have reduced debt burden
Shell (LON:RDSA) announced on Wednesday its intention to increase shareholder payouts as the world economy continues on its path to recovery.
The FTSE 100 company confirmed that, as of its Q2 announcement at the end of July, its will raise its dividend to within the range of 20% to 30% of cash flow from its operations.
Shell put its decision down to a “strong operational and financial delivery” on the back of what it considers to be an improving outlook of the global economy.
The oil giant said that “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”.
“In conjunction with the increased distributions, Shell will retire its net debt milestone of $65 billion and will continue to target further strengthening of its balance sheet and AA credit metrics. 2021 cash capex will remain below $22 billion,” the statement added.
During the Wednesday morning session the Shell share price is up by 2.44%.
Oil prices were hovering around their highest price since October 2018 as attention turned to the OPEC+ ministerial meeting last week.
Upon the conclusion of the meeting Opec+ postponed a decision on whether or not to ramp up oil production as major players within the cartel have failed to reach an agreement on supply levels.
“Today’s teaser from Royal Dutch Shell ahead of second quarter results will be getting its investors as excited as James Bond fans are by the trailer for the latest film in the series,” said Russ Mould, investment director at AJ Bell.
“The company has unveiled plans to return more cash to shareholders in the second half as the recent surge in the oil price benefits cash flow and helps with debt reduction.
“This news is an interesting coda to the recent court decision in the Hague which effectively forced Shell to reduce its emissions more quickly than planned. This is likely to require significant investment and for this reason Shell is likely to be wary of overstretching itself in terms of dividend commitments.