Oil and gas group Shell is going to reward shareholders heavily. The company wants to work more efficiently and pay more attention to costs. As a result, more money must be left over, and part of that goes to the shareholders.
For example, the British company wants to increase the dividend by 15 percent this quarter and buy back shares for at least 5 billion dollars, the equivalent of about 4.6 billion euros, in the second half of this year. The company announced this in the run-up to an investor day.
Shell will also take a stricter look at investments, which means that expenditure will be lower in the next two years. Structural cost savings between 2 and 3 billion dollars must also be found by 2025. And the shareholders also benefit from this because Shell will pay out a more significant part of the incoming cash flow to them.
Shell’s new CEO Wael Sawan wants to boost this efficiency by focusing more on profitable activities like liquefied natural gas (LNG) production. Shell wants to increase that. Shell will also no longer try to reduce oil production by 1 to 2 percent annually. This will keep the company the same until 2030. “We will invest in the models that work, with the highest returns and where our strength lies.”
The plans fit in with Sawan’s aim to boost the stock price of the oil and gas group. It is proportionally lower than that of competitors from the United States, such as ExxonMobil and Chevron. These companies also do less greening than Shell and other European oil and gas groups.
Critics are afraid that the plans will be at the expense of Shell’s greening, but the group reiterates its intention to achieve its self-imposed climate goals despite the partial change of course. However, they are not undisputed either. Environmental groups say the goals are not enough to meet the Paris climate agreement. Sawan argues that Shell “needs to develop profitable business models that can be scaled up quickly”. This would help the energy transition the most.