In This Article:
Shell is doubling down on making profits from fossil fuels and ramping up shareholder payouts as the oil giant seeks to woo Wall Street.
The FTSE 100 company announced plans to “deliver more value” on Wednesday, promising investors a 15pc dividend increase and stock buybacks of at least $5bn in the second half of 2023.
Capital investment is also being cut, from an expected $23-27bn this year to $22-25bn in 2024 and 2025.
The company said it would expand its booming liquified natural gas business, while focusing other investment on “low carbon” technologies including biofuels, hydrogen, electric vehicle charging and carbon capture and storage.
It made no mention of renewable energy sources such as wind and solar, which are attracting record investment internationally.
Wael Sawan, Shell’s chief executive, said: “We are investing to provide the secure energy customers need today and for a long time to come, while transforming Shell to win in a low-carbon future.
“Performance, discipline, and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the energy transition.
“We need to continue to create profitable business models that can be scaled at pace to truly impact the decarbonisation of the global energy system.
“We will invest in the models that work – those with the highest returns that play to our strengths.”
Shell had already vowed to return $12bn to shareholders through similar measures in the first half, after soaring energy prices led to record profits of $40bn in 2022.
However, the company cut its dividend during the pandemic and the payout remains 30pc below the pre-Covid level.
It is understood that Shell’s latest move is aimed at closing the gap between the company and its more highly valued American peers, with Sawan due to deliver an investor presentation in New York this evening.
Even then, the increase may not be enough. Biraj Borkhataria, an analyst at RBC, said the increase may come as an “initial disappointment”.
He added: “From our conversations into the event, we believe market consensus was for around a 20pc increase.”
At the same time, however, Shell’s refusal to use last year’s profits – boosted by price rises that were caused by the Ukraine war – to invest more money in renewables such as wind and solar has put it into conflict with some investors, such as the Church of England’s pension funds.
The Church’s Pension Board last month accused Mr Sawan, who succeeded Ben van Beurden in January, of a “change in tone” to downplay the importance of renewables.