Skip to main content

Shell cuts dividend for first time since World War Two


Shell cuts dividend for first time since World War Two 

LONDON (Reuters) - Royal Dutch Shell RDSa. cut its dividend for the first time since World War Two on Thursday as the energy company retrenched in the face of an unprecedented drop in oil demand due to the coronavirus pandemic.
FILE PHOTO: A Shell logo is seen reflected in a car's side mirror at a petrol station in west London, Britain, January 29, 2015. Picture taken January 29, 2015. REUTERS/Toby Melville
Shell also suspended the next tranche of its share buyback programme and said it was reducing oil and gas output by nearly a quarter after its net profit almost halved in the first three months of 2020.
Shell’s shares in London had slumped 7% by 0753 GMT, sharply underperforming rival BP (BP.L) which was down 2.2%.
For years, Shell has taken pride in having never cut its dividend since the 1940s, resisting such a move even during the deep downturns in the oil market of the 1980s.
Some investors, however, had called on major oil firms to break an industry taboo and consider cutting dividends, rather than taking on more debt to maintain payouts.
“Given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the Board believes that maintaining the current level of shareholder distributions is not prudent,” Shell Chairman Chad Holliday said.
ADVERTISEMENT
He also said the cut in Shell’s payout was a long-term “reset” of the company’s dividend policy.
Shell said it would reduce its quarterly dividend by two-thirds to 16 cents per share from the 47 cents it paid each quarter in 2019. If maintained for 2020 as a whole, Shell would save about $10 billion.
Shell is the first of the five so-called Oil Majors to cut its dividend because of the fallout from the coronavirus crisis. BP and Exxon Mobil (XOM.N) have said they will maintain their first-quarter dividends while Total (TOTF.PA) and Chevron (CVX.N) have yet to report first-quarter results.
Graphic - Shell dividends: here
Reuters Graphic
ADVERTISEMENT

‘NECESSARY EVIL’

The dividend cut also comes after Shell this month laid out the oil and gas sector’s most extensive strategy yet to reduce greenhouse gas emissions to net zero by 2050.
“The 66% dividend cut is a necessary evil to reinforce Shell’s capital frame and position it for the offence on the energy transition,” JP Morgan analyst Christyan Malek said.
Shell paid about $15 billion in dividends last year making it the world’s biggest payer of dividends after Saudi Arabia’s national oil company Saudi Aramco (2222.SE).
Dividends paid by Shell and BP last year also represented 24% of the 75 billion pounds ($94 billion) in total paid out by companies in the FTSE 100 index .FTSE of leading shares.
Graphic - Shell's upstream production: here
Reuters Graphic
Graphic - Shell's profits: here
Reuters Graphic
Following years of deep cost cuts after its acquisition of BG Group for $53 billion in 2016, Shell had previously planned to boost payouts to investors through dividends and share buybacks to $125 billion between 2021 and 2025.
Outside the Oil Majors, Norway’s Equinor (EQNR.OL) became the first large oil company to cut its dividend in response to the current downturn, reducing its first-quarter payout last week by two-thirds.
Global energy demand could slump by 6% in 2020 due to coronavirus lockdowns and travel restrictions in what would be the largest contraction in absolute terms on record, the International Energy Agency (IEA) said on Thursday.
Shell last month said it would reduce capital expenditure this year to $20 billion at most from a planned level of about $25 billion and also cut an additional $3 billion to $4 billion off operating costs over the next 12 months.
Its first-quarter net income attributable to shareholders based on a current cost of supplies and excluding identified items, fell 46% from a year earlier to $2.9 billion, above the consensus in an analyst survey provided by Shell.
Shell’s fourth-quarter net income was also $2.9 billion.
The company said it cut activity at its refining business by up to 40% in response to the demand shock.
Shell said it expected to cut production of oil and gas in the second quarter to between 1.75 million and 2.25 million barrels of oil equivalent per day (boed) from 2.7 million boed in the first quarter.
Shell’s gearing, or its debt-to-capital ratio, inched down to 28.9% in the first quarter from 29.3% in the fourth quarter, but was up from 26.5% in the same period a year earlier.

Comments

TRENDING

Stormy Daniels seeks Trump testimony on her sex claims

How to prepare Menemen

Drinking Water Crisis in Rural Towns

How to make Mini Pumpkins Stuffed with Onion, Mushrooms, and Chard

How to prepare Seared Chicken Breast With Potatoes and Capers in 6 easy Steps

Popular Food To Eat in China |Cold Sesame Noodles

How to prepare Skillet Chicken With Black Beans, Rice and Chiles

New symptoms of omicron virus

Popular posts from this blog

Stormy Daniels seeks Trump testimony on her sex claims

New post Stormy Daniels seeks Trump testimony on her sex claims 25 minutes ago Share this with Facebook   Share this with Twitter   Share Media caption Stormy Daniels: 'I was threatened' Adult-film star Stormy Daniels has filed a court motion for US President Donald Trump to testify about her claim that they had a relationship. Her lawyer wants sworn testimony from Mr Trump about a "hush" agreement the actress says she signed. The attorney, Michael Avenatti, is also seeking a legal interview with the president's lawyer. Ms Daniels alleges she had unprotected sex with Mr Trump in 2006 a year after he married Melania Trump. He denies it. Mr Avenatti's motion, filed in a court in the Central District of California early on Wednesday, ramps up the legal duel between the porn star and the president. Should Trump be worried about Stormy Daniels? The president and the porn star: Why this matters Ex-model ...

How to prepare Menemen

 Menemen (Turkish Scrambled Eggs With Tomato) Time :25 minutes Menemen, made from eggs, tomatoes, peppers and sometimes onions, is a distinctly Turkish breakfast comfort food. Although a year-round dish, it is especially pleasing in the summer, with really ripe tomatoes from the garden or farmer’s market. Be creative with this dish: Add shallots, chiles, fresh herbs or Aleppo pepper, or treat it as purists do, with only tomatoes and eggs. Cook slowly, stirring infrequently, until the eggs form billowy puffs. You can serve topped with feta cheese or lamb sausage, with any warm flatbread on the side. INGREDIENTS Yield : 4 servings 4tablespoons extra-virgin olive oil 1medium white onion (about 10 ounces), peeled and diced ½teaspoon dried oregano, plus more as needed ¼teaspoon Aleppo pepper, plus more as needed Kosher salt and freshly ground black pepper 1mild but flavorful long green pepper (such as Turkish carliston, Hungarian banana or Anaheim), stemmed, halved lengthwise, seeded, ...

Drinking Water Crisis in Rural Towns

Drinking water is essential for life, but many rural towns in the U.S. are struggling to provide safe and reliable water to their residents. For decades, these towns have neglected their drinking water systems, resulting in aging infrastructure, water quality violations, and financial challenges. In this blog post, we will explore some of the causes and consequences of this crisis, and what can be done to address it. Causes of the Crisis One of the main causes of the crisis is the shrinking population of many rural towns. As people move to urban areas or other states, the tax base and the customer base of the water systems decline. This means less revenue to cover the costs of operation, maintenance, and improvement of the water systems. According to a report by the American Bar Association³, in 2015, 9 percent of all water systems had a documented violation of water quality standards, exposing 21 million people to unhealthy drinking water. These violations were more likely to occur in...

How to make Mini Pumpkins Stuffed with Onion, Mushrooms, and Chard

Mini Pumpkins Stuffed with Onion, Mushrooms, and Chard INGREDIENTS 4  (10 to 12-ounce) mini pumpkins, or 2 (1 1/2-pound) acorn squash 1 1/2  teaspoons  kosher salt, divided 8  ounces  fresh chanterelles or other wild mushrooms 1  medium yellow or white onion 1/2  bunch  Swiss chard (about 4 ounces) 1/2  bunch  fresh parsley 2  sprigs  fresh thyme, or 1/4 teaspoon dried thyme 2  ounces  Comté or Swiss cheese 3  tablespoons  olive oil, divided 2  tablespoons  crème fraîche or sour cream 1/4  teaspoon  freshly ground black pepper INSTRUCTIONS Arrange a rack in the middle of the oven and heat the oven to 375°F. Cut the tops off 4 mini pumpkins (like a jack-o-lantern), or cut 2 acorn squash in half lengthwise. Scoop out and discard the seeds and fibers. Place cut-side up in a 9x13-inch baking dish. Place the lids next to the pumpkins. Season the insides of the pumpkins with 1/4 teaspoon of the...