Shell shareholders are in line to reap the rewards of the upturn in the oil price after the company confirmed it would be boosting returns.
Subject to final board approval, the Anglo-Dutch supermajor will increase total shareholder distributions to between 20% and 30% of cash flow from its operations
That is expected to start at Shell’s Q2 results announcement, which is due at the end of July.
In a trading result issued on Wednesday, the energy giant also confirmed that as a result of “strong operational and financial delivery”, it expects to have further reduced its net debt in the second quarter.
An “improved macro-economic outlook” was also cited as a reason for optimism.
Shell said the extent of the reduction to its net debt would be moderated by working capital movements.
In conjunction with the increased distributions, Shell is to retire its net debt milestone of £47 billion.
It will also continue to target further strengthening of its balance sheet and AA credit metrics.
Despite the boost for shareholders, Shell is still planning to keep a cautious grip on the purse strings, with 2021 cash capex to remain below £15.9bn.
Off the back of the update, Shell’s B shares rose by about 2.7%, before reversing their gains over the course of the day.
The company closed the day at 1,420.4 pence a share, down -0.08%
The oil price has enjoyed a significant surge in recent days, with US crude futures briefly hitting a six-year high.
The increase has been driven by a recovery in demand combined with the failure of OPEC+ to agree a production increase deal – the cartel abandoned its meeting on Monday.
Last year, Shell cut its dividend for the first time since the Second World War, due to the nosedive in oil demand brought on by Covid-19 lockdowns.
