Great Britain

Shell shareholders get reward as oil giant returns to profit

Royal Dutch Shell increased its dividend payout to shareholders following a better-than-expected third quarter of the year, months after cutting it for the first time since World War II.

The oil giant which is trying to transform itself into a carbon-neutral energy company said Thursday that it was planning to increase its dividend by 4% to 16.65 U.S. cents per share for the third quarter.

“The strength of our performance gives us the confidence to lay out our strategic direction, resume dividend growth and to provide clarity on the cash allocation framework, with clear parameters to increase shareholder distributions,” Chief Executive Ben van Beurden said.

The dividend hike came as the company reported earnings on a current cost of supply basis — the industry standard — of $177 million in the July to September period.

Though down 97% on last year because of the sharp slide in oil prices, the company's earnings still beat the consensus in financial markets of $146 million.

It's certainly a sharp improvement on the performance in the second quarter when the company reported a massive loss of $18.4 billion after it was forced to reassess how much the oil it had in untapped reserves would sell for.

“On the face of it, there is a positive direction of travel here that should go some way towards assuaging concerns about Shell’s long-term direction of travel,” said Stuart Lamont, investment manager at Brewin Dolphin.

Like others in the sector, Shell has faced a double challenge this year, dealing with plunging oil prices, some of which turned negative for a short while in April, and increased pressure to set new environmental goals.

Shell and its U.K. rival BP have pledged to lower emissions to net zero by the middle of the century.

“Undoubtedly, we are moving towards a renewable future,” said David Kimberley, an analyst at Freetrade.

“But this is not going to happen overnight and claims that the pandemic has accelerated this process seem misplaced and overly optimistic.”

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