Shell plc (LON/NYSE:SHEL) will today update investors on its strategy to create more value with less emissions, and deliver increased shareholder returns through a balanced energy transition.
“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,” said Shell Chief Executive Officer, Wael Sawan.
Today’s update reflects Shell’s balanced approach as it operationalises its Powering Progress strategy.
Shell to deliver more value with less emissions
- Enhanced focus on performance, discipline and simplification
- Shareholder distributions increased to 30-40% of cash flow from operations (CFFO) through the cycle
- 15% increase in dividend per share effective Q2 2023*
- Share buybacks of at least $5 billion for the second half of 2023*
- Capital spending reduced to $22-25 billion per year for 2024 and 2025
- Annual operating cost structurally reduced by $2-3 billion by end 2025
- Reiterated commitment to climate targets, including net-zero emissions by 2050
*Subject to Board approval at the time
More value
An enhanced focus on performance and stronger capital and cost discipline will underpin higher shareholder distributions of 30-40% of CFFO through the cycle, compared with 20-30% previously, through a combination of dividends and share buybacks. Shell will raise the dividend per share by an expected 15%, effective from the second quarter 2023 interim dividend, payable in September, and commence share buybacks of at least $5 billion for the second half of 2023, subject to Board approval.
Shell will continue to invest in providing secure supplies of energy, while actively working to reduce carbon emissions. Today, Shell also confirms it will:
- Grow its leading Integrated Gas business and maintain leadership in the global liquefied natural gas (LNG) market.
- Extend its advantaged position in Upstream to achieve cash flow longevity by stabilising liquids production to 2030.
- Leverage its brand, customer relationships, and trading strengths to optimise the value from investments it has made in Downstream and Renewables & Energy Solutions, while helping customers across the transport and industry sectors to decarbonise. Shell will:
- Strengthen the performance of its Marketing business, while building leading positions in low-carbon fuels and electric vehicle charging.
- Invest in hydrogen and carbon capture and storage (CCS) in a disciplined manner to create options for the future.
- Repurpose its Energy and Chemicals Parks footprint to offer more low-carbon solutions to its customers while undertaking a strategic review of its Energy and Chemicals Park assets on Bukom and Jurong Island in Singapore, and further high-grading its European footprint.
- Selectively invest in Power, focusing on markets where its trading activities and customer reach can help to deliver higher returns, while also using the access to green electrons to enable growth in low-carbon energy solutions.
Less emissions
Shell is making good progress towards its target to become a net-zero emissions energy business by 2050, by reducing emissions from its operations, and from the fuels and other energy products it sells to customers. Shell will continue to make progress by:
- Aiming to achieve near-zero methane emissions by 2030 and to eliminate routine flaring from its Upstream operations by 2025, moving faster than the World Bank’s Zero Routine Flaring 2030 initiative.
- Planning to invest $10-15 billion across 2023 to 2025 to support the development of low-carbon energy solutions including biofuels, hydrogen, electric vehicle charging and CCS.
“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,” said Sawan.
Notes to editors
- For further information and access to the webcast of Shell’s Capital Markets Day 2023 presentation starting at 13:30 BST (8:30 EDT, 14:30 CET) visit the investor page of our website.
- Shell’s low carbon fuels business includes its 44% interest in the raízen joint venture.
- Share buyback programmes for the second half of 2023 will be announced at the Q2 and Q3 results announcements and are expected to be completed by the Q4 2023 results announcement.
