Royal Dutch Shell raised its dividend after easily beating quarterly profit forecasts and outlined plans to shrink its oil and gas operations as it presses forward with a transition to low-carbon energy.
The Anglo-Dutch company hit record earnings from its vast retail division, despite the impact on demand of the COVID-19 pandemic, which it said continued to generate “significant uncertainty.”
In a sign of renewed confidence, Shell said it would boost its dividend on an annual basis after it cut the payout in April for the first time since the 1940s.
“We are starting a new era of dividend growth,” CEO Ben van Beurden told reporters in a call.
Shell is planning a major restructuring as part of “a complete overhaul” to reduce greenhouse gas emissions to net zero by 2050.
In line with plans to shrink its oil and gas portfolio, it said it would cut back its oil refineries from 14 sites to six “energy and chemical parks.”
Shell’s shares have dropped by more than 60% so far this year, more than any other major oil company, as investors fret over the impact of the pandemic on energy demand and the long-term energy transition.
But following its strong quartlerly results, Shell outlined a long-term plan to reduce debt to $65 billion and to aim for shareholder distributions of 20-30% of cash flow. Its debt at the end of September was $73.5 billion, down from $77.8 billion in the previous quarter.