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Shell eyes dividend and spending boost after 2020

Shell eyes dividend and spending boost after 2020
FILE PHOTO: Staff members work at the booth of Royal Dutch Shell at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan, April 4, 2017. REUTERS/Toru Hanai -
Toru Hanai(Reuters)
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By Ron Bousso

LONDON (Reuters) – Royal Dutch Shell on Tuesday outlined plans to increase spending and dividends after 2020 in a show of confidence by the energy company despite an uncertain outlook for oil and gas prices.

In a strategy update, the Anglo-Dutch company said it was on track to deliver its previous commitments to increase cash generation and carry out one of the world’s largest share buyback programmes of $25 billion (£19.7 billion) by the end of next year.

Shell, the world’s second-largest listed oil and gas company after Exxon Mobil , underwent deep cost cuts following the 2016 acquisition of smaller rival BG Group for $53 billion and the collapse of oil prices in late 2014.

Despite a slow and bumpy recovery in oil prices, it reported the largest profit among its peers last year and vastly increased its revenue from previous years.

For a graphic on Shell annual cashflow, click:

“It is the success of our strategy and strength of our delivery today that gives us confidence for the future,” Shell Chief Executive Officer Ben van Beurden said in a statement.

Shell said its free cash flow – cash available to pay for dividends and share buybacks – is set to rise to around $35 billion per year by 2025 at a Brent crude oil price of $60 per barrel.

That compares with $28-33 billion in free cash flow it expects to deliver by the end of next year.

It said the cash delivery “creates the potential to distribute $125 billion or more to shareholders” in the form of dividends and share buybacks between 2021 and 2025.

That compares with distributions of around $90 billion between 2016 and 2020.

It expects to increase its dividend payouts to shareholders once it completes a $25 billion share buyback by the end of 2020 it had promised following the BG acquisition.

Shell, the world’s biggest dividend payer at $16 billion a year, last increased its quarterly dividend in the first quarter of 2014 to $0.47 per share.

For a graphic on Shell annual earnings 2018, click:

(Reporting by Ron Bousso; editing by Jason Neely and Louise Heavens)

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