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: https://tmsnrt.rs/2WFDl1o
"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: https://tmsnrt.rs/2KpS1Lt
ADVERTISEMENT(Reporting by Ron Bousso; editing by Jason Neely and Louise Heavens)
