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Royal Dutch Shell PLC RDS.B

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Shell Delivers Strong Cash Flow in Q1; Debt Reduction Brings Increase in Shareholder Returns Closer

Allen Good, CFA Sector Strategist

Analyst Note

| Allen Good, CFA |

Shell reported an improvement in first-quarter adjusted earnings to $3.2 billion from $2.9 billion a year ago and $393 million in the fourth quarter. Each segment improved from the fourth quarter, while the upstream and chemicals segments led the year-over-year improvement. Operating cash flow, excluding working capital, was also much improved at $12.7 billion compared with $7.4 billion a year ago. Combined with divestment proceeds, Shell was able to cover the dividend and reduce net debt to $71.3 billion from $75.4 billion at year-end 2020. Shell is moving closer to its $65 billion net debt target, at which point it will introduce its shareholder distribution return target of 20%-30% of operating cash flow. It already announced a 4% increase in the dividend this year, which it plans to do annually.

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Company Profile

Business Description

Royal Dutch Shell is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2019, it produced 2.0 million barrels of liquids and 11.4 billion cubic feet of natural gas per day. At year-end 2019, reserves stood at 11.1 billion barrels of oil equivalent (including equity companies), 37% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America. The company operates refineries with capacity of 2.9 mmb/d located in the Americas, Asia, Africa, and Europe and sells 18 mtpa of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America.

Carel van Bylandtlaan 30
The Hague, 2596 HR, United Kingdom
T +31 703779111
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 87,000