Shell Produces One of Its Strongest Ever Quarters
Royal Dutch Shell’s CEO Ben van Beurden announced Thursday that good operational delivery across all Shell businesses produced one of the company’s “strongest ever quarters”.
The company reported cash flow from operating activities of $12.1 billion in the third quarter (3Q), which included negative working capital movements of $2.6 billion, compared with $7.6 billion in the third quarter of 2017, which included negative working capital movements of $1.3 billion.
“Excluding working capital movements, cash flow from operations of $14.7 billion mainly reflected increased earnings and higher dividends received,” Shell said in its latest results statement.
Shell’s CCS (current cost of supplies) earnings attributable to shareholders in 3Q were $5.6 billion, excluding identified items, compared with $4.1 billion, excluding identified items, in 3Q 2017.
“Earnings primarily benefited from increased realized oil, gas and LNG prices as well as higher contributions from trading in Integrated Gas, partly offset by lower margins in Downstream, higher deferred tax charges in Upstream and adverse currency exchange effects,” Shell said in its results statement.
Total dividends distributed to shareholders in the quarter were $3.9 billion, Shell revealed. In October, the first tranche of the company’s share buyback program was completed, with almost 61 million A ordinary shares bought back for cancellation for an aggregate consideration of $2 billion. Today, Shell launched the second tranche of the share buyback program, with a maximum aggregate consideration of $2.5 billion in the period up to, and including, January 28, 2019.
“Good operational delivery across all Shell businesses produced one of our strongest-ever quarters, with cash flow from operations of $14.7 billion, excluding working capital movements. Our strong financial performance allowed us to cover the cash dividend, interest payments, share buybacks and to further pay down debt,” Shell’s Ben van Beurden said in a company statement.
“Our strategy remains on track. We have completed the first tranche of share buybacks, in line with our intention to purchase $25 billion of our shares by the end of 2020, and today I’m pleased to announce the second tranche. Meanwhile, the transformation of our portfolio continued, with further divestments of non-strategic assets and the final investment decision on LNG Canada,” he added.
In a video posted by Shell on Twitter, the company’s chief financial officer said, “I am proud of our performance track record and with our strong cash flow outlook, Shell’s future looks bright”.
Commenting on Shell’s latest results statement, investment bank Jefferies said, “we believe Shell has one of the most sustainable business models in the sector, capable of fully funding the dividend with free cash flow when oil prices are at the bottom of the cycle but also generating strong free cash flow in a moderate oil price environment”.
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