Shell shares surge as it announces $2bn buyback

·2 min read
Ben van Beurden, chief executive officer of Royal Dutch Shell
Ben van Beurden, chief executive officer of Royal Dutch Shell. Photo: Sergio Moraes/Reuters

Shares in oil major Shell (RDSA.L) headed higher on Thursday morning in London as it reported half-year results, and announced a $2bn (£1.4bn) share buyback programme. 

After the opening bell, stock was up around 3.8%, buoyed by news that its results had surpassed expectations. 

Buybacks come around a year after the company took the leap of cutting its dividend. In the early stages of the pandemic a collapse in oil prices saw the commodity dip below zero. This was only the second time it had cut its dividend since the Second World War. 

"The quality of Shell’s operational and financial delivery and strengthened balance sheet have given the board confidence to rebase the dividend per share from Q2 2021 onwards to 24 US cents," said Royal Dutch Shell chief executive officer, Ben van Beurden. "We are also launching $2bn of share buybacks, which is targeted to be completed by the end of this year.

"Total shareholder distributions for 2021 are expected to be around the middle of the 20-30% range of CFFO from the previous four quarters. Our progressive dividend policy to grow dividends per share by 4% annually, subject to board approval, remains unchanged."

Shell's A-shares, five-day look. Chart: Yahoo Finance UK
Shell's A-shares, five-day look. Chart: Yahoo Finance UK

Meanwhile, adjusted earnings headed to around $5.5bn during Q2 — outstripping last year's numbers by more than eight times. 

It beat analyst expectations of $5.1bn. 

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"There will be questions raised about whether the payouts planned are far too generous given the scale of the mountain Shell still has to climb to reduce its carbon emissions," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. 

"Although Shell says it will now move to the second phase of allocating capital to power its transition strategy, these results are likely to lead to fresh calls to accelerate its move to renewables."

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