Shell scraps scrip dividend, confirms US$25bil buyback plan

LONDON: Royal Dutch Shell Plc will stop paying dividends in shares for the first time since 2015 as it seeks to demonstrate it has left the worst of the crude slump behind.

Europe’s biggest oil company will stop the so-called scrip dividend from this quarter, it said in a statement yesterday.

It reiterated a 2015 plan to buy back at least US$25bil of shares from 2017 to 2020, subject to reducing debt further and a recovery in oil prices.

Oil majors including Shell and BP Plc are starting to reap the benefits of cost cuts made in response to the collapse in crude prices three years ago.

Last month, BP gave the boldest signal yet that the industry had managed to emerge from the down- turn, announcing that it would buy back shares for the first time in three years.

Shell also boosted its guidance for free cash flow to at least US$25bil by 2020 at US$60-a-barrel oil from an earlier outlook of US$20bil.

Shell first introduced the scrip dividend in 2010 and maintained it until the second quarter of 2014.

It introduced it again in 2015 after oil prices crashed. The purchase of BG Group Plc also increased debt and Shell used the scrip programme to help preserve cash.

Statoil ASA has also said it will stop its scrip dividend from this quarter while Total SA has said the discount it gives on the programme will cease once it completes the acquisition of Maersk Oil Ltd.