Oil major Shell has decided to boost its dividend for the second consecutive quarter this year after seeing an increase in quarterly profit driven by a sharp rise in oil and gas prices.
According to its 2Q 2021 report on Thursday, Shell’s CCS earnings attributable to shareholders amounted to $2.6 billion in the second quarter of 2021 compared to $4.3 billion in 1Q 2021 and compared to a loss of $18.4 billion in the second quarter of 2020.
Shell’s adjusted profit in this year’s second quarter totalled $5.5 billion compared to $3.2 billion in 1Q 2021 and compared to $638 million in 2Q 2020.
Compared with the first quarter of 2021, current-quarter adjusted earnings reflected higher realised oil prices, one-off favourable tax impacts, higher marketing margins and lower operating expenses. This was partly offset by lower contributions from trading and optimisation.
At the end of the second quarter of 2021, net debt was $65.7 billion, compared with $71.3 billion at the end of the first quarter of 2021, mainly driven by free cash flow generation in the quarter.
Commenting on the results, Shell CEO, Ben van Beurden , said: “We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy. 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 2Q 2021 onwards to 24 US cents”.
Shell is also launching $2 billion of share buybacks, which is targeted to be completed by the end of this year.
Van Beurden added: “Total shareholder distributions for 2021 are expected to be around the middle of the 20-30 per cent range of CFFO from the previous four quarters. Our progressive dividend policy to grow dividends per share by 4 per cent annually, subject to board approval, remains unchanged”.
In April 2021, Shell increased its dividend by around 4 per cent when compared to the fourth quarter of 2020.
Compared with the first quarter of 2021, total production decreased by 8 per cent, mainly due to unfavourable seasonal effects and higher maintenance activities.