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Shell Chief Pledges Everything to Maintain Its ‘Iconic’ Dividend

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BLOOMBERG: Shell Chief Pledges Everything to Maintain Its ‘Iconic’ Dividend

by Nidaa Bakhsh and Mark Barton

(Bloomberg) — Royal Dutch Shell Plc Chief Executive Officer Ben van Beurden pledged to do all he can to maintain payments to shareholders of Europe’s largest oil company after crude prices fell by more than half in the past six months.

“We have a very long-term dividend policy and I’m not minded to change that,” Van Beurden said in an interview today with Bloomberg Television. “The dividend is an iconic item at Shell and I will do everything to protect it.”

Shell, which missed analysts’ expectations for fourth-quarter earnings today, plans to pay a first-quarter dividend of 47 cents a share, unchanged from the previous two quarters, the Hague-based company said in a statement. The company is cutting its capital spending by $15 billion over three years to help it weather the collapse in oil prices and keep paying shareholders.

The industry is scurrying to protect returns for investors as crude below $50 a barrel guts cash flows. Statoil ASA, Tullow Oil Plc and Premier Oil Plc have delayed projects or cut exploration spending. BP Plc has frozen wages and Chevron Corp. delayed its 2015 drilling budget.

“While Shell does not cover its dividend organically in a $50-$70 per barrel oil-price environment, other majors, e.g. BP, are worse off,” Kim Fustier, an Edison Investment Research analyst, said in an e-mailed note. “Shell’s robust balance sheet and ability to sell assets means it can comfortably maintain its current dividend over the medium term.”

Shell reported profit excluding one-time items and inventory changes was $3.3 billion in the fourth quarter, up from $2.9 billion a year earlier. That missed the $4.1 billion average of 13 analyst estimates compiled by Bloomberg.

Shell “isn’t immune to low oil prices and that puts pressure on the investment program,” Van Beurden said in the interview. About 40 projects will be affected by the cuts, he said. “We can weather the storm.”

To contact the reporters on this story: Nidaa Bakhsh in London at [email protected]; Mark Barton in London at [email protected]

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