The Hague-based LNG giant Shell is looking to press on its “competitive advantage in LNG” through the 2020s assessing the opportunities for growth under its updated strategy.
Speaking to investors, Shell’s CEO Ben van Beurden said that Integrated Gas business, a ‘cash engine’ for the company, has seen good financial performance “underpinned by its position as a leader in both the global liquefied natural gas (LNG) and gas-to-liquids value chains, as well as by the underlying strength Shell sees in natural gas and LNG markets.”
Van Beurden pointed to a number of updates to the company’s strategy.
“We have increased our outlook for organic free cash flow, which has been consistently strong over the past five quarters. We have also made significant progress with our divestment programme, allowing us to reduce net debt in that time. Meanwhile, we intend to cancel our scrip dividend programme with effect from the fourth quarter 2017,” he said.
The outlook for annual organic free cash flow has increased to $25 to $30 billion by 2020 at a Brent crude oil price of $60 per barrel, $5 billion above the company’s previous outlook in June 2016.
Shell remains focused on reducing its debt with gearing at 25.4 percent at the end of the third quarter. However, additional divestment proceeds of over $5 billion since then bring the figure closer to 20 percent.
The $30 billion divestment programme between 2016 and 2018 is almost delivered, with deals worth $23 billion completed (headline), $2 billion announced, and $5 billion in advanced progress. Once this programme is completed the company expects to continue divestments at an average rate of more than $5 billion until at least 2020, according to the financial outlook.
The annual capital investment will continue to be between $25 and $30 billion, and at current oil prices capital investment will be managed towards the bottom end of that range, or lower if needed, Shell said.
The company also remains on track to deliver 1 million barrels of oil equivalent per day and $10 billion of cash flow from operations from new projects by 2018.
Shell has also set its sights on reducing the carbon footprint of its energy products by around a half by 2050 with a 20 percent reduction aimed by 2035.