REG-Royal Dutch Shell: Shell strategy update and financial outlook to 2025

ShellAnnouncement

04/06/2019 07:05

Management Day 2019:  Shell, strongly positioned for the future of energy,
provides strategy update and financial outlook to 2025
* Shell refreshes strategy for the energy future as it builds on strong
foundation
* The company is on track to deliver on its 2020 commitments; now increases
organic free cash flow outlook to around $35 billion for 2025 at $60 per
barrel (real terms, 2016)
* Shell’s expected cash delivery creates the potential to distribute $125
billion or more to shareholders (dividends and share buybacks) over the
five-year period of 2021-2025
LONDON, June 4, 2019 - Royal Dutch Shell plc (Shell) today updates investors
on the company’s strategy, setting out a compelling financial outlook to
2025 and building on a strong foundation that will enable it to thrive through
the transition to a lower-carbon energy system.

“We have reshaped our company with a focus on value and have demonstrated a
clear track record of delivering on our ambitious promises made at our
Management Day in November 2017,” said Royal Dutch Shell plc Chief Executive
Officer, Ben van Beurden.  “It is the success of our strategy and strength
of our delivery today that gives us confidence for the future.”

Van Beurden summed up the key points of the company’s update: “Increased
organic free cash flow outlook, greater potential distributions to
shareholders and confidence in our world class investment case given our
high-margin portfolio, improving returns and a globally recognised brand.”

Shell highlighted its delivery on commitments since the last Management Day in
2017:
* achieved $10 billion additional cash flow from operations from new projects
started up since 2014;
* demonstrated capital discipline within committed capital range;
* delivered $30 billion of divestments from 2016-2018;
* cancelled the scrip dividend; and
* started the $25 billion share buyback programme.
Financial outlook

By the end of next year, Shell plans to complete its $25 billion share buyback
programme (subject to further progress with debt reduction and oil price
conditions) in combination with reaching a gearing level of 25% (20%
pre-IFRS16) and delivering $28-33 billion of organic free cash flow ($25-30
billion pre-IFRS16) at $60 per barrel (real terms, 2016).

Looking further ahead to 2025, van Beurden set out a robust financial outlook
that included the potential to make distributions to shareholders of $125
billion or more in the form of dividends and share buybacks in the period of
2021-2025.  This is in comparison to around $52 billion in shareholder
distributions in the period of 2011-2015 and expected shareholder
distributions of around $90 billion in the period of 2016-2020. Shell expects
to increase the dividend per share when there is line of sight to the
completion of the $25 billion share buyback programme.

Shell also plans to:
* fully sustain the Upstream business through the next decades, and grow the
company’s market-facing businesses;
* increase organic free cash flow to around $35 billion in 2025 at $60 per
barrel (real terms, 2016);
* achieve a return on average capital employed of more than 12% in 2025;
* maintain gearing of 15-25% through the cycle; and
* invest, on average, $30 billion of cash capex a year over 2021-2025
(excluding major inorganic opportunities, but including minor acquisition
spend of up to $1 billion), with a ceiling of $32 billion a year.
Strategy updates

Shell presents a refreshed strategy that reflects the next step in delivering
the world class investment case and thriving through the energy transition.
Its strategic themes are re-focused into three categories to shape the
portfolio and drive capital allocation for value growth and resiliency: Core
Upstream, Leading Transition and Emerging Power.

Deep Water, Shales and Conventional Oil and Gas form the Core Upstream themes.

The market-facing businesses of Integrated Gas, Chemicals and Oil Products
will be the cornerstone of Shell leading through the energy transition and
form the Leading Transition themes.

The Emerging Power theme will focus on creating business models to meet
evolving customer demands as society transitions to much greater levels of
electrification.

Shell reaffirms the role each of its businesses play in delivering the
company’s performance and building on its foundation for the future:

Upstream continues to focus on delivery and financial performance and is
expected to continue generating robust cash flow for decades to come. It has a
strong development funnel of projects that offers long-life, resilient growth
opportunities.

The Integrated Gas business is expected to attract investment to maintain and
grow its positions through competitive options for future development. Natural
gas and liquefied natural gas are expected to continue to experience strong
demand as the world tackles climate change, poor air quality and population
growth.

Downstream continues to deliver strong financial performance due to highly
integrated refining, trading and marketing operations, premium products, as
well as competitive growth in the Chemicals business. Strong brand and
customer reach will continue to be a differentiator for Shell and underpin
growth in its Downstream businesses.

Shell continues to develop its Power business. The company plans to seek new
opportunities to grow this business as the role of electricity increases in
the global energy system and consumers’ needs evolve. The returns Shell
achieves will drive the pace of growth in Power.   

Ben van Beurden said, “All this adds up to a forward-looking strategy that
ensures Shell is well-placed to continue to deliver a world class investment
case and thrive in the energy transition.”

Royal Dutch Shell plc

The Hague, June 4, 2019

Enquiries:

Investor Relations

Europe:                         + 31 70 377 4540

North America:              +1 832 337 2034

Media Relations

International:                 +44 207 934 5550

Americas:                      +1 832 337 4355

CAUTIONARY NOTE

The companies in which Royal Dutch Shell plc directly and indirectly owns
investments are separate legal entities. In this announcement “Shell”,
“Shell Group” and “Royal Dutch Shell” are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words “we”, “us” and “our”
are also used to refer to Royal Dutch Shell plc and its subsidiaries in
general or to those who work for them. These terms are also used where no
useful purpose is served by identifying the particular entity or entities.
‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies”
as used in this announcement refer to entities over which Royal Dutch Shell
plc either directly or indirectly has control. Entities and unincorporated
arrangements over which Shell has joint control are generally referred to as
“joint ventures” and “joint operations”, respectively.  Entities over
which Shell has significant influence but neither control nor joint control
are referred to as “associates”. The term “Shell interest” is used for
convenience to indicate the direct and/or indirect ownership interest held by
Shell in an entity or unincorporated joint arrangement, after exclusion of all
third-party interest. This announcement contains forward-looking statements
(within the meaning of the U.S. Private Securities Litigation Reform Act of
1995) concerning the financial condition, results of operations and businesses
of Royal Dutch Shell. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements. Forward-looking
statements are statements of future expectations that are based on
management’s current expectations and assumptions and involve known and
unknown risks and uncertainties that could cause actual results, performance
or events to differ materially from those expressed or implied in these
statements. Forward-looking statements include, among other things, statements
concerning the potential exposure of Royal Dutch Shell to market risks and
statements expressing management’s expectations, beliefs, estimates,
forecasts, projections and assumptions. These forward-looking statements are
identified by their use of terms and phrases such as “aim”,
“ambition”, ‘‘anticipate’’, ‘‘believe’’,
‘‘could’’, ‘‘estimate’’, ‘‘expect’’,
‘‘goals’’, ‘‘intend’’, ‘‘may’’,
‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’,
‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”,
‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and
similar terms and phrases. There are a number of factors that could affect the
future operations of Royal Dutch Shell and could cause those results to differ
materially from those expressed in the forward-looking statements included in
this announcement, including (without limitation): (a) price fluctuations in
crude oil and natural gas; (b) changes in demand for Shell’s products; (c)
currency fluctuations; (d) drilling and production results; (e) reserves
estimates; (f) loss of market share and industry competition; (g)
environmental and physical risks; (h) risks associated with the identification
of suitable potential acquisition properties and targets, and successful
negotiation and completion of such transactions; (i) the risk of doing
business in developing countries and countries subject to international
sanctions; (j) legislative, fiscal and regulatory developments including
regulatory measures addressing climate change; (k) economic and financial
market conditions in various countries and regions; (l) political risks,
including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the approval
of projects and delays in the reimbursement for shared costs; and (m) changes
in trading conditions. No assurance is provided that future dividend payments
will match or exceed previous dividend payments. All forward-looking
statements contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in this
section. Readers should not place undue reliance on forward-looking
statements. Additional risk factors that may affect future results are
contained in Royal Dutch Shell’s Form 20-F for the year ended December 31,
2018 (available at www.shell.com/investor and www.sec.gov). These risk factors
also expressly qualify all forward-looking statements contained in this
announcement and should be considered by the reader.  Each forward-looking
statement speaks only as of the date of this announcement, June 4, 2019.
Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any
obligation to publicly update or revise any forward-looking statement as a
result of new information, future events or other information. In light of
these risks, results could differ materially from those stated, implied or
inferred from the forward-looking statements contained in this announcement.
We may have used certain terms, such as resources, in this announcement that
the United States Securities and Exchange Commission (SEC) strictly prohibits
us from including in our filings with the SEC.  U.S. investors are urged to
consider closely the disclosure in our Form 20-F, File No 1-32575, available
on the SEC website www.sec.gov.

This announcement contains inside information.

June 4, 2019

Contacts:

- Linda Szymanski, Company Secretary

LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70

Classification: Inside Information



Copyright (c) 2019 PR Newswire Association,LLC. All Rights Reserved