“Today’s teaser from Royal Dutch Shell ahead of second quarter results will be getting its investors as excited as James Bond fans are by the trailer for the latest film in the series.
The company has unveiled plans to return more cash to shareholders in the second half as the recent surge in the oil price benefits cash flow and helps with debt reduction.
“This news is an interesting coda to the recent court decision in the Hague which effectively forced Shell to reduce its emissions more quickly than planned. This is likely to require significant investment and for this reason Shell is likely to be wary of overstretching itself in terms of dividend commitments,” says AJ Bell investment director Russ Mould.
“The continuing volatility in oil prices means managing an oil and gas business like Shell remains a high-wire act. To put the see-saw nature of the market into context, oil has traded at multi-year lows and more recently at multi-year highs all in less than 18 months.
“The latest move reflects OPEC’s continuing influence over crude prices, with the collapse of talks over a supply increase providing a catalyst.
“Such wild swings in the oil price make the kind of long-term planning and investment Shell will require to successfully transform itself into an energy business fit for a post fossil fuels future a real challenge.”