Shell resists pressure to distribute cash to shareholders despite surpassing Q1 predictions

Shell, one of the world’s largest oil companies, is facing pressure to increase returns to shareholders after a strong start to the year. The company’s chief executive, Wael Sawan, spoke out after Shell posted profits nearly 20% higher than expected in the first quarter of 2024.

Despite the positive results, analysts have suggested that Shell could improve on the $5 billion it currently spends each quarter on dividends and share buybacks. Sawan defended the company’s current approach, stating that shareholder returns were at the top end of what they had guided and were appropriate for their financial framework.

Shell’s operating cash flow is now running at a yearly rate of more than $60 billion, with room for potential increases in dividends on an underlying basis. Analysts have noted that Shell’s valuation compared to its US rivals is significantly lower, leading to calls for the company to consider moving its listing from London to New York.

While Sawan stated that moving the listing is not currently a live discussion, he acknowledged that the board would keep such a move under review. He emphasized that his focus until the end of 2025 is on improving performance, with potential levers to unlock more value beyond a change of listing.

In morning trading, Shell’s shares rose just under 1% in London to £28.45. The company reported strong profits in its gas business, accounting for 40% of its earnings, with production of liquefied natural gas at the top end of guidance. Overall oil and gas production was up 10% compared to the previous quarter due to lower maintenance in key regions.