Shell raises dividend months after first cut since Second World War

Oil giant Shell has increased payouts to shareholders following a better than expected third quarter of the year, months after cutting its dividend for the first time since the Second World War.

Shell said current cost of supply earnings were 177 million dollars (£136 million) during the three months.

It is a 97% reduction from last year, but still beat analyst predictions that the measure would reach 146 million dollars (£112 million).

The firm was left reeling three months ago when its CCS losses reached 18.4 billion dollars (£14 billion) in the second quarter after it was forced to reassess how much oil it had in untapped reserves would sell for.

So a small profit was a positive for the company, whose shares rose on the London markets on Thursday.

“On the face of it, there is a positive direction of travel here that should go some way towards assuaging concerns about Shell’s long-term direction of travel,” said Stuart Lamont, investment manager at Brewin Dolphin.

As a result, Shell said it was planning to increase its dividend by around 4% to 16.65 US cents per share for the third quarter of the year.

“The strength of our performance gives us the confidence to lay out our strategic direction, resume dividend growth and to provide clarity on the cash allocation framework, with clear parameters to increase shareholder distributions,” said chief executive Ben van Beurden.

Oil giants have faced a double challenge this year, dealing with plunging oil prices, some of which turned negative for a short while in April, and increased pressure to set new environmental goals.

Shell and UK rival BP have pledged to lower emissions to net zero by the middle of the century.

David Kimberley, an analyst at Freetrade, said: “Undoubtedly, we are moving towards a renewable future. But this is not going to happen overnight and claims that the pandemic has accelerated this process seem misplaced and overly optimistic.

“It’s worth remembering that there was a dip in energy usage and similar claims about a green future after the last financial crisis.

“Instead we got a decade of sustained growth in hydrocarbon usage. With demand for electricity in most European countries back to pre-pandemic levels and cheap oil on the market, it’s unlikely the predicted green future is going to be appearing any time soon.”

Shell said its adjusted earnings were 1 billion US dollars (£770 million) in the third quarter, its cash flow from operating activities was 10.4 billion dollars (£8 billion), down 15% from the same time last year. Free cash flow hit 7.6 billion dollars (£5.9 billion).