With all happenings around the globe, Royal Dutch Shell stated that they will be proactively taking measures to ensure resilience and (financial) strength of the business. Shell has reduced at least 20% of the capital expenses including “material reductions in working capital”, with possible reductions in the near future. Chief Executive Ben van Beurden said that aside from protecting all its staff and customers in this difficult situation, further steps are also being taken to protect the business. He further assured that the Shell has undergone many market volatility before, despite the unique combination of falling oil prices and rapid spike in supply. To weather this situation, decisive action has been taken to ensure that the company will be able to rebound for an economic recovery that will come, eventually.
The operational cost cutting measures are expected to reduce by an approximate between USD 3 billion and USD 4 billion in the next 12 months. The capital expenditures on the other hand has been reduced from the USD 25 billion by at least USD 5 billion.
With all the cost cutting measures in place, this will contribute to the free cash flow on a pre-tax basis of approximately USD 8 billion and USD 9 billion.
Additionally, the Anglo-Dutch supermajor has decided not to continue with the following transaction of its share buyback programme after the initial completion of its current standing one in a move to evolve its business environment.
Currently, Shell says investments in strategic priorities are imperative for the financial resilience of the business and that they will continue to manage the market volatility via maintenance of strong credit metrics. The company’s liquidity of USD 20 billion in cash as well as equivalents and USD 10 billion of undrawn credit adds to its strong credentials.
Chief Executive further adds that despite the tough conditions, “I am very proud of our staff and contractors across the world for maintaining their focus on safe and reliable operations while also ensuring their own health and welfare and that of their families, communities and our customers,”
Royal Dutch Shell will publish its next quarterly update note on 31 March and release its first quarter 2020 results on 30 April.
Source: Upstream Online