RDSA Shell Plc

--Shell plans to return $125 billion or more to shareholders from 2021 to 2025

--Expanding power business could be promising, CEO says, but Shell will proceed with caution

--CFO Jessica Uhl says Shell committed to sustainable dividend-per-share growth

By Oliver Griffin

Royal Dutch Shell PLC (RDSB.LN) on Tuesday said it is committed to delivering dividend-per-share growth and laid out a strategy reaffirming its commitment to its core upstream division and investment in power in the five-year cycle starting in 2021.

Jessica Uhl, the Anglo-Dutch company's chief financial officer, said any dividend growth would be resilient and that share buybacks will continue to feature to ensure that outcome.

"We want to make sure that as we increase the dividend per share, we do that in a sustainable way," Ms. Uhl said.

The integrated energy major said it is on track to meet its 2020 commitments, and plans to return $125 billion or more to shareholders from 2021 to 2025 via dividends and buybacks. Shell said it intends to hike its dividend when closer to finishing its current $25 billion share-buyback program, which the company expects to complete next year.

Shell maintained its first-quarter dividend at 47 cents a share this year.

The targeted shareholder returns for the five years ending in 2025 would be an increase on the approximately $90 billion expected for the period ending in 2020. For the five years ended 2015, Shell's shareholder returns amounted to around $52 billion.

Shell raised its guidance for organic free cash flow in 2025 to $35 billion at an oil price of $60 a barrel. It also said it will invest an average of $30 billion in capital expenditure a year during the period, capped at $32 billion a year. This includes minor acquisition spend of up to $1 billion but excludes major inorganic opportunities.

The company has re-focused its strategic themes into three categories--core upstream, leading transition and emerging power--which will shape its portfolio and drive capital allocation.

In particular, Chief Executive Ben van Beurden said the company's power business could one day sit alongside its oil-and-gas and chemicals business, but that Shell won't get ahead of itself.

"We are investing with care and we will remain very disciplined," he said

Mr. van Beurden said the transition to lower-carbon energy was challenging the traditional business models in the power sector and that Shell sees potential in an integrated power business that could deliver returns of 8% to 12%.

With some $1.6 billion invested in the power division to date, Mr. van Beurden said spend on the business will rise to an average of $2 billion to $3 billion from 2021 to 2025, as long as it meets the company's investment criteria.

While Shell said its integrated gas, chemicals and oil products businesses will form its leading themes for the energy transition, the chief executive reaffirmed Shell's commitment to its core upstream business, which includes the company's deep-water, shale and conventional oil-and-gas operations.

Pressed on how this strategy would affect the company's alignment to the Paris Agreement targets regarding climate change, Mr. van Beurden said Shell could only change its mix of energy products if its customers are willing to buy them.

"History isn't going to be solely determined by Shell, or by the [oil-and-gas] industry," Mr. van Beurden said.

Write to Oliver Griffin at oliver.griffin@dowjones.com; @OliGGriffin

(END) Dow Jones Newswires

June 04, 2019 07:25 ET (11:25 GMT)

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