Royal Dutch Shell plc Shell Acts To Reinforce Business Resilience And Financial Strength
March 23 2020 - 03:30AM
Dow Jones News
TIDMRDSA TIDMRDSB
The Hague, March 23, 2020 - As the COVID-19 virus spreads across the
world - seriously impacting people's health, our way of life and global
markets - Shell is putting the safety and health of our people and
customers first, along with the safe operations of all our businesses.
At the same time, we are taking decisive action to reinforce the
financial strength and resilience of our business so that we are
well-positioned for the eventual economic recovery.
"As well as protecting our staff and customers in this difficult time,
we are also taking immediate steps to ensure the financial strength and
resilience of our business," said Ben van Beurden, Chief Executive
Officer of Royal Dutch Shell. "The combination of steeply falling oil
demand and rapidly increasing supply may be unique, but Shell has
weathered market volatility many times in the past."
"In these very 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."
In order to deliver sustainable cash flow generation, Shell is actively
managing all our operational and financial levers -- from focusing on
maintaining safe and reliable operations each day to reducing capital
spend and operating expenses.
Today, we are announcing that we have embarked on a series of
operational and financial initiatives that are expected to result in:
-- reduction of underlying operating costs by $3-4 billion per annum over
the next 12 months compared to 2019 levels;
-- reduction of cash capital expenditure to $20 billion or below for 2020
from a planned level of around $25 billion; and
-- material reductions in working capital.
Together, these initiatives are expected to contribute $8 - 9 billion of
free cash flow on a pre-tax basis. Shell is still committed to its
divestment programme of more than $10 billion of assets in 2019-20 but
timing depends on market conditions.
The Board of Royal Dutch Shell has decided not to continue with the next
tranche of the share buyback programme following the completion of the
current share buyback tranche.
We will continue to review the dynamically evolving business environment
and are prepared to take further strategic decisions and consider
changes to the overall financial framework as necessary.
In the current environment, Shell's financial resilience is fundamental
to continued investment in our strategic priorities. Shell seeks to
maintain strong financial credit metrics and ensure it has a robust
balance sheet to manage volatility. Shell's liquidity remains strong,
with around $20 billion in cash and cash equivalents, $10 billion of
undrawn credit lines under our revolving credit facility and access to
our extensive commercial paper programmes.
Read about Shell's global response to COVID-19 at
https://www.shell.com/covid19.html
Shell will publish its next quarterly update note on 31 March 2020 and
release its Q1 2020 results on 30 April 2020.
Notes to editor
-- Divestments of around $5 billion of assets were completed in 2019
-- Current share buyback tranche refers to the $1 billion share buybacks
announced on 30 January 2020
-- Shell is rated AA- with negative outlook by S&P and Aa2 with stable
outlook by Moody's
Royal Dutch Shell plc
Enquiries:
Investor Relations:
Europe + 31 (0) 70 377 4540
North America +1 832 337 2034
Media:
International +44 (0) 207 934 5550
Americas +1 832 337 4355
Cautionary Note
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate legal entities. In this announcement
"Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our" are
also used to refer to Royal Dutch Shell plc and its subsidiaries in
general or to those who work for them. These terms are also used where
no useful purpose is served by identifying the particular entity or
entities. "Subsidiaries", "Shell subsidiaries" and "Shell companies"
as used in this announcement refer to entities over which Royal Dutch
Shell plc either directly or indirectly has control. Entities and
unincorporated arrangements over which Shell has joint control are
generally referred to as "joint ventures" and "joint operations",
respectively. Entities over which Shell has significant influence but
neither control nor joint control are referred to as "associates". The
term "Shell interest" is used for convenience to indicate the direct
and/or indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all third-party
interest.
This announcement contains forward-looking statements (within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995)
concerning the financial condition, results of operations and businesses
of Royal Dutch Shell. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations that
are based on management's current expectations and assumptions and
involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those
expressed or implied in these statements. Forward-looking statements
include, among other things, statements concerning the potential
exposure of Royal Dutch Shell to market risks and statements expressing
management's expectations, beliefs, estimates, forecasts, projections
and assumptions. These forward-looking statements are identified by
their use of terms and phrases such as "aim", "ambition", "anticipate",
"believe", "could", "estimate", "expect", "goals", "intend",
"may", "objectives", "outlook", "plan", "probably",
"project", "risks", "schedule", "seek", "should", "target",
"will" and similar terms and phrases. There are a number of factors
that could affect the future operations of Royal Dutch Shell and could
cause those results to differ materially from those expressed in the
forward-looking statements included in this announcement, including
(without limitation): (a) price fluctuations in crude oil and natural
gas; (b) changes in demand for Shell's products; (c) currency
fluctuations; (d) drilling and production results; (e) reserves
estimates; (f) loss of market share and industry competition; (g)
environmental and physical risks; (h) risks associated with the
identification of suitable potential acquisition properties and targets,
and successful negotiation and completion of such transactions; (i) the
risk of doing business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and regulatory
developments including regulatory measures addressing climate change;
(k) economic and financial market conditions in various countries and
regions; (l) political risks, including the risks of expropriation and
renegotiation of the terms of contracts with governmental entities,
delays or advancements in the approval of projects and delays in the
reimbursement for shared costs; (m) risks associated with the impact of
pandemics, such as the COVID-19 (coronavirus) outbreak, and (n) changes
in trading conditions. No assurance is provided that future dividend
payments will match or exceed previous dividend payments. All
forward-looking statements contained in this announcement are expressly
qualified in their entirety by the cautionary statements contained or
referred to in this section. Readers should not place undue reliance on
forward-looking statements. Additional risk factors that may affect
future results are contained in Royal Dutch Shell's Form 20-F for the
year ended December 31, 2019 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this announcement and should be
considered by the reader. Each forward-looking statement speaks only as
of the date of this announcement, 23 March 2020. Neither Royal Dutch
Shell plc nor any of its subsidiaries undertake any obligation to
publicly update or revise any forward-looking statement as a result of
new information, future events or other information. In light of these
risks, results could differ materially from those stated, implied or
inferred from the forward-looking statements contained in this
announcement.
This announcement may contain references to Shell's website. These
references are for the readers' convenience only. Shell is not
incorporating by reference any information posted on www.shell.com.
We may have used certain terms, such as resources, in this announcement
that the United States Securities and Exchange Commission (SEC) strictly
prohibits us from including in our filings with the SEC. Investors are
urged to consider closely the disclosure in our Form 20-F, File No
1-32575, available on the SEC website www.sec.gov.
LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
Classification: Additional regulated information required to be
disclosed under the laws of a Member State
(END) Dow Jones Newswires
March 23, 2020 03:15 ET (07:15 GMT)
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