Anglo-Dutch supermajor Shell has slashed its dividend by 66 per cent, the first time the company has cut cash distributions to shareholders since World War II
The annual pay-out will fall from US$14.9bn to US$5.1bn, freeing up US$10bn of capital.
The last time one of the supermajors cut the dividend was BP, in the immediate aftermath of the Macondo disaster.
Tom Ellacott, senior vice-president with Wood Mackenzie’s corporate analysis team, said, “The move is a sensible and prudent action to preserve cash in the face of huge macro uncertainty.
“We estimate the cut reduces Shell’s cash flow 2020 cash flow breakeven from US$51 per bbl to US$36 per bbl.
“A permanent dividend reset could also accelerate the strategic pivot to ‘Big Energy’ through the reinvestment of more retained earnings in the youthful zero-carbon energy sector.
“Shell’s dividend cut has thrown down the gauntlet to the supermajors. BP, Chevron, ExxonMobil and Total are due to pay out US$41bn of dividends in 2020. Combined pay-outs would fall by US$27bn of they all cut by 66 per cent.”
