BAKU, Azerbaijan, April 30
By Leman Zeynalova - Trend:
Shell's cut will reduce the company's 2020 cash flow breakeven from $51/bbl to $31/bb, Luke Parker, vice president with Wood Mackenzie’s corporate analysis team, said, Trend reports.
Anglo-Dutch supermajor Shell today slashed its dividend by 66 percent, the first time the company has cut cash distributions to shareholders since World War II.
The annual pay-out will fall from $15 billion to $5 billion, freeing up $10 billion of capital.
The last time one of the supermajors cut the dividend was BP, in the immediate aftermath of the Macondo disaster.
“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 2020 cash flow breakeven from $51/bbl to $31/bbl.”
“A permanent dividend reset would also help fund an accelerated strategic pivot to 'Big Energy' through the reinvestment of maturing oil and gas cash flow into the youthful zero-carbon energy sector,” he added.
Shell’s dividend cut has thrown down the gauntlet to the supermajors. BP, Chevron, ExxonMobil and Total are due to pay out $41 billion of dividends in 2020. Combined pay-outs would fall by $27 billion if they all cut by 66 percent, reducing 2020 cash flow breakevens by $15/bbl on average.
