BAKU, Azerbaijan, March 24
By Leman Zeynalova – Trend:
As the COVID-19 virus spreads across the world, Royal Dutch Shell is taking decisive action to reinforce the financial strength and resilience of its business so that the company is well-positioned for the eventual economic recovery, Trend reports citing the company.
“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,” said said Ben van Beurden, Chief Executive Officer of Royal Dutch Shell.
In order to deliver sustainable cash flow generation, Shell is actively managing all its operational and financial levers – from focusing on maintaining safe and reliable operations each day to reducing capital spend and operating expenses.
Shell said it has 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 program of more than $10 billion of assets in 2019-20 but timing depends on market conditions,” the company said.
The Board of Royal Dutch Shell has decided not to continue with the next tranche of the share buyback program 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.”
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 its extensive commercial paper programs.
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