Royal Dutch Shell plc (Shell) has set out a financial outlook to 2025, building on a strong foundation that will enable the company to thrive through the transition to a lower-carbon energy system.
Shell recently issued the company’s future strategy, saying it is on track to deliver on its 2020 commitments and has increased its organic free cash flow outlook to around $35 billion for 2025 at $60 per barrel (real terms, 2016)
Chief Executive Officer, Ben van Beurden said the company has been reshaped with a focus on value.
“It is the success of our strategy and strength of our delivery today that gives us confidence for the future,” he said.
By the end of next year, Shell plans to complete its $25 billion share buyback programme (subject to further progress with debt reduction and oil price conditions) in combination with reaching a gearing level of 25 per cent and delivering $28-33 billion of organic free cash flow at $60 per barrel.
Shell also plans to:
- fully sustain the Upstream business through the next decades, and grow the company’s market-facing businesses;
- increase organic free cash flow to around $35 billion in 2025 at $60 per barrel (real terms, 2016);
- achieve a return on average capital employed of more than 12% in 2025;
- maintain gearing of 15-25% through the cycle; and
- invest, on average, $30 billion of cash capex a year over 2021-2025 (excluding major inorganic opportunities, but including minor acquisition spend of up to $1 billion), with a ceiling of $32 billion a year.
Shell also continues to develop its power business. The company plans to seek new opportunities to grow this business as the role of electricity increases in the global energy system and consumers’ needs evolve. The returns Shell achieves will drive the pace of growth in Power.
Ben van Beurden said, “All this adds up to a forward-looking strategy that ensures Shell is well-placed to continue to deliver a world class investment case and thrive in the energy transition.”