Press "Enter" to skip to content

Shell Keeps Spending Constrained Amid Concern About Buybacks

(Bloomberg) — Royal Dutch Shell (AS:) expects capital expenditure to be near the lower end of the $24 billion to $29 billion range in 2019, as the company keeps a lid on spending amid concern about its ability to sustain hefty shareholder returns.

The statement on fourth-quarter earnings published on Friday comes after Shell’s previous set of bumper profits was overshadowed by a warning about the pace of share buybacks. It’s only the second time the company has issued such guidance, which was a response to criticism about the unpredictability of its financial results.

Shell also indicated that post-tax impairment charges in the final three months of the year would be between $1.7 billion and $2.3 billion, based on the macroeconomic outlook. These so-called “identified items” totaled $1.3 billion in the third quarter.

Last week, Chevron Corp (NYSE:) said it expects to write down as much as $11 billion for assets including shale-gas holdings in the U.S. prices in the country are on course for the lowest annual average in two decades, forcing producers to consider revaluing what many of the fields are worth.

Shell warned in October that the worsening economy could slow the pace of returns to shareholders, prompting a negative reaction from investors despite the company comfortably beating even the highest analyst profit estimate for the third quarter. Friday’s statement also gave a relatively downbeat assessment of the market.

“Trading and optimization performance is expected to be average” in the company’s integrated gas unit, according to the statement. In the marketing business “margins are expected to be lower due to seasonal trends, and weaker compared to the fourth quarter of 2018 due to crude price movements.”

The company’s B shares slipped 0.7% to 2,257 pence as of 8:14 a.m. in London.

Upstream production will range from 2.775 million to 2.825 million barrels of oil equivalent a day in the fourth quarter, Shell said. Integrated gas output will be between 920,000 and 970,000 barrels of oil equivalent a day, with gas-liquefaction volumes of 8.8 million to 9.4 million tons.

Shell is scheduled to publish fourth-quarter results on Jan. 30.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.