Shell pursues $7 billion share buyback as LNG outlook improves

Royal Dutch Shell will pursue a US $7 billion share buyback programme after selling its US shale business “at pace” as its liquefied natural gas (LNG) business works to optimise production after being hit by supply bottlenecks last quarter.

“The remaining $5.5 billion of proceeds from the Permian divestment will be distributed in the form of share buybacks at pace,” Shell said in its fourth quarter 2021 update note published on Friday. “This decision was taken on December 31, 2021, at the first Board meeting held in the UK following the decision to implement the simplification of the company’s share structure,” it said.

Last year, Shell sold its Permian Basin shale oil assets to ConocoPhillips for US $9.5 billion in cash. It said it would return US $7 billion of the proceeds to shareholders on top of 20 percent to 30 percent of cash flow from operations.

Shell, the world's largest trader of liquefied natural gas (LNG), said that its production and liquefaction volumes were impacted in the fourth quarter by unplanned maintenance, mainly in Australia, where its giant Prelude floating LNG vessel was hit by a power outage. But trading and optimisation results in Integrated Gas are expected to be significantly higher compared to the third quarter 2021, overcoming ongoing supply issues and capturing unique optimisation opportunities generated through the large scale and scope of our LNG trading portfolio in the prevailing high LNG spot price environment.

According to Shell, its fuel sales were impacted by a slowdown in global economic activity due to the spread of the Omicron variant. The company is due to declare its quarterly results on February 3.