Royal Dutch Shell cut its dividend to shareholders Apr. 30 for the first time since World War II in response to the sharp drop in oil prices due to the coronavirus pandemic. First quarter dividend was cut 66% to $0.16/share from dividends of $0.47/share at the end of 2019.
“Given the continued deterioration in the macroeconomic outlook and the significant mid and long-term uncertainty, we are taking further prudent steps to bolster our resilience, underpin the strength of our balance sheet and support the long-term value creation of Shell,” said Shell CEO Ben van Beurden.
In addition to cutting dividends, Shell will suspend the next tranche of its share repurchase program. Since the plan was launched, the oil giant has brought back nearly $16 billion of stock for cancellation.
First quarter results
Shell posted a net loss of $24 million for the first quarter of 2020, compared with a profit of $6 billion in the same period a year ago.
On a current cost of supplies (CCS) basis and excluding identified items, net income attributable to shareholders came in at $2.9 billion for the first quarter of 2020. This compares with $5.3 billion in the first quarter of 2019, reflecting a year-on-year drop of 46%.
On a CCS basis and excluding identified items, Shell’s upstream segment recorded a profit of $291 million during the quarter, down 82% from the $1.6 billion (adjusted) achieved in the year-ago period. This primarily reflects the impact of a drop in production plus lower oil and gas prices. Shell’s upstream volumes averaged 2.7 MMboe/d (64% liquids), down 5% from the year-ago period due to asset sales, normal field declines and lower joint venture production. Liquids production totaled 1.73 million b/d, up 4% year over year, while natural gas output was down 17% to 5.68 bcfd. At $46.53/bbl, the group’s worldwide realized liquids prices were 19% below the year-earlier levels. Natural gas prices were down 20%.
In the Oil Products segment, Shell reported adjusted income of $1.4 billion, 6% less than the year-ago period due to decline in sales volumes (down 18% year over year) and lower refining margins. The Integrated Gas unit reported adjusted income of $2.1 billion, down 17% from the $2.6 billion in the first quarter of 2019. Results were primarily impacted by lower commodity prices and decline in trading contribution.
Meanwhile, the total Integrated Gas production increased by 12% year over year to 955,000 boe/d. LNG liquefaction volumes were up 2% from the first quarter of 2019 to 8.88 million tonnes.
In the Chemicals segment, the company recorded a profit of $148 million during the quarter, down 67% from the $451 million (adjusted) achieved in the year-ago period. The decline was due to decreasing volumes, lower margins, and higher operating expenses.