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Shell says it will increase the amount of cash back to shareholders, particularly as it seeks to reduce clean energy costs and spending and reduce the valuation gap between its rivals ExxonMobil and Chevron.
In a statement ahead of the New York investors’ event, Shell has pledged to reduce annual expenses from $5 billion to $7 billion by 2028 compared to 2022, and to reduce its capital expenditures from $200 billion to $222 billion per year.
As part of the change, the FTSE 100 Group reduced its low-carbon energy investment target from 20% to 10% of capital expenditure, but set climate targets set last year.
Instead, Shell aims to increase sales of liquefied natural gas by 4% to 5% per year through 2030, keeping oil production flat at 140,000 barrels a day.
The group also said it would return 40% of its operating cash flow to shareholders, an increase of 10 percentage points over its previous range.
The UK oil major’s stock has grown nearly 20% since CEO Wael Sawan reset his strategy two years ago and has promised to be “ruthless” in pursuit of higher shareholder profits.
However, the valuation gap between Shells such as Exxonmobil and Chevron and their US rivals has not been closed. Shell currently trades with two US majors’ free cash flow multiples at around half the price.
