Shell to cut spending and sell assets after profit warning
By Sarah Young
LONDON (Reuters) - Anglo-Dutch oil company Royal Dutch Shell (RDSa.L: Quote) has suspended its controversial Arctic drilling program as part of a wider drive to cut spending and streamline operations following a major profit warning.
Just a month into the top job, Chief Executive Ben van Beurden set out plans to make the world's No.3 investor-owned oil company leaner, with a new focus on growing cash.
The planned changes follow a profit warning for the quarter to the end of December that revealed across-the-board problems at Shell, which was also hit by industry-wide challenges of delivering attractive returns to shareholders in the face of flat oil prices and rising costs.
"Our overall strategy remains robust, but 2014 will be a year where we are changing emphasis, to improve our returns and cash flow performance," van Beurden said.
Those improvements would be driven by cutting capital spending to $37 billion this year from $46 billion in 2013, while at the same time, increasing disposals, with a target to sell $15 billion worth of assets in 2014-15.
To keep investors happy, Shell said it would raise its first quarter dividend by 4 percent to $0.47 per share, in a move it touted as a sign of its ability to grow free cash flow.
Van Beurden, the company's former head of refining who has been on the company's board for just a year, said Shell would now abandon its previously set cash flow and spending targets.
"You can see how our returns are growing and then you can judge for yourself whether it's a good story or not," he said, appearing confident as he make his public debut as CEO at a media event in London. Continued...