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* Shell shares fall 4% as Q4 profits halve to $2.9 bln
* Shell's 2019 profit down 23% from a year earlier
* Buybacks to slow to $1 bln in Q1 from average $2.7 bln
* Plan to complete $25 bln buyback 'unchanged' - CEO
(Recasts, updates with shares)
By Ron Bousso and Shadia Nasralla
LONDON, Jan 30 (Reuters) - Royal Dutch Shell is
cutting the pace of its vast $25 billion share buyback programme
after lower oil and natural gas prices halved its profit in the
last three months of 2019, sending its shares to their lowest
since July 2017.
While the Anglo-Dutch energy company warned again that a
slowing global economy could affect its buyback programme, which
is the world's largest, Chief Executive Ben van Beurden said
Shell still intended to complete it.
Shell is set to buy about $1 billion of shares in the first
quarter of 2020, which is down from $2.75 billion per quarter
since July 2018 and means it will probably miss its target of
completing the programme by the end of 2020, analysts said.
Shell had already warned in October that the buyback
programme could be delayed beyond the target because slowing
global growth due to the Sino-U.S. trade war had hit demand for
oil, natural gas and chemicals.
"With $15 billion done to date it now looks extremely
challenging to complete the programme by year end," Redburn
analysts said.
A rise in Shell's debt ratio, or gearing, to 29.3% in its
fourth quarter from 27.9% in the previous quarter, and well
above its 25% target, added to the pressure on the oil company.
Shell, which pays about $15 billion in dividends every year,
plans to boost payouts to investors through dividends and share
buybacks to $125 billion between 2021 and 2025.
Although rising tensions in the Middle East and a Phase 1
trade deal between the world's top two economies boosted oil
prices to above $70 a barrel in early January, prices dropped to
below $60 this week as the outbreak of the coronavirus in China
exacerbated fears global economic growth could slow.
SLOW DOWN
Shell's fourth-quarter headline profit halved to $2.9
billion from $5.7 bln in the same period of 2018, its lowest in
more than three years, as weaker oil and gas prices pushed the
company to take a $1.65 billion charge on its U.S. gas fields.
Shell's cash generation, a key metric for its operations
that underwent deep cost cuts in recent years, also fell sharply
to $10.3 billion from $22 billion a year earlier.
"Our intention to complete the $25 billion share buyback
programme is unchanged, but the pace remains subject to macro
conditions and further debt reduction," Ben van Beurden said.
Shell's fourth-quarter charge was mainly related to its
onshore natural gas fields in North America. Rivals including
Chevron and BP have also booked a number of
significant provisions in recent months.
The 48% drop in net income attributable to shareholders,
based on a current cost of supplies (CCS) and excluding
identified items to $2.9 billion was below a forecast of $3.2
billion in a survey of analysts provided by the company.
For 2019, Shell's profit was $16.5 billion, down 23% from
the previous year.
Free cash flow, or money available to pay for dividends and
share buybacks, plummeted to $5.4 billion in the quarter from
$16.7 billion a year earlier.
(Reporting by Ron Bousso and Shadia Nasralla; Editing by Jason
Neely and David Clarke)
