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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
(Updates shares, adds details, quote, graphics)
By Ron Bousso and Shadia Nasralla
LONDON, Jan 30 (Reuters) - Royal Dutch Shell is
reining in its vast $25 billion share buyback programme after
lower oil and natural gas prices halved its profit in the last
three months of 2019 and sent its shares to their lowest in
nearly three years.
The Anglo-Dutch energy company warned again that a slowing
global economy could affect its buyback programme, which is the
world's largest, and Chief Executive Ben van Beurden said the
coronavirus epidemic was dominating the negative backdrop.
Shell is set to buy back about $1 billion of its shares in
the first quarter of 2020, down from $2.75 billion a quarter
since July 2018, which means it will probably miss its target of
completing the programme by the end of 2020, analysts said.
Van Beurden said Shell still planned to complete the
programme but did not provide a new time frame. "All economic
indicators are working against us," he told reporters.
Shell's shares traded in London slumped more than
4% and were 2.8% lower at 1045 GMT, underperforming the overall
FTSE 100 index, which was down 0.7% mainly on fears
about the fallout from the coronavirus.
Shell shares hit a low of 2,037 pence, matching their lowest
on April 21, 2017.
Shares of the world's biggest oil and gas companies have
struggled in recent years, caught between an unsteady recovery
in oil prices and growing investor concerns about the future of
the sector as the world tries to shift away from fossil fuels.
Shell had already warned in October that the buyback
programme could miss its 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.
CASH FLOW PLUMMETS
A rise in Shell's debt ratio, or gearing, to 29.3% in its
fourth quarter from 27.9% in the previous quarter, added to the
pressure on the oil company and van Beurden said it was likely
to remain above its of 25% target this year.
Shell, which pays about $15 billion in dividends every year,
is aiming to increase payouts to investors through dividends and
share buybacks to $125 billion between 2021 and 2025.
While rising tensions in the Middle East and a Phase 1 trade
deal between Washington and Beijing sent oil prices above $70 a
barrel in early January, they dropped below $60 this week as the
coronavirus exacerbated concerns about global growth.
Shell's fourth-quarter headline profit fell 48% 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 have undergone deep cost cuts in recent years, also fell
sharply to $10.3 billion from $22 billion a year earlier.
Van Beurden said if the current global economic conditions
continued to weigh, Shell's cash flow could fall by more than $7
billion in 2020 compared with last year.
Shell's fourth-quarter charge was mainly related to its
shale natural gas fields in North America. Rivals including
Chevron and BP have also booked a number of
significant provisions in recent months.
The 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 Shell.
For 2019 as a whole, Shell's profit came in at $16.5
billion, down 23% from 2018.
Free cash flow, a measure of the amount of money Shell has
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)
