* Shell to boost returns to 20%-30% of free cashflow
* Company to "retire" $65 bln net debt target
* Spending to stay below $22 billion in 2021 as planned
* Second quarter LNG trading "significantly" below average
(Adds shares)
By Ron Bousso
LONDON, July 7 (Reuters) - Royal Dutch Shell will
boost returns to shareholders via share buybacks or dividends
earlier than expected after a sharp rise in oil and gas prices
helped it reduce debt, the Anglo-Dutch energy firm said on
Wednesday.
Shell will increase its distribution to shareholders to 20%
to 30% of cash flow from operations beginning in the second
quarter, the company said in a trading statement before
quarterly results.
The move, which comes earlier than many analysts had
expected, was due to "strong operational and financial delivery,
combined with an improved macroeconomic outlook."
Shell's London-traded shares were up 2.2% by 0758 GMT,
compared with a 1.2% gain for the broader European energy index
.
Shell previously said it would boost returns once its net
debt dropped below $65 billion. The company said on Wednesday it
would "retire" the target without specifying whether it had hit
it.
"In the second quarter, Shell expects to have further
reduced its net debt, although the extent of the reduction will
be moderated by working capital movements," it said.
Analysts had largely expected Shell to increase distribution
towards the end of the year, but a strong rise in oil and
natural gas prices in recent months accelerated the timetable.
The shareholder returns increase "is an important milestone
that highlights the strength of Shell's free cashflow
proposition and sends an important message to the market," JP
Morgan analyst Christyan Malek said in a note.
In the first quarter, the company raised its dividend after
profits rose to $3.23 billion.
Shell, which is in the midst of a strategic shift to lower
its greenhouse gas emissions, said it would stick to its
spending plans that would remain below $22 billion in 2021.
Despite the higher oil and gas prices, Shell said its
liquefied natural gas (LNG) trading operations, the world's
largest, were "significantly below average" in the second
quarter and similar to the previous quarter.
Oil products sales are expected to be between 4 million to 5
million barrels per day, still well below pre-pandemic levels.
(Reporting by Ron Bousso; Editing by Edmund Blair and Jason
Neely)
