* Shell boosts third quarter dividend by 4%
* Outlines plans to focus oil and gas operations
* Q3 profits easily beat forecasts
* Shell says to boost dividend annually
(Updates throughout)
By Ron Bousso and Shadia Nasralla
LONDON, Oct 29 (Reuters) - Royal Dutch Shell on
Thursday raised its dividend after easily beating quarterly
profit forecasts and outlined plans to shrink its oil and gas
operations as it presses forward with a transition to low-carbon
energy.
The Anglo-Dutch company still warned the pandemic will
continue to generate "significant uncertainty".
In a sign of renewed confidence, despite the collapse in
energy demand because of COVID-19, Shell said it would boost its
dividend on an annual basis after it cut the payout in April for
the first time since the 1940s.
The company's shares rose 4% shortly after trading began in
London.
Shell is planning a major restructuring as part of "a
complete overhaul" to reduce greenhouse gas emissions to net
zero by 2050.
In line with plans to shrink its oil and gas portfolio, it
said on Thursday it would reduce its oil refineries from 14
sites to six "energy and chemical parks".
And it named nine hubs for oil and gas production: Brazil,
Brunei, Gulf of Mexico, Kazakhstan, Malaysia, Nigeria, Oman,
Permian and Britain's North Sea.
Shell's shares have dropped by more than 60% so far this
year, more than any other major oil company, as investors fret
over the impact of the pandemic on energy demand and the
long-term energy transition.
But following its strong quartlerly results, Shell outlined
a long-term plan to reduce debt to $65 billion and aim for
shareholder distributions of 20-30% of cash flow. Its debt at
the end of September was $73.5 billion, down from $77.8 billion
in the previous quarter.
Shell's capital investment will remain in a range of between
$19 and $22 billion in the near term while it targets annual
divestments of $4 billion.
"We are confident that Shell can sustainably grow its
shareholder distributions as well as invest for growth," Shell
Chairman Chad Holliday said in a statement.
STRONG MARKETING
Shell said the pandemic's impact on demand has continued
into the fourth quarter, with refining expected to run at 69% to
77% of capacity.
"As a result of COVID-19, there continues to be significant
uncertainty in the macroeconomic conditions with an expected
negative impact on demand for oil, gas and related products,"
Shell said in a statement.
Its adjusted earnings in the third quarter fell 80% to $955
million, but easily beat company-provided average analysts
forecasts of a $146 million profit.
Shell increased its quarterly dividend to 16.65 cents.
The results were driven by a record profit from Shell's
marketing division, which includes the world's biggest retail
network. Earnings in the segment were up 10% on the year at $1.6
billion for the quarter on 20% lower product sales than a year
ago.
Shell, the world's biggest Liquefied Natural Gas trader,
wrote down the value of its LNG portfolio by just under $1
billion in the quarter, focusing on its flagship Prelude project
in Australia.
Shell in July had cut the value of its oil and gas assets,
including Prelude, by $16.8 billion in the second quarter after
sharply lowering its price outlook.
(Reporting by Ron Bousso; editing by David Goodman, Jason Neely
and Barbara Lewis)
