We're currently experiencing extremely high call volumes. We're very sorry for any inconvenience this might cause. If you need help with your account, please visit our Help Centre, or email us and we’ll get back to you as soon as we can. For more information and tips on managing your account online please visit www.hl.co.uk/coronavirus

We’re experiencing high call volumes, please check FAQs before calling.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account

Royal Dutch Shell Plc B Shares (RDSB) EUR0.07

Sell:1,479.60p Buy:1,481.80p 0 Change: 21.40p (1.48%)
FTSE 100:2.90%
Market closed Prices as at close on 9 April 2020 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:1,479.60p
Buy:1,481.80p
Change: 21.40p (1.48%)
Market closed Prices as at close on 9 April 2020 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:1,479.60p
Buy:1,481.80p
Change: 21.40p (1.48%)
Market closed Prices as at close on 9 April 2020 Prices delayed by at least 15 minutes | Switch to live prices |
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

HL comment (23 March 2020)


Complete a quick 3 question survey to help us improve our research.


Royal Dutch Shell has taken steps to free up $8-9bn of free cash flow through reductions in operating costs, capital spending and working capital requirements.

The group is also suspending its share buyback programme.

The shares fell 2.6% in early trading.

View the latest Shell share price and how to deal

Our View

The collapse in oil prices has sent a shockwave through the oil industry. It started with a massive surge in Saudi Arabian supply, when the production agreement between Russia and oil cartel OPEC broke down. But the challenges have now shifted into demand too as the coronavirus outbreak sees economies grind to a halt and fuel usage fall.

Oil majors like Shell are better placed than smaller rivals, but this is still cripplingly bad news for profits.

At $25.52 a barrel the price of Brent crude oil is some 60% below last year's average. All things being equal that implies 60% lower revenue in the upstream division and potentially integrated gas as well - that would potentially make these divisions significantly loss making. With lower demand likely to hit the downstream - which includes the production and sale of oil derivatives and petrol stations around the world - there's a genuine risk that profits get wiped out if current prices persist.

There's nothing Shell can do to influence the price of oil though. Just as the crash came out of the blue predicting a recovery is likely to be equally thankless. A renewal of the OPEC/Russia agreement could be just around the corner or the relationship may be unsolvable. Instead management are, quite rightly, focussing on the things they can control.

The first order of the day, as in so many industries at the moment, is conserving cash. It's cash that pays staff, services debt and, crucially, funds the dividend.

Shell is taking a hatchet to the cost base, taking around 10% of operating costs over 12 months and 20% off planned capital investment. Shareholder returns are being reigned back too, with the next tranche in the $25bn buyback programme suspended. Even then keeping the balance sheet in good health is reliant on $10bn of asset sales that will be more challenging in low oil price world.

The motivation behind the drastic action, we suspect, is sustaining the dividend - Shell hasn't cut its payment since the Second World War. But the annual dividend payments set Shell back $15.2bn last year, and with the shares currently offering a prospective yield of 14% the market is clearly worried that unprecedented circumstances will result in an unprecedented cut.

We think the actions taken today will keep the dividend in place for now. However, if oil prices continue to slide along the floor the dividend is going to become more and more of a burden and eventually Shell will have to crack. The rub for CEO Ben van Beurden is that after a certain point the group's future is out of his hands.

Register for updates on Shell

Coronavirus Actions

Shell expects to reduce underlying operating costs by $3-4bn a year over the next 12 months compared to 2019. Capital expenditure is expected to fall to $20bn or below, compared to previous expectations of $25bn.

The group is still committed to $10bn of asset sales in 2019-20, although timing will depend on market conditions.

Shell has around $20bn of cash on hand, with $10bn of undrawn credit lines.

The company expects to announce a quarterly update on 31 March with first quarter results on 30 April.

Find out more about Royal Dutch Shell B shares including how to invest

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


Previous Royal Dutch Shell Plc B Shares updates

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used.

Share

The London Stock Exchange does not disclose whether a trade is a buy or a sell so this data is estimated based on the trade price received and the LSE-quoted mid-price at the point the trade is placed. It should only be considered an indication and not a recommendation.

Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'.