Why holding Shell (LON: RDSB) share is a good idea

Highlights

  • Royal Dutch Shell PLC’s aims to distribute the remaining US$ 5.5 million proceeds of its Permian sale in the form of share buybacks ‘at pace’.
  • The group’s integrated gas production and liquefication volumes were hindered by unplanned maintenance, particularly in the Australian region.

Oil major Royal Dutch Shell PLC’s (LON: RDSB) said it aims to distribute the remaining proceeds of about US$ 5.5 million from its US-based Permian basin divestment in the form of share buybacks ‘at pace’, in its Q4 2021 update note.

The said amount is in addition to its distribution of about 20 to 30 per cent of cash flow from operations.

The note added that the group’s board had undertaken this decision on 31 December last year. The group’s Q4 2021 results are expected to be released on 3 February.

Royal Dutch Shell’s Q4 2021 update note

Integrated gas business: The group estimates production for its integrated gas business segment to be in the range of 910 kboepd and 950 kboepd. And its liquefied natural gas (LNG) liquefication volumes are likely to be around 7.7 million tonnes to 8.3 million tonnes.

Shell stated that both of its production and liquefication volumes were hindered by unplanned maintenance, particularly in the Australian region.

Moreover, its underlying operating expense (opex) is projected to be between US$ 1.6 and US$ 1.8 billion. Furthermore, it’s before tax depreciation is forecasted to be in the range of US$ 1.2 and US$ 1.4 billion, and its taxation charge is expected to be between US$ 600 million and US$ 1 billion.

Upstream business: The group expects production to be between 2,150 kboepd and 2,250 kboepd. And its underlying opex is estimated between US$ 2.7 and US$ 3.0 billion.

And its Q4 2021 pre-tax depreciation is estimated to be in the range of US$ 2.8 and US$ 3.1 billion and a taxation charge expected to be between US$ 2.4 and US$ 2.8 billion.

Oil products business: The Q4 2021 oil products sales volumes are forecasted around 4.0 to 5.0 million bpd. The group said it estimates its marketing figures to be consistent with Q4 2022 but lower than Q3 2021 due to seasonal trends.

The Q4 2021 underlying opex for the oil products segment is projected to be between US$ 3.4 and US$ 3.8 billion. The Q4 2021 pre-tax depreciation is forecasted to be between US$ 800 and US$ 1 billion, and its taxation charge is forecasted to be around US$ 300 million.

Royal Dutch Shell PLC’s (LON: RDSB) share price performance

Royal Dutch Shell’s shares were down by 0.33 per cent at GBX 1,715.40 on 7 January 2022 at 08:55 AM BST. The FTSE 100 index was at 7,457.39, up by 0.09 per cent. The group is part of the FTSE 100 index.

The market cap of the company is at £61,608.87 million, and it has given shareholders a one-year return of 20.79 per cent as of date.

RDSB share price and volume

Image source: Refinitiv

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