‘Supermajors’ — All in Trouble
The company said it recorded adjusted earnings of $4.85 billion for the full-year, which is significantly lower than a profit of $16.5 billion reported for 2019. Still, the oil business decided to raise its Q1 dividend to $0.1735 per share.
“2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy. We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021,” said Ben van Beurden, CEO of the company.
In September, Shell announced it could cut as much as 9,000 jobs globally in a response to the persistent coronavirus pandemic. In January, it decided to lay off 330 employees in its operations in the North Sea.
Oil companies were already mulling certain steps to remodel their future plants as part of the shift away from fossil fuels. Shell represents one of the companies that are working to speed up that transition.
Shell’s losses are attributed more to their accounting than to a cash-related issue, as a result of the group’s substantial write-downs. Ben van Beurden is expected to introduce the company’s plan to transition toward greener forms of energy.
The oil business is being pressured by pension funds and other investors to make certain decisions. They expect van Beurden to utilize a part of the dividends that comes from the oil operations to invest in green energy that will hopefully bring similar dividend gains in the future.
The oil company published the announcement after two of its biggest competitors BP and Exxon also reported similar losses. As for its future prospects, the business said it expects uncertainty to continue to weigh on demand for oil and gas products. Therefore, the company said it is considering certain steps to slash production.
BP sustained a loss of $18.1 billion in 2020, its first annual loss in ten years. US-based oil company Exxon reported a loss of $22.4 billion, as well as Chevron and ConocoPhillips.
"This week's huge losses by Shell, BP and Exxon reflect the challenges oil and gas companies face," said David Elmes, professor of practice and chief of the Global Energy Research Network at Warwick Business School.
"They are skating on ever-thinning ice as the effects of climate change combine with other events like the Covid-19 pandemic."
British-Dutch oil business Shell reported a net loss of $21.7 billion in 2020 as a result of the coronavirus pandemic.