Shell Pakistan (SHEL.PSX) has announced that its parent company, Shell Petroleum Company (SPCo), will be divesting its 77% shareholding in the company, signaling its exit from Pakistan.
The decision comes after SPCo faced losses in 2022 due to various factors such as exchange rate fluctuations, the devaluation of the Pakistani rupee, and overdue receivables. Simultaneously, in a separate press release, Shell revealed its plans to increase dividend payouts and share buybacks, while maintaining steady oil production until 2030.
Official press release
The next step
This strategic move aims to rebuild investor confidence, which had wavered due to concerns over Shell’s energy transition plan. Under the new financial framework announced prior to an investor conference in New York, Shell intends to distribute 30% to 40% of its cash flow from operations to shareholders, a significant increase from the previous range of 20% to 30%.
This includes a 15% dividend boost and an acceleration of the share buyback program, with $5 billion allocated for the second quarter, up from the recent quarters’ $4 billion. The financial framework represents CEO Wael Sawan’s proactive approach to enhancing Shell’s share performance in comparison to its U.S. counterparts.
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Despite posting a record $40 billion profit last year, the British company had struggled to attract investors. With these measures, Shell aims to regain market confidence and strengthen its position in the energy industry.
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