Shell announces commencement of a share buyback programme

Rhea-AI Summary

Shell plc has launched an $8.5 billion share buyback program for H1 2022, funded by the remaining $5.5 billion from its Permian divestment and $3.0 billion from its capital allocation framework. The first tranche of $4.0 billion is set to run until May 4, 2022, aiming to reduce issued share capital, with up to 622,094,828 shares eligible for repurchase. The program represents about 20-30% of cash flow from operations and is expected to conclude by Shell's Q2 results on July 28, 2022.

Positive

• Share buyback of $8.5 billion increases shareholder value.
• Reduction of issued share capital through repurchase enhances EPS.
• Demonstrates strong capital allocation strategy by returning cash to shareholders.

Negative

• None.

Shell announces commencement of a share buyback programme

February 3, 2022
Shell plc

Shell plc (the ‘company’) today announces the commencement of a share buyback programme of $8.5 billion for the first half of 2022. This comprises the remaining $5.5 billion of Permian divestment proceeds and $3.0 billion as part of the company’s capital allocation framework, which includes shareholder distributions in the range of 20-30% of cash flow from operations.  It is intended that, subject to market conditions, this programme will be completed by the company’s Q2 results, which are scheduled for July 28, 2022.

In the first tranche of this buyback programme (the ‘initial programme’), the company has entered into an irrevocable, non-discretionary arrangement with a broker to enable the purchase of ordinary shares for a period up to and including May 4, 2022. The aggregate maximum consideration for the purchase of ordinary shares under the initial programme is $4.0 billion. The purpose of the initial programme is to reduce the issued share capital of the company. All shares repurchased as part of this arrangement will be cancelled.

The maximum number of ordinary shares which may be purchased by the company under the initial programme is 622,094,828, which is the maximum pursuant to the authority granted by shareholders at the company's 2021 Annual General Meeting, less the number of ordinary shares that were repurchased by the company pursuant to the share buyback programmes announced on July 29, 2021 and December 2, 2021¹.

The broker will make its trading decisions in relation to the company's securities independently of the company. The initial programme will be carried out on the London Stock Exchange and/or on BATS and/or on Chi-X and will be effected within certain pre-set parameters. It will be conducted in accordance with the company's general authority to repurchase shares granted by its shareholders at the company’s Annual General Meeting held on May 18, 2021¹, and in accordance with Chapter 12 of the Listing Rules, Article 5 of the Market Abuse Regulation 596/2014/EU dealing with buy-back programmes (“EU MAR”) and EU MAR as “onshored” into UK law from the end of the Brexit transition period (on 11:00 pm on 31 December 2020) through the European Union (Withdrawal) Act 2018 (as amended by the European Union (Withdrawal Agreement) Act 2020), and as amended, supplemented, restated, novated, substituted or replaced by relevant statutory instruments (including, The Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310)), from time to time and the Commission Delegated Regulation (EU) 2016/1052 (the “EU MAR Delegation Regulation”) and the EU MAR Delegated Regulation as “onshored” into UK law from the end of the Brexit transition period (on 11:00 pm on 31 December 2020) through the European Union (Withdrawal) Act 2018 (as amended by the European Union (Withdrawal Agreement) Act 2020), and as amended, supplemented, restated, novated, substituted or replaced by relevant statutory instruments (including, The Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310)), from time to time.

¹ The existing shareholder authority to buy back shares granted at the company's 2021 Annual General Meeting expires at the earlier of the close of business on August 18, 2022, and the end of the date of the company's 2022 Annual General Meeting. The company expects to seek renewal of shareholder authority to buy back shares at subsequent Annual General Meetings.

Enquiries

Media International: +44 (0) 207 934 5550

Media Americas: +1 832 337 4355

CAUTIONARY STATEMENT

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this announcement “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively.  Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, “milestones”, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December 31, 2020 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader.  Each forward-looking statement speaks only as of the date of this announcement, February 3, 2022. Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

The content of websites referred to in this announcement does not form part of this announcement.

We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC.  Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.

LEI number of Shell plc: 21380068P1DRHMJ8KU70

Classification: Acquisition or disposal of the issuer’s own shares

FAQ

What is Shell's share buyback program announced in 2022?

Shell announced an $8.5 billion share buyback program for H1 2022, funded by divestment proceeds and capital allocation.

How much will Shell repurchase in the first tranche of the buyback?

The first tranche of the buyback program involves $4.0 billion, set to last until May 4, 2022.

What is the expected impact of Shell's buyback program on shareholders?

The buyback program is expected to enhance shareholder value and improve EPS by reducing share capital.

When does Shell expect to complete its share buyback program?

Shell aims to complete the buyback program by its Q2 results announcement on July 28, 2022.

How many shares is Shell planning to buy back?

Shell plans to repurchase up to 622,094,828 ordinary shares as part of its buyback program.