Shell slashes prices and clear vitality funding to spice up shareholder payouts | USAEMALL.com

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Shell has said it will cut costs and spending, especially in clean energy, and boost the amount of cash it returns to shareholders as it tries to narrow the valuation gap with rivals ExxonMobil and Chevron. 

In a statement ahead of an event for investors in New York, Shell pledged to cut annual costs by $5bn to $7bn by 2028, compared with 2022, and trim its capital expenditure to between $20bn and $22bn a year. 

As part of the change, the FTSE 100 group slashed its target for low-carbon energy investment from 20 per cent of its capital expenditure to 10 per cent but stood by the climate targets it set last year.

Instead, Shell aims to grow sales of liquefied natural gas by 4 per cent to 5 per cent a year to 2030, and to hold oil production flat at 1.4mn barrels a day. 

The group also said it would return 40 per cent to 50 per cent of its operating cash flow to shareholders, an increase of 10 percentage points on the previous range.

The UK oil major’s shares have risen nearly 20 per cent since chief executive Wael Sawan reset its strategy two years ago, promising to be “ruthless” in pursuit of higher shareholder returns. 

But the valuation gap between Shell and its US rivals, such as ExxonMobil and Chevron, has not closed. Shell currently trades at roughly half the price to free cash flow multiple of the two US majors.