Oil major Royal Dutch Shell — the biggest dividend payer into UK pension pots — posted its best annual profits for five years on Thursday despite volatile oil prices.
Shell is reaping the benefits of cost savings since its 2016 mega-merger with BG, as well as sell-offs and a big run higher in oil prices during the first nine months of last year.
Oil prices collapsed from four-year highs of $86 a barrel to around $50 a barrel within weeks, but the firm still managed a forecast-beating 36% jump in annual profits to $21.9 billion (£19.1 billion).
Its shares propped up the FTSE 100’s gains as a result today as the stock rose nearly 4% or 87.5p to 2373p.
Rival BP rose in tandem ahead of its own results next month, gaining 8.3p to 519.7p.
Shell’s giant corporate cash machine generated a huge $49.6 billion in cashflow last year, funding $3.9 billion in dividend payouts in the final quarter as well as a $25 billion buyback programme.
“We’re going to do it all, we need to do it all,” chief financial officer Jessica Uhl said.
But analysts also flagged up a potential problem in the longer term as the firm only added 700 million barrels in new reserves, compared with production of about 1.4 billion barrels.
That put its closely watched reserve-replacement ratio at 53% last year, well below the three-year average of 96%.
