Royal Dutch Shell has announced a large share buy back program – 2018

A share buy back program from Royal Dutch Shell.

Last week Shell announced the immediate start of a large share buy back program ($25 Billion). They had previously announced that it plans to buy billions in own shares. But the starting date was still a big question. The program runs until 2020, depending on further progress in debt repayment and oil prices.





Share Buy back Program

According to CEO Ben van Beurden, the outlook for free cash flow is good. He is also satisfied with the progress that Shell has made in strengthening the balance sheet. This gives RDS the confidence to start their share buy back program.

This buy back program is almost 10% of the current outstanding shares. The maximum number of ordinary shares which may be purchased by the company under the buy back program is 834 million, which is the maximum pursuant to the authority granted by shareholders at the company’s 2018 Annual General Meeting.

The first tranche of this buyback program (the ‘initial program’) will end October 25, 2018. The shares bought back under the initial program will be whichever of the A ordinary shares and/or B ordinary shares is economically the least expensive on a given trading day. The aggregate maximum consideration for the purchase of A ordinary shares and B ordinary shares under the initial program is $2 billion.

The purpose of the initial program is to reduce the issued share capital of the company to offset the number of shares issued under the Scrip Dividend Program and to significantly reduce the equity issued in connection with the company’s combination with BG Group. All shares repurchased, as part of the initial program will be cancelled

Any further tranches of the buyback program, which may be conducted after completion of the initial program, will be announced in due course by Shell.



By buying back shares the company is effectively reducing its outstanding shares on the market. And if there are fewer shares outstanding the EPS (Earning Per Share) will be affected by this action. Normally when a company announces a share buyback, investors get excited and the share price will also go up.

I like these kinds of programs and I think they are a good thing for shareholders.

If you want to know more about my opinion on share buy backs, read my Ahold post.



5 thoughts on “Royal Dutch Shell has announced a large share buy back program – 2018

  1. Jung in Rente

    Just like Lanny I had no idea about the buyback plans yet, although RDS is by far the largest position in our portfolio.

    However, I was already wondering if the company would increase its dividend anytime soon. What would you have preferred? An increase in DPS or a decrease in shares?

    – David

    1. Pollie Post author

      I prefer an increase in dividend above a share buy back. Because with the money from the dividend, I determine were the money eventually is going.
      But don’t get me wrong. I also love a good share buy back!

      And what do you prefer?

      1. Jung in Rente

        It’s pretty much the same with me. I like buybacks! However, if I could make the decision, I would definitely go for the dividend increase, too. And that’s for one simple reason. I wouldn’t buy RDS shares right now, as I think the stock price is currently too high. And if I wouldn’t like to buy those shares, why should RDS do so?! Maybe the management knows more than we do. But I don’t think so.

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