This archive report was first published on 1 November 2019.
On November 1, 2019, the global economy's uncertain future led two of the world's top oil firms, BP and Royal Dutch Shell, to issue warnings to investors about potential delays in promised growth in returns. This marked the first time since the 2014 oil downturn that such warnings were issued.
Both companies, which account for nearly 15% of the FTSE's total dividends, signaled that billions of dollars in shareholder returns could be delayed due to oil prices failing to make their expected recovery. This led to sharp drops in the shares of both companies, weakening investors' appetite for the oil and gas sector, which has underperformed most other industries in recent years.
Shell Chief Financial Officer Jessica Uhl told reporters that the company's outlook was tied to an improved price and margin environment. She noted that there were clear signals of slower economic activity in 2019 and 2020 than expected. Shell is currently in the midst of a three-year $25 billion share buyback programme, the world's biggest.
However, Uhl stated that the current conditions were not meeting the company's expectations, and if this continued into 2020, they would need to extend the time period for the buybacks.
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