uploads///Cash flow

How Is Shell’s Cash Flow Holding Up?


Sep. 6 2018, Updated 7:31 a.m. ET

Shell’s cash flow

In the first half of the year, Royal Dutch Shell’s (RDS.A) cash flow from operations stood at $18.9 billion, falling slightly from $20.8 billion in the first half of 2017. In the first half, Shell’s YoY (year-over-year) higher earnings didn’t translate into higher cash flow due to increased tax payments led by settlements of cases, audits, and higher earnings.

In its Integrated Gas segment, Shell’s cash margining on derivatives rose, which impacted its cash flow. Shell’s cash outflow from investing rose 22.0% YoY to $4.2 billion in the first half. Shell’s cash outflow from financing stood at $15.5 billion in the first half, which included debt and dividend outflow.

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Did Shell have a cash flow surplus or shortfall?

In the first half, Shell generated $18.9 billion in cash from operations. It had a capital expenditure cash outflow of $10.7 billion and a dividend outflow of $8.2 billion, totaling $18.9 billion of cash outflow. This resulted in neither a cash flow surplus nor a shortfall, which is the difference between its cash inflow of $18.9 billion and cash outflow of $18.9 billion.

Among Shell’s peers, ExxonMobil (XOM) and Chevron (CVX) had cash flow surpluses in the first half. However, BP (BP) had a cash flow shortfall in the first half.

Shell had divestment proceeds of $2.3 billion in the first half. The company utilized divestment proceeds and cash reserves to repay a portion of its debt in the first half. Shell’s cash balance fell from $20.3 billion at the beginning of the first half to $19.4 billion at the end of the first half.

What Shell’s cash flow analysis implies

Because Shell didn’t report either a surplus or a shortfall in the first half, it just managed to cover its vital capex and dividend outflow. Although this isn’t an ideal scenario, this isn’t an unfavorable situation for its cash shortfall.

However, this scenario could improve to a cash flow surplus in the second half. In this situation, Shell’s earnings could rise due to higher YoY volumes and an improved oil price environment.


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