Shell Seeks Listing More Shares To Use As Alternative To Cash Dividend

Royal Dutch Shell said on Monday that it had applied to the UK Listing Authority and the London Stock Exchange for the listing of 47,791,678 A ordinary shares that will be issued as a scrip dividend alternative to paying a cash dividend for the Q4 2016 interim dividend.

Shell is seeking admission of the shares to the Official List of the United Kingdom Listing Authority and to be traded on the main market of the London Stock Exchange. The Anglo-Dutch oil major has also applied to Euronext Amsterdam for the shares to be admitted to trading on Euronext Amsterdam.

Trading of those shares, which will rank pari passu with the existing issued A ordinary shares, is expected to begin next Monday, March 27, Shell said in its filing to the London Stock Exchange.

Shell started offering a scrip dividend program with its first-quarter interim dividend for 2015. Scrip dividend programs give shareholders the option of being paid dividends in the form of shares rather than in cash. While scrip dividend programs offer certain tax advantages—in Shell’s case, dividends paid in shares are not subject to Dutch dividend withholding tax, currently at 15 percent—offering shares instead of cash is easing some of the cash strain that all the oil majors have been facing since the oil price crash.

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BP, for example, has been offering scrip dividends since 2010.

For the fourth quarter of 2016, almost all supermajors, including BP and Shell, reported disappointing figures. Shell booked a $1 billion profit in the fourth quarter, but full-year earnings of $3.5 billion were the worst in a decade. BP, for its part, reported $72 million in earnings in the fourth quarter, and a full-year 2016 loss of $1 billion. Shell, however, reported a positive cash flow for the second consecutive quarter. That allowed the Anglo-Dutch major to slightly reduce its massive pile of debt that it had accumulated with the purchase of BG Group the previous year.

By Tsvetana Paraskova for Oilprice.com

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