Royal Dutch/Shell, the crisis-stricken oil group, sought to regain investor confidence yesterday by unveiling a $2bn (£1bn) share buy-back programme.
Reporting better-than-expected first-quarter profits, the oil giant also pledged that its exploration and production strategy would be geared to achieving short-term gains for shareholders over the next 12 months.
The double bill of good news was designed to try to put a lid, at least temporarily, on the reserves scandal which has plunged Shell into the gravest crisis in its 96-year history.
Despite a 1 per cent decline in production during the quarter, Shell managed to keep a whisker ahead of BP as the world's second biggest oil company by output. On an underlying basis, its 9 per cent increase in profits to $4.25bn for the three months was better than BP's first-quarter performance. Shell shares rose 2 per cent to 393p.
Shell said it would increase spending this year by about $1.5bn to between $14.5bn and $15bn, adding that investment was being switched to short-term payback projects which would generate higher margins. Significant cost pressure in Nigeria and Russia, where Shell is a partner in the giant Sakhalin project, is another factor behind the increased budget for capital investment.
Malcolm Brinded, Shell's head of exploration and production, said the focus this year would be on "value rather than volume", concentrating on fields where Shell could achieve payback within 12 months.
He declined to give any production growth forecasts for the group but maintained this did not mean Shell was not interested in growth in the future.
Jeroen van der Veer, Shell's new chairman, ducked questions about whether he would survive in the longer term in the aftermath of the company's 25 per cent cut in proven reserves - equivalent to 4.35 billion barrels.
He also said he had not had any direct contact with the US Justice Department, which is conducting a criminal investigation into the reserves downgrade and deliberate attempts by Shell and some of its former executives to suppress the fact that reserves were being overbooked.
In an attempt to rebuild morale among Shell's 115,000 workforce, Mr van der Veer, Mr Brinded and Rob Routs, Shell's head of oil products and chemicals, will embark next week on a series of "engagement sessions" involving thousands of staff. The company's top 500 managers will also gather for a one-and-a-half day bonding session next month in the US.Reuse content