Shell pivots in new pitch to investors

Shell is tapping the brakes on continued oil production curbs, the multinational giant said Wednesday, in a broader strategy update that will boost payouts to shareholders.

Driving the news: Here's what Shell said ahead of CEO Wael Sawan's investor presentation in New York City this morning...

• It's boosting dividends by 15% beginning this quarter and buying back at least $5 billion in shares in the second half of 2023.

• Shell is reducing its annual capital spending target to the $22 billion-$25 billion range in 2024 and 2025.
• The company is "stabilizing" oil production through 2030 while growing its natural gas business.

The intrigue: Shell reiterated its commitment to reaching net-zero emissions in 2050, while signaling a selective approach to diversification.

• It announced a cumulative $10 billion-$15 billion in 2023-2025 for "low carbon" areas like biofuels, hydrogen, EV charging and CO2 capture.
• Those hydrogen and carbon capture ventures will be "disciplined" to create "options for the future."
• Shell, which has been moving into renewable electricity and power services, said it would approach power "selectively."

Why it matters: Two is a trend, right? Shell's recalibration follows European peer BP's recent decision to scale back its plans to reduce oil and gas production this decade.

• The moves come as the Russia crisis has boosted focus on energy security, and the majors are reporting huge profits in their core fossil businesses.

What they're saying: “We need to continue to create profitable business models that can be scaled at pace to truly impact the decarbonization of the global energy system," Sawan said in a statement.

• "We will invest in the models that work — those with the highest returns that play to our strengths," he added.

The big picture: Despite strong profits, European giants' market performance has lagged U.S. heavyweights Exxon and Chevron, which have not signaled a move away from fossil fuels.

• "[T]he shift in strategy of the European majors is another sign that the American vision for Big Oil is winning out," Bloomberg reports.

Of note: Whether Shell is ditching its move away from oil is sort of in the eye of the beholder.

• In 2021, Shell said it planned to reduce oil production 1%-2% annually through 2030.
• But Shell told Axios in March it's "already at the upstream production levels [that] a 1-2% per year reduction would have delivered."
• Reuters has a detailed dissection of the company's posture.

The other side: My inbox is filling up with statements from climate advocates bashing Shell's strategy.

• Helen Clarkson, CEO of the nonprofit Climate Group, said Shell is "recklessly abandoning its responsibilities for the climate crisis."