Royal Dutch Shell surprised the oil world today, slashing its dividend — for the first time since World War II — by 66%. At a press briefing, Shell CEO Ben Van Beurden explained the dramatic decision: “We live in a crisis of uncertainty at the moment; we don’t know what is on the other side.”
The move will enable Shell to plug nearly $10 billion in cash outflow per year, and do wonders for its ability to whether the downcycle. According to analyst Tom Ellacott at WoodMackenzie, this will reduce Shell’s breakeven oil price from $51 per barrel to $36. Benchmark Brent crude is trading at $25/bbl today.
