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Shell restores cash dividend, boosts guidance

Royal Dutch Shell plc said it will start paying dividends fully in cash from the fourth quarter of 2017, and raised guidance for annual organic cash flow generation as it continues its recovery from a steep fall in the price of oil in 2014.

Shell introduced a scrip dividend, which gives shareholders the option to be paid in either shares or cash, in 2015 as the company coped with the sliding oil price and moved to acquire BG Group Plc through a combination of cash and stock. Its fourth-quarter interim dividend, to be announced on Feb. 1, 2018, will be entirely in cash.

Shell raised its forecast for annual organic free cash flow to $30 billion by 2020 at a Brent crude oil price of $60 per barrel from its previous guidance of $25 billion. It expects new projects to generate $10 billion of cash flow from operations by 2018.

The company expects the ratio of debt to equity capital to decrease to 20% from 25.4% at the end of the third quarter due to additional divestment proceeds of more than $5 billion. A total of $23 billion of deals have been completed under the company's $30 billion divestment program. The company said it plans to continue to divest at an average rate of more than $5 billion until at least 2020.

The company reiterated its plan to buy back at least $25 billion of shares in the period between 2017 and 2020, if debt reduction continues as planned and oil prices recover.

Shell shares gained 3.4% to 2,394 pence by 12:40 p.m. in London.