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Royal Dutch Shell shares fall, despite cuts and dividend protection

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Shares in Royal Dutch Shell are trading lower today, after the energy giant posted adjusted Q4 figures well short of analysts' already low estimates, particularly at exploration and production levels.

Despite the slump, Shell maintained its fourth-quarter dividend unchanged from the previous quarter – and also pledged to lower capital expenditure significantly during 2015. Reductions totalling $15bn will be implemented the next three years.

Reactions from industry commentators and analysts were mixed. David Madden, market analyst at IG, said this “enormous cut” signals “cautious times ahead”, and noted that “a healthy dividend” proved insufficient to win back traders’ confidence.

Other commentators were more positive, and welcoming. Justin Cooper, CEO of Shareholder solutions at Capita Asset Services, considered the dividend “a tremendous boost to investors”, in light of the mounting pressure of tumbling oil prices, and believed it gave UK investors “cause for celebration”.

“The sheer scale of Shell’s contribution to the UK equity income market can’t be understated,” he continued. “Shell is one of the biggest dividend payers in the world, paying out £8bn of the £13.8bn paid out by oil and gas producers to UK investors last year.”

Graham Spooner, investment research analyst at The Share Centre, said that Shell had “remained resilient”, despite contending against slumping oil prices, which have fallen more than 50 per cent since the middle of last year. He went on to note that Shell was the first of the big four oil companies to report earnings for Q4, and he expected falling oil prices “to weigh heavily on all”.

Spooner went on to recommend Shell as a ‘buy’ for medium risk investors, believing the company continued to represent “a core holding for most portfolios” due to the “relatively stable cash flows and attractive dividend income” the share generated.

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