Shell plc publishes third quarter 2023 press release
London, November 2, 2023
"Shell delivered another quarter of strong
operational and financial performance, capturing opportunities in
volatile commodity markets. We continue to simplify our portfolio
while delivering more value with less emissions.
Shell is commencing a $3.5 billion buyback
programme for the next three months, bringing the buybacks for the
second half of 2023 to $6.5 billion, well in excess of the $5
billion announced at Capital Markets Day in June. This takes total
announced shareholder distributions for 2023 to ~$23
billion."
Shell plc Chief Executive
Officer, Wael Sawan
CONSISTENT PERFORMANCE, SUPPORTING ENHANCED
DISTRIBUTIONS
- Q3 2023 Adjusted Earnings of $6.2 billion, reflecting robust
operational performance and higher oil prices and refining margins.
CFFO of $12.3 billion for the quarter, with a $0.4 billion working
capital inflow, despite higher oil prices.
- Enhancing shareholder distributions with $3.5 billion share
buybacks announced, expected to be completed by Q4 2023 results
announcement. Total announced distributions for 2023 ~$23 billion,
with dividend per share this quarter being 32% higher than in Q3
2022.
- Demonstrating capital discipline with cash capex outlook for
2023 of $23 - 25 billion.
$ million |
Adj. Earnings1 |
Adj. EBITDA1 |
CFFO |
Cash capex |
Integrated Gas |
2,529 |
4,871 |
4,009 |
1,099 |
Upstream |
2,221 |
7,412 |
5,336 |
2,007 |
Marketing |
720 |
1,519 |
880 |
917 |
Mobility |
456 |
988 |
|
669 |
Lubricants |
226 |
425 |
|
86 |
Sectors & Decarbonisation |
38 |
106 |
|
163 |
Chemicals & Products |
1,380 |
2,591 |
2,379 |
879 |
Chemicals |
(329) |
34 |
|
486 |
Products |
1,710 |
2,557 |
|
393 |
Renewables & Energy Solutions |
(67) |
79 |
(34) |
659 |
Corporate |
(482) |
(136) |
(238) |
87 |
Less:
Non-controlling interest (NCI) |
77 |
|
|
|
Shell |
Q3 2023 |
6,224 |
16,336 |
12,332 |
5,649 |
Q2 2023 |
5,073 |
14,435 |
15,130 |
5,130 |
1Income/(loss) attributable to shareholders for Q3 2023 is $7.0
billion. Reconciliation of non-GAAP measures can be found in the
unaudited results, available on www.shell.com/investors.
- CFFO of $12.3 billion for Q3 2023 includes a working capital
inflow of $0.4 billion, with the impact of higher prices on
inventory offset by favourable timing effects of accounts
payable/receivable. Stable net debt, $40.5 billion at the end of Q3
2023.
$ billion |
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 2023 |
Q3 2023 |
Divestment proceeds |
0.3 |
0.2 |
1.7 |
0.5 |
0.3 |
Free
cash flow |
7.5 |
15.5 |
9.9 |
12.1 |
7.5 |
Net
debt |
48.3 |
44.8 |
44.2 |
40.3 |
40.5 |
Q3 2023 FINANCIAL PERFORMANCE DRIVERS
INTEGRATED GAS
Key data |
Q2 2023 |
Q3 2023 |
Q4 2023 outlook |
Realised liquids price ($/bbl) |
60 |
63 |
— |
Realised gas price ($/mscf) |
8 |
8 |
— |
Production (kboe/d) |
985 |
900 |
870 - 930 |
LNG liquefaction volumes (MT) |
7.2 |
6.9 |
6.7 - 7.3 |
LNG sales volumes (MT) |
16.0 |
16.0 |
— |
- Adjusted Earnings similar to Q2 2023, reflecting favourable
trading and optimisation results combined with higher realised
liquids prices offset by lower volumes. Trading and optimisation
results were higher than in Q2 2023, benefiting from stable supply
and capturing additional optimisation opportunities.
- Q4 2023 outlook reflects ongoing maintenance at Prelude and
lower expected liquefaction volumes from Egypt.
UPSTREAM
Key data |
Q2 2023 |
Q3 2023 |
Q4 2023 outlook |
Realised liquids price ($/bbl) |
72 |
79 |
— |
Realised gas price ($/mscf)* |
7 |
7 |
— |
Liquids production (kboe/d) |
1,283 |
1,311 |
— |
Gas production (mscf/d) |
2,425 |
2,564 |
— |
Total production (kboe/d) |
1,701 |
1,753 |
1,750 - 1,950 |
*With the completion of the 2022-2023 gas year
at the end of September 2023, the Groningen gas field has been
closed (subject to exceptional circumstances under which the Dutch
government may instruct to re-open the field to a certain extent).
Upstream realised gas prices have been restated for 2022 and 2023
to exclude the impact of GasTerra.
- Adjusted Earnings higher in Q3 2023 due to higher oil prices
and higher production volumes. Production was higher, with strong
performance in Deep Water.
- Q4 2023 production outlook reflects the closure of the
Groningen gas field.
MARKETING
Key data |
Q2 2023 |
Q3 2023 |
Q4 2023 outlook |
Marketing sales volumes (kb/d) |
2,607 |
2,654 |
2,250 - 2,750 |
Mobility (kb/d)* |
1,791 |
1,782 |
— |
Lubricants (kb/d)* |
83 |
82 |
— |
Sectors & Decarbonisation (kb/d)* |
733 |
790 |
— |
*Comparative information has been revised - see Quarterly
Databook
- Adjusted Earnings impacted by compressed fuels margins due to
rising feedstock costs in Mobility, offset by improved margin
performance in Sectors & Decarbonisation. Adjusted Earnings
also reflect one-off tax charges.
CHEMICALS & PRODUCTS
Key data |
Q2 2023 |
Q3 2023 |
Q4 2023 outlook |
Refining & Trading sales volumes (kb/d) |
1,466 |
1,548 |
— |
Chemicals sales volumes (kT) |
2,828 |
2,998 |
— |
Refinery utilisation (%) |
85 |
84 |
75 - 83 |
Chemicals manufacturing plant utilisation (%) |
70 |
70 |
62 - 70 |
Global indicative refining margin ($/bbl) |
9 |
16 |
— |
Global indicative chemical margin ($/t) |
153 |
115 |
— |
- Higher refining margins in Q3 2023 driven by lower global
product supply combined with higher demand. Chemicals margins
continue to be impacted by weak demand. Trading and optimisation
margins are higher than in Q2 2023.
- Q4 2023 Refinery utilisation outlook lower than Q3 2023 due to
planned maintenance activities in North America.
RENEWABLES & ENERGY SOLUTIONS
Key data |
Q2 2023 |
Q3 2023 |
External power sales (TWh) |
67 |
76 |
Sales of natural gas to end-use customers (TWh) |
172 |
170 |
Renewables power generation capacity* |
7.1 |
7.4 |
|
2.5 |
2.5 |
- under construction and/or committed for sale (GW)
|
4.6 |
4.9 |
*Excluding Shell's equity share of associates where
information cannot be obtained
- Adjusted Earnings are lower than in Q2 2023 mainly driven by
lower margins due to seasonal impacts, primarily in
Europe, and lower trading and optimisation results.
Renewables and Energy Solutions includes
renewable power generation, the marketing and trading and
optimisation of power and pipeline gas, as well as carbon credits,
and digitally enabled customer solutions. It also includes the
production and marketing of hydrogen, development of commercial
carbon capture and storage hubs, investment in nature-based
projects that avoid or reduce carbon emissions, and Shell Ventures,
which invests in companies that work to accelerate the energy and
mobility transformation.
CORPORATE
Key data |
Q2 2023 |
Q3 2023 |
Q4 2023 outlook |
Adjusted Earnings ($ billion) |
(0.7) |
(0.5) |
(0.6) - (0.8) |
- The Adjusted Earnings outlook is a net expense of $2.8 - 3.0
billion for the full year 2023. This excludes the impact of
currency exchange rate and fair value accounting effects.
UPCOMING INVESTOR EVENTS
1 February 2024 |
Fourth quarter 2023 results and dividends |
2 May 2024 |
First quarter 2024 results and dividends |
1 August 2024 |
Second quarter 2024 results and dividends |
31 October 2024 |
Third quarter 2024 results and dividends |
USEFUL LINKS
Results materials Q3 2023
Quarterly Databook Q3 2023
Dividend announcement Q3 2023
Webcast registration Q3 2023
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
This announcement includes certain measures that
are calculated and presented on the basis of methodologies other
than in accordance with generally accepted accounting principles
(GAAP) such as IFRS, including Adjusted Earnings, Adjusted EBITDA,
CFFO excluding working capital movements, Cash capital expenditure,
free cash flow, Divestment proceeds and Net debt. This information,
along with comparable GAAP measures, is useful to investors because
it provides a basis for measuring Shell plc’s operating performance
and ability to retire debt and invest in new business
opportunities. Shell plc’s management uses these financial
measures, along with the most directly comparable GAAP financial
measures, in evaluating the business performance.
This announcement contains a forward-looking
non-GAAP measure for cash capital expenditure and divestments. We
are unable to provide a reconciliation of this forward-looking
non-GAAP measure to the most comparable GAAP financial measure
because certain information needed to reconcile the non-GAAP
measure to the most comparable GAAP financial measure is dependent
on future events some of which are outside the control of the
company, such as oil and gas prices, interest rates and exchange
rates. Moreover, estimating such GAAP measure with the required
precision necessary to provide a meaningful reconciliation is
extremely difficult and could not be accomplished without
unreasonable effort. Non-GAAP measures in respect of future periods
which cannot be reconciled to the most comparable GAAP financial
measure are estimated in a manner which is consistent with the
accounting policies applied in Shell plc’s consolidated financial
statements.
CAUTIONARY STATEMENT
The companies in which Shell plc directly and
indirectly owns investments are separate legal entities. In this
announcement "Shell", "Shell Group" and "Group" are sometimes used
for convenience where references are made to Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our"
are also used to refer to Shell plc and its subsidiaries in general
or to those who work for them. These terms are also used where no
useful purpose is served by identifying the particular entity or
entities. "Subsidiaries", "Shell subsidiaries" and "Shell
companies" as used in this announcement refer to entities over
which Shell plc either directly or indirectly has control. Entities
and unincorporated arrangements over which Shell has joint control
are generally referred to as "joint ventures" and "joint
operations", respectively. "Joint ventures" and "joint operations"
are collectively referred to as "joint arrangements".
Entities over which Shell has significant influence but neither
control nor joint control are referred to as "associates". The term
"Shell interest" is used for convenience to indicate the direct
and/or indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all
third-party interest.
This announcement contains forward-looking
statements (within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995) concerning the financial condition,
results of operations and businesses of Shell. All statements other
than statements of historical fact are, or may be deemed to be,
forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management’s
current expectations and assumptions and involve known and unknown
risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied in these statements. Forward-looking statements include,
among other things, statements concerning the potential exposure of
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"intend", "may", "milestones", "objectives", "outlook", "plan",
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"target", "will" and similar terms and phrases. There are a number
of factors that could affect the future operations of Shell and
could cause those results to differ materially from those expressed
in the forward-looking statements included in this announcement,
including (without limitation): (a) price fluctuations in crude oil
and natural gas; (b) changes in demand for Shell’s products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, judicial, fiscal and regulatory
developments including regulatory measures addressing climate
change; (k) economic and financial market conditions in various
countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with
governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; (m)
risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or
exceed previous dividend payments. All forward-looking statements
contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in
this section. Readers should not place undue reliance on
forward-looking statements. Additional risk factors that may affect
future results are contained in Shell plc’s Form 20-F for the year
ended December 31, 2022 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this announcement and
should be considered by the reader. Each forward-looking statement
speaks only as of the date of this announcement, November 2, 2023.
Neither Shell plc nor any of its subsidiaries undertake any
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or other
information. In light of these risks, results could differ
materially from those stated, implied or inferred from the
forward-looking statements contained in this announcement.
All amounts shown throughout this announcement
are unaudited. The numbers presented throughout this announcement
may not sum precisely to the totals provided and percentages may
not precisely reflect the absolute figures, due to rounding.
Shell’s Net carbon intensity
Also, in this announcement we may refer to
Shell’s “Net Carbon Intensity”, which includes Shell’s carbon
emissions from the production of our energy products, our
suppliers’ carbon emissions in supplying energy for that production
and our customers’ carbon emissions associated with their use of
the energy products we sell. Shell only controls its own emissions.
The use of the term Shell’s “Net Carbon Intensity” is for
convenience only and not intended to suggest these emissions are
those of Shell plc or its subsidiaries.
Shell’s Net-Zero Emissions Target
Shell’s operating plan, outlook and budgets are
forecasted for a ten-year period and are updated every year. They
reflect the current economic environment and what we can reasonably
expect to see over the next ten years. Accordingly, they reflect
our Scope 1, Scope 2 and Net Carbon Intensity (NCI) targets over
the next ten years. However, Shell’s operating plans cannot reflect
our 2050 net-zero emissions target and 2035 NCI target, as these
targets are currently outside our planning period. In the future,
as society moves towards net-zero emissions, we expect Shell’s
operating plans to reflect this movement. However, if society is
not net zero in 2050, as of today, there would be significant risk
that Shell may not meet this target.
The content of websites referred to in this announcement does
not form part of this announcement.
We may have used certain terms, such as
resources, in this announcement that the United States Securities
and Exchange Commission (SEC) strictly prohibits us from including
in our filings with the SEC. Investors are urged to consider
closely the disclosure in our Form 20-F, File No 1-32575, available
on the SEC website www.sec.gov.
The financial information presented in this
announcement does not constitute statutory accounts within the
meaning of section 434(3) of the Companies Act 2006 (“the Act”).
Statutory accounts for the year ended December 31, 2022 were
published in Shell’s Annual Report and Accounts, a copy of which
was delivered to the Registrar of Companies for England and Wales,
and in Shell’s Form 20-F. The auditor’s report on those accounts
was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Act.
The information in this announcement does not
constitute the unaudited condensed consolidated financial
statements which are contained in Shell’s third quarter 2023
unaudited results available on www.shell.com/investors.
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