The Hague, October 28, 2021
"This quarter we've generated record cash flow, maintained
capital discipline and announced our intention to distribute $7
billion to our shareholders from the sale of our Permian assets.
Today, we also set a new 2030 target to halve the absolute
emissions from our operations, compared to 2016 levels on a net
basis. Altogether, this is clear evidence of how we are
accelerating our Powering Progress strategy, purposefully and
profitably."
Royal Dutch Shell Chief Executive Officer, Ben van
Beurden
QUALITY PORTFOLIO DELIVERING RECORD CASH
- Highest ever CFFO excl. working capital of $17.5 billion,
supported by outstanding cash generation across the businesses and
boosted by commodity derivatives.
- Disciplined cash capex of $13.2 billion in the first nine
months; expected to be around $20 billion in 2021.
- Share buybacks of $1.0 billion in Q3 2021 out of a total target
of $2 billion in the second half of 2021. Additional shareholder
distributions of $7 billion related to the Permian sale to start in
2022, post deal completion.
- An absolute emissions reduction target of 50% by 2030, compared
to 2016 levels on a net basis, covering all Scope 1 and 2 emissions
under Shell’s operational control.
$ million |
Adj. Earnings1 |
Adj. EBITDA (CCS) |
CFFO ex. WC |
CFFO |
Cash capex |
Integrated Gas |
1,680 |
3,768 |
7,871 |
5,674 |
1,272 |
Upstream |
1,686 |
6,766 |
5,889 |
5,777 |
1,502 |
Oil Products |
1,212 |
2,360 |
3,262 |
3,757 |
976 |
Refining & Trading |
(3) |
415 |
|
|
364 |
Marketing |
1,215 |
1,945 |
|
|
612 |
Chemicals |
395 |
715 |
684 |
840 |
1,053 |
Corporate |
(732) |
(147) |
(233) |
(22) |
36 |
Less: Non-controlling interest |
112 |
|
|
|
|
RDS |
Q3 2021 |
4,130 |
13,460 |
17,472 |
16,025 |
4,840 |
Q2 2021 |
5,534 |
13,623 |
14,176 |
12,617 |
4,383 |
1 Income/(loss) attributable to shareholders for Q3 2021 is
$(0.4) billion. Reconciliation of non-GAAP measures can be found in
the unaudited results, available on www.shell.com/investors.
$ billion |
Q3 2020 |
Q4 2020 |
Q1 2021 |
Q2 2021 |
Q3 2021 |
Divestment proceeds |
0.9 |
0.2 |
3.4 |
1.3 |
1.3 |
Free cash flow |
7.6 |
0.9 |
7.7 |
9.7 |
12.2 |
Net debt |
73.5 |
75.4 |
71.3 |
65.7 |
57.5 |
Q3 2021 FINANCIAL PERFORMANCE DRIVERS
INTEGRATED GAS, RENEWABLES AND ENERGY
SOLUTIONS
Key data |
Q2 2021 |
Q3 2021 |
Q4 2021 outlook |
Realised liquids price ($/bbl) |
58.97 |
68.04 |
— |
Realised gas price ($/mscf) |
6.32 |
8.36 |
— |
Production (kboe/d) |
938 |
938 |
940 - 980 |
LNG liquefaction volumes (MT) |
7.49 |
7.39 |
8.0 - 8.6 |
LNG sales volumes (MT) |
15.92 |
15.18 |
— |
- Adjusted Earnings benefited from higher realised prices, partly
offset by lower earnings contribution from the Renewables &
Energy Solutions business due to lower margins in North
America.
- Strong cash flow, with CFFO excluding working capital of $7.9
billion, benefiting from $4.3 billion derivatives cash inflows from
variation margin in gas and power trading due to significant price
increases. These variation margin inflows could reverse in future
quarters.
UPSTREAM
Key data |
Q2 2021 |
Q3 2021 |
Q4 2021 outlook |
Realised liquids price ($/bbl) |
62.53 |
67.10 |
— |
Realised gas price ($/mscf) |
4.31 |
6.09 |
— |
Liquids production (kboe/d) |
1,558 |
1,497 |
— |
Gas production (mscf/d) |
4,082 |
3,387 |
— |
Total production (kboe/d) |
2,262 |
2,081 |
2,100 - 2,350 |
- Adjusted Earnings benefited from higher prices, offset by lower
volumes. Q2 2021 included a one-off release of a non-cash tax
provision of approximately $600 million.
- Continued strong cash conversion, with CFFO excluding working
capital of $5.9 billion.
- Higher cash generation than in Q2 2021, despite 8% lower
production due to seasonality and Hurricane Ida.
OIL PRODUCTS
Key data |
Q2 2021 |
Q3 2021 |
Q4 2021 outlook |
Sales volumes (kb/d) |
4,552 |
4,665 |
4,200 - 5,200 |
Refining & Trading sales volumes (kb/d) |
2,145 |
2,087 |
— |
Marketing sales volumes (kb/d) |
2,406 |
2,578 |
— |
Refinery utilisation (%) |
76 |
71 |
68 - 76 |
Global indicative refining margin ($/bbl) |
4.17 |
5.7 |
— |
- Strong Marketing Adjusted Earnings driven by higher
volumes.
- Refinery processing intake and utilisation impacted by planned
maintenance and Hurricane Ida.
- Trading and optimisation contributions to earnings lower when
compared to second quarter 2021.
- Strong cash conversion with CFFO excluding working capital of
$3.3 billion.
CHEMICALS
Key data |
Q2 2021 |
Q3 2021 |
Q4 2021 outlook |
Sales volumes (kT) |
3,609 |
3,549 |
3,500 - 3,900 |
Manufacturing plant utilisation (%) |
82 |
78 |
73 - 81 |
- Adjusted Earnings impacted by Hurricane Ida as well as lower
spreads in both base and intermediate product lines resulting in
lower margins and JV earnings.
- Strong cash conversion despite timing effects of dividends from
joint ventures and associates.
CORPORATE
Key data |
Q2 2021 |
Q3 2021 |
Q4 2021 outlook |
Adjusted Earnings ($ million) |
(399) |
(732) |
(750) - (650) |
- Corporate segment Adjusted Earnings were a net expense of $732
million in line with expectations.
- The full year estimate for Corporate Adjusted Earnings is a net
expense of $2,450 - 2,550 million. This excludes the impact of
currency exchange rate effects.
- Net debt decreased by $8.2 billion to $57.5 billion in Q3 2021
driven by improvement in the macroeconomic environment and
commodity derivatives inflows, partly offset by a working capital
outflow.
UPCOMING INVESTOR EVENTS
3 February 2022 |
Fourth quarter 2021 results and dividends |
5 May 2022 |
First
quarter 2022 results and dividends |
28 July 2022 |
Second
quarter 2022 results and dividends |
27 October 2022 |
Third
quarter 2022 results and dividends |
USEFUL LINKS
Q3 2021 results materials
Quarterly Databook Q3 2021
Dividend announcement Q3 2021
Q3 results webcast registration
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 Royal Dutch Shell plc’s operating
performance and ability to retire debt and invest in new business
opportunities. Royal Dutch 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. 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 Shell, 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 Royal Dutch
Shell plc’s consolidated financial statements.
CAUTIONARY STATEMENT
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.
The companies in which Royal Dutch 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 Royal Dutch Shell plc
and its subsidiaries in general. Likewise, the words “we”, “us” and
“our” are also used to refer to Royal Dutch 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 Royal Dutch 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. 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 Shell to
market risks and statements expressing management’s expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and
phrases such as “aim”, “ambition”, “anticipate”, “believe”,
“could”, “estimate”, “expect”, “goals”, “intend”, “may”,
“milestones”, “objectives”, “outlook”, “plan”, “probably”,
“project”, “risks”, “schedule”, “seek”, “should”, “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 Royal Dutch Shell plc’s Form 20-F for the year
ended December 31, 2020 (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, October 28, 2021.
Neither Royal Dutch 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.
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, 2020 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 interim financial statements which
are contained in Shell’s third quarter 2021 and nine months
unaudited results available on www.shell.com/investors.
CONTACTS
- Media: International +44 207 934 5550; USA +1 832 337 4355
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