TIDMSHELL
The following is an update to the fourth quarter 2022 outlook
and gives an overview of our current expectations for the fourth
quarter. Impacts presented may vary from the actual fourth quarter
2022 results and are subject to finalisation of those results,
which are scheduled to be published on February 2, 2023. Unless
otherwise indicated, all outlook statements exclude identified
items.
Integrated Gas
Outlook ($
million) Comment
------------------------- ------------- ----------------------------------------
Adjusted EBITDA:
----------------------------------------
Reflecting longer than expected
Production (kboe/d) 900 - 940 outage of Prelude.
------------- ----------------------------------------
Mainly reflecting longer than expected
LNG liquefaction volumes plant outage at Prelude and operational
(MT) 6.6 - 7.0 issues at QGC in Australia.
------------- ----------------------------------------
Underlying opex 1,200 - 1,400
------------- ----------------------------------------
Adjusted Earnings:
----------------------------------------
Pre-tax depreciation 1,200 - 1,600
------------- ----------------------------------------
Taxation charge 500 - 900 This includes favourable movements
in deferred tax positions.
------------- ----------------------------------------
Other Considerations:
----------------------------------------------------------------------------------
Trading & Optimisation: expected to be significantly higher compared
to Q3'22.
----------------------------------------------------------------------------------
Upstream
Outlook ($
million) Comment
------------------------- ------------- ----------------------------------------
Adjusted EBITDA:
----------------------------------------
Production (kboe/d) 1,825 - 1,925
------------- ----------------------------------------
Underlying opex 2,800 - 3,300
------------- ----------------------------------------
No storage transfer effects in the
Profit of joint ventures quarter, lower gas prices and portfolio
and associates (400) - 200 effects.
------------- ----------------------------------------
Exploration well
write-offs 150 - 550
------------- ----------------------------------------
Adjusted Earnings:
----------------------------------------
Pre-tax depreciation 3,100 - 3,500
------------- ----------------------------------------
Taxation charge 3,100 - 3,900 This includes favourable movements
in deferred tax positions.
------------- ----------------------------------------
Other Considerations:
----------------------------------------------------------------------------------
--
----------------------------------------------------------------------------------
Marketing
Outlook ($ million) Comment
------------------------ --------------------- -------
Adjusted EBITDA:
-------
Sales volumes (kb/d) 2,350 - 2,750
--------------------- -------
Underlying opex 2,000 - 2,300
--------------------- -------
Adjusted Earnings:
-------
Pre-tax depreciation 300 - 500
--------------------- -------
Taxation charge 0 - 200
--------------------- -------
Other Considerations:
--------------------------------------------------------
Marketing results: expected to be lower than Q3'22.
--------------------------------------------------------
Chemicals & Products
Outlook ($ million) Comment
--------------------- ------------------- ----------------------------------
Adjusted EBITDA:
----------------------------------
Indicative refining
margin $19/bbl Q3'22: $15/bbl
------------------- ----------------------------------
Indicative chemicals
margin $37/tonne Q3'22: ($27)/tonne
------------------- ----------------------------------
Refinery utilisation 88% - 92%
------------------- ----------------------------------
Chemicals utilisation 75% - 79%
------------------- ----------------------------------
Underlying opex 2,800 - 3,200
------------------- ----------------------------------
Adjusted Earnings:
----------------------------------
Pre-tax depreciation 700 - 900
------------------- ----------------------------------
Taxation charge (200) - 100 This includes favourable movements
in deferred tax positions.
------------------- ----------------------------------
Other Considerations:
------------------------------------------------------------------------------
Trading & Optimisation: expected to be significantly lower than
Q3'22.
Chemicals results are expected to be lower than Q3'22 in part due
to the commencement of depreciation for Shell Polymers Monaca (the
Pennsylvania Chemicals project).
------------------------------------------------------------------------------
Renewables and Energy Solutions
Outlook ($ million) Comment
------------------ ------------------- -------
Adjusted Earnings (500) - 100
------------------- -------
Corporate
Outlook ($ million) Comment
------------------ ------------------- -------
Adjusted Earnings (550) - (750)
------------------- -------
Shell Group
Outlook ($ million) Comment
-------------------------- ------------------------------------- ----------------
CFFO:
----------------
Tax Paid 4,300 - 4,700
------------------------------------- ----------------
Working Capital Working capital estimations are inherently uncertain,
exacerbated by current market volatility. We
estimate a working capital inflow of $4 billion
for the quarter.
-------------------------------------------------------
Other Considerations
-----------------------------------------------------------------------------------
The Q4'22 earnings impact of recently announced additional taxes
in the EU (the solidarity contribution) and the deferred tax impact
from the increased UK Energy Profits Levy is expected to be around
$2 billion. These impacts will be reported as identified items and
therefore will not impact Q4'22 Adjusted Earnings and will have
limited cash impact in Q4'22 given the expected timing of payments.
-----------------------------------------------------------------------------------
Guidance
For guidance on Indicative Refining Margin, Indicative Chemicals
Margin and full-year price and margin sensitivities see the Q3 2022
Quarterly Databook (Link
https://www.globenewswire.com/Tracker?data=mcd9dTDI4mx4dCQkkwzh576cmj0r6qyxt7jAuF_lUaiG_yVPbjdFTW3M--uz0WzhMnZLQOOfMlmjxOo8E4jCQjMa5FEBvpMaKqMK2mkAy2srY9_0_dtlid6D6Uy5Xekyr2Tzk8fuopTxHi4ZQJ28kff59xD15nxBGA_UxGMSjqKe1yCJk6agVzdIs2NUp51KxJWyIiNT8gutaVilfBXhimozmbZ7BgwtUpqarsmJWGyEamEvroY0fwR0_9POeTqrMNxJ0Qet0FtZByrDCqLQpEs7-vsGUtkbciQkxin_1SNas6vRXiCaXYVw0L9gw2TQ
).
Consensus
The consensus collection for quarterly Adjusted Earnings,
Adjusted EBITDA is per the new reporting segments and CFFO at a
Shell group level, managed by Vara Research, is expected to be
published on 26 January 2023.
Enquiries
Media International: +44 (0) 207 934 5550
Media Americas: +1 832 337 4355
Cautionary Note
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.
Forward-Looking Statements
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 Shell plc's Form 20-F for the year
ended December 31, 2021 (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, January 6, 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.
Shell's net carbon footprint
Also, in this announcement we may refer to Shell's "Net Carbon
Footprint" or "Net Carbon Intensity", which include 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 Footprint" or "Net Carbon
Intensity" are 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 Footprint (NCF) targets over the next ten
years. However, Shell's operating plans cannot reflect our 2050
net-zero emissions target and 2035 NCF 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.
Forward Looking Non-GAAP measures
This announcement may contain certain forward-looking non-GAAP
measures such as IFRS, including Adjusted Earnings, "Adjusted
EBITDA", Cash flow from operating activities excluding working
capital movements, Cash capital expenditure, Net debt and
Underlying opex.
Adjusted Earnings and Adjusted EBITDA are measures used to
evaluate Shell's performance in the period and over time.
The "Adjusted Earnings" and Adjusted EBITDA are measures which
aim to facilitate a comparative understanding of Shell's financial
performance from period to period by removing the effects of oil
price changes on inventory carrying amounts and removing the
effects of identified items.
Adjusted Earnings is defined as income/(loss) attributable to
shareholders adjusted for the current cost of supplies and
excluding identified items. "Adjusted EBITDA (CCS basis)" is
defined as "Income/(loss) for the period" adjusted for current cost
of supplies; identified items; tax charge/(credit); depreciation,
amortisation and depletion; exploration well write-offs and net
interest expense. All items include the non-controlling interest
component.
Cash flow from operating activities excluding working capital
movements is a measure used by Shell to analyse its operating cash
generation over time excluding the timing effects of changes in
inventories and operating receivables and payables from period to
period. Working capital movements are defined as the sum of the
following items in the Consolidated Statement of Cash Flows: (i)
(increase)/decrease in inventories, (ii) (increase)/decrease in
current receivables, and (iii) increase/(decrease) in current
payables. Cash capital expenditure is the sum of the following
lines from the Consolidated Statement of Cash flows: Capital
expenditure, Investments in joint ventures and associates and
Investments in equity securities. Net debt is defined as the sum of
current and non-current debt, less cash and cash equivalents,
adjusted for the fair value of derivative financial instruments
used to hedge foreign exchange and interest rate risks relating to
debt, and associated collateral balances. Underlying operating
expenses is a measure of Shell's cost management performance and
aimed at facilitating a comparative understanding of performance
from period to period by removing the effects of identified items,
which, either individually or collectively, can cause volatility,
in some cases driven by external factors. Underlying operating
expenses comprises the following items from the Consolidated
statement of Income: production and manufacturing expenses;
selling, distribution and administrative expenses; and research and
development expenses and removes the effects of identified items
such as redundancy and restructuring charges or reversals,
provisions or reversals and others.
We are unable to provide a reconciliation of these
forward-looking Non-GAAP measures to the most comparable GAAP
financial measures because certain information needed to reconcile
those Non-GAAP measures to the most comparable GAAP financial
measures 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 measures 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 calculated in a manner which is consistent
with the accounting policies applied in Shell plc's consolidated
financial statements.
The contents of websites referred to in this announcement do 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.
LEI number of Shell plc: 21380068P1DRHMJ8KU70
(END) Dow Jones Newswires
January 06, 2023 02:00 ET (07:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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