The Hague, April 7, 2021 − This is an update to the first
quarter 2021 outlook provided in the fourth quarter results
announcement on February 4, 2021. The impacts presented here may
vary from the actual results and are subject to finalisation of the
first quarter 2021 results. Unless otherwise indicated, presented
impacts relate to Adjusted Earnings on a post-tax basis.
The Texas winter storm had an impact on our operations and is
expected to have an aggregate adverse impact of up to $200 million
on Adjusted Earnings, individual segmental impacts are further
detailed below.
INTEGRATED GAS
- Production is expected to be between 920 and 960 thousand
barrels of oil equivalent per day.
- LNG liquefaction volumes are expected to be between 7.8 and 8.4
million tonnes.
- Pre-tax depreciation is expected to be between $1.3 and $1.4
billion.
- Trading and optimisation results are expected to be
significantly below average.
- Approximately 80% of our term sales of LNG in 2020 have been
oil price linked with a price-lag of up to 6 months. The volatility
of the JKM spot price in January had limited impact on Adjusted
Earnings.
- Operational and net financial impact from the Texas winter
storm is expected to be limited as trading margins are offset by
provisions due to related counterparty credit risk.
- CFFO is expected to be impacted by a working capital outflow
driven by increased receivables reflecting the higher commodity
price environment.
- CFFO excluding working capital is expected to be not
significantly impacted by cash flows related to commodity
derivatives.
UPSTREAM
- Adjusted Earnings are expected to be positive in the first
quarter 2021, capturing the upside from the current commodity price
environment.
- Production is expected to be between 2,400 and 2,475 thousand
barrels of oil equivalent per day, including 10 to 20 thousand
barrels per day lower production due to the Texas winter
storm.
- Total Adjusted Earnings are expected to be adversely impacted
by up to $40 million due to operational impacts of the Texas winter
storm.
- Pre-tax depreciation is expected to be between $3.1 and $3.4
billion.
- Currency effects are expected to adversely impact Adjusted
Earnings by up to $200 million.
- Tax expenses are expected to be between $700 and $1,100
million.
- Tax paid is expected to be between $500 and $750 million.
- Working capital outflows as expected due to increased
receivables reflecting the higher commodity price environment.
OIL PRODUCTS
- Refinery utilisation is expected to be between 71% and 75%.
Latest refinery crude distillation capacities are provided in the
2020 Annual Report, replacing calendar-day with stream day.
- Refining indicative margin is around $2.6/bbl, slightly
improved from $1.6/bbl in the fourth quarter 2020. Definition and
formula are provided at the end of this release.
- Trading and optimisation results are expected to be average and
higher than the fourth quarter 2020.
- Sales volumes are expected to be between 3,700 and 4,700
thousand barrels per day.
- Marketing results are expected to be higher compared with the
fourth quarter 2020, as higher margins and lower costs are more
than offsetting lower sales volumes.
- Pre-tax depreciation is expected to be between $0.9 and $1.1
billion.
- Total Adjusted Earnings are expected to be adversely impacted
by up to $80 million due to operational impacts of the Texas winter
storm.
- Working capital outflows are expected due to the higher
commodity price environment.
- CFFO excluding working capital is expected to be positively
impacted by the lower cash cost of sales.
CHEMICALS
- Chemicals Adjusted Earnings are expected to be positively
impacted by improved base margins and slightly higher intermediate
margins compared with the fourth quarter 2020.
- Chemicals manufacturing plant utilisation is expected to be
between 77% and 81%.
- Chemicals sales volumes are expected to be between 3,500 and
3,700 thousand tonnes.
- Pre-tax depreciation is expected to be between $250 and $350
million.
- Total Adjusted Earnings are expected to be adversely impacted
by around $60 million due to operational impacts of the Texas
winter storm.
- CFFO is expected to be negatively impacted by $150 to $250
million due to timing effect of dividends received from Joint
Ventures & Associates.
CORPORATE
- Corporate segment Adjusted Earnings are expected to be a net
expense of $600 to $700 million for the first quarter. This
excludes the impact of currency exchange effects.
Shell enhancing financial disclosures
At our first quarter 2021 results announcement we are planning
to provide enhanced voluntary disclosures in a Quarterly Databook,
to be available on www.shell.com/investors. The disclosures will
cover Integrated Gas, Upstream, Refining & Trading, Marketing
and Chemicals. The publication of the enhanced disclosures will be
followed by a webcast on the 4th of May 2021, with an opportunity
for Q&A.
Full-year price and margin sensitivities
The Adjusted Earnings and CFFO price and margin sensitivities
are indicative and in relation to the full-year results. These
exclude the short-term impacts from working capital movements,
cost-of-sales adjustments and derivatives. Sensitivity accuracy is
subject to trading and optimisation performance, including
short-term opportunities, depending on market conditions.
$ million |
Adjusted Earnings |
CFFO |
Integrated Gas |
|
|
+$10/bbl Brent |
1,100 |
1,200 |
+$10/bbl Japan Customs-cleared Crude - 3 months |
1,100 |
1,200 |
Upstream |
|
|
+$10/bbl Brent |
3,000 |
4,000 |
+$1/mmbtu Henry Hub |
350 |
450 |
+$1/mmbtu EU TTF |
150 |
200 |
Refining |
|
|
+$1/bbl indicative refining margin |
500 |
— |
Indicative refining margin
The indicative margin is an approximation of Shell’s global net
realised refining margin, calculated using price and margin markers
from third parties’ databases. It is based on an approximation of
Shell’s crude intake and production from refinery units. The actual
margins realised by Shell may vary due to factors including
specific local market effects, refinery configuration, crude diet,
operating decisions and production.
Q1 2021: $2.65/bbl
Q4 2020: $1.59/bbl
Q3 2020: $0.84/bbl
The formula provided will be reviewed and updated annually,
reflecting any changes in our refining portfolio.
Calculation formula ($/bbl) - note that brackets indicate a
negative sign
Brent*(25%) + MSW*(11%) + LLS*(24.5%) + Dubai*(24.5%) + Urals
CIF EU*(13%) + NWE Naphtha (RDAM FOB Barge)*8% + NWE Mogas premium
unleaded*12.50% + NWE Kero*11.50% + NWE AGO*24.5% + NWE Benzene*1%
+ Sing Fueloil 380 cst*6.50% + Edmonton ULG Reg*3.50% + Edmonton
ULSD*3.50% + USGC Normal Butane*1.50% + USGC LS No 2 Gasoil*7% +
USGC Natural Gas*(2%) + USGC CBOB*15% + RINS*(20.50%) + NWE
Propylene Platts*0.50% – $1.7/bbl
Consensus
The consensus collection for quarterly Adjusted Earnings and
CFFO excluding working capital movements, managed by VARA research,
will be published on 22 April 2021.
Contacts
Media International: +44 (0) 207 934 5550
Media Americas: +1 832 337 4355
Cautionary Note
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 the following forward-looking
Non-GAAP measure: Adjusted Earnings.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 the above Non-GAAP measure to the most
comparable GAAP financial measure is dependent on future events
some which are outside the control of the company, 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 Royal Dutch
Shell plc’s consolidated financial 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 Royal Dutch 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
Royal Dutch 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”, “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 Royal Dutch
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, 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’s Form 20-F for
the year ended December 31, 2020 (available at
www.shell.com/investors 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, April 7, 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.
LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
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