Q4 2003 earnings advice:Portfolio upgrading milestones
December 22 2003 - 5:00AM
UK Regulatory
Over the past 2 years the Royal Dutch / Shell Group of Companies has engaged in
a focused programme of portfolio development and upgrading. In 2003 this has
led to several important announcements and milestones on future developments.
The upgrading programme has the objectives of improving the underlying return
on capital in the business, and re-deploying capital in alignment with the
stated strategic direction. 2003 has seen a series of actions in this
programme, including divestments, asset closures, country exits, cost
improvement programmes and asset re-structuring.
Total sales proceeds from divestments for the full year are expected to exceed
$4 billion of cash, well ahead of the initial expectation of around $2 billion,
reflecting the acceleration and successful delivery of the upgrading programme.
After tax profit on these sales exceeds $2 billion, expected to be slightly
below the total unusual charges during the year, including those detailed here.
The earnings in Q4 2003 are expected to include a net charge of around $820
million in addition to the previously announced $200 million charge for the
closure of Bakersfield refinery in California. This figure includes gains from
asset sales completed in Q4 2003. The majority of these charges are non-cash in
nature. None of these items will be treated as special. All amounts stated are
unaudited and approximate, and are subject to final quantification prior to
release of the formal earnings statement on February 5th 2004.
The Q4 2003 net charges in individual business sectors are expected to be
around $100 million for Exploration and Production, $400 million for Oil
Products - including the $200 million charge for Bakersfield, $450 million for
Chemicals and $70 million in the Other Industries and Corporate sectors.
The net impact on full year 2003 earnings of the overall upgrading programme,
together with impairment charges, is relatively immaterial at a Group level.
This is consistent with advice given in the Q3 results conference call held and
webcast on October 23rd 2003.
Notable development milestones announced in the quarter include
* Signature of the Heads of Agreement to construct the world's largest Gas to
Liquids plant in Qatar
* Start up of the major new deepwater Na Kika project in the Gulf of Mexico
* Agreement on cross border development projects in the UK and Norwegian
sectors of the North Sea, for the import of wet gas to the UK from
Statfjord and the final investment decision to develop the Ormen Lange
field to import gas to the UK
* Agreement to extend two production licence periods in Brunei for 19 years
* Signature of the agreement to explore for gas in the Kingdom of Saudi
Arabia
These achievements, together with the upgrading activities, continue to move
the portfolio in the stated strategic direction.
The Q4 results for 2003 for the Royal Dutch / Shell Group of Companies will be
released on Thursday 5th February 2004. This release will be followed by press
and investor conferences in London and The Hague. The investor meeting will be
broadcast on the Group website, which can be accessed at www.shell.com/investor
, and will also be accessible via a teleconference facility.
Further details for this event, including exact timings, will be announced
closer to the date.
The focus of the press and investor meetings will be financial results and
operational performance for Q4 2003 and the full year 2003. Where appropriate
an outlook for 2004 will be given.
To assist with preparations for the results announcement, listed below are some
of the main Shell website addresses, where key announcements made during the
last few months can be viewed.
1) Investor Relations News - www.shell.com/investornews
2) Shell Oil - www.countonshell.com
(for Press Releases select the option from the left hand navigation bar)
3) Shell Canada Oil Sands - www.shellcanada.com/code/products/oilsands/
dir_oilsands.html
For further information please contact:
Simon Henry +44 20 79343855
Gerard Paulides +44 20 79346287
Harold Hatchett +1 212 218 3112
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