Royal Dutch Shell 3rd Quarter 2015 Unaudited Results
October 29 2015 - 3:00AM
UK Regulatory
TIDMRDSA TIDMRDSB
ROYAL DUTCH SHELL PLC
3RD QUARTER 2015 UNAUDITED RESULTS
* Royal Dutch Shell's third quarter 2015 earnings, on a current cost of
supplies (CCS) basis (see Note 2), were a loss of $6.1 billion compared
with a gain of $5.3 billion for the same quarter a year ago.
* Third quarter 2015 CCS earnings included identified items of $7.9 billion.
* Third quarter 2015 CCS earnings excluding identified items (see page 5)
were $1.8 billion compared with $5.8 billion for the third quarter of 2014,
a decrease of 70%. Earnings were impacted by non-cash charges of some $1.0
billion related to adverse currency exchange rate effects on deferred tax
positions and financing items which were not included as identified items.
* Compared with the third quarter 2014, CCS earnings excluding identified
items included improved Downstream and lower Upstream results. In
Downstream, earnings benefited from steps taken by Shell to improve
financial performance and from higher realised refining margins. Upstream
earnings were negatively impacted by lower oil and gas prices, partly
offset by lower costs, increased production volumes and improved
operational performance.
* Basic CCS earnings per share excluding identified items decreased by 70%
versus the third quarter 2014.
* Cash flow from operating activities for the third quarter 2015 was $11.2
billion, compared with $12.8 billion for the same quarter last year.
Excluding working capital movements, cash flow from operating activities
for the third quarter 2015 was $5.3 billion, compared with $11.1 billion
for the third quarter 2014.
* Total dividends distributed to Royal Dutch Shell plc shareholders in the
quarter were $3.0 billion, of which $0.7 billion were settled under the
Scrip Dividend Programme. No shares were bought back during the third
quarter.
* Gearing at the end of the third quarter 2015 was 12.7%.
* A third quarter 2015 dividend has been announced of $0.47 per ordinary
share and $0.94 per American Depositary Share ("ADS").
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Nine months
Q3 2015 Q2 Q3 %1 2015 2014 %
2015 2014
(7,416) 3,986 4,463 -266 Income/(loss) attributable to Royal 1,000 14,279 -93
Dutch Shell plc shareholders
1,296 (625) 803 Current cost of supplies (CCS) 1,002 599
adjustment for Downstream
(6,120) 3,361 5,266 -216 CCS earnings 2,002 14,878 -87
(7,890) (474) (581) Identified items2 (6,849) (4,422)
1,770 3,835 5,847 -70 CCS earnings excluding identified 8,851 19,300 -54
items
Of which:
(425) 1,037 4,343 Upstream 1,287 14,775
2,617 2,961 1,793 Downstream 8,224 4,715
(422) (163) (289) Corporate and Non-controlling (660) (190)
interest
11,231 6,050 12,811 -12 Cash flow from operating activities 24,387 35,436 -31
(0.97) 0.53 0.83 -217 Basic CCS earnings per share ($) 0.32 2.36 -86
(1.94) 1.06 1.66 Basic CCS earnings per ADS ($) 0.64 4.72
0.28 0.61 0.92 -70 Basic CCS earnings per share excl. 1.40 3.06 -54
identified items ($)
0.56 1.22 1.84 Basic CCS earnings per ADS excl. 2.80 6.12
identified items ($)
0.47 0.47 0.47 - Dividend per share ($) 1.41 1.41 -
0.94 0.94 0.94 Dividend per ADS ($) 2.82 2.82
1 Q3 on Q3 change
2 See page 5
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
"Shell's integrated business and our performance drive are helping to mitigate
the impact of low oil prices on the bottom line, in what is a difficult
environment for the industry today.
We continue to improve the operational performance of our assets, and
production volumes are up. Costs are falling across the company and Shell's
performance drive is delivering at the bottom line.
Our financial framework is highly competitive, with balance sheet gearing at
12.7%, similar to year ago levels, despite a halving of oil prices. Both net
investments and dividends have been covered by operating cash flow over the
last year, when oil prices have averaged $60 per barrel.
While our cash flow and our operating performance in the quarter were strong,
the headline numbers we're reporting today include substantial charges. These
charges reflect both a lower oil and gas price outlook and the firm steps we
are taking to review and reduce Shell's longer-term option set.
We have halted exploration activities offshore Alaska, and stopped the
construction of the Carmon Creek in-situ oil project in Canada.
These are difficult, but impactful decisions. I am determined that Shell will
become a more focused and competitive company as a result.
The BG deal, which remains on track for completion in early 2016, is a
springboard to focus Shell into fewer and more profitable themes, especially
deep water and integrated gas."
THIRD QUARTER 2015 PORTFOLIO DEVELOPMENTS
Upstream
In Canada, Shell announced that it will not continue construction of the 80
thousand barrels of oil equivalent per day ("boe/d") Carmon Creek thermal
in-situ project (Shell interest 100%). Shell originally sanctioned the project
in October 2013 and announced in March 2015 that the project would be re-phased
to take advantage of the market downturn to optimise design and retender
certain contracts. After careful review of the potential design options,
updated costs, and the company's capital priorities, Shell's view is that this
project does not rank in its portfolio at this time. The project SEC Proved
Reserves estimated at 418 million barrels bitumen at end 2014 will be de-booked
and the project estimated recoverable petroleum resources will be classified as
Contingent Resources.
In Malaysia, Shell announced that with the expiry of the Malaysia LNG Dua
production-sharing contract ("PSC") on August 21, 2015, Shell has handed over
its operatorship and 50% interest to PETRONAS. In 2014, Shell share of gas
production from fields under the Malaysia LNG Dua PSC was 62 thousand boe/d.
In the United States, Shell completed the sale of its 49% equity interest in
Elba Liquefaction Company, LLC, owner of the Elba Liquefaction Project, to
Kinder Morgan, Inc. Once operational, Shell will retain 100% of the off-take
capacity of the project, which is proposed to be constructed and operated at
the existing Elba Island LNG terminal.
Offshore Alaska during the quarter, Shell drilled the Burger J well to target
depth as planned. The well is considered a dry-hole, with minor oil and gas
shows, and the result renders the Burger Prospect as uneconomic. This, combined
with the current economic and regulatory environment, has led Shell to cease
further exploration activity offshore Alaska for the foreseeable future.
Shell's leases in the Chukchi Sea do not expire until 2020 and in the Beaufort
Sea until 2017 and 2019. Recently, the US Government has denied our request for
a suspension of operations, which would have extended the expiration date of
these leases. We are considering our options in order to protect the remaining
value of our assets and leases.
Shell announced the final investment decision ("FID") to advance the Appomattox
deep-water development (Shell interest 79%) in the United States. The
Appomattox platform will be Shell's seventh 4-column host in the Gulf of
Mexico. The Appomattox development will initially produce from the Appomattox
and Vicksburg fields, with average peak production estimated to reach
approximately 175 thousand boe/d.
In Shell's heartlands exploration programme there were successful appraisals of
the Kaikias oil discovery (Shell interest 100%) and the Powernap oil discovery
(Shell interest 50%) in the United States Gulf of Mexico.
Shell had continued success with near-field exploration discoveries in Brunei,
Malaysia, Oman and the United Kingdom.
In October, Shell Nigeria Exploration and Production Company Ltd announced the
first production from the Bonga Phase 3 project (Shell interest 55%). Bonga
Phase 3 is an expansion of the Bonga Main development, with peak production
expected to be some 50 thousand boe/d. The oil will be transported through
existing pipelines to the Bonga floating production, storage and offloading
facility, which has the capacity to produce more than 200 thousand barrels of
oil and 150 million standard cubic feet of gas per day.
Downstream
During the quarter in China, Shell announced that it has reached an agreement
to sell its 75% interest in Tongyi Lubricants to Huo's Group and The Carlyle
Group. The transaction has received regulatory approval and is expected to
complete in 2015.
In Japan, Shell reached an agreement with Idemitsu for the sale of 125,261,200
shares in Showa Shell Sekiyu KK, representing a 33.24% shareholding in the
company, for a total consideration of JPY 169 billion (approximately $1.4
billion). Shell will retain a 1.8% holding in the company and continues to
license its brand to Showa Shell for use in its retail business. The
transaction is expected to complete in 2016, subject to obtaining regulatory
approval.
In October, Shell completed the sale of its retail, commercial fuels, and
supply and distribution logistics businesses in Norway to ST1 Nordic Oy. The
Shell brand will continue to be highly visible in Norway through a retail brand
licence agreement, and Shell fuels and lubricants will continue to be sold at
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