The following is an update to the third quarter 2023 outlook and
gives an overview of our current expectations for the third
quarter. Outlooks presented may vary from the actual third quarter
2023 results and are subject to finalisation of those results,
which are scheduled to be published on November 2, 2023. Unless
otherwise indicated, all outlook statements exclude identified
items. See appendix for previous quarter historical data.
Integrated Gas
$ billions |
Q3’23 Outlook |
Comment |
Adjusted EBITDA: |
Production (kboe/d) |
880 - 920 |
Production and LNG liquefaction outlook reflects scheduled
maintenance (including Prelude and Trinidad and Tobago). |
LNG liquefaction volumes (MT) |
6.6 - 7.0 |
Underlying opex |
1.1 - 1.3 |
|
Adjusted Earnings: |
Pre-tax depreciation |
1.2 - 1.6 |
|
Taxation charge |
0.7 - 1.0 |
|
Other Considerations: |
Trading & Optimisation: expected to be higher compared to
Q2’23. |
Upstream
$ billions |
Q3’23 Outlook |
Comment |
Adjusted EBITDA: |
Production (kboe/d) |
1,700 - 1,800 |
|
Underlying opex |
2.1 - 2.6 |
|
Adjusted Earnings: |
Pre-tax depreciation |
2.7 - 3.1 |
|
Taxation charge |
2.1 - 2.9 |
|
Other Considerations: |
The share of profit / (loss) of joint ventures and associates in
Q3’23 is expected to be around zero. Q3’23 exploration well-write
offs are expected to be ~$0.2 billion. |
Marketing
$ billions |
Q3’23 Outlook |
Comment |
Adjusted EBITDA: |
Sales volumes (kb/d) |
2,450 - 2,850 |
|
Underlying opex |
2.1 - 2.5 |
|
Adjusted Earnings: |
Pre-tax depreciation |
0.3 - 0.7 |
|
Taxation charge |
0.2 - 0.4 |
|
Other Considerations: |
Marketing results: expected to be similar to Q3’22. |
Chemicals & Products
$ billions |
Q3’23 Outlook |
Comment |
Adjusted EBITDA: |
Indicative refining margin |
$16/bbl |
|
Indicative chemicals margin |
$116/tonne |
The chemicals sub-segment adjusted earnings are expected to be in
line with Q2’23. |
Refinery utilisation |
82% - 86% |
|
Chemicals utilisation |
68% - 72% |
|
Underlying opex |
2.8 - 3.2 |
|
Adjusted Earnings: |
Pre-tax depreciation |
0.8 - 1.0 |
|
Taxation charge |
0.0 - 0.5 |
|
Other Considerations: |
Trading & Optimisation: expected to be higher than Q2’23. |
Renewables and Energy Solutions
$ billions |
Q3’23 Outlook |
Comment |
Adjusted Earnings |
(0.3) - 0.3 |
|
Corporate
$ billions |
Q3’23 Outlook |
Comment |
Adjusted Earnings |
(0.6) - (0.4) |
|
Shell Group
$ billions |
Q3’23 Outlook |
Comment |
CFFO: |
Tax Paid |
2.7 - 3.5 |
|
Working Capital |
(4) - 0 |
Working capital estimations inherently have a broad range of
uncertainty. |
Other Shell Group Considerations: |
- |
Guidance
The ‘Quarterly Databook’ contains guidance on Indicative
Refining Margin, Indicative Chemicals Margin and full-year price
and margin sensitivities (Link).
Consensus
The consensus collection for quarterly Adjusted
Earnings, Adjusted EBITDA is per the reporting segments and CFFO at
a Shell group level, managed by Vara Research, is expected to be
published on October 26, 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.
The numbers presented in this announcement may
not sum precisely to the totals provided and percentages may not
precisely reflect the absolute figures due to rounding.
Forward-Looking StatementsThis
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, 2022 (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 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 intensityAlso, in this
announcement we may refer to Shell’s “Net Carbon Intensity”, which
includes 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 Intensity”
is for convenience only and not intended to suggest these emissions
are those of Shell plc or its subsidiaries.
Shell’s net-Zero Emissions TargetShell’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 Intensity (NCI) targets over the next ten
years. However, Shell’s operating plans cannot reflect our
2050 net-zero emissions target and 2035 NCI 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
Appendix
Indicative Margins
|
Q2’23 |
Q3’23 Updated Outlook |
Indicative refining margin |
$9/bbl |
$16/bbl |
Indicative chemicals margin |
$153/tonne |
$116/tonne |
Underlying Opex
$ billions |
Q2’23 |
Q2’23 Adjusted |
Q3’23 Updated Outlook |
Production and manufacturing expenses |
6.0 |
|
|
Selling, distribution and administrative expenses |
3.3 |
|
|
Research and development |
0.3 |
|
|
Operating Expenses (Opex) |
9.7 |
9.7 |
|
Less: Identified Items |
|
0.0 |
|
Underlying Opex |
|
9.6 |
|
of which: |
|
|
|
Integrated Gas |
1.2 |
1.2 |
1.1 - 1.3 |
Upstream |
2.3 |
2.3 |
2.1 - 2.6 |
Marketing |
2.3 |
2.3 |
2.1 - 2.5 |
Chemicals & Products |
2.9 |
2.9 |
2.8 - 3.2 |
Renewables and Energy
Solutions |
0.9 |
0.9 |
|
Depreciation, depletion and amortisation
$ billions |
Q2’23 |
Q2’23 Adjusted |
Q3’23 Updated Outlook |
Depreciation, Depletion & Amortisation |
7.9 |
7.9 |
|
Less: Identified Items |
|
2.2 |
|
Pre-tax depreciation (as Adjusted) |
|
5.7 |
|
of which: |
|
|
|
Integrated Gas |
3.3 |
1.4 |
1.2 - 1.6 |
Upstream |
2.9 |
2.8 |
2.7 - 3.1 |
Marketing |
0.5 |
0.5 |
0.3 - 0.7 |
Chemicals & Products |
1.0 |
0.9 |
0.8 - 1.0 |
Renewables and Energy
Solutions |
0.2 |
0.1 |
|
Tax Charge
$ billions |
Q2’23 |
Q2’23 Adjusted |
Q3’23 Updated Outlook |
Taxation Charge |
2.2 |
2.2 |
|
Less: Identified Items |
|
(0.5) |
|
Taxation Charge (as Adjusted) |
|
2.8 |
|
of which: |
|
|
|
Integrated Gas |
0.3 |
0.8 |
0.7 - 1.0 |
Upstream |
1.6 |
1.7 |
2.1 - 2.9 |
Marketing |
0.3 |
0.2 |
0.2 - 0.4 |
Chemicals & Products |
(0.1) |
(0.0) |
0.0 - 0.5 |
Renewables and Energy
Solutions |
0.2 |
0.1 |
|
Adjusted Earnings
The “Adjusted Earnings” measure aims 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.
These items are in some cases driven by external factors and may,
either individually or collectively, hinder the comparative
understanding of Shell’s financial results from period to period.
This measure excludes earnings attributable to non-controlling
interest. For further details see the 2nd Quarter 2023 and half
year unaudited results (Link).
$ billions |
Q2’23 |
Q2’23 Adjusted |
Q3’23 Updated Outlook |
Income/(loss) attributable to Shell plc
shareholders |
3.1 |
3.1 |
|
Add: Current cost of supplies adjustment attributable to Shell plc
shareholders |
|
0.3 |
|
Less: Identified items attributable to Shell plc shareholders |
|
(1.6) |
|
Adjusted Earnings |
|
5.1 |
|
of which: |
|
|
|
Renewables and Energy
Solutions |
0.5 |
0.2 |
(0.3) - 0.3 |
Corporate |
(0.7) |
(0.7) |
(0.6) - (0.4) |
Volume Data
|
Q2’23 |
Q3’23 Updated Outlook |
Integrated Gas |
|
|
Production (kboe/d) |
985 |
880 - 920 |
LNG liquefaction volumes (MT) |
7.2 |
6.6 - 7.0 |
Upstream |
|
|
Production (kboe/d) |
1,701 |
1,700 - 1,800 |
Marketing |
|
|
Sales volumes (kb/d) |
2,607 |
2,450 - 2,850 |
Chemicals & Products |
|
|
Refinery utilisation |
85% |
82% - 86% |
Chemicals utilisation |
70% |
68% - 72% |
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