Q1 2022 FINANCIAL RESULTS

$ million
Adj. Earnings ¹
Adj. EBITDA
CFFO
Cash capex
Integrated Gas
4,093
6,315
6,443
863
Upstream
3,450
8,977
5,964
1,707
Marketing
737
1,323
(530)
473
Mobility
277
664
319
Lubricants
338
470
39
Sectors & Decarbonisation
121
188
115
Chemicals & Products
1,168
2,006
3,673
998
Chemicals
31
176
714
Products
1,137
1,830
284
Renewables & Energy Solutions
344
521
(459)
985
Corporate
(548)
(114)
(277)
37
Less: Non-controlling interest
114
Shell
Q1 2022
9,130
19,028
14,815
5,064
Q4 2021
6,391
16,349
8,170
6,500

1  Income/(loss) attributable to shareholders for Q1 2022 is $7.1 billion. Reconciliation of non-GAAP measures can be found in the unaudited results, available on www.shell.com/investors

QUARTERLY RESULTS PRESENTATION

Title: Q1 Results 2022

Duration 7:11

 

Description:

Sinead Gorman, Chief Financial Officer at Shell plc, presents the first quarter 2022 results.

Accessibility Script

[Audio]

Theme music begins

 

[Vision]

Leader with 3D animation with text:
FIRST QUARTER 2022/ RESULTS
STRONG RESULTS IN VOLATILE TIMES


Shell plc
5TH May 2022

#PoweringProgress

 

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

Welcome to our first quarter 2022 results presentation. Before I look at our performance, I would like to thank Jessica Uhl, who is leaving Shell after 17 years.

[Animation footage]

Sinead Gorman

Shell CFO

[Audio Sinead]

Her distinguished Shell career culminated in five years as Chief Financial Officer and she leaves an impressive legacy. She has been key in strengthening Shell’s financial position whilst delivering some of the industry’s best cash flows year after year and I am honoured and excited to follow in her footsteps.

 

 [Animation footage]

17-YEAR SHELL CAREER

5 YEARS AS CFO

STRENGTHENED SHELL’S FINANCIAL POSITION

[Animation footage]

Q1 2022/ HIGHLIGHTS

KEY DEVELOPMENTS

STRATEGY DELIVERY

Q1 2022 PERFORMANCE

[Audio Sinead]

Today, I will talk about our key developments, strategy delivery and our Q1 performance.

As the war continues in Ukraine, Shell is working hard to ensure the safety of our staff and contractors there and to support relief efforts. We are doing our utmost to keep retail sites operating in the country and supplies moving.

We are supporting our staff in Ukraine and taking care of our staff fleeing the war by offering assistance and means for relocation.

We have announced our intention to withdraw from all Russian hydrocarbons in a phased manner. So, we have stopped buying Russian crude oil and liquefied natural gas, or LNG, on the spot market and we will not renew any long-term contracts.

We have also stopped spot purchases of cargoes of refined products directly exported from Russia. For the first quarter 2022, we have taken post-tax charges of around $3.9 billion in relation to Russian oil & gas activities. 

As well as causing human tragedy, the war has led to deep uncertainty about supplies and rising prices.

The disruption in global energy markets shows that secure, reliable and affordable energy must be managed through engagement with governments, customers and suppliers.

 

[Vision]

Aerial views of electricity pylons followed by a cargo ship moored in a harbour followed by a natural gas plant,

 

[Audio Sinead]

We are continuing to deliver a secure supply of energy across the world. And as the world’s largest supplier of LNG, we continue shipping natural gas to where it is needed most. One example is the agreement we have just signed to ship LNG through the terminal that will be built in Germany.

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

 In Q1 2022, we have safely, on time and on budget completed the largest turnaround in Shell's history at Pearl in Qatar.

[Vision]

Pearl gas to liquids plant at dusk.

[Animation footage]

Pearl gas-to-liquids plant

 

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

Additionally, we have successfully started up the Powernap, Colibri and Mero-1 oil and gas projects.

 

[Vision]

Oil rig with a sunset in the background and clouds passing.

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

Prelude floating LNG is also back online and is supplying additional volumes since mid-April.

 

At the same time, we are accelerating our transition to low-carbon energy.

 

[Vision]

A figure wielding with a blowtorch followed by cylinders of metal being wielded followed by an aerial of a wind turbine in a harbour followed by a wind turbine at sea.

 

[Animation footage]

New Jersey, USA

1.5 gigawatts

 

[Audio Sinead]

This includes our successful bids, together with our partners, to develop large-scale offshore wind farms in the USA and UK.

 

[Animation footage]

Scotland. UK

5 gigawatts

 

[Audio Sinead]

Together, they represent 6.5 gigawatts of total generation capacity.

 

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

And just last week, we announced the acquisition of Sprng Energy group, one of India’s leading renewable power platforms,

 

[Vision]

A field of solar panels angled upwards tracks backwards followed by a timelapse of solar panels changing their angles and panels with a sunset in the background.

 

[Animation footage]

Sprng Energy acquisition announced.

 

[Audio Sinead]

one of India’s leading renewable power platforms.

 

This deal positions Shell as one of the first movers in building a truly integrated energy transition business in India.

 

While we deliver a secure supply of energy,

 

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

we are also meeting the climate targets that form part of our Powering Progress strategy, to be a net-zero emissions energy business by 2050.

 

[Animation footage]

POWERING PROGRESS:

NER-ZERO EMISSIONS

ENNERGY BUSINESS BY 2050

 

[Audio Sinead]

So by the end of 2021, we achieved our short-term target to reduce the net carbon intensity of the energy products we sell by 2.5%, compared with 2016.

 

[Animation footage]

NET CARBON INTENSITY

2.5% LOWER

by end of 2021 compared with 2016

 

[Audio Sinead]

As an energy user and producer, Shell has set a bold target to reduce net absolute emissions from its operations, including the energy it buys and uses, by 50% by 2030, compared with 2016 levels.

 

[Animation footage]

ABSOLUTE SCOPE 1 & 2 EMISSIONS

18% EMISSIONS

At the end of 2021 compared with 2016

 

[Audio Sinead]

We are making good progress towards this target with an 18% reduction at the end of 2021, compared with 2016.

 

 

[Animation footage]

SHELL ENERGY TRANSITION PROGRESS REPORT

ENERGY TRANSITION

 

[Audio Sinead]

The recently published Shell Energy Transition Progress Report outlines our strong progress against our strategy and will be put to an advisory vote at our Annual General Meeting this month.

 

[Vision]

Electric charging station garage with cars charging up.

 

[Animation footage]

Q1 2022 PERFORMANCE

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

Turning to our Q1 2022 performance, this was a strong quarter for Shell amid volatile geopolitical and macro conditions.

 

[Animation footage]

ADJUSTED EARNINGS

$9.1 BILLION

[Animation footage]

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION

$19 BILLION

[Animation footage]

CASH FLOW FROM OPERATIONS

$14.8 BILLION

[Audio Sinead]

Our Adjusted Earnings were $9.1 billion and our Adjusted EBITDA was $19.0 billion. We delivered $14.8 billion of cash flow from operations, which included $7.4 billion of working capital outflow, due to rising commodity prices.

[Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

[Audio Sinead]

These results reflect the benefits of the strong integration of trading and optimisation activities across all of our businesses, including Renewables and Energy Solutions, or RES.

 

[Animation footage]

STRONG INTEGRATION

OF TRADING AND

OPTIMISATION

ACROSS ALL BUSINESSES

 

[Audio Sinead]

In RES, which we are reporting as a separate segment for the first time,

 

[Animation footage]

RENEWABLES AND ENERGY SOLUTIONS

Q1 2022 RESULTS

 

ADJUSTED EARNINGS

$0.3 BILLION

 

[Audio Sinead]

we delivered Adjusted Earnings of more than $300 million

 

[Animation footage]

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION

$0.5 BILLION

 

[Audio Sinead]

and Adjusted EBITDA of some $500 million, primarily driven by the exceptional market environment as well as seasonality.

 

 [Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

Starting this quarter, we have enhanced our disclosures to offer more transparency about our Growth pillar.

 

[Animation footage]

HOW IS THE SEGMENTATION CHANGING?

 

 [Audio Sinead]

You can find insights into the new Group Segmentation and Additional Disclosures in the informative video and in the Quarterly Databook, all available on shell.com.

 

[Audio Sinead]

This quarter we are increasing our dividend by some 4% as previously announced.

 

Also, we have made substantial progress in buying back shares.

 

 [Animation footage]

SHARE BUYBACKS

$4 BILLION COMPLETED

OF $8.5 BILLION PROGRAMME FOR H1

[Audio Sinead]

We have now completed $4 billion of our planned total of $8.5 billion share buyback programme for the first half of 2022.

 

  [Vision]

Wide shot of Sinead Gorman standing left in front of a white background with a 3d graphic background talking to camera.

 

[Audio Sinead]

The remaining $4.5 billion is expected to be completed before the Q2 results announcement.

 

[Animation footage]

SHELL Q1 2022 RESULTS

NET DEBT

$48.5 BILLION

 

[Audio Sinead]

This quarter we have further strengthened our balance sheet by reducing net debt to $48.5 billion.

 

[Animation footage]

DISCIPLENED CAPEX SUPPORTING ENERGY TRANSITION

 

[Audio Sinead]

We will stay disciplined with our investments and any incremental capex will be to provide energy security and accelerate the energy transition.

[Animation footage]

CASH CAPEX 2022

$23-27 BILLION

 

[Audio Sinead]

Including our investment in Sprng Energy, our cash capex will remain within the $23 to 27 billion dollar range for 2022.

 

[Animation footage]

STRONG CASH FLOWS

HEALTHY BALANCE SHEET

DISCIPLINED STRATEGY DELIVERY

 

[Audio Sinead]

Strong cash flows, a healthy balance sheet and continued disciplined delivery of our strategy gives us a solid foundation to invest in the energy transition whilst also safeguarding the company.

With the current macro-economic outlook, we expect to be distributing more than 30% of our CFFO in the second half of the year, subject to board approval.

We will provide more details on our capital allocation framework at our Q2 results announcement.

Our delivery this quarter demonstrates the leading role we intend to play in the world's energy security and transition to a low-carbon energy system.

Thank you.

 

[Graphic]

Thank you for your interest in Shell plc. Please understand that an investment in Shell plc securities carries with it the risk that you could sustain losses as a result of your investment. Therefore, an investment in Shell plc securities may not be appropriate for all investors.

Accordingly, before investing in our securities we urge you to read our Annual Report and Form 20-F and consider the risks discussed within. You can find our full disclaimer on the next slide in this presentation. You can download the full presentation slides, including the disclaimer, and our Annual Report and Form 20-F at www.shell.com/investors

[Graphic]

Shell logo Shell plc | May 5, 2022

 

 

[Graphic]

“Adjusted Earnings” is the income attributable to Shell plc shareholders for the period, adjusted for the after-tax effect of oil price changes on inventory and for identified items, and excludes earnings attributable to non-controlling interest. In this presentation, “earnings” refers to “Adjusted Earnings” unless stated otherwise. We define "Adjusted EBITDA" 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. In this presentation, “operating expenses”, “costs” and “underlying costs” refer to “Underlying operating expenses” unless stated otherwise. Underlying operating expenses represent “operating expenses excluding identified items”. Operating expenses consist of the following lines in the Consolidated Statement of Income: (i) production and manufacturing expenses; (ii) selling, distribution and administrative expenses; and (iii) research and development expenses. Cash flow from operating activities excluding working capital movements is defined as “Cash flow from operating activities” less 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. In this presentation, “capex” refers to “Cash capital expenditure” unless stated otherwise. Cash capital expenditure comprises the following lines from the Consolidated Statement of Cash Flows: Capital expenditure, Investments in joint ventures and associates and Investments in equity securities. Free cash flow is defined as the sum of “Cash flow from operating activities” and “Cash flow from investing activities”. Organic free cash flow is defined as free cash flow excluding inorganic cash capital expenditure, divestment proceeds and tax paid on divestments. In this presentation, “divestments” refers to “divestment proceeds” unless stated otherwise. Divestment proceeds are defined as the sum of (i) proceeds from sale of property, plant and equipment and businesses, (ii) proceeds from sale of joint ventures and associates, and (iii) proceeds from sale of 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. Reconciliations of the above non-GAAP measures are included in the Shell plc Unaudited Condensed Financial Report for the first quarter ended March 31, 2022.

This presentation may contain certain forward-looking non-GAAP measures such as cash capital expenditure and divestments. 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 presentation do not form part of this presentation. We may have used certain terms, such as resources, in this presentation 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.

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this presentation “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 presentation 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.

Also, in this presentation 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 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.

This presentation 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 presentation, 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 presentation 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 presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, May 5, 2022. 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 presentation.

 

[Graphic]

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#ShellResults

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QUARTERLY RESULTS ANALYST Q&A SESSION

Ben van Beurden (CEO, Shell plc), Sinead Gorman (CFO, Shell plc) and Wael Sawan (Integrated Gas, Renewables and Energy Solutions Director, Shell plc) hosted a results analyst webcast of the first quarter 2022 results on Thursday May 5th at 14:00 BST (15:00 CEST and 09:00 EDT).