Shell Fourth Quarter 2023 Update Note

Integrated Gas

$ billions	Q4’23 Outlook	Comment
Adjusted EBITDA:
Production (kboe/d)	880 – 920
LNG liquefaction volumes (MT)	6.9 – 7.3
Underlying opex	1.1 – 1.3
Adjusted Earnings:
Pre-tax depreciation	1.3 – 1.7
Taxation charge	0.9 – 1.2
Other Considerations:
Trading & Optimisation is expected to be significantly higher than Q3’23 due to seasonality and increased optimisation opportunities.

Upstream

$ billions	Q4’23 Outlook	Comment
Adjusted EBITDA:
Production (kboe/d)	1,830 – 1,930
Underlying opex	2.2 – 2.6
Adjusted Earnings:
Pre-tax depreciation	2.8 – 3.2
Taxation charge	1.6 – 2.4	This includes favourable movements in non-cash deferred tax positions.
Other Considerations:
The share of profit / (loss) of joint ventures and associates in Q4’23 is expected to be ~$0.2 billion. Q4’23 exploration well-write offs are expected to be ~$0.2 billion.

Marketing

$ billions	Q4’23 Outlook	Comment
Adjusted EBITDA:
Sales volumes (kb/d)	2,350 – 2,750
Underlying opex	2.1 – 2.5
Adjusted Earnings:
Pre-tax depreciation	0.3 – 0.7
Taxation charge	0.1 – 0.3
Other Considerations:
Marketing results are expected to be in line with Q3’23.

 Chemicals & Products

$ billions	Q4’23 Outlook	Comment
Adjusted EBITDA:
Indicative refining margin	$10/bbl
Indicative chemicals margin	$125/tonne	The Chemicals sub segment adjusted earnings are expected to be around Q4’22 levels.
Refinery utilisation	78% – 82%	Reflects planned maintenance activities in North America.
Chemicals utilisation	60% – 64%
Underlying opex	2.8 – 3.2
Adjusted Earnings:
Pre-tax depreciation	0.9 – 1.1
Taxation charge / (credit)	(0.6) – (0.2)
Other Considerations:
Trading & Optimisation is expected to be significantly lower than Q3’23. The Chemicals & Products segment is expected to make an Adjusted Earnings loss in Q4’23.

 Renewables and Energy Solutions

$ billions	Q4’23 Outlook	Comment
Adjusted Earnings	(0.3) – 0.3

 Corporate

$ billions	Q4’23 Outlook	Comment
Adjusted Earnings	(0.6) – (0.4)

 Shell Group

$ billions	Q4’23 Outlook	Comment
CFFO:
Tax Paid	3.4 – 4.2
Other	(2) – (1)	CFFO excluding working capital expected to include an ~$0.9 billion outflow related to timing of payments of emissions certificates relating to the German BEHG* and US Biofuel programmes.
Working Capital & Derivative Movements	(3) – 3	Working Capital and derivative estimations inherently have a broad range of uncertainty. Q4’23 Working Capital movements is expected to include a ~$1.0 billion payment of German Mineral Oil Taxes.
Other Shell Group Considerations:
Non-cash post tax impairments / (impairment reversals)   (These items are reported as identified items)	2.5 – 4.5	Chemicals & Products Integrated Gas R&ES** Upstream Marketing	1.5 – 2.1 0.3 – 0.8 0.3 – 0.8 0.2 – 0.4 0.2 – 0.4
Impairments are primarily driven by macro & external developments as well as portfolio choices, including the Singapore Chemicals & Products assets.

*Brennstoffemissionshandelsgesetz (Fuel Emissions Trading Act)

** Renewables & Energy Solutions

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 January 25, 2024.

Appendix

Indicative Margins

	Q3’23	Q4’23 Updated Outlook
Indicative refining margin	$16/bbl	$10/bbl
Indicative chemicals margin	$115/tonne	$125/tonne

Volume Data

	Q3’23 Adjusted	Q4’23 QPR Outlook	Q4’23 Updated Outlook
Integrated Gas
Production (kboe/d)	900	870 – 930	880 – 920
LNG liquefaction volumes (MT)	6.9	6.7 – 7.3	6.9 – 7.3
Upstream
Production (kboe/d)	1,753	1,750 – 1,950	1,830 – 1,930
Marketing
Sales volumes (kb/d)	2,654	2,250 – 2,750	2,350 – 2,750
Chemicals & Products
Refinery utilisation	84%	75% – 83%	78% – 82%
Chemicals utilisation	70%	62% – 70%	60% – 64%

Underlying Opex

$ billions	Q3’23	Q3’23 Adjusted	Q4’23 Updated Outlook
Production and manufacturing expenses	6.4
Selling, distribution and administrative expenses	3.4
Research and development	0.3
Operating Expenses (Opex)	10.1	10.1
Less: Identified Items		(0.4)
Underlying Opex		9.7
of which:
Integrated Gas	1.2	1.2	1.1 – 1.3
Upstream	2.4	2.2	2.2 – 2.6
Marketing	2.4	2.4	2.1 – 2.5
Chemicals & Products	2.9	2.8	2.8 – 3.2
Renewables and Energy Solutions	1.0	1.0

Depreciation, depletion and amortisation

$ billions	Q3’23	Q3’23 Adjusted	Q4’23 Updated Outlook
Depreciation, Depletion & Amortisation	5.9	5.9
Less: Identified Items		0.2
Pre-tax depreciation (as Adjusted)		5.7
of which:
Integrated Gas	1.4	1.4	1.3 – 1.7
Upstream	2.8	2.8	2.8 – 3.2
Marketing	0.5	0.5	0.3 – 0.7
Chemicals & Products	1.1	1.0	0.9 – 1.1
Renewables and Energy Solutions	0.2	0.1

Tax Charge

$ billions	Q3’23	Q3’23 Adjusted	Q4’23 Updated Outlook
Taxation Charge	4.1	4.1
Less: Identified Items and Cost of supplies adjustment		0.5
Taxation Charge (as Adjusted)		3.6
of which:
Integrated Gas	0.8	0.8	0.9 – 1.2
Upstream	2.2	2.2	1.6 – 2.4
Marketing	0.3	0.3	0.1 – 0.3
Chemicals & Products	0.2	0.2	(0.6) – (0.2)
Renewables and Energy Solutions	0.3	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 3rd Quarter 2023 unaudited results (Link).

$ billions	Q3’23	Q3’23 Adjusted	Q4’23 Updated Outlook
Income/(loss) attributable to Shell plc shareholders	7.0	7.0
Add: Current cost of supplies adjustment attributable to Shell plc shareholders		(1.0)
Less: Identified items attributable to Shell plc shareholders		(0.1)
Adjusted Earnings		6.2
of which:
Renewables and Energy Solutions	0.6	(0.1)	(0.3) – 0.3
Corporate	(0.5)	(0.5)	(0.6) – (0.4)

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