Shell plc 2nd Quarter 2023 and Half-Year Unaudited Results

SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS
SUMMARY OF UNAUDITED RESULTS
Quarters												$ million																	Half year
Q2 2023			Q1 2023			Q2 2022			%¹																	Reference			2023			2022			%
3,134			8,709			18,040			-64			Income/(loss) attributable to Shell plc shareholders																	11,843			25,156			-53
5,073			9,646			11,472			-47			Adjusted Earnings														A			14,720			20,601			-29
14,435			21,432			23,150			-33			Adjusted EBITDA														A			35,867			42,177			-15
15,130			14,159			18,655			+7			Cash flow from operating activities																	29,289			33,470			-12
(3,015)			(4,238)			(6,207)						Cash flow from investing activities																	(7,253)			(10,481)
12,116			9,921			12,448						Free cash flow														G			22,037			22,989
5,130			6,501			7,024						Cash capital expenditure														C			11,631			12,088
9,653			9,312			9,547			+4			Operating expenses														F			18,964			19,004			—
9,607			9,293			9,270			+3			Underlying operating expenses														F			18,900			18,526			+2
11.6%			17.2%			14.3%						ROACE on a Net income basis														D			11.6%			14.3%
13.4%			15.9%			12.4%						ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis														D			13.4%			12.4%
40,310			44,224			46,357						Net debt														E			40,310			46,357
17.3%			18.4%			19.3%						Gearing														E			17.3%			19.3%
2,731			2,902			2,898			-6			Total production available for sale (thousand boe/d)																	2,816			2,930			-4
0.46			1.26			2.42			-63			Basic earnings per share ($)																	1.73			3.34			-48
0.75			1.39			1.54			-46			Adjusted Earnings per share ($)														B			2.15			2.74			-22
0.3310			0.2875			0.2500			+15			Dividend per share ($)																	0.6185			0.5000			+24

1.Q2 on Q1 change

Quarter Analysis1

Income attributable to Shell plc shareholders, compared with the first quarter 2023, mainly reflected lower LNG trading and optimisation results, lower realised oil and gas prices, lower refining margins, and lower volumes.

Second quarter 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals of $1.7 billion. These charges are included in identified items amounting to a net loss of $1.6 billion in the quarter. This compares with identified items in the first quarter 2023 which amounted to a net loss of $0.5 billion.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as income attributable to Shell plc shareholders and adjusted for the above identified items and the cost of supplies adjustment of positive $0.3 billion.

Cash flow from operating activities for the second quarter 2023 was $15.1 billion, and included a working capital inflow of $4.8 billion, and tax payments of $3.8 billion. The working capital inflow mainly reflected lower prices on inventories, initial margin inflow, a decrease in over-the-counter collateral, and other accounts receivable and payable movements.
Cash flow from investing activities for the quarter was an outflow of $3.0 billion, and included capital expenditure of $4.6 billion, net other investing cash inflows of $1.1 billion, and divestment proceeds of $0.5 billion.

Net debt and Gearing: At the end of the second quarter 2023, net debt was $40.3 billion, compared with $44.2 billion at the end of the first quarter 2023. Gearing was 17.3% at the end of the second quarter 2023, compared with 18.4% at the end of the first quarter 2023, mainly driven by net debt reduction.

Shareholder distributions

Total shareholder distributions in the quarter amounted to $5.6 billion comprising repurchases of shares of $3.6 billion and cash dividends paid to Shell plc shareholders of $2.0 billion. Dividends declared to Shell plc shareholders for the second quarter 2023 amount to $0.3310 per share. Shell has now completed the $4 billion of share buybacks announced

SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

in the first quarter 2023 results announcement. Today, Shell announces a share buyback programme of $3 billion which is expected to be completed by the third quarter 2023 results announcement. Subject to Board approval, a share buyback programme of at least $2.5 billion is expected to be announced at the third quarter 2023 results announcement.

Half Year Analysis1

Income attributable to Shell plc shareholders, compared with the first half 2022, reflected lower realised oil and gas prices, lower volumes, and lower refining margins, partly offset by higher Mobility margins.

First half 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals of $2.1 billion which are included in identified items amounting to a net loss of $2.1 billion. This compares with identified items in the first half 2022 which amounted to a net gain of $1.1 billion.

Adjusted Earnings andAdjusted EBITDA2 for the first half 2023 were driven by the same factors as income attributable to Shell plc shareholders and adjusted for identified items and the cost of supplies adjustment of positive $0.8 billion.
Cash flow from operating activities for the first half 2023 was $29.3 billion, and included working capital inflows of $4.1 billion, and tax payments of $6.9 billion.

Cash flow from investing activities for the first half 2023 was an outflow of $7.3 billion and included capital expenditure of $10.8 billion, divestment proceeds of $2.2 billion, and net other investing cash inflows of $1.2 billion.

This announcement, together with supplementary financial and operational disclosure for this quarter, is available at www.shell.com/investors3.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
3. Not incorporated by reference.

SECOND QUARTER 2023 PORTFOLIO DEVELOPMENTS

Integrated Gas

In July 2023, we agreed to sell our participating interest of 35% in Indonesia’s Masela Production Sharing Contract to Indonesia’s PT Pertamina Hulu Energi and PETRONAS Masela Sdn. Bhd. The participating interest includes the Abadi gas project.

Upstream

In April 2023, we completed the restart of operations at the Pierce field in the UK North Sea after a major redevelopment to enable gas production, after years of the field producing only oil. Pierce is a joint arrangement between Shell (92.52%) and Ithaca Energy (UK) Limited (7.48%).

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

PERFORMANCE BY SEGMENT

INTEGRATED GAS
Quarters												$ million						Half year
Q2 2023			Q1 2023			Q2 2022			%¹						Reference			2023			2022			%
754			2,410			8,103			-69			Segment earnings2						3,164			11,183			-72
(1,744)			(2,506)			4,346						Of which: Identified items			A			(4,250)			3,332
2,498			4,917			3,758			-49			Adjusted Earnings2			A			7,415			7,850			-6
4,827			7,482			6,529			-35			Adjusted EBITDA2			A			12,309			12,844			-4
3,628			6,286			8,176			-42			Cash flow from operating activities			H			9,914			14,619			-32
1,089			813			919						Cash capital expenditure			C			1,901			1,782
142			138			144			+2			Liquids production available for sale (thousand b/d)						140			132			+6
4,895			4,825			4,642			+1			Natural gas production available for sale (million scf/d)						4,860			4,573			+6
985			970			944			+2			Total production available for sale (thousand boe/d)						978			920			+6
7.17			7.19			7.66			—			LNG liquefaction volumes (million tonnes)						14.35			15.66			-8
16.03			16.97			15.21			-6			LNG sales volumes (million tonnes)						33.00			33.50			-2

1. Q2 on Q1 change
2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

Integrated Gas includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. It includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure necessary to deliver these to market. Integrated Gas also includes the marketing, trading and optimisation of LNG, including LNG as a fuel for heavy-duty vehicles.

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, reflected the effect of lower contributions from trading and optimisation due to seasonality and fewer optimisation opportunities and lower realised prices (decrease of $2,413 million), and unfavourable deferred tax movements (decrease of $90 million), partly offset by higher volumes (increase of $55 million).

Second quarter 2023 segment earnings also included net impairment charges and reversals of $1,438 million mainly in North America, and unfavourable movements of $293 million due to the fair value accounting of commodity derivatives. As part of Shell’s normal business, commodity derivative hedge contracts are entered into for mitigation of economic exposures on future purchases and sales. As these commodity derivatives are measured at fair value, this creates an accounting mismatch over periods. These unfavourable movements and net impairment charges are part of identified items and compare with the first quarter 2023 which included unfavourable movements of $2,188 million due to the fair value accounting of commodity derivatives and impairment charges of $262 million in Australia.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, and working capital inflows of $208 million, partly offset by tax payments of $1,279 million, and net cash outflows related to derivatives of $201 million.

Total oil and gas production, compared with the first quarter 2023, increased by 2% mainly due to the ramp-up of new fields, and lower maintenance.

Half Year Analysis1

Segment earnings, compared with the first half 2022, reflected the net effect of lower realised prices and higher contributions from trading and optimisation (decrease of $433 million) and lower volumes (decrease of $132 million), partly offset by lower operating expenses (decrease of $82 million).

Half year 2023 segment earnings also included unfavourable movements of $2,481 million due to the fair value accounting of commodity derivatives and net impairment charges and reversals of $1,700 million. These losses are part of identified items and compare with the first half 2022 which included favourable movements of $3,562 million due to the fair value accounting of commodity derivatives, and gains of $780 million from net impairment charges and reversals, partly offset by charges of $387 million due to provisions for onerous contracts.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

Cash flow from operating activities for the first half 2023 was primarily driven by Adjusted EBITDA and working capital inflow of $2,329 million, partly offset by net cash outflows related to derivatives of $2,618 million, and tax payments of $2,163 million.

Total oil and gas production, compared with the first half 2022, increased by 6% mainly due to lower maintenance in Pearl GTL, Prelude, Trinidad and Tobago, and ramp-up of new fields in Oman and Canada, partly offset by derecognition of Sakhalin-related volumes and production-sharing contract effects. LNG liquefaction volumes decreased by 8% mainly due to the derecognition of Sakhalin-related volumes.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS
UPSTREAM
Quarters													$ million								Half year
Q2 2023				Q1 2023			Q2 2022			%¹								Reference			2023			2022			%
1,586				2,779			6,391			-43			Segment earnings2								4,365			9,486			-54
(98)				(21)			1,479						Of which: Identified items					A			(120)			1,124
1,684				2,801			4,912			-40			Adjusted Earnings2					A			4,485			8,362			-46
6,447				8,837			11,167			-27			Adjusted EBITDA2					A			15,284			20,144			-24
4,519				5,808			8,110			-22			Cash flow from operating activities					H			10,327			14,074			-27
2,029				1,870			2,858						Cash capital expenditure					C			3,899			4,565
1,283				1,346			1,325			-5			Liquids production available for sale (thousand b/d)								1,314			1,364			-4
2,425				3,078			3,428			-21			Natural gas production available for sale (million scf/d)								2,749			3,517			-22
1,701				1,877			1,917			-9			Total production available for sale (thousand boe/d)								1,788			1,970			-9

1. Q2 on Q1 change
2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas, and operates the infrastructure necessary to deliver them to the market.

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, mainly reflected lower prices (decrease of $741 million) and lower volumes (decrease of $718 million), partly offset by lower operating expenses (decrease of $116 million) and lower depreciation, depletion and amortisation charges (decrease of $54 million).
Second quarter 2023 segment earnings also included charges of $127 million due to Brazil Oil export tax and a $65 million charge relating to impairments, partly offset by gains of $92 million related to the impact of the strengthening Brazilian real on a deferred tax position. These gains and losses are part of identified items, and compare with the first quarter 2023 which amounted to a net loss of $21 million.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, and working capital inflows of $772 million, partly offset by tax payments of $2,346 million.

Total production, compared with the first quarter 2023, decreased mainly due to scheduled maintenance and divestments, partly offset by growth from new fields.

Half Year Analysis1

Segment earnings, compared with the first half 2022, mainly reflected lower realised oil and gas prices (decrease of $3,077 million) and lower volumes (reduction of $844 million) mainly as a result of divestments.

First half 2023 segment earnings also included charges of $176 million from impairments, and charges of $127 million relating to Brazil Oil export tax, partly offset by gains of $140 million related to the impact of the strengthening Brazilian real on a deferred tax position. These gains and losses are part of identified items, and compare with the first half 2022 which included a net gain from impairments and impairment reversals of $1,285 million, partly offset by unfavourable movements of $346 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the first half 2023 was primarily driven by Adjusted EBITDA, partly offset by tax payments of $4,364 million and the timing impact of dividends from joint ventures and associates of $486 million.

Total production, compared with the first half 2022, decreased mainly due to the impact of divestments, partly offset by growth from new fields.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS
MARKETING
Quarters													$ million								Half year
Q2 2023				Q1 2023			Q2 2022			%¹								Reference			2023			2022			%
970				1,137			836			-15			Segment earnings²								2,107			1,000			+111
76				262			85						Of which: Identified items					A			338			(487)
894				874			751			+2			Adjusted Earnings²					A			1,768			1,488			+19
1,604				1,578			1,452			+2			Adjusted EBITDA2					A			3,181			2,775			+15
1,412				1,086			(454)			+30			Cash flow from operating activities					H			2,498			(984)			+354
670				2,685			1,620						Cash capital expenditure					C			3,355			2,092
2,607				2,446			2,515			+7			Marketing sales volumes (thousand b/d)								2,527			2,444			+3

1. Q2 on Q1 change
2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonisation businesses. The Mobility business operates Shell’s retail network including electric vehicle charging services. The Lubricants business produces, markets and sells lubricants for road transport, and machinery used in manufacturing, mining, power generation, agriculture and construction. The Sectors & Decarbonisation business sells fuels, speciality products and services including low-carbon energy solutions to a broad range of commercial customers including the aviation, marine, commercial road transport and agricultural sectors.

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, reflected higher Marketing margins (increase of $153 million) mainly driven by seasonal effects and improved unit margins in Mobility, partly offset by lower margins in Lubricants and Sectors & Decarbonisation. The second quarter 2023 also included lower taxes (decrease of $41 million). These net gains were partly offset by higher operating expenses (increase of $173 million).

Second quarter 2023 segment earnings also included a gain of $88 million related to indirect tax credits. This gain is part of identified items, and compares with the first quarter 2023 which included a gain of $210 million related to similar indirect tax credits.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, and the timing of payments relating to emissions and biofuel programmes of $103 million. These inflows were partly offset by tax payments of $169 million, working capital outflows of $83 million, and non-cash cost-of-sales (CCS) adjustments of $54 million.

Marketing sales volumes (comprising hydrocarbon sales), compared with the first quarter 2023, increased mainly due to seasonal effects.

Half Year Analysis1

Segment earnings, compared with the first half 2022, reflected higher Marketing margins (increase of $830 million) due to higher volumes in Mobility and Aviation and higher margins in Lubricants and Sectors & Decarbonisation. These were partly offset by higher operating expenses (increase of $363 million) including the impact of higher volumes, and higher depreciation charges (increase of $95 million).
First half 2023 segment earnings also included gains of $298 million related to indirect tax credits, and favourable movements of $58 million due to the fair value accounting of commodity derivatives. These gains are part of identified items and compare with the first half 2022 which included losses of $230 million from net impairments and reversals, net losses of $98 million related to the sale of assets, provisions for onerous contracts of $62 million, provisions for expected credit losses of $57 million and unfavourable movements of $42 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activitiesfor the first half 2023 was primarily driven by Adjusted EBITDA, the timing of payments relating to emissions and biofuel programmes of $189 million, and dividends from joint ventures and associates of $106 million. These inflows were partly offset by working capital outflows of $438 million, tax payments of $240 million and non-cash cost-of-sales (CCS) adjustments of $210 million.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

Marketing sales volumes (comprising hydrocarbon sales), compared with the first half 2022, increased mainly due to Mobility asset acquisitions and improved demand in Aviation.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS
CHEMICALS AND PRODUCTS
Quarters													$ million								Half year
Q2 2023				Q1 2023			Q2 2022			%¹								Reference			2023			2022			%
349				1,799			2,131			-81			Segment earnings²								2,148			3,203			-33
(100)				22			96						Of which: Identified items					A			(78)			1
450				1,777			2,035			-75			Adjusted Earnings²					A			2,226			3,203			-30
1,300				3,050			3,184			-57			Adjusted EBITDA2					A			4,350			5,191			-16
2,110				2,290			2,728			-8			Cash flow from operating activities					H			4,401			6,402			-31
669				613			1,226						Cash capital expenditure					C			1,281			2,224
1,335				1,413			1,342			-6			Refinery processing intake (thousand b/d)								1,374			1,370			—
1,466				1,706			1,596			-14			Refining & Trading sales volumes (thousand b/d)								1,585			1,597			-1
2,828				2,831			3,054			—			Chemicals sales volumes (thousand tonnes)								5,658			6,384			-11

1. Q2 on Q1 change
2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

The Chemicals and Products segment includes chemicals manufacturing plants with their own marketing network, and refineries which turn crude oil and other feedstocks into a range of oil products which are moved and marketed around the world for domestic, industrial and transport use. The segment also includes the Pipeline business, Trading of crude oil, oil products and petrochemicals, and Oil Sands activities (the extraction of bitumen from mined oil sands and its conversion into synthetic crude oil).

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, reflected lower Products margins (decrease of $1,099 million) mainly driven by lower refining margins and lower contributions from trading and optimisation, and lower Chemicals margins (decrease of $80 million) including weaker demand and lower income from joint ventures and associates. Segment earnings also reflected higher operating expenses (increase of $122 million) due to higher maintenance spend and provisions for site restoration.

Second quarter 2023segment earnings also included impairment charges of $76 million. These losses are part of identified items, and compare with the first quarter 2023 which included favourable movements of $134 million due to the fair value accounting of commodity derivatives, and impairment charges of $72 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the second quarter 2023, Chemicals had negative adjusted earnings of $468 million and Products had positive adjusted earnings of $917 million.

Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, working capital inflows of $679 million, the timing of payments relating to emissions and biofuel programmes of $574 million, and dividends from joint ventures and associates of $112 million. These inflows were partly offset by non-cash cost-of-sales (CCS) adjustments of $376 million, cash outflows relating to commodity derivatives of $206 million, and tax payments of $113 million.

Chemicals manufacturing plant utilisation was 70% compared with 71% in the first quarter 2023.

Refinery utilisation was 85% compared with 91% in the first quarter 2023 due to higher planned and unplanned maintenance.

Half Year Analysis1

Segment earnings,compared with the first half 2022, reflected lower Products margins (decrease of $773 million) mainly driven by lower refining margins, as well as higher depreciation charges (increase of $286 million) and higher operating expenses (increase of $129 million).

First half 2023 segment earnings also included impairment charges of $148 million, and favourable movements of $137 million related to the fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first half 2022 which included gains of $172 million related to the sale of assets, gains of $94 million related to the remeasurement of redundancy and restructuring costs, unfavourable movements of $159 million related to the fair value accounting of commodity derivatives, and impairment charges of $87 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the first half 2023, Chemicals had negative adjusted earnings of $801 million and Products had positive adjusted earnings of $3,027 million.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

Cash flow from operating activitiesfor the first half 2023 was primarily driven by Adjusted EBITDA, cash inflows relating to commodity derivatives of $607 million, the timing of payments relating to emissions and biofuel programmes of $380 million, and dividends from joint ventures and associates of $101 million. These inflows were partly offset by non-cash cost-of-sales (CCS) adjustments of $880 million, tax payments of $263 million and working capital outflows of $125 million.

Chemicals manufacturing plant utilisation was 71% compared with 82% in the first half 2022, mainly due to economic optimisation in the first half 2023.

Refinery utilisation was 88% compared with 82% in the first half 2022, due to lower planned maintenance partly offset by portfolio activities.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS
RENEWABLES AND ENERGY SOLUTIONS
Quarters													$ million								Half year
Q2 2023				Q1 2023			Q2 2022			%¹								Reference			2023			2022			%
530				2,200			(173)			-76			Segment earnings2								2,729			(1,709)			+260
301				1,810			(898)						Of which: Identified items					A			2,112			(2,778)
228				389			725			-41			Adjusted Earnings2					A			617			1,069			-42
438				668			1,013			-35			Adjusted EBITDA2					A			1,106			1,534			-28
3,192				1,091			(558)			+193			Cash flow from operating activities					H			4,283			(1,017)			+521
556				440			321						Cash capital expenditure					C			996			1,307
67				68			54			-2			External power sales (terawatt hours)3								135			110			+23
172				221			188			-22			Sales of pipeline gas to end-use customers (terawatt hours)4								393			445			-12

1. Q2 on Q1 change
2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
3. Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
4. Physical natural gas sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders. Excluding sales of natural gas by other segments and LNG sales.

Renewables and Energy Solutions includes renewable power generation, the marketing and trading and optimisation of power and pipeline gas, as well as carbon credits, and digitally enabled customer solutions. It also includes the production and marketing of hydrogen, development of commercial carbon capture and storage hubs, investment in nature-based projects that avoid or reduce carbon emissions, and Shell Ventures, which invests in companies that work to accelerate the energy and mobility transformation.

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, reflected higher operating expenses (increase of $99 million), and lower margins (decrease of $75 million) mainly from trading and optimisation results in the Americas due to seasonally lower demand and decreased volatility, partly offset by lower taxes (decrease of $63 million).
Second quarter 2023segment earnings also included favourable movements of $310 million due to the fair value accounting of commodity derivatives. As part of Shell’s normal business, commodity derivative hedge contracts are entered into for mitigation of economic exposures on future purchases, sales and inventory. As these commodity derivatives are measured at fair value, this creates an accounting mismatch over periods. These favourable movements are part of identified items and compare with the first quarter 2023 which included favourable movements of $1,815 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the quarter was primarily driven by working capital inflows of $2,958 million, and Adjusted EBITDA, partly offset by net cash outflows related to derivatives of $170 million, and tax payments of $86 million.

Half Year Analysis1

Segment earnings, compared with the first half 2022, reflected higher operating expenses (increase of $207 million), and lower margins (decrease of $170 million) mainly from trading and optimisation results for gas and power in the Americas and Australia, partly offset by Marketing in Europe.

Half year 2023 segment earnings also included favourable movements of $2,125 million due to the fair value accounting of commodity derivatives. These favourable movements are part of identified items and compare with the first half 2022 which included unfavourable movements of $2,778 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings andAdjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first half 2023 was primarily driven by working capital inflows of $3,505 million, and Adjusted EBITDA, partly offset by net cash outflows related to derivatives of $313 million.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

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SHELL PLC 2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS

Additional Growth Measures

Quarters															Half year
Q2 2023			Q1 2023			Q2 2022			%¹						2023			2022			%
												Renewable power generation capacity (gigawatt):
2.5			2.3			0.5			+6			– In operation2			2.5			0.5			+413
4.6			4.0			2.4			+14			– Under construction and/or committed for sale3			4.6			2.4			+89

1. Q2 on Q1 change
2. Shell’s equity share of renewable generation capacity post commercial operation date. It excludes Shell’s equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.
3. Shell’s equity share of renewable generation capacity under construction and/or committed for sale under long-term offtake agreements (PPA). It excludes Shell’s equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.

CORPORATE
Quarters									$ million						Half year
Q2 2023			Q1 2023			Q2 2022						Reference			2023			2022
(701)			(1,064)			(529)			Segment earnings1						(1,765)			(1,264)
(48)			(24)			97			Of which: Identified items			A			(72)			(90)
(654)			(1,039)			(626)			Adjusted Earnings1			A			(1,693)			(1,174)
(180)			(183)			(197)			Adjusted EBITDA1			A			(363)			(310)
269			(2,403)			652			Cash flow from operating activities			H			(2,134)			375

1.Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
The Corporate segment covers the non-operating activities supporting Shell, comprising Shell’s holdings and treasury organisation, its self-insurance activities and its headquarters and central functions. All finance expense and income and related taxes are included in Corporate segment earnings rather than in the earnings of business segments.

Quarter Analysis1

Segment earnings, compared with the first quarter 2023, reflected favourable movements in tax credits and lower net interest expense.

Adjusted EBITDA2 was in line with the previous quarter.

Half Year Analysis1

Segment earnings, compared with the first half 2022, reflected unfavourable movements in tax credits and unfavourable currency exchange rate effects.

Adjusted EBITDA2was mainly driven by unfavourable currency exchange rate effects.

1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.

OUTLOOK FOR THE THIRD QUARTER 2023
Cash capital expenditure range for the full year has been lowered and is expected to be within $23 – 26 billion.

Integrated Gas production is expected to be approximately 870 – 930 thousand boe/d. LNG liquefaction volumes are expected to be approximately 6.3 – 6.9 million tonnes. Production and LNG liquefaction outlook reflects scheduled maintenance (including Prelude and Trinidad and Tobago).

Upstream production is expected to be approximately 1,600 – 1,800 thousand boe/d. Production outlook reflects scheduled maintenance across the portfolio.

Marketing sales volumes are expected to be approximately 2,450 – 2,950 thousand b/d.

Refinery utilisation is expected to be approximately 82% – 90%. Chemicals manufacturing plant utilisation is expected to be approximately 67% – 75%.

Corporate Adjusted Earnings are expected to be a net expense of approximately $500 – $700 million in the third quarter 2023 and a net expense of approximately $2,400 – $2,800 million for the full year 2023. This excludes the impact of hedge effectiveness and currency exchange rate effects.

FORTHCOMING EVENTS
Third quarter 2023 results and dividends are scheduled to be announced on November 2, 2023.

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