| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||||||||||||||||||||||||||||||||||||
| SUMMARY OF UNAUDITED RESULTS | ||||||||||||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||||||||||||
| 7,044 | 3,134 | 6,743 | +125 | Income/(loss) attributable to Shell plc shareholders | 18,887 | 31,899 | -41 | |||||||||||||||||||||||||||||
| 6,224 | 5,073 | 9,454 | +23 | Adjusted Earnings | A | 20,944 | 30,055 | -30 | ||||||||||||||||||||||||||||
| 16,336 | 14,435 | 21,512 | +13 | Adjusted EBITDA | A | 52,204 | 63,689 | -18 | ||||||||||||||||||||||||||||
| 12,332 | 15,130 | 12,539 | -18 | Cash flow from operating activities | 41,622 | 46,009 | -10 | |||||||||||||||||||||||||||||
| (4,827) | (3,015) | (5,049) | Cash flow from investing activities | (12,080) | (15,530) | |||||||||||||||||||||||||||||||
| 7,505 | 12,116 | 7,490 | Free cash flow | G | 29,542 | 30,479 | ||||||||||||||||||||||||||||||
| 5,649 | 5,130 | 5,426 | Cash capital expenditure | C | 17,280 | 17,515 | ||||||||||||||||||||||||||||||
| 10,097 | 9,653 | 9,359 | +5 | Operating expenses | F | 29,062 | 28,363 | +2 | ||||||||||||||||||||||||||||
| 9,735 | 9,607 | 9,893 | +1 | Underlying operating expenses | F | 28,635 | 28,419 | +1 | ||||||||||||||||||||||||||||
| 12.0% | 11.6% | 17.3% | ROACE on a Net income basis | D | 12.0% | 17.3% | ||||||||||||||||||||||||||||||
| 12.5% | 13.4% | 14.7% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 12.5% | 14.7% | ||||||||||||||||||||||||||||||
| 82,147 | 84,366 | 81,990 | Total debt | E | 82,147 | 81,990 | ||||||||||||||||||||||||||||||
| 40,470 | 40,310 | 48,343 | Net debt | E | 40,470 | 48,343 | ||||||||||||||||||||||||||||||
| 17.3% | 17.3% | 20.3% | Gearing | E | 17.3% | 20.3% | ||||||||||||||||||||||||||||||
| 2,706 | 2,731 | 2,766 | -1 | Total production available for sale (thousand boe/d) | 2,779 | 2,875 | -3 | |||||||||||||||||||||||||||||
| 1.06 | 0.46 | 0.93 | +130 | Basic earnings per share ($) | 2.78 | 4.29 | -35 | |||||||||||||||||||||||||||||
| 0.93 | 0.75 | 1.30 | +24 | Adjusted Earnings per share ($) | B | 3.08 | 4.04 | -24 | ||||||||||||||||||||||||||||
| 0.3310 | 0.3310 | 0.2500 | — | Dividend per share ($) | 0.9495 | 0.7500 | +27 | |||||||||||||||||||||||||||||
1.Q3 on Q2 change
Quarter Analysis1
Income attributable to Shell plc shareholders, compared with the second quarter 2023, mainly reflected higher refining margins, higher realised oil prices, higher LNG trading and optimisation results, and higher Upstream production, partly offset by lower Integrated Gas volumes.
Third quarter 2023 income attributable to Shell plc shareholders also included impairment charges, largely offset by favourable movements due to the fair value accounting of commodity derivatives. These charges and favourable movements are included in identified items amounting to a net loss of $0.1 billion in the quarter. This compares with identified items in the second quarter 2023 which amounted to a net loss of $1.6 billion and mainly related to net impairment charges and reversals of $1.7 billion.
Adjusted Earnings and Adjusted 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 negative $1.0 billion.
Cash flow from operating activities for the third quarter 2023 was $12.3 billion, and primarily driven by Adjusted EBITDA, and a working capital inflow of $0.4 billion, partly offset by tax payments of $3.2 billion, and derivatives of $2.5 billion. The working capital inflow mainly reflected accounts receivable and payable movements, partly offset by inventory movements due to higher prices and higher volumes.
Cash flow from investing activities for the quarter was an outflow of $4.8 billion, and included cash capital expenditure of $5.6 billion, and divestment proceeds of $0.3 billion.
Net debt and Gearing: At the end of the third quarter 2023, net debt was $40.5 billion, compared with $40.3 billion at the end of the second quarter 2023. Gearing was 17.3% at the end of the third quarter 2023 and in line with the end of the second quarter 2023.
| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||
Shareholder distributions
Total shareholder distributions in the quarter amounted to $4.9 billion comprising repurchases of shares of $2.7 billion and cash dividends paid to Shell plc shareholders of $2.2 billion. Dividends declared to Shell plc shareholders for the third quarter 2023 amount to $0.3310 per share. Shell has now completed $3 billion of share buybacks announced in the second quarter 2023 results announcement. Today, Shell announces a share buyback programme of $3.5 billion which is expected to be completed by the fourth quarter 2023 results announcement.
Nine Months Analysis1
Income attributable to Shell plc shareholders, compared with the first nine months 2022, reflected lower realised oil and gas prices, lower volumes, and lower refining margins, partly offset by higher Marketing margins, and higher LNG trading and optimisation results.
First nine months 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals of $2.3 billion which are included in identified items amounting to a net loss of $2.2 billion. This compares with identified items in the first nine months 2022 which amounted to a net loss of $0.3 billion.
Adjusted Earnings and Adjusted EBITDA2 for the first nine months 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 negative $0.2 billion.
Cash flow from operating activities for the first nine months 2023 was $41.6 billion, and primarily driven by Adjusted EBITDA, and working capital inflow of $4.5 billion, partly offset by tax payments of $10.1 billion, and derivatives of $5.1 billion.
Cash flow from investing activities for the first nine months 2023 was an outflow of $12.1 billion and included cash capital expenditure of $17.3 billion, divestment proceeds of $2.5 billion, and net other investing cash inflows of $1.2 billion.
This Unaudited Condensed Interim Financial Report, together with supplementary financial and operational disclosure for this quarter, is available at www.shell.com/investors3.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
- Not incorporated by reference.
THIRD QUARTER 2023 PORTFOLIO DEVELOPMENTS
Integrated Gas
In October 2023, we completed the previously announced sale of 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.
In October 2023, we and our partners in the Oman LNG LLC venture signed an amended shareholders’ agreement for Oman LNG LLC (Oman LNG) extending the business beyond 2024. We will remain the largest private shareholder in Oman LNG, with a 30% shareholding.
Upstream
In August 2023, we announced that gas production has started at the Timi platform in Malaysia under the SK318 production-sharing contract (Shell interest 75%).
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||
PERFORMANCE BY SEGMENT
| INTEGRATED GAS | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| 2,154 | 754 | 5,736 | +186 | Segment earnings2 | 5,318 | 16,919 | -69 | |||||||||||||||||||
| (375) | (1,744) | 3,417 | Of which: Identified items | A | (4,625) | 6,750 | ||||||||||||||||||||
| 2,529 | 2,498 | 2,319 | +1 | Adjusted Earnings2 | A | 9,944 | 10,169 | -2 | ||||||||||||||||||
| 4,871 | 4,827 | 5,393 | +1 | Adjusted EBITDA2 | A | 17,180 | 18,237 | -6 | ||||||||||||||||||
| 4,009 | 3,628 | 6,664 | +11 | Cash flow from operating activities | A | 13,923 | 21,283 | -35 | ||||||||||||||||||
| 1,099 | 1,089 | 956 | Cash capital expenditure | C | 3,000 | 2,739 | ||||||||||||||||||||
| 122 | 142 | 123 | -14 | Liquids production available for sale (thousand b/d) | 134 | 129 | +4 | |||||||||||||||||||
| 4,517 | 4,895 | 4,645 | -8 | Natural gas production available for sale (million scf/d) | 4,744 | 4,597 | +3 | |||||||||||||||||||
| 900 | 985 | 924 | -9 | Total production available for sale (thousand boe/d) | 952 | 922 | +3 | |||||||||||||||||||
| 6.88 | 7.17 | 7.24 | -4 | LNG liquefaction volumes (million tonnes) | 21.23 | 22.90 | -7 | |||||||||||||||||||
| 16.01 | 16.03 | 15.66 | — | LNG sales volumes (million tonnes) | 49.01 | 49.16 | — | |||||||||||||||||||
- Q3 on Q2 change
- 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 second quarter 2023, reflected the combined effect of higher contributions from trading and optimisation and higher realised prices from liquid products (increase of $368 million), partly offset by lower volumes (decrease of $159 million).
Third quarter 2023 segment earnings also included unfavourable movements of $340 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 are part of identified items and compare with the second quarter 2023 which included net impairment charges and reversals of $1,438 million and unfavourable movements of $293 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted 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 $348 million, partly offset by tax payments of $679 million, and net cash outflows related to derivatives of $454 million.
Total oil and gas production, compared with the second quarter 2023, decreased by 9% mainly due to higher planned maintenance at Prelude, in Trinidad and Tobago and production-sharing contract effects in Pearl GTL. LNG liquefaction volumes decreased by 4% mainly due to higher maintenance at Prelude.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, reflected lower volumes (decrease of $540 million), and the net effect of lower realised prices and higher contributions from trading and optimisation (decrease of $172 million), partly offset by lower operating expenses (decrease of $159 million).
First nine months 2023 segment earnings also included unfavourable movements of $2,821 million due to the fair value accounting of commodity derivatives and net impairment charges and reversals of $1,700 million. These unfavourable movements and net impairment charges and reversals are part of identified items and compare with the first nine months 2022 which included favourable movements of $6,980 million due to the fair value accounting of commodity derivatives, and gains of $779 million from net impairment charges and reversals, partly offset by other impacts of $608 million, which mainly comprised loan write-downs, as well as charges of $387 million due to provisions for onerous contracts.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||
Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, and working capital inflow of $2,677 million, partly offset by net cash outflows related to derivatives of $3,071 million, and tax payments of $2,843 million.
Total oil and gas production, compared with the first nine months 2022, increased by 3% mainly due to lower maintenance in Pearl GTL, 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 in Pearl GTL. LNG liquefaction volumes decreased by 7% mainly due to the derecognition of Sakhalin-related volumes.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | |||||||||||||||||||||||||||||
| UPSTREAM | |||||||||||||||||||||||||||||
| Quarters | $ million | Nine months | |||||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
| 1,983 | 1,586 | 5,357 | +25 | Segment earnings2 | 6,349 | 14,843 | -57 | ||||||||||||||||||||||
| (238) | (98) | (539) | Of which: Identified items | A | (357) | 585 | |||||||||||||||||||||||
| 2,221 | 1,684 | 5,896 | +32 | Adjusted Earnings2 | A | 6,706 | 14,258 | -53 | |||||||||||||||||||||
| 7,412 | 6,447 | 12,539 | +15 | Adjusted EBITDA2 | A | 22,696 | 32,682 | -31 | |||||||||||||||||||||
| 5,336 | 4,519 | 8,343 | +18 | Cash flow from operating activities | A | 15,663 | 22,417 | -30 | |||||||||||||||||||||
| 2,007 | 2,029 | 1,733 | Cash capital expenditure | C | 5,906 | 6,298 | |||||||||||||||||||||||
| 1,311 | 1,283 | 1,273 | +2 | Liquids production available for sale (thousand b/d) | 1,313 | 1,333 | -1 | ||||||||||||||||||||||
| 2,564 | 2,425 | 2,995 | +6 | Natural gas production available for sale (million scf/d) | 2,687 | 3,341 | -20 | ||||||||||||||||||||||
| 1,753 | 1,701 | 1,789 | +3 | Total production available for sale (thousand boe/d) | 1,776 | 1,909 | -7 | ||||||||||||||||||||||
- Q3 on Q2 change
- 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 second quarter 2023, mainly reflected higher realised liquids prices (increase of $525 million) and higher volumes (increase of $392 million).
Third quarter 2023 segment earnings also included legal provisions of $169 million and charges of $62 million related to the impact of the weakening Brazilian real on a deferred tax position. These losses are part of identified items, and compare with the second quarter 2023 which 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.
Adjusted Earnings and Adjusted 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, partly offset by tax payments of $2,090 million.
Total production, compared with the second quarter 2023, increased mainly due to higher performance in Deep Water.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, mainly reflected lower realised oil and gas prices (decrease of $4,641 million), lower volumes (decrease of $1,654 million), and the comparative adverse impact of $1,037 million relating to storage and working gas transfer effects, partly offset by lower operating expenses (decrease of $673 million).
First nine months 2023 segment earnings also included charges of $188 million from impairments, legal provisions of $169 million and deferred tax charges of $132 million due to amendments to IAS 12, partly offset by gains of $106 million due to fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first nine months 2022 which included a gain of $982 million related to net impairment charges and reversals, and losses of $529 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA and higher tax payments of $6,455 million, partly offset by a working capital inflow of $374 million.
Total production, compared with the first nine months 2022, decreased mainly due to the impact of divestments and field decline, partly offset by ramp-up of new fields.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||||||||||||||||||||||||||||
| MARKETING | ||||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||||
| 702 | 970 | 757 | -28 | Segment earnings² | 2,809 | 1,758 | +60 | |||||||||||||||||||||
| (18) | 76 | (63) | Of which: Identified items | A | 320 | (550) | ||||||||||||||||||||||
| 720 | 894 | 820 | -20 | Adjusted Earnings² | A | 2,488 | 2,308 | +8 | ||||||||||||||||||||
| 1,519 | 1,604 | 1,505 | -5 | Adjusted EBITDA2 | A | 4,700 | 4,280 | +10 | ||||||||||||||||||||
| 880 | 1,412 | 2,299 | -38 | Cash flow from operating activities | A | 3,378 | 1,315 | +157 | ||||||||||||||||||||
| 917 | 670 | 746 | Cash capital expenditure | C | 4,273 | 2,838 | ||||||||||||||||||||||
| 2,654 | 2,607 | 2,581 | +2 | Marketing sales volumes (thousand b/d) | 2,570 | 2,490 | +3 | |||||||||||||||||||||
- Q3 on Q2 change
- 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, and agricultural sectors.
Quarter Analysis1
Segment earnings, compared with the second quarter 2023, reflected one-off tax charges (increase of $105 million), and higher operating expenses (increase of $67 million). Marketing margins were in line with the second quarter 2023 and included lower Mobility fuel margins due to rising feedstock costs and lower Lubricants margins, offset by higher Sectors & Decarbonisation margins.
Adjusted Earnings and Adjusted 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, the timing of payments relating to emissions and biofuel programmes of $90 million, and non-cash cost-of-sales (CCS) adjustments of $70 million. These inflows were partly offset by working capital outflows of $533 million and tax payments of $224 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the second quarter 2023, increased mainly due to seasonality in Aviation.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, reflected higher Marketing margins (increase of $1,097 million) due to higher unit margins and volumes. These were partly offset by higher operating expenses (increase of $613 million) including the impact of asset acquisitions and higher volumes, and higher depreciation charges (increase of $174 million).
First nine months 2023 segment earnings also included gains of $298 million related to indirect tax credits, and favourable movements of $51 million due to the fair value accounting of commodity derivatives. These gains are part of identified items and compare with the first nine months 2022 which included losses of $236 million from net impairments and reversals, net losses of $111 million related to the sale of assets, unfavourable movements of $88 million due to the fair value accounting of commodity derivatives, and provisions for onerous contracts of $62 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, and the timing of payments relating to emissions and biofuel programmes of $279 million. These inflows were partly offset by working capital outflows of $971 million, tax payments of $464 million, and non-cash cost-of-sales (CCS) adjustments of $140 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the first nine months 2022, increased mainly due to improved demand in Aviation and Mobility asset acquisitions.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | |||||||||||||||||||||||||||||
| CHEMICALS AND PRODUCTS | |||||||||||||||||||||||||||||
| Quarters | $ million | Nine months | |||||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
| 1,173 | 349 | 980 | +236 | Segment earnings² | 3,322 | 4,183 | -21 | ||||||||||||||||||||||
| (207) | (100) | 208 | Of which: Identified items | A | (285) | 208 | |||||||||||||||||||||||
| 1,380 | 450 | 772 | +207 | Adjusted Earnings² | A | 3,607 | 3,975 | -9 | |||||||||||||||||||||
| 2,591 | 1,300 | 1,797 | +99 | Adjusted EBITDA2 | A | 6,940 | 6,988 | -1 | |||||||||||||||||||||
| 2,379 | 2,110 | 3,385 | +13 | Cash flow from operating activities | A | 6,779 | 9,787 | -31 | |||||||||||||||||||||
| 879 | 669 | 828 | Cash capital expenditure | C | 2,160 | 3,051 | |||||||||||||||||||||||
| 1,334 | 1,335 | 1,434 | — | Refinery processing intake (thousand b/d) | 1,360 | 1,391 | -2 | ||||||||||||||||||||||
| 1,548 | 1,466 | 1,803 | +6 | Refining & Trading sales volumes (thousand b/d) | 1,573 | 1,666 | -6 | ||||||||||||||||||||||
| 2,998 | 2,828 | 2,879 | +6 | Chemicals sales volumes (thousand tonnes) | 8,656 | 9,264 | -7 | ||||||||||||||||||||||
- Q3 on Q2 change
- 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 and optimisation 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 second quarter 2023, reflected higher Products margins (increase of $849 million) mainly driven by higher refining margins due to lower global product supply and higher margins from trading and optimisation. Segment earnings also reflected higher Chemicals margins (increase of $55 million) including higher income from joint ventures and associates. In addition, the third quarter 2023 reflected lower operating expenses (decrease of $68 million).
Third quarter 2023 segment earnings also included losses of $79 million from net impairments and reversals, legal provisions of $74 million, and unfavourable movements of $53 million due to the fair value accounting of commodity derivatives. These losses are part of identified items, and compare with the second quarter 2023 which included losses of $76 million from net impairments and reversals.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the third quarter 2023, Chemicals had negative adjusted earnings of $329 million and Products had positive adjusted earnings of $1,710 million.
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, and non-cash cost-of-sales (CCS) adjustments of $1,280 million. These inflows were partly offset by the timing of payments relating to emissions and biofuel programmes of $634 million, working capital outflows of $619 million, and cash outflows relating to commodity derivatives of $372 million.
Chemicals manufacturing plant utilisation was 70%, in line with the second quarter 2023.
Refinery utilisation was 84% compared with 85% in the second quarter 2023.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, reflected lower Products margins (decrease of $577 million) mainly driven by lower refining margins partly offset by higher margins from trading and optimisation. The segment earnings also reflected higher depreciation charges (increase of $466 million), and higher operating expenses (increase of $107 million) with both depreciation and operating expenses including the start-up of operations at Shell Polymers Monaca in the USA. These were partly offset by higher Chemicals margins (increase of $409 million).
First nine months 2023 segment earnings also included losses of $227 million from net impairments and reversals, legal provisions of $74 million and favourable movements of $84 million related to the fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first nine months 2022 which included gains of $181 million related to the sale of assets, gains of $87 million related to the remeasurement of redundancy and restructuring costs, favourable movements of $67 million related to the fair value accounting of commodity derivatives, and losses of $142 million from net impairments and reversals.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the first nine months 2023, Chemicals had negative adjusted earnings of $1,130 million and Products had positive adjusted earnings of $4,737 million.
Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, non-cash cost-of-sales (CCS) adjustments of $401 million, cash inflows relating to commodity derivatives of $235 million, and dividends (net of profits) from joint ventures and associates of $78 million. These inflows were partly offset by working capital outflows of $744 million, the timing of payments relating to emissions and biofuel programmes of $254 million, and tax payments of $211 million.
Chemicals manufacturing plant utilisation was 70% compared with 79% in the first nine months 2022, mainly due to unplanned maintenance and economic optimisation in the first nine months 2023.
Refinery utilisation was 87% compared with 84% in the first nine months 2022, due to lower planned maintenance.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | |||||||||||||||||||||||||||||
| RENEWABLES AND ENERGY SOLUTIONS | |||||||||||||||||||||||||||||
| Quarters | $ million | Nine months | |||||||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
| 600 | 530 | (4,023) | +13 | Segment earnings2 | 3,329 | (5,732) | +158 | ||||||||||||||||||||||
| 667 | 301 | (4,406) | Of which: Identified items | A | 2,778 | (7,184) | |||||||||||||||||||||||
| (67) | 228 | 383 | -129 | Adjusted Earnings2 | A | 551 | 1,452 | -62 | |||||||||||||||||||||
| 79 | 438 | 530 | -82 | Adjusted EBITDA2 | A | 1,186 | 2,064 | -43 | |||||||||||||||||||||
| (34) | 3,192 | (8,051) | -101 | Cash flow from operating activities | A | 4,249 | (9,068) | +147 | |||||||||||||||||||||
| 659 | 556 | 1,086 | Cash capital expenditure | C | 1,655 | 2,393 | |||||||||||||||||||||||
| 76 | 67 | 67 | +14 | External power sales (terawatt hours)3 | 211 | 177 | +19 | ||||||||||||||||||||||
| 170 | 172 | 157 | -1 | Sales of pipeline gas to end-use customers (terawatt hours)4 | 563 | 603 | -7 | ||||||||||||||||||||||
- Q3 on Q2 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
- Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
- 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 activities such as 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 second quarter 2023, reflected lower margins (decrease of $170 million) mainly due to seasonal impacts primarily in Europe and from trading and optimisation, and higher operating expenses (increase of $88 million).
Third quarter 2023 segment earnings also included favourable movements of $506 million due to the fair value accounting of commodity derivatives, a gain of $312 million mainly related to a previously novated gas supply contract (see Note 8), partly offset by losses of $76 million on the sale of assets, and $75 million of net impairment charges and reversals. 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 and losses are part of identified items and compare with the second quarter 2023 which included favourable movements of $310 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Most Renewables and Energy Solutions activities were loss-making in the third quarter 2023, partly offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the quarter was primarily driven by cash outflows related to derivatives of $1,407 million, and tax payments of $258 million, partly offset by working capital inflows of $1,188 million.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, reflected lower margins (decrease of $420 million) mainly from trading and optimisation for gas and power partly offset by Energy Marketing, and higher operating expenses (increase of $291 million).
Nine months 2023 segment earnings also included favourable movements of $2,632 million due to the fair value accounting of commodity derivatives. These favourable movements are part of identified items and compare with the first nine months 2022 which included unfavourable movements of $7,192 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Most Renewables and Energy Solutions activities were loss-making for the first nine months 2023, partly offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the first nine months 2023 was primarily driven by working capital inflows of $4,693 million, and Adjusted EBITDA, partly offset by net cash outflows related to derivatives of $1,719 million.
1.All earnings amounts are shown post-tax, unless stated otherwise.
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| SHELL PLC 3rd QUARTER 2023 UNAUDITED RESULTS | ||
2.Adjusted EBITDA is without taxation.
Additional Growth Measures
| Quarters | Nine months | ||||||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | %¹ | 2023 | 2022 | % | |||||||||||||||||
| Renewable power generation capacity (gigawatt): | |||||||||||||||||||||||
| 2.5 | 2.5 | 2.2 | — | – In operation2 | 2.5 | 2.2 | +13 | ||||||||||||||||
| 4.9 | 4.6 | 3.0 | +6 | – Under construction and/or committed for sale3 | 4.9 | 3.0 | +62 | ||||||||||||||||
- Q3 on Q2 change
- 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.
- 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.
| CORPORATE | ||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||
| Q3 2023 | Q2 2023 | Q3 2022 | Reference | 2023 | 2022 | |||||||||||||||
| (460) | (701) | (543) | Segment earnings1 | (2,225) | (1,807) | |||||||||||||||
| 22 | (48) | 28 | Of which: Identified items | A | (50) | (62) | ||||||||||||||
| (482) | (654) | (571) | Adjusted Earnings1 | A | (2,175) | (1,745) | ||||||||||||||
| (136) | (180) | (251) | Adjusted EBITDA1 | A | (499) | (562) | ||||||||||||||
| (238) | 269 | (100) | Cash flow from operating activities | A | (2,372) | 276 | ||||||||||||||
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 second quarter 2023, reflected favourable movements in net interest expense and currency exchange rate effects.
Adjusted EBITDA2 was mainly driven by favourable currency exchange rate effects.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2022, were primarily driven by unfavourable movements in tax credits, partly offset by favourable currency exchange rate effects.
Adjusted EBITDA2 was mainly driven by favourable currency exchange rate effects.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
OUTLOOK FOR THE FOURTH QUARTER 2023
Cash capital expenditure for full year 2023 is expected to be within ~$23 – $25 billion.
Integrated Gas production is expected to be approximately 870 – 930 thousand boe/d. LNG liquefaction volumes are expected to be approximately 6.7 – 7.3 million tonnes. Outlook reflects ongoing maintenance at Prelude and lower expected liquefaction volumes from Egypt.
Upstream production is expected to be approximately 1,750 – 1,950 thousand boe/d. Production outlook reflects the closure of the Groningen gas field.
Marketing sales volumes are expected to be approximately 2,250 – 2,750 thousand b/d.
Refinery utilisation is expected to be approximately 75% – 83%, due to planned maintenance activities in North America. Chemicals manufacturing plant utilisation is expected to be approximately 62% – 70%.
Corporate Adjusted Earnings are expected to be a net expense of approximately $550 – $750 million in the fourth quarter 2023 and a net expense of approximately $2,750 – $2,950 million for the full year 2023. This excludes the impact of currency exchange rate and fair value accounting effects.
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