| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| SUMMARY OF UNAUDITED RESULTS | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| 6,743 | 18,040 | (447) | -63 | Income/(loss) attributable to Shell plc shareholders | 31,899 | 8,640 | +269 | |||||||||||||||||||
| 9,454 | 11,472 | 4,130 | -18 | Adjusted Earnings | A | 30,055 | 12,898 | +133 | ||||||||||||||||||
| 21,512 | 23,150 | 13,460 | -7 | Adjusted EBITDA | A | 63,689 | 38,656 | +65 | ||||||||||||||||||
| 12,539 | 18,655 | 16,025 | -33 | Cash flow from operating activities | 46,009 | 36,935 | +25 | |||||||||||||||||||
| (5,049) | (6,207) | (3,804) | Cash flow from investing activities | (15,530) | (7,339) | |||||||||||||||||||||
| 7,490 | 12,448 | 12,221 | Free cash flow | G | 30,479 | 29,596 | ||||||||||||||||||||
| 5,426 | 7,024 | 4,840 | Cash capital expenditure | C | 17,515 | 13,197 | ||||||||||||||||||||
| 9,359 | 9,547 | 8,359 | -2 | Operating expenses | F | 28,363 | 26,264 | +8 | ||||||||||||||||||
| 9,893 | 9,270 | 8,696 | +7 | Underlying operating expenses | F | 28,419 | 25,924 | +10 | ||||||||||||||||||
| 17.3% | 14.3% | 2.9% | ROACE on a Net income basis | D | 17.3% | 2.9% | ||||||||||||||||||||
| 14.7% | 12.4% | 6.1% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 14.7% | 6.1% | ||||||||||||||||||||
| 48,343 | 46,357 | 57,492 | Net debt | E | 48,343 | 57,492 | ||||||||||||||||||||
| 20.3% | 19.3% | 25.6% | Gearing | E | 20.3% | 25.6% | ||||||||||||||||||||
| 2,766 | 2,898 | 3,068 | -5 | Total production available for sale (thousand boe/d) | 2,875 | 3,269 | -12 | |||||||||||||||||||
| 0.93 | 2.42 | (0.06) | -62 | Basic earnings per share ($) | 4.29 | 1.11 | +286 | |||||||||||||||||||
| 1.30 | 1.54 | 0.53 | -16 | Adjusted Earnings per share ($) | B | 4.04 | 1.66 | +143 | ||||||||||||||||||
| 0.25 | 0.25 | 0.24 | — | Dividend per share ($) | 0.75 | 0.6535 | +15 |
1.Q3 on Q2 change
Quarter Analysis1
Income attributable to Shell plc shareholders, compared with the second quarter 2022, mainly reflected lower LNG trading and optimisation results, lower chemicals and refining margins, as well as higher underlying operating expenses, partly offset by increased volumes from higher-value barrels in Deep Water.
Third quarter 2022 income attributable to Shell plc shareholders also included net losses of $1.0 billion due to the fair value accounting of commodity derivatives, and impairment charges of $0.4 billion. These net losses are included in identified items amounting to a charge of $1.4 billion in the quarter. This compares with identified items in the second quarter 2022 which amounted to a net gain of $5.2 billion.
Adjusted Earnings andAdjusted EBITDA 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 $1.4 billion.
Cash flow from operating activities for the third quarter 2022 was $12.5 billion, and included working capital outflows of $4.2 billion, and tax payments of $3.4 billion. The working capital outflows are mainly driven by the increase in European gas inventories, and initial margin outflows, partly offset by lower prices on crude inventories.
Cash flow from investing activities for the quarter was an outflow of $5.0 billion.
Net debt and Gearing: At the end of the third quarter 2022, net debt was $48.3 billion, compared with $46.4 billion at the end of the second quarter 2022, mainly reflecting lower cash flow from operating activities and the absorption of debt from the acquisition of Sprng Energy. Gearing was 20.3% at the end of the third quarter 2022, compared with 19.3% at the end of the second quarter 2022, mainly driven by the increase in net debt.
Shareholder distributions
Total shareholder distributions in the quarter amounted to $6.8 billion. Dividends declared to Shell plc shareholders for the third quarter 2022 amount to $0.25 per share. Shell has now completed $6 billion of share buybacks announced in the
| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
second quarter 2022 results announcement. Today, Shell announces a share buyback programme of $4 billion which is expected to be completed by the fourth quarter 2022 results announcement. Shareholder distributions are in excess of 30% of cash flow from operating activities for the last four quarters. Subject to Board approval, Shell intends to increase the dividend per share by an expected 15% for the fourth quarter 2022, which will be paid in March 2023.
Nine Months Analysis1
Income attributable to Shell plc shareholders, compared with the first nine months 2021, mainly reflected higher realised prices, higher refining margins, higher trading and optimisation results, partly offset by lower volumes, and lower chemicals margins.
First nine months 2022 income attributable to Shell plc shareholders also included net losses of $0.8 billion due to the fair value accounting of commodity derivatives, the write-down of a loan of $0.8 billion, and net impairment reversals of $1.4 billion. These gains and losses are included in identified items amounting to a net charge of $0.3 billion in the first nine months. This compares with identified items in the first nine months 2021 which amounted to a net charge of $6.9 billion.
Adjusted Earnings andAdjusted EBITDA for the first nine months 2022 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 $2.1 billion.
Cash flow from operating activities for the first nine months 2022 was $46.0 billion, and reflected working capital outflows of $15.8 billion, and tax payments of $8.7 billion.
Cash flow from investing activities for the first nine months 2022 was an outflow of $15.5 billion.
This announcement, together with supplementary financial and operational disclosure and a separate press release for this quarter, is available at www.shell.com/investors2.
1.All earnings amounts are shown post-tax, unless stated otherwise.
2. Not incorporated by reference.
THIRD QUARTER 2022 PORTFOLIO DEVELOPMENTS
Withdrawal from Russian oil and gas activities
We refer to Note 8 to the Condensed Consolidated Interim Financial Statements.
Integrated Gas
In July 2022, we were selected by QatarEnergy as a partner in the North Field East expansion project in Qatar, and in October 2022, we were selected as a partner in the North Field South project.
Upstream
In July 2022, we announced the final investment decision to develop the Jackdaw gas field in the UK North Sea, following regulatory approval earlier this year.
In September 2022, we announced the agreement to sell our 100% interest in Shell Onshore Ventures LLC, which holds a 51.8% membership interest in Aera Energy LLC in the USA.
In September 2022, we announced the final investment decision to develop the Rosmari-Marjoram gas project in Sarawak, Malaysia.
Chemicals and Products
In October 2022, we announced that Shell USA, Inc. and Shell Midstream Partners, L.P. had completed the definitive agreement and plan of merger announced in July 2022, pursuant to which Shell USA, Inc. acquired all of the common units representing limited partner interests in Shell Midstream Partners, L.P. not held by Shell USA, Inc. or its affiliates.
Renewables and Energy Solutions
In July 2022, we announced the final investment decision to build Holland Hydrogen I, which will be Europe’s largest renewable hydrogen plant once operational in 2025.
In August 2022, we completed the 100% acquisition of Solenergi Power Private Limited and with it, the Sprng Energy group of companies in India, which develops and manages renewable energy facilities such as solar and wind farms and infrastructure assets.
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
PERFORMANCE BY SEGMENT
| INTEGRATED GAS | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| 5,736 | 8,103 | (131) | -29 | Segment earnings | 16,919 | 3,290 | +414 | |||||||||||||||||||
| 3,417 | 4,346 | (1,968) | Of which: Identified items | A | 6,750 | (1,723) | ||||||||||||||||||||
| 2,319 | 3,758 | 1,837 | -38 | Adjusted Earnings | A | 10,169 | 5,012 | +103 | ||||||||||||||||||
| 5,393 | 6,529 | 3,922 | -17 | Adjusted EBITDA | A | 18,237 | 10,663 | +71 | ||||||||||||||||||
| 6,664 | 8,176 | 1,915 | -18 | Cash flow from operating activities | 21,283 | 6,668 | +219 | |||||||||||||||||||
| 956 | 919 | 827 | Cash capital expenditure | C | 2,739 | 2,488 | ||||||||||||||||||||
| 123 | 144 | 168 | -14 | Liquids production available for sale (thousand b/d) | 129 | 175 | -26 | |||||||||||||||||||
| 4,645 | 4,642 | 4,760 | — | Natural gas production available for sale (million scf/d) | 4,597 | 4,865 | -6 | |||||||||||||||||||
| 924 | 944 | 989 | -2 | Total production available for sale (thousand boe/d) | 922 | 1,014 | -9 | |||||||||||||||||||
| 7.24 | 7.66 | 7.39 | -5 | LNG liquefaction volumes (million tonnes) | 22.90 | 23.04 | -1 | |||||||||||||||||||
| 15.66 | 15.21 | 15.18 | +3 | LNG sales volumes (million tonnes) | 49.16 | 47.48 | +4 |
1.Q3 on Q2 change
The Integrated Gas segment includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. The segment includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure necessary to deliver gas and liquids to market as well as 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 2022, reflected the net effect of lower contributions from trading and optimisation and higher realised prices (decrease of $994 million). The trading and optimisation contributions were mainly impacted by a combination of seasonality and supply constraints, coupled with substantial differences between paper and physical realisations in a volatile and dislocated market.
Third quarter 2022 segment earnings also included gains of $3,419 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 gains are part of identified items and compare with the second quarter 2022 which included net impairment reversals of $2,508 million and gains of $1,979 million due to the fair value accounting of commodity derivatives, partly offset by charges of $326 million due to provisions for onerous contracts.
Adjusted Earnings and Adjusted EBITDA 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 net cash inflows related to derivatives (inflow of $3,591 million). This was partly offset by working capital movements (outflow of $1,174 million) and tax payments (outflow of $845 million).
Total oil and gas production, compared with the second quarter 2022, decreased by 2% mainly due to “Permitted Industrial Actions” at Prelude and production sharing contract effects, partly offset by lower maintenance activities in Trinidad & Tobago. LNG liquefaction volumes decreased by 5% mainly due to “Permitted Industrial Actions” at Prelude and higher maintenance activities.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2021, reflected higher realised prices and contributions from trading and optimisation (increase of $6,700 million). This was partly offset by lower volumes (decrease of $892 million) and higher operating expenses (increase of $394 million).
First nine months 2022 segment earnings also included gains of $6,980 million due to the fair value accounting of commodity derivatives and net impairment reversals of $779 million, 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. These gains and losses are part of identified items and compare with the first nine months 2021 which included losses of $2,382 million due to the fair value accounting of commodity derivatives and impairment charges of $389 million, partly offset by gains of $1,104 million related to the sale of assets.
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
Adjusted Earnings and Adjusted EBITDA 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 2022 was primarily driven by Adjusted EBITDA and net cash inflows related to derivatives (inflow of $7,053 million), partly offset by tax payments (outflow of $2,112 million) and working capital movements (outflow of $1,479 million).
Total oil and gas production, compared with the first nine months 2021, decreased by 9% due to higher maintenance and production sharing contract effects, derecognition of Sakhalin-related volumes and “Permitted Industrial Actions” at Prelude, partly offset by new field ramp up’s in Trinidad & Tobago. LNG liquefaction volumes decreased by 1% due to the derecognition of Sakhalin-related volumes, “Permitted Industrial Actions” at Prelude and lower feedgas supply, partly offset by lower maintenance.
1.All earnings amounts are shown post-tax, unless stated otherwise.
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| UPSTREAM | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| 5,357 | 6,391 | 1,318 | -16 | Segment earnings | 14,843 | 4,689 | +217 | |||||||||||||||||||
| (539) | 1,479 | (415) | Of which: Identified items | A | 585 | (489) | ||||||||||||||||||||
| 5,896 | 4,912 | 1,734 | +20 | Adjusted Earnings | A | 14,258 | 5,178 | +175 | ||||||||||||||||||
| 12,539 | 11,167 | 6,768 | +12 | Adjusted EBITDA | A | 32,682 | 18,724 | +75 | ||||||||||||||||||
| 8,343 | 8,110 | 5,724 | +3 | Cash flow from operating activities | 22,417 | 14,588 | +54 | |||||||||||||||||||
| 1,733 | 2,858 | 1,490 | Cash capital expenditure | C | 6,298 | 4,663 | ||||||||||||||||||||
| 1,273 | 1,325 | 1,495 | -4 | Liquids production available for sale (thousand b/d) | 1,333 | 1,536 | -13 | |||||||||||||||||||
| 2,995 | 3,428 | 3,103 | -13 | Natural gas production available for sale (million scf/d) | 3,341 | 3,866 | -14 | |||||||||||||||||||
| 1,789 | 1,917 | 2,030 | -7 | Total production available for sale (thousand boe/d) | 1,909 | 2,202 | -13 |
1.Q3 on Q2 change
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 2022, mainly reflected increased volumes from higher-value barrels in Deep Water this quarter ($442 million), non-cash provision releases ($503 million), and share of profit of joint ventures and associated gain relating to storage transfer effects ($209 million).
Third quarter 2022 segment earnings also included a gain of $312 million due to the impact of the discount rate change on provisions and charges of $361 million relating to UK Energy Profits Levy and an impairment charge of $303 million. These gains and losses are part of identified items, and compare with the second quarter 2022 which included net gains from impairments and impairment reversals of $1,682 million and a $252 million charge related to the impact of the weakening Brazilian real on a deferred tax position.
Adjusted Earnings and Adjusted EBITDA 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 the timing impact of dividends from joint ventures and associates of $1,543 million and tax payments of $2,372 million.
Total production, compared with the second quarter 2022, decreased mainly due to the derecognition of Salym in Russia and unscheduled deferments, which are partly offset by higher scheduled maintenance in the second quarter 2022.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2021, mainly reflected higher realised oil and gas prices (increase of $8,343 million) and a gain of $979 million relating to storage and working gas transfer effects, partly offset by lower volumes (reduction of $1,842 million), mainly as a result of divestments.
First nine month 2022 segment earnings also included a gain from net impairment and impairment reversals of $982 million and losses of $529 million due to the fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first nine months 2021 which included losses of $378 million due to the fair value accounting of commodity derivatives, a net charge of $99 million related to the impact of the weakening Brazilian real on a deferred tax position, impairment charges of $226 million, and a net gain of $236 million related to the sale of assets.
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activitiesfor the first nine months of 2022 was primarily driven by Adjusted EBITDA, partly offset by the timing impact of dividends from joint ventures and associates of $2,843 million and tax payments of $6,060 million.
Total production, compared with the first nine months 2021, decreased due to the impact of divestments and scheduled maintenance. The impact of field decline was more than offset by growth from new fields.
1.All earnings amounts are shown post-tax, unless stated otherwise
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| MARKETING | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| 757 | 836 | 1,432 | -9 | Segment earnings² | 1,758 | 3,065 | -43 | |||||||||||||||||||
| (63) | 85 | 332 | Of which: Identified items | A | (550) | 208 | ||||||||||||||||||||
| 820 | 751 | 1,099 | +9 | Adjusted Earnings² | A | 2,308 | 2,857 | -19 | ||||||||||||||||||
| 1,505 | 1,452 | 1,760 | +4 | Adjusted EBITDA2 | A | 4,280 | 4,896 | -13 | ||||||||||||||||||
| 2,299 | (454) | 1,843 | +606 | Cash flow from operating activities | 1,315 | 3,802 | -65 | |||||||||||||||||||
| 746 | 1,620 | 595 | Cash capital expenditure | C | 2,838 | 1,445 | ||||||||||||||||||||
| 2,581 | 2,515 | 2,578 | +3 | Marketing sales volumes (thousand b/d) | 2,490 | 2,403 | +4 |
1.Q3 on Q2 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, shipping, commercial road transport and agricultural sectors.
Quarter Analysis1
Segment earnings, compared with the second quarter 2022, reflected higher Marketing unit margins (increase of $148 million) mainly driven by seasonal impacts in Mobility, partly offset by lower Lubricants and Sectors & Decarbonisation margins. The third quarter 2022 also included higher operating expenses (increase of $73 million).
Adjusted Earnings and Adjusted EBITDA 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 $910 million, partly offset by tax payments of $112 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the second quarter 2022, increased mainly due to seasonal effects in Mobility and Sectors & Decarbonisation, partly offset by lower Lubricants sales volumes which were impacted by market exits.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2021, reflected higher operating expenses partly driven by increased volumes (increase of $567 million), partly offset by higher Marketing margins (increase of $128 million).
First nine months 2022 segment earnings also included net losses of $236 million from impairments and impairment reversals, net losses of $111 million related to the sale of assets, losses of $88 million due to the fair value accounting of commodity derivatives, and provisions for onerous contracts of $62 million. These net losses are part of identified items and compare with the first nine months 2021 which included gains of $312 million related to the sale of assets, partly offset by charges of $120 million related to redundancy and restructuring costs.
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activitiesfor the first nine months 2022 was primarily driven by Adjusted EBITDA, and non-cash cost-of-sales adjustments of $691 million, partly offset by working capital outflows of $3,304 million, and tax payments of $333 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the first nine months 2022, increased mainly due to demand recovery in Aviation (within Sectors & Decarbonisation).
1.All earnings amounts are shown post-tax, unless stated otherwise
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| CHEMICALS AND PRODUCTS | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| 980 | 2,131 | 255 | -54 | Segment earnings² | 4,183 | 407 | +928 | |||||||||||||||||||
| 208 | 96 | (221) | Of which: Identified items | A | 208 | (1,838) | ||||||||||||||||||||
| 772 | 2,035 | 475 | -62 | Adjusted Earnings² | A | 3,975 | 2,245 | +77 | ||||||||||||||||||
| 1,797 | 3,184 | 1,282 | -44 | Adjusted EBITDA2 | A | 6,988 | 4,894 | +43 | ||||||||||||||||||
| 3,385 | 2,728 | 2,724 | +24 | Cash flow from operating activities | 9,787 | 5,281 | +85 | |||||||||||||||||||
| 828 | 1,226 | 1,436 | Cash capital expenditure | C | 3,051 | 3,765 | ||||||||||||||||||||
| 1,434 | 1,342 | 1,629 | +7 | Refinery processing intake (thousand b/d) | 1,391 | 1,737 | -20 | |||||||||||||||||||
| 1,803 | 1,596 | 2,087 | +13 | Refining & Trading sales volumes (thousand b/d) | 1,666 | 2,059 | -19 | |||||||||||||||||||
| 2,879 | 3,054 | 3,549 | -6 | Chemicals sales volumes (thousand tonnes) | 9,264 | 10,741 | -14 |
1.Q3 on Q2 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 second quarter 2022, reflected lower Products margins (decrease of $833 million) mainly due to lower Refining margins due to recovery in global product supply to meet demand, lower Chemicals margins (decrease of $276 million) due to higher feedstock and utility costs, and higher operating expenses (increase of $134 million).
Third quarter 2022segment earnings also included gains of $226 million due to the fair value accounting of commodity derivatives. These gains are part of identified items, and compare with the second quarter 2022 which included gains of $74 million due to the fair value accounting of commodity derivatives, gains of $64 million related to the sale of assets, and impairment charges of $41 million.
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the third quarter were a loss of $555 million for Chemicals and positive earnings of $1,327 million for Products, from high Refining margins in the third quarter 2022, although lower than in the second quarter 2022.
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, working capital inflows of $2,419 million, the timing of payments relating to emissions and biofuel programmes of $563 million, and cash inflows relating to commodity derivatives of $410 million. These net inflows were partly offset by non-cash cost-of-sales adjustments of $1,878 million.
Chemicals manufacturing plant utilisation was 76% (previous methodology: 70%) compared with 78% (previous methodology: 71%) in the second quarter 2022, due to optimisation in the current low-margin environment.
Refinery utilisation was 88% (previous methodology: 79%) compared with 84% (previous methodology: 69%) in the second quarter 2022, due to lower unplanned maintenance.
With effect from the second quarter 2022, the methodology applied in calculating both Chemicals manufacturing plant utilisation and Refinery utilisation has been revised to further align with industry disclosures. The revisions include moving from stream days capacity (defined as the maximum throughput, excluding the impact of maintenance or operational outages) to calendar days capacity (defined as the throughput including typical limitations such as maintenance over an extended period of time). Furthermore, Refinery utilisation is now specific to the capacity of the crude distillation unit (except for Scotford Refinery which uses the capacity of the hydrocracker), and no longer the capacity across all refinery units.
Nine Months Analysis1
Segment earnings,compared with the first nine months 2021, reflected higher Products margins (increase of $4,375 million) reflecting higher realised Refining margins and higher contributions from trading and optimisation, as well as lower depreciation charges (decrease of $239 million). These were partly offset by lower Chemicals margins (decrease of $2,306 million) and higher operating expenses (increase of $465 million).
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
First nine months 2022 segment earnings also included gains of $181 million related to the sale of assets, gains of $87 million related to the remeasurement of redundancy and restructuring costs, gains of $67 million related to the fair value accounting of commodity derivatives, and impairment charges of $142 million. These gains and losses are part of identified items, and compare with the first nine months 2021 which included impairment charges of $1,487 million, charges of $177 million related to the fair value accounting of commodity derivatives, and charges of $82 million related to provisions for onerous contracts.
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the first nine months 2022 were a loss of $683 million for Chemicals and positive earnings of $4,658 million for Products.
Cash flow from operating activitiesfor the first nine months 2022 was primarily driven by Adjusted EBITDA, non-cash cost-of-sales adjustments of $2,295 million, the timing of payments relating to emissions and biofuel programmes of $1,553 million, dividends from joint ventures and associates of $518 million, and a long-term payable for a volume purchase contract of $507 million. These inflows were partly offset by working capital outflows of $2,318 million.
Chemicals manufacturing plant utilisation was 79% (previous methodology: 73%) compared with 87% (previous methodology: 79%) in the first nine months 2021, due to higher turnarounds and optimisation for the low margin environment during the first nine months 2022.
Refinery utilisation was 84% (previous methodology: 74%) compared with 81% (previous methodology: 73%) in the first nine months 2021.
1.All earnings amounts are shown post-tax, unless stated otherwise.
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| RENEWABLES AND ENERGY SOLUTIONS | ||||||||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
| (4,023) | (173) | (3,127) | -2221 | Segment earnings | (5,732) | (3,408) | -68 | |||||||||||||||||||
| (4,406) | (898) | (2,956) | Of which: Identified items | A | (7,184) | (3,122) | ||||||||||||||||||||
| 383 | 725 | (171) | -47 | Adjusted Earnings | A | 1,452 | (286) | +608 | ||||||||||||||||||
| 530 | 1,013 | (124) | -48 | Adjusted EBITDA | A | 2,064 | (101) | +2147 | ||||||||||||||||||
| (8,051) | (558) | 3,842 | -1344 | Cash flow from operating activities | (9,068) | 5,687 | -259 | |||||||||||||||||||
| 1,086 | 321 | 456 | Cash capital expenditure | C | 2,393 | 742 | ||||||||||||||||||||
| 67 | 54 | 64 | +24 | External power sales (terawatt hours)2 | 177 | 188 | -6 | |||||||||||||||||||
| 157 | 188 | 192 | -16 | Sales of pipeline gas to end-use customers (terawatt hours)3 | 603 | 650 | -7 |
1.Q3 on Q2 change
2.Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
3.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.
The Renewables and Energy Solutions segment includes Shell’s Integrated Power activities, comprising electricity generation, marketing, trading and optimisation of power and pipeline gas, and digitally enabled customer solutions. The segment also includes production and marketing of hydrogen, development of commercial carbon capture & storage hubs, trading of carbon credits and investment in nature-based projects that avoid or reduce carbon.
Quarter Analysis1
Segment earnings, compared with the second quarter 2022, mainly reflected lower trading and optimisation results for gas and power due to price volatility across North America, Europe and Australia, as well as higher operating expenses.
Third quarter 2022segment earnings also included net losses of $4,414 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 losses are part of identified items and compare with the second quarter 2022 which included net losses of $898 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA 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 movements (outflow of $5,694 million) and net cash outflows related to derivatives (outflow of $2,695 million), partly offset by Adjusted EBITDA.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2021, reflected higher trading and optimisation results for gas and power, partly offset by higher operating expenses.
However, first nine months 2022 segment earnings also included net losses of $7,192 million due to the fair value accounting of commodity derivatives. These losses are part of identified items and compare with the first nine months 2021 which included net losses of $3,067 million due to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA 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 2022 was primarily driven by working capital movements (outflow of $7,256 million) and net cash outflows related to derivatives (outflow of $3,676 million), partly offset by Adjusted EBITDA.
1.All earnings amounts are shown post-tax, unless stated otherwise.
Additional Growth Measures
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
| Quarters | Nine months | |||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | %¹ | 2022 | 2021 | % | ||||||||||||||||||||
| Renewable power generation capacity (gigawatt): | ||||||||||||||||||||||||||
| 2.2 | 0.5 | 0.7 | +354 | – In operation2 | 2.2 | 0.7 | +230 | |||||||||||||||||||
| 3.0 | 2.4 | 2.1 | +24 | – Under construction and/or committed for sale3 | 3.0 | 2.1 | +43 |
1.Q3 on Q2 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). Q2 2022 has been revised for updated information. It excludes Shell’s equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.
| CORPORATE | ||||||||||||||||||||
| Quarters | $ million | Nine months | ||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | Reference | 2022 | 2021 | |||||||||||||||
| (543) | (529) | (623) | Segment earnings | (1,807) | (1,747) | |||||||||||||||
| 28 | 97 | 109 | Of which: Identified items | A | (62) | 50 | ||||||||||||||
| (571) | (626) | (732) | Adjusted Earnings | A | (1,745) | (1,797) | ||||||||||||||
| (251) | (197) | (147) | Adjusted EBITDA | A | (562) | (421) | ||||||||||||||
| (100) | 652 | (22) | Cash flow from operating activities | 276 | 909 |
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 2022, reflected favourable movements in the net interest expense, partly offset by unfavourable currency exchange rate effects and lower tax credits.
Third quarter 2022 segment earnings also included a gain of $26 million from the deferred tax impact of the weakening Brazilian real on financing positions. This gain is part of identified items, and compare with the second quarter 2022 which included a gain of $99 million from the deferred tax impact of the weakening Brazilian real on financing positions.
Adjusted EBITDAwas mainly driven by unfavourable currency exchange effects.
Nine Months Analysis1
Segment earnings, compared with the first nine months 2021, reflected lower tax credits and unfavourable currency exchange rate movements, partly offset by lower net interest expense.
First nine month segment earnings also included a loss of $61 million from the deferred tax impact of the strengthening Brazilian real on financing positions. This loss is part of identified items, and compare with the first nine months 2021 which included a gain of $50 million from the deferred tax impact of the weakening Brazilian real on financing positions.
Adjusted EBITDAwas mainly driven by unfavourable currency exchange effects.
1.All earnings amounts are shown post-tax, unless stated otherwise
OUTLOOK FOR THE FOURTH QUARTER 2022
Cash capital expenditure is expected to be in line with the $23 – $27 billion range for the full year.
A cash outflow of approximately $1.96 billion is expected in the fourth quarter 2022 following the completion of the transactions to acquire all of the common units representing limited partner interests in Shell Midstream Partners, L.P. not held by Shell USA, Inc. or its affiliates.
Integrated Gas production is expected to be approximately 910 – 960 thousand boe/d.
LNG liquefaction volumes are expected to be approximately 7.0 – 7.6 million tonnes.
Upstream production is expected to be approximately 1,750 – 1,950 thousand boe/d in the fourth quarter 2022.
Marketing sales volumes are expected to be approximately 2,250 – 2,750 thousand b/d.
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| SHELL PLC 3rd QUARTER 2022 UNAUDITED RESULTS |
Refinery utilisation is expected to be approximately 88% – 96%.
Chemicals manufacturing plant utilisation is expected to be approximately 72% – 80%.
The utilisation ranges presented use the revised methodology (please refer to ‘Chemicals and Products’ in the ‘Performance by Segment’ section).
Chemicals sales volumes are expected to be approximately 2,700 – 3,200 thousand tonnes.
Corporate Adjusted Earnings are expected to be a net expense of approximately $450 – $650 million in the fourth quarter 2022 and a net expense of approximately $2,200 – $2,400 million for the full year 2022. This excludes the impact of currency exchange rate effects.
FORTHCOMING EVENTS
Fourth quarter 2022 and full year results and dividends are scheduled to be announced on February 2, 2023.