| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS |
| SUMMARY OF UNAUDITED RESULTS | ||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| 474 | 7,044 | 10,409 | -93 | Income/(loss) attributable to Shell plc shareholders | 19,360 | 42,309 | -54 | |||||||||||||||||||
| 7,306 | 6,224 | 9,814 | +17 | Adjusted Earnings | A | 28,250 | 39,870 | -29 | ||||||||||||||||||
| 16,335 | 16,336 | 20,600 | — | Adjusted EBITDA | A | 68,538 | 84,289 | -19 | ||||||||||||||||||
| 12,575 | 12,332 | 22,404 | +2 | Cash flow from operating activities | 54,196 | 68,414 | -21 | |||||||||||||||||||
| (5,657) | (4,827) | (6,918) | Cash flow from investing activities | (17,737) | (22,448) | |||||||||||||||||||||
| 6,918 | 7,505 | 15,486 | Free cash flow | G | 36,460 | 45,965 | ||||||||||||||||||||
| 7,113 | 5,649 | 7,319 | Cash capital expenditure | C | 24,393 | 24,833 | ||||||||||||||||||||
| 10,897 | 10,097 | 11,114 | +8 | Operating expenses | F | 39,959 | 39,477 | +1 | ||||||||||||||||||
| 10,565 | 9,735 | 11,037 | +9 | Underlying operating expenses | F | 39,201 | 39,456 | -1 | ||||||||||||||||||
| 8.4% | 12.0% | 16.7% | ROACE on a Net income basis | D | 8.4% | 16.7% | ||||||||||||||||||||
| 11.6% | 12.5% | 15.8% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 11.6% | 15.8% | ||||||||||||||||||||
| 81,541 | 82,147 | 83,795 | Total debt | E | 81,541 | 83,795 | ||||||||||||||||||||
| 43,541 | 40,470 | 44,837 | Net debt | E | 43,541 | 44,837 | ||||||||||||||||||||
| 18.8% | 17.3% | 18.9% | Gearing | E | 18.8% | 18.9% | ||||||||||||||||||||
| 2,827 | 2,706 | 2,831 | +4 | Total production available for sale (thousand boe/d) | 2,791 | 2,864 | -3 | |||||||||||||||||||
| 0.07 | 1.06 | 1.47 | -93 | Basic earnings per share ($) | 2.88 | 5.76 | -50 | |||||||||||||||||||
| 1.11 | 0.93 | 1.39 | +19 | Adjusted Earnings per share ($) | B | 4.20 | 5.43 | -23 | ||||||||||||||||||
| 0.3440 | 0.3310 | 0.2875 | +4 | Dividend per share ($) | 1.2935 | 1.0375 | +25 | |||||||||||||||||||
1.Q4 on Q3 change
Quarter Analysis1
Income attributable to Shell plc shareholders, compared with the third quarter 2023, reflected higher LNG trading and optimisation margins, favourable deferred tax movements, and higher production, offset by lower refining margins, lower margins from crude and oil products trading and optimisation, and higher operating expenses.
Fourth quarter 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals ($3.9 billion), and unfavourable movements due to the fair value accounting of commodity derivatives. These charges and unfavourable movements are included in identified items amounting to a net loss of $6.0 billion in the quarter. This compares with identified items in the third quarter 2023 which amounted to a net loss of $0.1 billion, and mainly related to impairment charges, largely offset by favourable movements due to the fair value accounting of commodity derivatives.
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 positive $0.8 billion.
Cash flow from operating activities for the fourth quarter 2023 was $12.6 billion, and primarily driven by Adjusted EBITDA, and a working capital inflow of $3.3 billion, partly offset by tax payments of $3.6 billion, and a derivatives outflow of $1.0 billion and the timing impact of payments relating to emission certificates and biofuel programmes of $0.9 billion. The working capital inflow mainly reflected inventory movements due to lower prices.
Cash flow from investing activities for the quarter was an outflow of $5.7 billion, and included cash capital expenditure of $7.1 billion, and divestment proceeds of $0.6 billion.
Net debt and Gearing: At the end of the fourth quarter 2023, net debt was $43.5 billion, compared with $40.5 billion at the end of the third quarter 2023, mainly reflecting share buybacks, cash dividends paid to Shell plc shareholders, lease
| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
additions, and interest payments, partly offset by free cash flow. Gearing was 18.8% at the end of the fourth quarter 2023, compared with 17.3% at the end of the third quarter 2023, driven by higher net debt and lower equity.
Shareholder distributions
Total shareholder distributions in the quarter amounted to $6.2 billion comprising repurchases of shares of $4.0 billion and cash dividends paid to Shell plc shareholders of $2.2 billion. Dividends declared to Shell plc shareholders for the fourth quarter 2023 amount to $0.3440 per share. Shell has now completed $3.5 billion of share buybacks announced in the third quarter 2023 results announcement. Today, Shell announces a share buyback programme of $3.5 billion which is expected to be completed by the first quarter 2024 results announcement.
Full Year Analysis1
Full year 2023 income attributable to Shell plc shareholders, compared with the full year 2022, reflected lower realised oil and gas prices, lower volumes, and lower refining margins, partly offset by higher LNG trading and optimisation margins, and higher Marketing margins. By focusing the portfolio and simplifying the organisation, $1.0 billion of pre-tax structural cost reductions4 were delivered compared with the full year 2022, mainly driven by divestments.
Full year 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals of $6.2 billion, and unfavourable movements of $1.3 billion due to the fair value accounting of commodity derivatives. These charges and unfavourable movements are included in identified items amounting to a net loss of $8.2 billion. This compares with identified items in the full year 2022 which amounted to a net gain of $1.2 billion.
Adjusted Earnings and Adjusted EBITDA2 for the full year 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 $0.6 billion.
Cash flow from operating activities for the full year 2023 was $54.2 billion, and primarily driven by Adjusted EBITDA, and a working capital inflow of $7.8 billion, partly offset by tax payments of $13.7 billion, and a derivatives outflow of $6.1 billion.
Cash flow from investing activities for the full year 2023 was an outflow of $17.7 billion and included cash capital expenditure of $24.4 billion, divestment proceeds of $3.1 billion, interest received of $2.1 billion, and net other investing cash inflows of $1.4 billion.
This Unaudited Condensed Financial Report, together with supplementary financial and operational disclosure for this quarter, is available at www.shell.com/investors3. Progress to date on the financial targets that were announced during Capital Markets Day in June 2023 is available at www.shell.com/investors/results-and-reporting/progress-on-cmd23.html3.
1.All earnings amounts are shown post-tax, unless stated otherwise.
2.Adjusted EBITDA is without taxation.
3.Not incorporated by reference.
4.Structural cost reductions describe decreases in underlying operating expenses as a result of operational efficiencies, divestments, workforce reductions and other cost-saving measures that are expected to be sustainable compared with 2022 levels.
FOURTH 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 December 2023, we announced the start of production of the FPSO Sepetiba in the Mero field, offshore Santos Basin in Brazil. We hold a 19.3% stake in the Mero Unitized Field.
In December 2023, we announced the final investment decision for Sparta, a deep-water development in the US Gulf of Mexico. We hold a 51% interest.
In January 2024, we reached an agreement to sell The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance. Completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
Chemicals and Products
In January 2024, we announced the final investment decision to convert the hydrocracker of the Wesseling site at the Energy and Chemicals Park Rheinland in Germany into a production unit for Group III base oils, used in making high-quality lubricants such as engine and transmission oils. Crude oil processing will end at the Wesseling site by 2025 but will continue at the Godorf site.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
PERFORMANCE BY SEGMENT
| INTEGRATED GAS | ||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| 1,728 | 2,154 | 5,293 | -20 | Segment earnings2 | 7,046 | 22,212 | -68 | |||||||||||||||||||
| (2,235) | (375) | (675) | Of which: Identified items | A | (6,861) | 6,075 | ||||||||||||||||||||
| 3,963 | 2,529 | 5,968 | +57 | Adjusted Earnings2 | A | 13,907 | 16,137 | -14 | ||||||||||||||||||
| 6,578 | 4,871 | 8,332 | +35 | Adjusted EBITDA2 | A | 23,759 | 26,569 | -11 | ||||||||||||||||||
| 3,597 | 4,009 | 6,409 | -10 | Cash flow from operating activities | A | 17,520 | 27,692 | -37 | ||||||||||||||||||
| 1,196 | 1,099 | 1,527 | Cash capital expenditure | C | 4,196 | 4,265 | ||||||||||||||||||||
| 113 | 122 | 123 | -7 | Liquids production available for sale (thousand b/d) | 128 | 128 | +1 | |||||||||||||||||||
| 4,570 | 4,517 | 4,607 | +1 | Natural gas production available for sale (million scf/d) | 4,700 | 4,600 | +2 | |||||||||||||||||||
| 901 | 900 | 917 | — | Total production available for sale (thousand boe/d) | 939 | 921 | +2 | |||||||||||||||||||
| 7.06 | 6.88 | 6.78 | +3 | LNG liquefaction volumes (million tonnes) | 28.29 | 29.68 | -5 | |||||||||||||||||||
| 18.09 | 16.01 | 16.82 | +13 | LNG sales volumes (million tonnes) | 67.09 | 65.98 | +2 | |||||||||||||||||||
1.Q4 on Q3 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 third quarter 2023, reflected the net effect of higher contributions from trading and optimisation, and realised prices (increase of $1,559 million), and higher volumes (increase of $81 million), partly offset by higher operating expenses (increase of $146 million), and unfavourable deferred tax movements ($140 million). Trading and optimisation results reflect seasonality and a high number of optimisation opportunities.
Fourth quarter 2023 segment earnings also included unfavourable movements of $1,587 million due to the fair value accounting of commodity derivatives, and impairment charges of $547 million. 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 impairment charges are part of identified items and compare with the third quarter 2023 which included unfavourable movements of $340 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, partly offset by net cash outflows related to derivatives of $1,596 million, tax payments of $731 million and working capital outflows of $654 million.
Total oil and gas production was in line with the third quarter 2023. LNG liquefaction volumes increased by 3% mainly due to lower maintenance.
Full Year Analysis1
Segment earnings, compared with the full year 2022, reflected the net effect of lower realised prices and higher contributions from trading and optimisation (decrease of $1,143 million), lower volumes (decrease of $466 million), and unfavourable deferred tax movements ($728 million).
Full year 2023 segment earnings also included unfavourable movements of $4,407 million due to the fair value accounting of commodity derivatives, and net impairment charges and reversals of $2,247 million. These unfavourable movements and net impairment charges and reversals are part of identified items and compare with the full year 2022 which included favourable movements of $6,273 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.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
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 full year 2023 was primarily driven by Adjusted EBITDA, and a working capital inflow of $2,023 million, partly offset by net cash outflows related to derivatives of $4,668 million, and tax payments of $3,574 million.
Total oil and gas production, compared with the full year 2022, increased by 2% mainly due to ramp-up of new fields in Oman, Canada, Australia, and Trinidad and Tobago, and lower maintenance in Pearl GTL (Qatar) and Trinidad and Tobago, partly offset by derecognition of Sakhalin-related volumes, and production-sharing contract effects in Egypt and Pearl GTL (Qatar). LNG liquefaction volumes decreased by 5% 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 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
| UPSTREAM | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||||||||||||||||||||||||||
| 2,179 | 1,983 | 1,380 | +10 | Segment earnings2 | 8,528 | 16,222 | -47 | |||||||||||||||||||||||||||||||||||||||||||
| (909) | (238) | (1,681) | Of which: Identified items | A | (1,267) | (1,096) | ||||||||||||||||||||||||||||||||||||||||||||
| 3,088 | 2,221 | 3,061 | +39 | Adjusted Earnings2 | A | 9,794 | 17,319 | -43 | ||||||||||||||||||||||||||||||||||||||||||
| 7,910 | 7,412 | 9,418 | +7 | Adjusted EBITDA2 | A | 30,607 | 42,100 | -27 | ||||||||||||||||||||||||||||||||||||||||||
| 5,787 | 5,336 | 7,224 | +8 | Cash flow from operating activities | A | 21,450 | 29,641 | -28 | ||||||||||||||||||||||||||||||||||||||||||
| 2,436 | 2,007 | 1,845 | Cash capital expenditure | C | 8,343 | 8,143 | ||||||||||||||||||||||||||||||||||||||||||||
| 1,361 | 1,311 | 1,331 | +4 | Liquids production available for sale (thousand b/d) | 1,325 | 1,333 | -1 | |||||||||||||||||||||||||||||||||||||||||||
| 2,952 | 2,564 | 3,067 | +15 | Natural gas production available for sale (million scf/d) | 2,754 | 3,272 | -16 | |||||||||||||||||||||||||||||||||||||||||||
| 1,870 | 1,753 | 1,859 | +7 | Total production available for sale (thousand boe/d) | 1,800 | 1,897 | -5 | |||||||||||||||||||||||||||||||||||||||||||
1.Q4 on Q3 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 third quarter 2023, mainly reflected favourable movements in deferred tax positions ($628 million) and higher volumes (increase of $185 million).
Fourth quarter 2023 segment earnings also included net impairment charges and reversals of $454 million, charges of $424 million related to the impact of the weakening Argentine peso on a deferred tax position, and legal provisions of $358 million, partly offset by a gain of $182 million due to the impact of the discount rate change on provisions. These charges and gains are part of identified items, and compare with the third quarter 2023 which 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.
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 $2,015 million.
Total production, compared with the third quarter 2023, increased mainly due to lower scheduled maintenance and growth from new fields.
Full Year Analysis1
Segment earnings, compared with the full year 2022, mainly reflected lower realised oil and gas prices (decrease of $5,696 million) and lower volumes (decrease of $2,001 million).
Full year 2023 segment earnings also included net impairment charges and reversals of $642 million, and net charges of $295 million related to the impact of the weakening Argentine peso and strengthening Brazilian real on a deferred tax position. These charges and gains are part of identified items, and compare with the full year 2022 which included net impairment reversals and charges of $853 million, and charges of $1,385 million relating to the EU solidarity contribution and $802 million relating to the UK Energy Profits Levy.
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 full year 2023 was primarily driven by Adjusted EBITDA, partly offset by tax payments of $8,470 million.
Total production, compared with the full year 2022, decreased mainly due to the impact of divestments. 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.
2.Adjusted EBITDA is without taxation.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
| MARKETING | ||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| 143 | 702 | 375 | -80 | Segment earnings² | 2,951 | 2,133 | +38 | |||||||||||||||||||
| (549) | (18) | (72) | Of which: Identified items | A | (229) | (622) | ||||||||||||||||||||
| 692 | 720 | 446 | -4 | Adjusted Earnings² | A | 3,180 | 2,754 | +15 | ||||||||||||||||||
| 1,337 | 1,519 | 1,045 | -12 | Adjusted EBITDA2 | A | 6,037 | 5,324 | +13 | ||||||||||||||||||
| 2,709 | 880 | 1,062 | +208 | Cash flow from operating activities | A | 6,088 | 2,376 | +156 | ||||||||||||||||||
| 1,339 | 917 | 1,993 | Cash capital expenditure | C | 5,612 | 4,831 | ||||||||||||||||||||
| 2,508 | 2,654 | 2,543 | -5 | Marketing sales volumes (thousand b/d) | 2,554 | 2,503 | +2 | |||||||||||||||||||
1.Q4 on Q3 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, and agricultural sectors.
Quarter Analysis1
Segment earnings, compared with the third quarter 2023, reflected lower Marketing margins (decrease of $101 million) including lower Lubricants margins due to higher feedstock costs and impact of seasonality on Mobility margins, partly offset by higher Sectors & Decarbonisation margins. Fourth quarter 2023 segment earnings also included lower tax charges (decrease of $121 million) mainly due to one-off tax helps.
Fourth quarter 2023 segment earnings also included impairment charges of $406 million, and charges of $97 million related to redundancy and restructuring. These charges are part of identified items.
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 $1,843 million. These inflows were partly offset by tax payments of $280 million and non-cash cost-of-sales (CCS) adjustments of $81 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the third quarter 2023, decreased mainly due to seasonality.
Full Year Analysis1
Segment earnings, compared with the full year 2022, reflected higher Marketing margins (increase of $1,465 million) including higher unit margins in Mobility, higher margins in Lubricants due to lower feedstock costs and higher volumes in Sectors & Decarbonisation. These were partly offset by higher operating expenses (increase of $703 million) and higher depreciation charges (increase of $264 million) mainly due to asset acquisitions.
Full year 2023 segment earnings also included net impairment charges and reversals of $457 million, and charges of $111 million related to redundancy and restructuring partly offset by gains of $298 million related to indirect tax credits. These charges and gains are part of identified items and compare with the full year 2022 which included net impairment charges and reversals of $321 million, net losses of $135 million related to the sale of assets, 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 full year 2023 was primarily driven by Adjusted EBITDA, working capital inflows of $873 million, and the timing impact of payments relating to emission certificates and biofuel programmes of $296 million. These inflows were partly offset by tax payments of $744 million, and non-cash cost-of-sales (CCS) adjustments of $221 million.
Marketing sales volumes (comprising hydrocarbon sales), compared with the full year 2022, increased mainly due to improved demand in Aviation.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
1.All earnings amounts are shown post-tax, unless stated otherwise.
2.Adjusted EBITDA is without taxation.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
| CHEMICALS AND PRODUCTS | ||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| (1,792) | 1,173 | 332 | -253 | Segment earnings² | 1,530 | 4,515 | -66 | |||||||||||||||||||
| (1,875) | (207) | (412) | Of which: Identified items | A | (2,160) | (204) | ||||||||||||||||||||
| 83 | 1,380 | 744 | -94 | Adjusted Earnings² | A | 3,690 | 4,719 | -22 | ||||||||||||||||||
| 770 | 2,591 | 1,574 | -70 | Adjusted EBITDA2 | A | 7,710 | 8,561 | -10 | ||||||||||||||||||
| 207 | 2,379 | 3,119 | -91 | Cash flow from operating activities | A | 6,987 | 12,906 | -46 | ||||||||||||||||||
| 1,031 | 879 | 786 | Cash capital expenditure | C | 3,192 | 3,838 | ||||||||||||||||||||
| 1,315 | 1,334 | 1,434 | -1 | Refinery processing intake (thousand b/d) | 1,349 | 1,402 | -4 | |||||||||||||||||||
| 1,560 | 1,548 | 1,800 | +1 | Refining & Trading sales volumes (thousand b/d) | 1,570 | 1,700 | -8 | |||||||||||||||||||
| 2,588 | 2,998 | 3,017 | -14 | Chemicals sales volumes (thousand tonnes) | 11,245 | 12,281 | -8 | |||||||||||||||||||
1.Q4 on Q3 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 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 third quarter 2023, reflected lower Products margins (decrease of $1,193 million) mainly driven by lower refining margins due to lower global product demand and lower margins from trading and optimisation. Segment earnings also reflected lower Chemicals margins (decrease of $150 million) including the impact of continuing global oversupply as well as weak demand and lower income from joint ventures and associates. In addition, the fourth quarter 2023 reflected higher operating expenses (increase of $76 million). These were partly offset by favourable deferred tax movements (increase of $123 million).
Fourth quarter 2023 segment earnings also included net impairment charges and reversals of $1,977 million mainly relating to the Chemicals assets in Singapore, and charges of $78 million related to redundancy and restructuring partly offset by favourable movements of $130 million due to the fair value accounting of commodity derivatives. These charges and gains are part of identified items, and compare with the third quarter 2023 which included net impairment charges and reversals of $79 million, legal provisions of $74 million, and unfavourable movements of $53 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. In the fourth quarter 2023, Chemicals had negative Adjusted Earnings of $492 million and Products had positive Adjusted Earnings of $576 million.
Cash flow from operating activities for the quarter was primarily driven by working capital inflows of $1,353 million, Adjusted EBITDA, cash inflows relating to commodity derivatives of $294 million, and dividends (net of profits) from joint ventures and associates of $222 million. These inflows were partly offset by non-cash cost-of-sales (CCS) adjustments of $1,028 million, the timing impact of payments relating to emission certificates and biofuel programmes of $970 million, and tax payments of $273 million.
Chemicals manufacturing plant utilisation was 62% compared with 70% in the third quarter 2023, due to higher planned and unplanned maintenance in North America and economic optimisation.
Refinery utilisation was 81% compared with 84% in the third quarter 2023, due to planned maintenance in North America.
Full Year Analysis1
Segment earnings, compared with the full year 2022, reflected lower Products margins (decrease of $1,528 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 $546 million) due to start-up of operations at Shell Polymers Monaca in the USA. These were partly offset by higher Chemicals margins (increase of $612 million).
Full year 2023 segment earnings also included net impairment charges and reversals of $2,204 million mainly relating to the Chemicals assets in Singapore, and charges of $84 million related to redundancy and restructuring partly offset by
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
favourable movements of $213 million due to the fair value accounting of commodity derivatives. These charges and gains are part of identified items, and compare with the full year 2022 which included net impairment charges and reversals of $226 million, legal provisions of $149 million, unfavourable movements of $147 million related to the fair value accounting of commodity derivatives, tax charges relating to the EU solidarity contribution of $74 million partly offset by gains of $223 million related to the sale of assets, and gains of $104 million related to the remeasurement of redundancy and restructuring costs.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the full year 2023, Chemicals had negative Adjusted Earnings of $1,622 million and Products had positive Adjusted Earnings of $5,313 million.
Cash flow from operating activities for the full year 2023 was primarily driven by Adjusted EBITDA, working capital inflows of $609 million, cash inflows relating to commodity derivatives of $529 million, and dividends (net of profits) from joint ventures and associates of $300 million. These inflows were partly offset by the timing impact of payments relating to emission certificates and biofuel programmes of $1,224 million, non-cash cost-of-sales (CCS) adjustments of $627 million, and tax payments of $484 million.
Chemicals manufacturing plant utilisation was 68% compared with 79% in the full year 2022, mainly due to planned and unplanned maintenance and economic optimisation during the full year 2023.
Refinery utilisation was 85% compared with 86% in the full year 2022.
1.All earnings amounts are shown post-tax, unless stated otherwise.
2.Adjusted EBITDA is without taxation.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
| RENEWABLES AND ENERGY SOLUTIONS | ||||||||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
| (291) | 600 | 4,673 | -148 | Segment earnings2 | 3,038 | (1,059) | +387 | |||||||||||||||||||
| (445) | 667 | 4,379 | Of which: Identified items | A | 2,333 | (2,805) | ||||||||||||||||||||
| 155 | (67) | 293 | +331 | Adjusted Earnings2 | A | 705 | 1,745 | -60 | ||||||||||||||||||
| 228 | 79 | 396 | +187 | Adjusted EBITDA2 | A | 1,413 | 2,459 | -43 | ||||||||||||||||||
| (1,265) | (34) | 2,674 | -3655 | Cash flow from operating activities | A | 2,984 | (6,394) | +147 | ||||||||||||||||||
| 1,026 | 659 | 1,076 | Cash capital expenditure | C | 2,681 | 3,469 | ||||||||||||||||||||
| 68 | 76 | 66 | -11 | External power sales (terawatt hours)3 | 279 | 243 | +15 | |||||||||||||||||||
| 175 | 170 | 241 | +3 | Sales of pipeline gas to end-use customers (terawatt hours)4 | 738 | 843 | -12 | |||||||||||||||||||
1.Q4 on Q3 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 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 third quarter 2023, reflected higher margins (increase of $118 million) mainly due to trading and optimisation primarily in Europe and the Americas as a result of market volatility and seasonality, and favourable tax movements ($110 million), partly offset by higher operating expenses (increase of $38 million).
Fourth quarter 2023 segment earnings also included impairment charges of $551 million, partly offset by favourable movements of $125 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 charges and favourable movements are part of identified items and compare with the third quarter 2023 which included favourable movements of $506 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 fourth quarter 2023, more than offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the quarter was primarily driven by working capital outflows of $970 million, tax payments of $413 million, and net cash outflows related to derivatives of $268 million, partly offset by Adjusted EBITDA.
Full Year Analysis1
Segment earnings, compared with the full year 2022, reflected lower margins (decrease of $684 million) mainly from trading and optimisation due to lower gas and power prices in 2023, unfavourable tax movements ($218 million), and higher operating expenses (increase of $186 million).
Full year 2023 segment earnings also included favourable movements of $2,756 million due to the fair value accounting of commodity derivatives, partly offset by net impairment charges and reversals of $669 million. These favourable movements and charges are part of identified items and compare with the full year 2022 which included unfavourable movements of $2,444 million due to the fair value accounting of commodity derivatives, and impairment charges of $361 million.
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 full year 2023, more than offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the full year 2023 was primarily driven by working capital inflows of $3,723 million, and Adjusted EBITDA, partly offset by net cash outflows related to derivatives of $1,988 million, and tax payments of $762 million.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
1.All earnings amounts are shown post-tax, unless stated otherwise.
2.Adjusted EBITDA is without taxation.
Additional Growth Measures
| Quarters | Full year | |||||||||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | %¹ | 2023 | 2022 | % | ||||||||||||||||||||
| Renewable power generation capacity (gigawatt): | ||||||||||||||||||||||||||
| 2.5 | 2.5 | 2.2 | +2 | – In operation2 | 2.5 | 2.2 | +13 | |||||||||||||||||||
| 4.1 | 4.9 | 4.2 | -17 | – Under construction and/or committed for sale3 | 4.1 | 4.2 | -3 | |||||||||||||||||||
1.Q4 on Q3 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.
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.
| CORPORATE | ||||||||||||||||||||
| Quarters | $ million | Full year | ||||||||||||||||||
| Q4 2023 | Q3 2023 | Q4 2022 | Reference | 2023 | 2022 | |||||||||||||||
| (586) | (460) | (654) | Segment earnings1 | (2,811) | (2,461) | |||||||||||||||
| (19) | 22 | (28) | Of which: Identified items | A | (69) | (90) | ||||||||||||||
| (567) | (482) | (626) | Adjusted Earnings1 | A | (2,742) | (2,371) | ||||||||||||||
| (488) | (136) | (164) | Adjusted EBITDA1 | A | (987) | (725) | ||||||||||||||
| 1,540 | (238) | 1,916 | Cash flow from operating activities | A | (832) | 2,192 | ||||||||||||||
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 third quarter 2023, reflected unfavourable movements in currency exchange rate effects and net interest expense, partly offset by a favourable movement in tax credits.
Adjusted EBITDA2 was mainly driven by unfavourable currency exchange rate effects.
Full Year Analysis1
Segment earnings, compared with the full year 2022, were primarily driven by unfavourable movements in currency exchange rate effects and tax credits.
Adjusted EBITDA2 was 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.
PRELIMINARY RESERVES UPDATE
When final volumes are reported in the 2023 Annual Report and Accounts and 2023 Form 20-F, Shell expects that SEC proved oil and gas reserves additions before taking into account production will be approximately 1.3 billion boe, and that 2023 production will be approximately 1.1 billion boe. As a result, total proved reserves on an SEC basis are expected to be approximately 9.8 billion boe. Acquisitions and divestments of 2023 reserves are expected to account for a net increase of approximately 0.2 billion boe.
The proved Reserves Replacement Ratio on an SEC basis is expected to be 120% for the year and 120% for the 3-year average. Excluding the impact of acquisitions and divestments, the proved Reserves Replacement Ratio is expected to be 99% for the year and 90% for the 3-year average.
Further information will be provided in the 2023 Annual Report and Accounts and 2023 Form 20-F.
OUTLOOK FOR THE FIRST QUARTER 2024
Cash capital expenditure for full year 2024 is expected to be within $22 – $25 billion.
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| SHELL PLC 4th QUARTER 2023 AND FULL YEAR UNAUDITED RESULTS | ||
Integrated Gas production is expected to be approximately 930 – 990 thousand boe/d. LNG liquefaction volumes are expected to be approximately 7.0 – 7.6 million tonnes. Outlook reflects Prelude back in operation after a major turnaround.
Upstream production is expected to be approximately 1,730 – 1,930 thousand boe/d. Production outlook reflects the planned maintenance in deep-water assets.
Marketing sales volumes are expected to be approximately 2,150 – 2,650 thousand b/d.
Refinery utilisation is expected to be approximately 83% – 91%, higher due to completion of planned maintenance activities in North America. Chemicals manufacturing plant utilisation is expected to be approximately 68% – 76%.
Corporate Adjusted Earnings are expected to be a net expense of approximately $400 – $600 million in the first quarter and a net expense of approximately $1,500 – $2,100 million for the full year 2024. This excludes the impact of currency exchange rate and fair value accounting effects.
Energy Transition Strategy Update: As Shell progresses towards its goal of achieving net-zero emissions by 2050 in an evolving energy marketplace serving a dynamic world, Shell continuously evaluates and updates its energy transition strategy, including its interim targets to reduce the carbon intensity of the energy products it sells. Shell expects to publish its 2024 Energy Transition Strategy on March 14, 2024. This publication will update shareholders and wider society on Shell’s energy transition strategy in line with its Capital Markets Day 2023 communications and set out Shell’s climate targets and ambitions for the future.
FORTHCOMING EVENTS
| Date | Event | ||||
| February 14, 2024 | Shell LNG Outlook 2024 | ||||
| March 14, 2024 | Publication of Annual Report and Accounts and filing of Form 20-F for the year ended December 31, 2023 | ||||
| March 14, 2024 | Publication of Energy Transition Strategy 2024 | ||||
| March 27, 2024 | Annual ESG Update | ||||
| May 2, 2024 | First quarter 2024 results and dividends | ||||
| May 21, 2024 | Annual General Meeting | ||||
| August 1, 2024 | Second quarter 2024 results and dividends | ||||
| October 31, 2024 | Third quarter 2024 results and dividends | ||||