The following is an update to the third quarter 2022 outlook. Impacts presented may vary from the actual third quarter 2022 results and are subject to finalisation of those results, which will be published on October 27, 2022. Unless otherwise indicated, all outlook statements exclude identified items.
Integrated Gas
Adjusted EBITDA
- Production is expected to be between 890 and 940 thousand barrels of oil equivalent per day.
- LNG liquefaction volumes are expected to be between 6.9 and 7.5 million tonnes.
- Trading and optimisation results for Integrated Gas are expected to be significantly lower compared to the second quarter 2022 as a result of seasonality and substantial differences between paper and physical realisation in a volatile and dislocated market.
- Underlying Opex is expected to be between $1.1 and $1.3 billion.
Adjusted Earnings
- Pre-tax depreciation is expected to be between $1.3 and $1.7 billion.
- Taxation charge is expected to be between $1.3 and $1.6 billion.
Upstream
Adjusted EBITDA
- Production is expected to be between 1,750 and 1,850 thousand barrels of oil equivalent per day.
- Underlying Opex is expected to be between $2.5 and $2.9 billion.
- The share of profit of joint ventures and associates is expected to include a gain between $0.5 and $0.7 billion relating to storage transfer effects.
- Adjusted EBITDA is also expected to include non-cash one-off gains between $0.8 and $1.0 billion.
Adjusted Earnings
- Pre-tax depreciation is expected to be between $3.0 and $3.4 billion.
- Taxation charge is expected to be between $3.4 and $4.0 billion, which includes a one-off release of non-cash tax provision of approximately $0.3 billion.
Marketing
Adjusted EBITDA
- Marketing results are expected to be higher than the second quarter 2022.
- Underlying Opex is expected to be between $2.0 and $2.2 billion.
- Sales volumes are expected to be between 2,350 and 2,750 thousand barrels per day.
Adjusted Earnings
- Pre-tax depreciation is expected to be between $300 and $500 million.
- Taxation charge is expected to be between $150 and $350 million.
Chemicals & Products
Adjusted EBITDA
- The indicative refining margin is $15/bbl, compared to $28/bbl in the second quarter 2022; the decrease in margin is expected to have a negative impact of between $1.0 and $1.4 billion on the third quarter Adjusted EBITDA for Products compared to the second quarter 2022.
- The indicative chemicals margin is expected to be negative of $(27)/tonne, compared to a positive $86/tonne in the second quarter 2022; the decrease in margin is expected to have a negative impact of between $300 and $600 million on the third quarter Adjusted EBITDA of Chemicals compared to the second quarter 2022.
- Trading and Optimisation is expected to be in line with the second quarter 2022.
- Refinery utilisation is expected to be between 86% and 90%.
- Chemicals utilisation is expected to between 75% and 79%.
- Underlying Opex is expected to be between $2.7 and $3.1 billion.
Adjusted Earnings
- Pre-tax depreciation is expected to be between $650 and $850 million.
- Taxation charge is expected to be between $100 and $400 million.
Renewables and Energy Solutions
- Renewables and Energy Solutions Adjusted Earnings are expected to be between $(300) and $300 million for the third quarter.
Corporate
- Corporate segment Adjusted Earnings are expected to be a net expense of $550 to $750 million for the third quarter.
Shell Group
CFFO
- Tax paid is expected to be between $3.4 and $3.8 billion.
- As of the end of August, CFFO was impacted by working capital outflows of around $2.5 billion. Prevailing volatility could lead to additional outflows in CFFO in September from the combined effect of: price impacts on inventory, changes in inventory volumes (including gas storage), margining effects on derivatives and movements in accounts payable and receivables balances.
Full-year price and margin sensitivities
The Adjusted Earnings and CFFO price and margin sensitivities are indicative and subject to change. These are in relation to the full-year results and exclude short-term impacts from working capital movements, production seasonality, cost-of-sales adjustments and derivatives. Sensitivity accuracy is subject to trading and optimisation performance, including short-term opportunities, depending on market conditions. These sensitivities are reviewed and updated annually in the fourth quarter.
| Marker sensitivity | Adjusted Earnings $ million | CFFO $ million |
| Integrated Gas | ||
| +$10/bbl Brent | 1,000 | 1,000 |
| +$10/bbl Japan Customs-cleared Crude – 3 months | 1,100 | 1,200 |
| Upstream | ||
| +$10/bbl Brent | 2,500 | 3,000 |
| +$1/mmbtu Henry Hub | 250 | 325 |
| +$1/mmbtu EU TTF | 150 | 150 |
| Chemicals & Products | ||
| +$1/bbl indicative refining margin | 425 | — |
| +$30/tonne indicative chemicals margin | 700 | — |
Indicative chemicals margin
The indicative chemicals margin is an approximation of Shell’s global chemical margin performance trend (including equity-accounted associates), calculated using price markers from third parties’ databases. It is based on a simplified feedstock and product yield profile at a nominal level of plant performance and optimisation. The actual margins realised by Shell may vary due to factors including specific local market effects, chemicals plants maintenance, optimisation, operating decisions and product demand.
Actual historical indicative margins based on the enclosed indicative margin formula are available on the Chemicals & Products page in the Quarterly Data Book.
| Q3 2022 | Q2 2022 | Q1 2022 |
| $(27)/tonne | $86/tonne | $98/tonne |
Actual realised margins are expected to exceed the formula this quarter due to various optimisation strategies in the current market environment.
Calculation formula ($/tonne) – note that brackets indicate a negative sign. For Natural Gas a factor of 48.65mmBTU/tonne and for Ethane a factor of 17.6bbl/tonne has been assumed.
NWE TTF Natural Gas*(4.0%) + USGC Henry Hub Natural Gas*(12.5%) + USGC Mont Belvieu Ethane*(4.0%) + NWE Naphtha*(19.0%) + NWE Butane*(3.5%) + Singapore Automotive Gasoil 10ppm*(4.0)% + Singapore Fuel oil 380 cst*(1.5)% + Japan Naphtha*(9.0)% + USGC VGO_LS*(4.5)% + USGC Gasoline Regular*5.5% + NWE Propylene*6.0% + NWE Ethylene Oxide*2.5% + NWE Ethylene*5.0% + South East Asia Propylene*1.5% + South East Asia Polypropylene*3% + China Styrene*10.5% + China Propylene Oxide*3.0% + China MEG*8.0% + USGC Ethylene*4.0% + Korea Benzene*(4.0)% + $18.5/tonne
Indicative refining margin
The indicative refining margin is an approximation of Shell’s global gross refining unit margin, calculated using price markers from third parties’ databases. It is based on a simplified crude and product yield profile at a nominal level of refining performance. The actual margins realised by Shell may vary due to factors including specific local market effects, refinery maintenance, crude diet optimisation, operating decisions and product demand.
Gross refining unit margin is defined as the hydrocarbon margin net of purchased/sold utilities, additives and relevant freight costs, divided by crude and feedstock intake in barrels. It is only applicable to the impact of market pricing on refining business performance, excluding trading margin.
Actual historical indicative margins based on the 2021 indicative margin formula are available on the Refining & Trading page in the Quarterly Data Book.
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 |
| $15.03/bbl | $28.04/bbl | $10.23/bbl | $6.55/bbl | $5.70/bbl |
The formula provided will be reviewed quarterly and typically updated annually, reflecting any changes in our refining portfolio.
Calculation formula ($/bbl) – note that brackets indicate a negative sign
Brent*(29.0%) + MSW*(11.5%) + LLS*(16.0%) + Dubai*(33.5%) + Urals CIF EU*(7.5%) + NWE Naphtha (RDAM FOB Barge)*9.5% + NWE Mogas premium unleaded*13.0% + NWE Kero*12.0% + NWE AGO*27% + NWE Benzene*1% + Sing Fueloil 380 cst*7.5% + USGC Normal Butane*3.5% + USGC LS No 2 Gasoil*8.0% + USGC Natural Gas*(2.0%) +TTF Natural Gas*(1%)+ USGC CBOB*14.5% + RINS*(22.0%) + NWE Propylene Platts*1% – $0.92/bbl
Consensus
The consensus collection for quarterly Adjusted Earnings, Adjusted EBITDA is per the new reporting segments and CFFO at a Shell group level, managed by Vara Research, will be published on 20 October 2022.