Shell Plc · LSE:SHEL
Shell — Q3 2022 Earnings Presentation
45 slides from Shell's earnings presentation, Oct 27, 2022
Slide 1: Third Quarter 2022 Results
#PoweringProgress THIRD QUARTER 2022 RESULTS ROBUST RESULTS FROM A RESILIENT PORTFOLIO Shell plc October 27, 2022
Slide 2: Definitions & Cautionary Note
DEFINITIONS & CAUTIONARY NOTE “Adjusted Earnings” is the income attributable to Shell plc shareholders for the period, adjusted for the after-tax effect of oil price changes on inventory and for identified items, and excludes earnings attributable to non-controlling interest. In this presentation, “
Slide 3: The Shell Investment Case: Powering Progress
GENERATING THE SHELL INVESTMENT CASE SHAREHOLDER VALUE Growing value through a dynamic portfolio and disciplined capital allocation POWERING PROGRESS R E S P E C T IN G N A T U R E Our strategy to accelerate the POWERING LIVES Protecting the environment, reducing waste and transition to net-zero emi
Slide 4: Q3 2022 Key Messages
POWERING PROGRESS Q3 2 02 2 K EY M ES SAG ES Delivering robust results Investing in energy security & transition Enhanced shareholder distributions Robust performance in a turbulent economic Disciplined cash capex: expected to be in the $14.5 billion buyback programme for Q1 – Q3 environment $
Slide 5: Powering Progress in Action
STRATEGY UPDATE P OWERI N G P RO G RESS I N A CT I O N Renewables & Energy Marketing Integrated Gas Chemicals & Products Upstream Solutions Integrated energy and Delivering the energy of Profitably decarbonising Integrated clean energy A world leader in LNG: chemicals parks delivering today while fu
Slide 6: Accelerating Energy Transition
STRATEGY UPDATE A CCEL ERAT I N G EN E RG Y T RA N SI T I ON Announced JV with Foresight to acquire Completed first road Announced JV with Shenergy Group to build development rights for 370 MW renewables trial in India using a network of hydrogen projects in Western Australia, including new bio-base
Slide 7: Volatile Business Environment
MACRO $/MMBtu V OL A TI LE B U S I N ESS EN V I RO N MEN T Oil and Gas Prices Shell Indicative Refining and Chemical Margins $/bbl $/MMBtu $/bbl $/tonne Brent JCC-3 Henry Hub (RHS) EU TTF (RHS) Indicative Refining margin Indicative Chemical margin (RHS) 140 80 35 400 120 70 30 300 60 100 25 50 200 8
Slide 8: Robust Results in Volatile Times
Q3 2022 FINANCIAL RESULTS Q3 2022 average Brent price: ROB U S T RES U LTS I N V OL A T I LE T I M ES $101/bbl Income attributable to Shell plc Includes net losses of $1.0 billion due to the fair value accounting of commodity derivatives and $6.7 billion shareholders current cost of supplies adjus
Slide 9: Robust Results in Volatile Times
Q3 2022 FINANCIAL RESULTS ROB U S T RES U LTS I N V OL A T I LE T I M ES Adjusted Earnings Q2 2022 to Q3 2022 Cash conversion Q3 2022 $ billion $ billion (4.2) 14 28 working capital movement 12 24 1.0 0.1 (1.3) 5.8 1.1 (0.3) (0.0) 20 2.9 10 (1.4) (1.7) 5.9 8 16 (4.3) (2.4) 6 12 11.5 0.4 21.5 (4.6) 9
Slide 10: Robust Results in Volatile Times
Q3 2022 FINANCIAL RESULTS Additional information available in ROB U S T RES U LTS I N V OL A T I LE T I M ES the Q3 2022 Quarterly Press Release Adjusted Earnings Adjusted EBITDA CFFO $ billion Q3 2022 Q2 2022 Q3 2022 Q2 2022 Q3 2022 Q2 2022 Integrated Gas 2.3 3.8 5.4 6.5 6.7 8.2 Upstream 5.9 4.9 12
Slide 11: Integrated Business Model Delivering Resilient EBITDA and Cash
CASH POTENTIAL I N T EG RATED B U S I N ESS M O D EL D EL I V ERI N G RES I L I EN T EB I T D A A N D CA S H Adjusted EBITDA Track record of strong CFFO $ billion $ billion 25 60 50 20 40 15 30 10 20 5 10 0 0 Growth Transition Upstream Peer range Shell Shell plc | October 27, 2022 Left graph exclude
Slide 12: IG Trading and Optimisation Results Impacted by Seasonality and Market Dislocations
Q3 2022 FINANCIAL RESULTS I G T RA D I N G A N D O P T I M I SATI O N RES U LTS I M P ACT ED B Y S EA SO N ALI TY A N D M A RK ET D I S L OCA TI O N S Seasonality effect and supply constraints Volatile and dislocated market $/MMBtu EU TTF > JKM, with 80 increased differential end JKM EU TTF Net Term
Slide 13: Enhanced Distributions and Net Debt Movement
Q3 2022 FINANCIAL RESULTS EN H A N CED D I S T RI B UTI ON S A N D N ET D EB T M OV EMEN T Cash dividends and Share buybacks Net debt Q2 2022 to Q3 2022 $ billion $ billion 60 8 7 (16.7) 6 1.0 0.9 0.7 40 5 (0.3) 6.8 5.4 4 4.2 46.4 48.3 3 20 2 1 0 0 2 Cash dividends 1 Buybacks 1 Dividends paid to She
Slide 14: Enhanced Shareholder Distributions
CAPITAL ALLOCATION EN H A N CED S H A REHO LD ER D I S T RI B UTI ON S $18.5 billion of share buybacks announced in 2022 FY 2022 Shareholder announcements We have now completed $6 billion of share buybacks, announced distributions at Q2 results $4 billion share buyback programme announced at Q
Slide 15: Continuing Portfolio Focus and High-Grading
DIVESTMENTS CON T I N U I N G P ORT F OL I O F OCU S A N D H I G H - G RAD I NG Shell Neft Gasnor Salym Fredericia refinery Duvernay shales PCK Schwedt refinery Puget Sound Sakhalin-2 Aera Energy Permian Mobile refinery Egypt Western Desert Deer Park refinery OML 17 Malampaya Nigeria onshore Complet
Slide 16: Our Progress: Carbon
CARBON OU R P ROG RESS UN PARIS AGREEMENT NET ZERO BY 2050 FROM 1.7 GTPA TO ZERO Strategy aligns with goal to limit the increase in Net-zero emissions energy business by 2050 We believe Shell’s total carbon emissions from the global average temperature to 1.5 degrees including all emissions (Scopes
Slide 17: Platform for Growth: Marketing Business
SHELL INSIGHTS: MARKETING BUSINESS Additional information: PLATFORM FOR GROWTH Shell Insights: Marketing Business Update A WORLD-LEADING CUSTOMER-FACING BUSINESS Mobility – Making customers’ life journeys Lubricants – Keeping the world progressing Sectors & Decarbonisation – Profitably better as the
Slide 18: Leading Brand, Customer Access and Differentiated Offerings
SHELL INSIGHTS: MARKETING BUSINESS LEADING BRAND, CUSTOMER ACCESS AND DIFFERENTIATED OFFERINGS Differentiated offerings contributing ~60% Focusing on low-carbon products and services % Gross margin 2021 Includes lubricants, convenience retail, E-mobility, biofuels, agriculture MOST VALUABLE and fore
Slide 19: Marketing Major Projects
M A RK ETI N G M A J O R P RO J E CT S Shell Shell- Project Country Products share % operated Under construction – Start-up 2022-2023 Shell Galloway USA 100 Renewable Fuels – RNG LanzaJet USA 15.4 Renewable Fuels Varennes Carbon Varennes Carbon Recycling Canada 40 Renewable Fuels Biofuels Plant Ro
Slide 20: Integrated Power and Hydrogen Portfolio and Projects
I N T EG RATED P OWE R A N D H Y D RO G E N P ORT F OLI O A N D P ROJE CT S UK NL Norway Spain France Germany Shell Capacity Project Country Project type share % MW Renewable generation – Capacity under construction and/or committed for sale Gangarri Australia 100 120 Solar Sprng Energy India 100 57
Slide 21: Carbon Capture and Storage and Nature-Based Projects
CA RB ON CA P T U RE A N D S T ORAG E A N D N A T U RE -B ASED P ROJE CT S Northern CO2 captured Lights Shell Shell- Announced projects Country and/or stored Technology share % operated mtpa Centre Mongstad CCS projects – Under construction Northern Lights (Phase 1) Norway 33.3% 1.5 JV CCS projects
Slide 22: Integrated Gas Portfolio & Major Projects
I N T EG RATED G A S P O RT F O LI O & M A J O R P ROJE CT S Peak LNG Shell Shell- Project Country production capacity share % operated kboe/d mtpa Under construction – Start-up 2022-2023 Arrow - Surat Gas Australia 50 backfill Gorgon - Jansz Australia 25 backfill Eemshaven Oman Gas Oman 53 120 LN
Slide 23: Chemicals and Products Portfolio & Major Projects
CH EM I CAL S A N D P RO D U CT S P O RT FO LI O & M A JOR P ROJE CT S Shell Products Shell- Project Country share % operated Construction complete – Start-up 2022 Pennsylvania Petrochemicals USA 100 1.5 mtpa polyethylene Complex Under construction – Start-up 2023+ Mossmorran Rotterdam Moerdijk en
Slide 24: Upstream Portfolio & Major Projects
U P S TREAM P O RT F O LI O & M A J O R P RO JE CT S Shell Peak production Shell- Project Country share % kboe/d operated Under construction – Start-up 2022-2023 Mero 2 [A] Brazil 19.3 180 Timi Malaysia 75 50 Pierce post Depressurisation UK 93 30 UK UK 50 45 Penguins Redevelopment Kazakhstan V
Slide 25: Upcoming events and useful links
Upcoming events: Useful links: Feb 2, 2023 Strategy Day 2021 Q4 2022 results Annual and Quarterly Databook May 4, 2023 Shell Energy Transition Strategy Q1 2023 results Nigeria briefing notes 2021 Jul 27, 2023 ESG performance data Q2 2023 results Simplified Share Structure Nov 2, 2023 Q3 2023 results
Slide 26: Slide 26
Slide 27: Capex Evolving Towards Growth Pillar
CAPITAL ALLOCATION CA P EX E V O L VI N G T O WA RD S G RO WT H P I L L A R Portfolio level approach Cash capex evolution SUSTAINING OUR STRATEGY – Net debt above $65 billion Cash Priority: Strengthen balance sheet and maintain ~4% dividend per share growth annually, subject to Board approval Cash
Slide 28: 2021 Delivery and Outlook
CAPITAL ALLOCATION – NEXT PHASE 2 02 1 D EL I V ERY A N D O U T L O OK GROWTH PILLAR: TRANSITION PILLAR: UPSTREAM PILLAR: THE FUTURE OF ENERGY ENABLING OUR STRATEGY FUNDING OUR STRATEGY Renewables Net debt end-2021: Integrated Chemicals and Shell Marketing and Energy Upstream $53 billion Gas Product
Slide 29: Differentiated Return Expectations by Business
CAPITAL ALLOCATION D I F F ERENT I ATED RE T U RN E X P E CT ATI O NS Project level approach B Y B U S I N ESS GROWTH PILLAR: TRANSITION PILLAR: UPSTREAM PILLAR: THE FUTURE OF ENERGY ENABLING OUR STRATEGY FUNDING OUR STRATEGY Marketing Renewables and Integrated Gas Chemicals Upstream Energy Solution
Slide 30: Energy Transition Spend
NON-ENERGY PRODUCTS & DECARBONISATION OF CUSTOMERS EN ERG Y T RA N S I TI ON S P EN D 2021 2021 2022 $55 bln total ~ 2/3rd of $55 bln ~ 1/3rd Energy expenditure in Opex Transition Spend Energy Transition Spend: Opex is an important value Expected to be up by ~20% in 2022 vs 2021 driver in less cap
Slide 31: Strategy Day 2021 Disclosure Overview
S T RA TEG Y D A Y 2 02 1 D I S CL OS U RE OV ERVI EW Carbon Marketing Renewables and Energy Solutions Net-zero emissions energy business by 2050 Adjusted Earnings expected to grow to >15 million customers by 2030 including all emissions (Scopes 1, 2 and 3), in line >$6 billion by 2025 >560
Slide 32: Strategy Day 2021 Disclosure Overview
S T RA TEG Y D A Y 2 02 1 D I S CL OS U RE OV ERVI EW Integrated Gas Chemicals and Products Upstream Opex reduction of ~20% by 2022 vs. 2019 1 mtpa plastic waste processed by 2025 ~80% of Cash capex to core positions >20% share in LNG bunkering sales by 2030 Reducing traditional fuel produ
Slide 33: Directors' Remuneration for 2022
REMUNERATION 2022 Scorecard and LTIP design DIRECTORS’ 2022 SHELL SCORECARD (changes from 2021 highlighted) 2022 LTIP PERFORMANCE CONDITIONS REMUNERATION FOR 2022 Measures Unit Weighting Absolute measures 40% Relative measures 60% FINANCIAL Cash flow from operations $ DELIVERY 35% 20% 20% Asset mana
Slide 34: We report our emissions in line with the Greenhouse Gas Protocol Initiative
We report our emissions in line with the Greenhouse Gas Protocol Initiative Royal Shell Dutch plc |Shell October plc 27, 2022 Representative of a range of typical emissions sources within Shell's value chain, which also include other indirect emissions not pictured. 34
Slide 35: Vast majority of emissions result from the use of energy we sell
Vast majority of emissions result from the use of energy we sell Our total emissions under operational control (Scopes 1 & 2) were 80 million tonnes CO₂e* Total emissions resulting from use of the energy products we sell (Scope 3) were 1551 million tonnes CO₂e Our climate target comprehensivel
Slide 36: Reducing Net Carbon Intensity and Net Absolute Emissions
CARBON RED U CI N G N ET CA RB O N I N T EN S I TY A N D N ET A B S OLUT E EM I S SI O N S Decarbonising our operations and helping our customers meet their changing energy needs Net Carbon Intensity (Scope 1, 2 and 3) Absolute emissions (Scope 1 and 2 ) gCO2e/MJ mtpa CO2e -20% -50% -2.5% -18.1% 79
Slide 37: Powering Progress in Action
STRATEGY P OWERI N G P RO G RESS I N A CT I O N POWERING LIVES RESPECTING NATURE ORGANISATIONAL EFFICIENCY Board: 50% Directors are women up from 38% in 2020, Disposed 30% less waste in 2021 vs 2013 A smarter, leaner, more focused organisation with exceeding FTSE Women Leaders Review target of 40% b
Slide 38: World Leader in LNG: Resilient Cash Generation into a Lower Carbon Future
INTEGRATED GAS STRATEGY WO RL D L EA D ER I N L N G : RE S I L I E NT CA S H G EN ERAT I ON I N T O A L O WE R CA RB O N F U T U RE Lead the market Run the business Grow the business Leverage world-class innovation, flexibility and LNG Unmatched portfolio delivers results through the cycle Sel
Slide 39: Shell's Decarbonisation Solutions
SECTORS & DECARBONISATION DEDICATED TEAMS WORK ON HIGHEST VALUE ENTERPRISE ACCOUNTS BRINGING SIGNIFICANT CO2e REDUCTIONS ACROSS A CUSTOMER’S VALUE CHAIN Other (Travel, Hypothetical example of a customer emissions profile split per business activity Use of Capital Goods, Raw Materials Sourcing Manufa
Slide 40: Good 2021 Results Overcoming Supply Disruptions and Price Volatility
RUN THE BUSINESS G O O D 2021 RES ULT S O V E RCO MI N G S U P PL Y D I S RU P TI ONS A N D P RI CE V O L A TI LI TY Consistent and resilient IG earnings over the past 5 years Adjusted EBITDA 2021 showing strong results however with significant quarterly results volatility $ per boe $ billion
Slide 41: Further Transforming Energy and Chemicals Park Rotterdam
CHEMICALS AND PRODUCTS F U RT HER T RA N S FORMI N G E N E RG Y A N D CH E M I CA LS P A RK ROT T E RD AM Transforming the Pernis refinery into the Energy and Chemicals Park Rotterdam to produce lower-carbon KEY fuels CO2 Integration of Hydrogen Holland 1 with Hollandse Power Kust (Noord) wind f
Slide 42: Delivering Low-Carbon Solutions through Integrated Energy and Chemicals Parks
CHEMICALS AND PRODUCTS D EL I V ERI N G L OW- CA RB O N S O L U TI O N S T H ROU G H I N T E G RA TED E N ERG Y A N D CH E M I CALS P A RK S Transition to 5 core Energy and Chemicals Parks Delivering synergies through integrating Refining and Chemicals, bringing customers and assets together Exp
Slide 43: Transforming Our Assets for the Customer of the Future
CHEMICALS AND PRODUCTS T RA N SF ORMI N G OU R A S S ET S F O R T H E CU S T OME R OF T H E F U T U RE Reducing fuel production at Energy and Chemicals Parks Reduce commodity exposure Transforming to reduce emissions (Scope 3) from our products mtpa Reducing traditional fuel production from ~100
Slide 44: Delivering the Energy of Today While Funding the Energy of Tomorrow
UPSTREAM SUSTAINING CASH DELIVERY D EL I V ERI N G T H E E N E RG Y O F T O D A Y WH I L E INTO THE 2030s F U N D I N G T H E EN E RG Y O F T O M O RROW Focusing the portfolio Prioritising 8 core advantaged positions that generate more than 80% of Upstream CFFO UK Core positions to attract ~80%
Slide 45: Actively Reviewing Our Operational Response and Portfolio Options for Onshore Oil in Nigeria
NIGERIA A CT I V ELY REV I EWI N G O U R O P E RA TI O NAL RE S P ON SE A N D P ORT F OLI O OP T I O N S F O R O N S H O RE O I L I N N I G E RI A Shell has been in discussion with the Nigerian government to review options regarding the future of our onshore portfolio. Shell intends to continue