Shell second quarter 2023 update note

Shell second quarter 2023 update note
The following is an update to the second quarter 2023 outlook and gives an overview of our current
expectations for the second quarter. Outlooks presented may vary from the actual second quarter
2023 results and are subject to finalisation of those results, which are scheduled to be published
on July 27, 2023. Unless otherwise indicated, all outlook statements exclude identified items.
Integrated Gas
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted EBITDA:
Production (kboe/d) 970 950 – 990
LNG liquefaction
volumes (MT) 7.2 6.9 – 7.3
Underlying opex 1.2 1.1 – 1.3
Adjusted Earnings:
Pre-tax depreciation 1.4 1.3 – 1.7
Taxation charge 1.1 0.7 – 1.0
Other Considerations:
Trading & Optimisation: expected to be significantly lower compared to a strong Q1’23 due to seasonality
and fewer optimisation opportunities. The Q2’23 contribution is expected to be in line with the average
contribution of Q2 in 2021 and 2022.
Upstream
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted EBITDA:
Production (kboe/d) 1,877 1,650 – 1,750
Reflects scheduled maintenance, including
assets in the Gulf of Mexico, Norway,
Malaysia and Brazil.
Underlying opex 2.4 2.1 – 2.5
Adjusted Earnings:
Pre-tax depreciation 2.8 2.5 – 2.9
Taxation charge 2.9 1.5 – 2.3
Other Considerations:
Q2’23 exploration well write-offs are expected to be ~$0.2 billion. The share of profit / (loss) of joint
ventures and associates in Q2’23 is expected to be around zero.
Marketing
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted EBITDA:
Sales volumes (kb/d) 2,446 2,400 – 2,800
Underlying opex 2.1 2.0 – 2.4
Adjusted Earnings:
Pre-tax depreciation 0.4 0.3 – 0.7
Taxation charge 0.3 0.1 – 0.4
Other Considerations:
Marketing results: expected to be in line with Q1’23.
Chemicals & Products
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted EBITDA:
Indicative refining
margin $15/bbl $9/bbl
Indicative chemicals
margin $138/tonne $150/tonne
The chemicals sub-segment adjusted
earnings are expected to reflect a loss for
Q2’23.
Refinery utilisation 91% 85% – 89%
Chemicals utilisation 71% 67% – 71%
Underlying opex 2.7 2.7 – 3.1
Adjusted Earnings:
Pre-tax depreciation 0.9 0.8 – 1.0
Taxation charge 0.4 (0.2) – 0.2
Other Considerations:
Trading & Optimisation: expected to be lower than Q1’23.
Renewables and Energy Solutions
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted Earnings 0.4 (0.3) – 0.3
Corporate
$ billions Q1’23 Q2’23 Outlook Comment
Adjusted Earnings (1.0) (0.8) – (0.6)
Shell Group
$ billions Q1’23 Q2’23 Outlook Comment
CFFO:
Tax Paid 3.1 3.7 – 4.5 Reflects regular phasing of payments.
Working Capital (0.8) 2 – 6 Working capital estimations inherently have
a broad range of uncertainty.
Other Shell Group Considerations:
Post tax impairments of up to $3 billion are expected for Q2’23, primarily driven by a one percent (1%)
increase in the discount rate used for impairment testing. Impairments / Impairment reversals are reported
as identified items and have no cash impact.
Guidance
Segment-level disclosures of Q1’23 financial measures reflected above are presented in the
‘Quarterly Databook’ (Link). The calculation of these measures at segment level use the same
methodology as at Shell level.
The ‘Quarterly Databook’ also contains guidance on Indicative Refining Margin, Indicative
Chemicals Margin and full-year price and margin sensitivities.
Consensus
The consensus collection for quarterly Adjusted Earnings, Adjusted EBITDA is per the reporting
segments and CFFO at a Shell group level, managed by Vara Research, is expected to be
published on July 20, 2023.
Enquiries
Media International: +44 (0) 207 934 5550
Media Americas: +1 832 337 4355
Cautionary Note
The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this
announcement “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to
Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its
subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by
identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this
announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated
arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”,
respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”. Entities over
which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell
interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all third-party interest.
Forward-Looking Statements
This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements
other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking
statements are statements of future expectations that are based on management’s current expectations and
assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in these statements. Forward-looking statements include,
among other things, statements concerning the potential exposure of Shell to market risks and statements expressing
management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking
statements are identified by their use of terms and phrases such as “aim”, “ambition”, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’,
‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, “milestones”, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’,
“schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could
affect the future operations of Shell and could cause those results to differ materially from those expressed in the
forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil
and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results;
(e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in developing countries and countries subject to
international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures
addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political
risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or
advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with
the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or exceed previous dividend payments. All forwardlooking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Readers should not place undue reliance on forward-looking statements.
Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December
31, 2022 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forwardlooking statements contained in this announcement and should be considered by the reader. Each forward-looking
statement speaks only as of the date of this announcement, July 7, 2023. Neither Shell plc nor any of its subsidiaries
undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future
events or other information. In light of these risks, results could differ materially from those stated, implied or inferred
from the forward-looking statements contained in this announcement.
Shell’s net carbon intensity
Also, in this announcement we may refer to Shell’s “Net Carbon Intensity”, which includes Shell’s carbon emissions from
the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our
customers’ carbon emissions associated with their use of the energy products we sell. Shell only controls its own
emissions. The use of the term Shell’s “Net Carbon Intensity” is for convenience only and not intended to suggest these
emissions are those of Shell plc or its subsidiaries.
Shell’s net-Zero Emissions Target
Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year. They
reflect the current economic environment and what we can reasonably expect to see over the next ten years.
Accordingly, they reflect our Scope 1, Scope 2 and Net Carbon Intensity (NCI) targets over the next ten years. However,
Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI target, as these targets are
currently outside our planning period. In the future, as society moves towards net-zero emissions, we expect Shell’s
operating plans to reflect this movement. However, if society is not net zero in 2050, as of today, there would be
significant risk that Shell may not meet this target.
Forward Looking Non-GAAP measures
This announcement may contain certain forward-looking non-GAAP measures such as IFRS, including Adjusted
Earnings, “Adjusted EBITDA”, Cash flow from operating activities excluding working capital movements, Cash capital
expenditure, Net debt and Underlying opex.
Adjusted Earnings and Adjusted EBITDA are measures used to evaluate Shell’s performance in the period and over time.
The “Adjusted Earnings” and Adjusted EBITDA are measures which aim to facilitate a comparative understanding of
Shell’s financial performance from period to period by removing the effects of oil price changes on inventory carrying
amounts and removing the effects of identified items.
Adjusted Earnings is defined as income/(loss) attributable to shareholders adjusted for the current cost of supplies and
excluding identified items. “Adjusted EBITDA (CCS basis)” is defined as “Income/(loss) for the period” adjusted for
current cost of supplies; identified items; tax charge/(credit); depreciation, amortisation and depletion; exploration well
write-offs and net interest expense. All items include the non-controlling interest component.
Cash flow from operating activities excluding working capital movements is a measure used by Shell to analyse its
operating cash generation over time excluding the timing effects of changes in inventories and operating receivables and
payables from period to period. Working capital movements are defined as the sum of the following items in the
Consolidated Statement of Cash Flows: (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current
receivables, and (iii) increase/(decrease) in current payables. Cash capital expenditure is the sum of the following lines
from the Consolidated Statement of Cash flows: Capital expenditure, Investments in joint ventures and associates and
Investments in equity securities. Net debt is defined as the sum of current and non-current debt, less cash and cash
equivalents, adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest
rate risks relating to debt, and associated collateral balances. Underlying operating expenses is a measure of Shell’s
cost management performance and aimed at facilitating a comparative understanding of performance from period to
period by removing the effects of identified items, which, either individually or collectively, can cause volatility, in some
cases driven by external factors. Underlying operating expenses comprises the following items from the Consolidated
statement of Income: production and manufacturing expenses; selling, distribution and administrative expenses; and
research and development expenses and removes the effects of identified items such as redundancy and restructuring
charges or reversals, provisions or reversals and others.
We are unable to provide a reconciliation of these forward-looking Non-GAAP measures to the most comparable GAAP
financial measures because certain information needed to reconcile those Non-GAAP measures to the most comparable
GAAP financial measures is dependent on future events some of which are outside the control of Shell, such as oil and
gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures with the required precision
necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without
unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most
comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied
in Shell plc’s consolidated financial statements.
The contents of websites referred to in this announcement do not form part of this announcement.
We may have used certain terms, such as resources, in this announcement that the United States Securities and
Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to
consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.
LEI number of Shell plc: 21380068P1DRHMJ8KU70

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