The following is an update to the second quarter 2024 outlook and gives an
overview of our current expectations for the second quarter. Outlooks presented
may vary from the actual second quarter 2024 results and are subject to
finalisation of those results, which are scheduled to be published on August
1, 2024. Unless otherwise indicated, all outlook statements exclude identified
items.
See appendix for previous quarter historical data.
Integrated Gas
+-----------------------------+-------------+----------------------------------+
|$ billions |Q2'24 Outlook|Comment | +-----------------------------+-------------+----------------------------------+
|Adjusted EBITDA: | +-----------------------------+-------------+----------------------------------+
|Production (kboe/d) | 940 - 980 | | +-----------------------------+-------------+----------------------------------+
|LNG liquefaction volumes (MT)| 6.8 - 7.2 | | +-----------------------------+-------------+----------------------------------+
|Underlying opex | 1.0 - 1.2 | | +-----------------------------+-------------+----------------------------------+
|Adjusted Earnings: | +-----------------------------+-------------+----------------------------------+
|Pre-tax depreciation | 1.2 - 1.6 | | +-----------------------------+-------------+----------------------------------+
|Taxation charge | 0.8 - 1.1 | | +-----------------------------+-------------+----------------------------------+
|Other Considerations: | +------------------------------------------------------------------------------+
|Trading & Optimisation results are expected to be in line with Q2'23, but | |lower compared to Q1'24 due to seasonality. | +------------------------------------------------------------------------------+
Upstream
+--------------------+-------------+-------------------------------------------+
|$ billions |Q2'24 Outlook|Comment | +--------------------+-------------+-------------------------------------------+
|Adjusted EBITDA: | +--------------------+-------------+-------------------------------------------+
|Production (kboe/d) |1,720 - 1,820| | +--------------------+-------------+-------------------------------------------+
|Underlying opex | 2.1 - 2.7 | | +--------------------+-------------+-------------------------------------------+
|Adjusted Earnings: | +--------------------+-------------+-------------------------------------------+
|Pre-tax depreciation| 2.5 - 2.9 | | +--------------------+-------------+-------------------------------------------+
|Taxation charge | 1.8 - 2.6 | | +--------------------+-------------+-------------------------------------------+
|Other Considerations: | +------------------------------------------------------------------------------+
|The share of profit / (loss) of joint ventures and associates in Q2'24 is | |expected to be -$0.2 billion. Q2'24 exploration well write-offs are expected | |to be -$0.2 billion. | +------------------------------------------------------------------------------+
Marketing
+----------------------+---------------+-------------------+
| $ billions | Q2'24 Outlook | Comment |
+----------------------+---------------+-------------------+
| Adjusted EBITDA: |
+----------------------+---------------+-------------------+
| Sales volumes (kb/d) | 2,700 - 3,100 | |
+----------------------+---------------+-------------------+
| Underlying opex | 2.5 - 2.9 | |
+----------------------+---------------+-------------------+
| Adjusted Earnings: |
+----------------------+---------------+-------------------+
| Pre-tax depreciation | 0.3 - 0.7 | |
+----------------------+---------------+-------------------+
| Taxation charge | 0.2 - 0.5 | |
+----------------------+---------------+-------------------+
| Other Considerations: |
+----------------------------------------------------------+
| Marketing results are expected to be in line with Q1'24. |
+----------------------------------------------------------+
Chemicals & Products
+---------------------------+-------------+------------------------------------+
|$ billions |Q2'24 Outlook|Comment | +---------------------------+-------------+------------------------------------+
|Adjusted EBITDA: | +---------------------------+-------------+------------------------------------+
|Indicative refining margin | $8/bbl | | +---------------------------+-------------+------------------------------------+
| | |Chemicals sub segment Adjusted | |Indicative chemicals margin| |Earnings are expected to be close to| | | $155/tonne |break-even in Q2'24. | +---------------------------+-------------+------------------------------------+
|Refinery utilisation | 91% - 95% | | +---------------------------+-------------+------------------------------------+
|Chemicals utilisation | 78% - 82% | | +---------------------------+-------------+------------------------------------+
|Underlying opex | 1.9 - 2.3 | | +---------------------------+-------------+------------------------------------+
|Adjusted Earnings: | +---------------------------+-------------+------------------------------------+
|Pre-tax depreciation | 0.7 - 0.9 | | +---------------------------+-------------+------------------------------------+
|Taxation charge | 0.1 - 0.5 | | +---------------------------+-------------+------------------------------------+
|Other Considerations: | +------------------------------------------------------------------------------+
|Trading & Optimisation is expected to be in line with Q1'24. | +------------------------------------------------------------------------------+
Renewables and Energy Solutions
+-------------------+---------------+---------+
| $ billions | Q2'24 Outlook | Comment |
+-------------------+---------------+---------+
| Adjusted Earnings | (0.5) - 0.1 | |
+-------------------+---------------+---------+
Corporate
+-------------------+---------------+---------+
| $ billions | Q2'24 Outlook | Comment |
+-------------------+---------------+---------+
| Adjusted Earnings | (0.7) - (0.5) | |
+-------------------+---------------+---------+
Shell Group
+--------------------+-------------+-------------------------------------------+
|$ billions |Q2'24 Outlook|Comment | +--------------------+-------------+-------------------------------------------+
|CFFO: | +--------------------+-------------+-------------------------------------------+
|Tax paid | 3.1 - 3.9 | | +--------------------+-------------+-------------------------------------------+
|Derivative movements| (2) - 2 |Derivative movements and working capital | +--------------------+-------------+estimations inherently have a broad range | |Working capital | (2) - 2 |of uncertainty. | +--------------------+-------------+-------------------------------------------+
|Other Shell Group Considerations: | +------------------------------------------------------------------------------+
|Non-cash post tax impairments of $1.5 - $2 billion are expected, and mainly | |include the Singapore Chemicals & Products assets ($0.6 - $0.8 billion) as | |well as Rotterdam HEFA ($0.6 - $1.0 billion), which is reported in the | |Marketing segment. These items are reported as identified items. | +------------------------------------------------------------------------------+
Guidance
The 'Quarterly Databook' contains guidance on Indicative Refining Margin,
Indicative Chemicals Margin and full-year price and margin sensitivities (Link
(https://www.shell.com/investors/results-and-reporting/data-
supplements.html#iframe=L2NnLWlmcmFtZS9hbm51YWwtcmVwb3J0LzIwMjAvIy9kYXRhc2hlZXQt
c2hlbGwtYXIyMS9saW5lLzEyLDEzLDE1LzAsMSwyLDMsNC9wZXJpb2RzLzA)).
Consensus
The consensus collection for quarterly Adjusted Earnings, Adjusted EBITDA is per
the reporting segments and CFFO at a Shell group level, managed by Vara Research, is expected to be published on July 25, 2024.
Appendix
Indicative Margins
For Integrated Gas Q1'24 realised prices have been restated. There is no impact
of this revision on previously
reported segment financials and other key performance indicators.
+--------------------------------+-------+----------------+
| Integrated Gas Realised Prices | Q1'24 | Q1'24 Restated |
+--------------------------------+-------+----------------+
| Liquids ($/bbl) | 72.72 | 67.29 |
+--------------------------------+-------+----------------+
| Gas ($/thousand scf) | 8.86 | 7.84 |
+--------------------------------+-------+----------------+
+-----------------------------+------------+-----------------------+
| Chemicals & Products | Q1'24 | Q2'24 Updated Outlook |
+-----------------------------+------------+-----------------------+
| Indicative refining margin | $12/bbl | $8/bbl |
+-----------------------------+------------+-----------------------+
| Indicative chemicals margin | $150/tonne | $155/tonne |
+-----------------------------+------------+-----------------------+
Volume Data
+-------------------------+--------------+-----------------+-------------------+
| | | | Q2'24 Updated | | |Q1'24 Adjusted|Q2'24 QPR Outlook| Outlook | +-------------------------+--------------+-----------------+-------------------+
|Integrated Gas | | | | +-------------------------+--------------+-----------------+-------------------+
|Production (kboe/d) | 992 | 920 - 980 | 940 - 980 | +-------------------------+--------------+-----------------+-------------------+
|LNG liquefaction volumes | | | | |(MT) | 7.6 | 6.8 - 7.4 | 6.8 - 7.2 | +-------------------------+--------------+-----------------+-------------------+
|Upstream | | | | +-------------------------+--------------+-----------------+-------------------+
|Production (kboe/d) | 1,872 | 1,630 - 1,830 | 1,720 - 1,820 | +-------------------------+--------------+-----------------+-------------------+
|Marketing | | | | +-------------------------+--------------+-----------------+-------------------+
|Sales volumes (kb/d) | 2,763 | 2,700 - 3,200 | 2,700 - 3,100 | +-------------------------+--------------+-----------------+-------------------+
|Chemicals & Products | | | | +-------------------------+--------------+-----------------+-------------------+
|Refinery utilisation | 91% | 87% - 95% | 91% - 95% | +-------------------------+--------------+-----------------+-------------------+
|Chemicals utilisation | 73% | 72% - 80% | 78% - 82% | +-------------------------+--------------+-----------------+-------------------+
Underlying Opex
+-----------------------------------+-----+--------------+---------------------+
|$ billions |Q1'24|Q1'24 Adjusted|Q2'24 Updated Outlook| +-----------------------------------+-----+--------------+---------------------+
|Production and manufacturing | | | | |expenses | 5.8 | | | +-----------------------------------+-----+--------------+---------------------+
|Selling, distribution and | | | | |administrative expenses | 3.0 | | | +-----------------------------------+-----+--------------+---------------------+
|Research and development | 0.2 | | | +-----------------------------------+-----+--------------+---------------------+
|Operating Expenses (Opex) | 9.0 | 9.0 | | +-----------------------------------+-----+--------------+---------------------+
|Less: Identified Items | | (0.1) | | +-----------------------------------+-----+--------------+---------------------+
|Underlying Opex | | 9.1 | | +-----------------------------------+-----+--------------+---------------------+
| of which: | | | | +-----------------------------------+-----+--------------+---------------------+
| Integrated Gas | 1.0 | 1.0 | 1.0 - 1.2 | +-----------------------------------+-----+--------------+---------------------+
| Upstream | 2.4 | 2.4 | 2.1 - 2.7 | +-----------------------------------+-----+--------------+---------------------+
| Marketing | 2.6 | 2.6 | 2.5 - 2.9 | +-----------------------------------+-----+--------------+---------------------+
| Chemicals & Products | 2.1 | 2.1 | 1.9 - 2.3 | +-----------------------------------+-----+--------------+---------------------+
| Renewables and Energy Solutions| 0.7 | 0.8 | | +-----------------------------------+-----+--------------+---------------------+
Depreciation, depletion and amortisation
+-----------------------------------+-----+--------------+---------------------+
|$ billions |Q1'24|Q1'24 Adjusted|Q2'24 Updated Outlook| +-----------------------------------+-----+--------------+---------------------+
|Depreciation, Depletion & | | | | |Amortisation | 5.9 | 5.9 | | +-----------------------------------+-----+--------------+---------------------+
|Less: Identified Items | | 0.2 | | +-----------------------------------+-----+--------------+---------------------+
|Pre-tax depreciation (as Adjusted) | | 5.7 | | +-----------------------------------+-----+--------------+---------------------+
| of which: | | | | +-----------------------------------+-----+--------------+---------------------+
| Integrated Gas | 1.4 | 1.4 | 1.2 - 1.6 | +-----------------------------------+-----+--------------+---------------------+
| Upstream | 2.8 | 2.7 | 2.5 - 2.9 | +-----------------------------------+-----+--------------+---------------------+
| Marketing | 0.5 | 0.5 | 0.3 - 0.7 | +-----------------------------------+-----+--------------+---------------------+
| Chemicals & Products | 1.0 | 0.9 | 0.7 - 0.9 | +-----------------------------------+-----+--------------+---------------------+
| Renewables and Energy Solutions| - | 0.1 | | +-----------------------------------+-----+--------------+---------------------+
Tax Charge
+-----------------------------------+-----+--------------+---------------------+
|$ billions |Q1'24|Q1'24 Adjusted|Q2'24 Updated Outlook| +-----------------------------------+-----+--------------+---------------------+
|Taxation Charge | 3.6 | 3.6 | | +-----------------------------------+-----+--------------+---------------------+
|Less: Identified Items and Cost of | | | | |supplies adjustment | | (0.5) | | +-----------------------------------+-----+--------------+---------------------+
|Taxation Charge (as Adjusted) | | 4.1 | | +-----------------------------------+-----+--------------+---------------------+
| of which: | | | | +-----------------------------------+-----+--------------+---------------------+
| Integrated Gas | 0.8 | 1.0 | 0.8 - 1.1 | +-----------------------------------+-----+--------------+---------------------+
| Upstream | 2.1 | 2.5 | 1.8 - 2.6 | +-----------------------------------+-----+--------------+---------------------+
| Marketing | 0.4 | 0.4 | 0.2 - 0.5 | +-----------------------------------+-----+--------------+---------------------+
| Chemicals & Products | 0.2 | 0.3 | 0.1 - 0.5 | +-----------------------------------+-----+--------------+---------------------+
| Renewables and Energy Solutions| 0.1 | - | | +-----------------------------------+-----+--------------+---------------------+
Adjusted Earnings
The 'Adjusted Earnings' measure aims 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. These items are in some cases driven by external factors and
may, either individually or collectively, hinder the comparative understanding
of Shell's financial results from period to period. This measure excludes
earnings attributable to non-controlling interest. For further details see the
1st Quarter 2024 unaudited results (Link
(https://www.shell.com/investors/results-and-reporting/quarterly-
results/_jcr_content/root/main/section_1564161910/simple_copy_copy_cop_22317024/
list_copy_1861700816/list_item_copy_114090543/links/item1.stream/1714613416055/4
4a581109f01104a8a465bac01d0c28f6c57ed07/q1-2024-qra-document.pdf)).
+-----------------------------------+-----+--------------+---------------------+
|$ billions |Q1'24|Q1'24 Adjusted|Q2'24 Updated Outlook| +-----------------------------------+-----+--------------+---------------------+
|Income/(loss) attributable to Shell| | | | |plc shareholders | 7.4 | 7.4 | | +-----------------------------------+-----+--------------+---------------------+
|Add: Current cost of supplies | | | | |adjustment attributable to Shell | | | | |plc shareholders | | (0.3) | | +-----------------------------------+-----+--------------+---------------------+
|Less: Identified items attributable| | | | |to Shell plc shareholders | | (0.6) | | +-----------------------------------+-----+--------------+---------------------+
|Adjusted Earnings | | 7.7 | | +-----------------------------------+-----+--------------+---------------------+
| of which: | | | | +-----------------------------------+-----+--------------+---------------------+
| Renewables and Energy Solutions| 0.6 | 0.2 | (0.5) - 0.1 | +-----------------------------------+-----+--------------+---------------------+
| Corporate |(0.4)| (0.5) | (0.7) - (0.5) | +-----------------------------------+-----+--------------+---------------------+
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. The
term 'joint venture', 'joint operations', 'joint arrangements', and 'associates'
may also be used to refer to a commercial arrangement in which Shell has a
direct or indirect ownership interest with one or more parties. 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.
The numbers presented in this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures due to rounding.
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''; 'commit'; 'commitment'; ''could''; ''estimate''; ''expect''; ''goals''; ''intend''; ''may''; 'milestones'; ''objectives''; ''outlook''; ''plan''; ''probably''; ''project''; ''risks''; 'schedule'; ''seek''; ''should''; ''target''; ''will''; 'would' 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, regional conflicts, such as the Russia-Ukraine war, and a significant cybersecurity breach; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking 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, 2023
(available at www.shell.com/investors/news-and-filings/sec-filings.html and www.sec.gov). These risk factors also expressly qualify all forward-looking 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 5, 2024. 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' (NCI),
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's NCI also includes the emissions associated with
the production and use of energy products produced by others which Shell
purchases for resale. Shell only controls its own emissions. The use of the
terms Shell's 'Net Carbon Intensity' or NCI are 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 NCI targets over the next ten years. However,
Shell's operating plans cannot reflect our 2050 net-zero emissions target, as
this target is 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 andassociates
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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