RDSA Shell Plc

TIDMRDSA TIDMRDSB 
 
 
   The Hague, December 21, 2020 - This is an update to the fourth quarter 
2020 outlook provided in the third quarter results announcement on 
October 29, 2020. The impacts presented here may vary from the actual 
results and are subject to finalisation of the fourth quarter 2020 
results. 
 
   This update note is presented based on prevailing commodity prices and 
forward curves, further movements and volatility till the end of the 
year are likely to impact earnings and CFFO. 
 
   Unless otherwise indicated, presented impacts relate to Adjusted 
Earnings on a post-tax basis. 
 
 
 
   INTEGRATED GAS 
 
 
   -- Production is expected to be between 900 and 940 thousand barrels of oil 
      equivalent per day. Despite increased production compared with the third 
      quarter 2020, earnings impact is limited due to PSC effects. 
 
   -- LNG liquefaction volumes are expected to be between 8.0 and 8.6 million 
      tonnes. 
 
   -- Trading and optimisation results are expected to be below average. 
 
   -- Approximately 80% of our term sales of LNG in 2020 have been oil price 
      linked with a price-lag of up to 6 months. 
 
   -- Significant margining outflows have impacted CFFO in the fourth quarter 
      so far, compared with margining related inflows at the end of the third 
      quarter 2020. The full quarter impact is subject to movements in 
      commodity prices and forward curves up until the last day of the quarter. 
 
 
 
 
 
   UPSTREAM 
 
 
   -- Adjusted Earnings are expected to show a loss in the current price 
      environment. 
 
   -- Production is expected to be between 2,275 and 2,350 thousand barrels of 
      oil equivalent per day, reflecting hurricane impacts in the US Gulf of 
      Mexico (between 60 and 70 thousand barrels of oil equivalent per day) and 
      the effect of mild weather in Northern Europe in the first half of the 
      fourth quarter. 
 
   -- Realised Upstream gas prices are expected to trend in line with Henry 
      Hub. 
 
   -- Depreciation is expected to be $100 to $200 million higher compared with 
      the third quarter 2020. 
 
   -- Tax charge in the range of $600 million and $900 million is expected to 
      negatively impact Adjusted Earnings in the fourth quarter. This includes 
      unfavourable movements in deferred tax positions. 
 
   -- Despite the expected earnings loss, CFFO is not expected to reflect a 
      comparable cash tax effect due to the build-up of deferred tax positions 
      in a number of countries. 
 
   -- CFFO is expected to be negatively impacted by the settlement of 
      previously booked provisions in the range of $400 to $500 million. 
 
 
 
 
 
   OIL PRODUCTS 
 
 
   -- Refinery utilisation is expected to be between 72% and 76%. 
 
   -- Realised gross refining margins are expected to be slightly improved 
      compared with the third quarter 2020. 
 
   -- Sales volumes are expected to be between 4,000 and 5,000 thousand barrels 
      per day. 
 
   -- Marketing results are expected to be in line with the fourth quarter 2019 
      while significantly lower compared with the record third quarter 2020 due 
      to lower volumes driven by seasonal trends. 
 
   -- Trading and optimisation results are expected to be significantly lower 
      compared with the third quarter 2020. 
 
   -- Significant derivatives related outflows have impacted CFFO in the fourth 
      quarter so far, compared with derivatives related inflows at the end of 
      the third quarter 2020. The full quarter impact is subject to movements 
      in commodity prices and forward curves up until the last day of the 
      quarter. 
 
   -- Working capital movements are typically impacted by movements between the 
      quarter opening and closing price of crude along with changes in 
      inventory volume. 
 
 
 
 
 
   CHEMICALS 
 
 
   -- Chemicals manufacturing plant utilisation is expected to be between 77% 
      and 81%. 
 
   -- Chemicals sales volumes are expected to between 3,600 and 3,900 thousand 
      tonnes. 
 
   -- Chemicals base and intermediate margins are expected to improve compared 
      with the third quarter 2020. 
 
 
 
 
 
   CORPORATE 
 
 
   -- Corporate segment Adjusted Earnings are expected to be a net expense of 
      $900 to $975 million for the fourth quarter, impacted by unfavourable 
      movements in deferred tax positions. This excludes the impact of currency 
      exchange effects. 
 
 
 
 
 
   OTHER 
 
 
   -- Higher underlying operating expenses due to increased activity compared 
      to the third quarter 2020 are expected to impact Adjusted Earnings across 
      the businesses. 
 
   -- As per previous disclosures, CFFO price sensitivity at Shell Group level 
      is estimated to be $6 billion per annum for each $10 per barrel Brent 
      price movement. 
 
   -- Note that this price sensitivity is indicative and is most applicable to 
      smaller price changes than those in the current environment and in 
      relation to the full-year results. This excludes the short-term impacts 
      from working capital movements and cost-of-sales adjustments. 
 
   -- Post-tax charges, in aggregate, between $3.5 to $4.5 billion in relation 
      to impairments, asset restructuring and onerous contracts are expected in 
      the fourth quarter. These expected charges, reported as identified items, 
      relate to Upstream (including partial impairment of Appomattox asset in 
      the US Gulf of Mexico due to subsurface updates), Oil Products (including 
      charges related to announced transformation of the refinery portfolio) 
      and Integrated Gas (onerous contracts). As per accounting standards, 
      charges linked to Reshape organisational restructuring  are expected to 
      be recognised in 2021. 
 
   -- Shell will provide a strategy update on 11 February 2021. 
 
 
 
 
 
   Consensus 
 
   The consensus collection for quarterly Adjusted Earnings and CFFO 
excluding working capital movements, managed by VARA research, is 
scheduled to be opened for submission on 13 January 2021, closed on 27 
January 2021, and made public on 28 January 2021. 
 
 
 
   Contacts 
 
   Media International: +44 (0) 207 934 5550 
 
   Media Americas: +1 832 337 4355 
 
   Cautionary Note 
 
   The companies in which Royal Dutch Shell plc directly and indirectly 
owns investments are separate legal entities. In this announcement 
"Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for 
convenience where references are made to Royal Dutch Shell plc and its 
subsidiaries in general. Likewise, the words "we", "us" and "our" are 
also used to refer to Royal Dutch 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 Royal Dutch 
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. 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. This announcement contains the following forward-looking 
Non-GAAP measure: Adjusted Earnings. We are unable to provide a 
reconciliation of the above forward-looking Non-GAAP measures to the 
most comparable GAAP financial measures because certain information 
needed to reconcile the above Non-GAAP measure to the most comparable 
GAAP financial measure is dependent on future events some which are 
outside the control of the company, such as oil and gas prices, interest 
rates and exchange rates. Moreover, estimating such GAAP measures 
consistent with the company accounting policies and 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 
Royal Dutch Shell plc's financial 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 Royal Dutch 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 Royal Dutch 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", "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 Royal Dutch 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, 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 
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 Royal Dutch Shell's Form 20-F for the 
year ended December 31, 2019 (available at www.shell.com/investor 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, December 21, 2020. Neither Royal Dutch 
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. 
 
   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 Royal Dutch Shell plc: 21380068P1DRHMJ8KU70 
 
 
 
 

(END) Dow Jones Newswires

December 21, 2020 02:15 ET (07:15 GMT)

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