Shell third quarter 2024 update note
The following is an update to the third quarter 2024 outlook and
gives an overview of our current expectations for the third
quarter. Outlooks presented may vary from the actual third quarter
2024 results and are subject to finalisation of those results,
which are scheduled to be published on October 31, 2024. Unless
otherwise indicated, all outlook statements exclude identified
items.
See appendix for previous quarter historical data.
Integrated Gas
$ billions |
Q3’24 Outlook |
Comment |
Adjusted EBITDA: |
Production (kboe/d) |
920 - 960 |
|
LNG liquefaction volumes (MT) |
7.3 - 7.7 |
|
Underlying opex |
1.1 - 1.3 |
|
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
Q2’24. |
Upstream
$ billions |
Q3’24 Outlook |
Comment |
Adjusted EBITDA: |
Production (kboe/d) |
1,740 - 1,840 |
|
Underlying opex |
1.9 - 2.5 |
|
Adjusted Earnings: |
Pre-tax depreciation |
2.3 - 2.9 |
|
Taxation charge |
2.0 - 2.8 |
|
Other Considerations: |
The share of profit / (loss) of joint ventures and associates in
Q3’24 is expected to be ~$0.1 billion. Q3’24 exploration well
write-offs are expected to be ~$0.1 billion. |
Marketing
$ billions |
Q3’24 Outlook |
Comment |
Adjusted EBITDA: |
Sales volumes (kb/d) |
2,750 - 3,150 |
|
Underlying opex |
2.5 - 2.9 |
|
Adjusted Earnings: |
Pre-tax depreciation |
0.4 - 0.8 |
|
Taxation charge |
0.2 - 0.5 |
|
Other Considerations: |
Marketing results are expected to be in line with Q2’24. |
Chemicals and Products
$ billions |
Q3’24 Outlook |
Comment |
Adjusted EBITDA: |
Indicative refining margin |
$5.5/bbl |
|
Indicative chemicals margin |
$164/tonne |
The Chemicals sub-segment adjusted earnings are expected to reflect
a marginal loss in Q3’24. |
Refinery utilisation |
79% - 83% |
|
Chemicals utilisation |
73% - 77% |
|
Underlying opex |
2.1 - 2.5 |
|
Adjusted Earnings: |
Pre-tax depreciation |
0.8 - 1.0 |
|
Taxation charge / (credit) |
(0.3) - 0.1 |
|
Other Considerations: |
Trading & Optimisation is expected to be lower than Q2’24. |
Renewables and Energy Solutions
$ billions |
Q3’24 Outlook |
Comment |
Adjusted Earnings |
(0.4) - 0.2 |
|
Corporate
$ billions |
Q3’24 Outlook |
Comment |
Adjusted Earnings |
(0.7) - (0.5) |
|
Shell Group
$ billions |
Q3’24 Outlook |
Comment |
CFFO: |
Tax paid |
2.5 - 3.3 |
|
Derivative movements |
(2) - 2 |
Derivative movements and working capital estimations inherently
have a broad range of uncertainty. |
Working capital |
0 - 4 |
Other Shell Group Considerations: |
- |
Guidance
The ‘Quarterly Databook’ contains guidance on Indicative
Refining Margin, Indicative Chemicals Margin and full-year price
and margin sensitivities (Link).
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 October 23, 2024.
Appendix
Indicative Margins
Chemicals & Products |
Q2’24 |
Q3’24 Updated Outlook |
Indicative refining margin |
$7.7/bbl |
$5.5/bbl |
Indicative chemicals margin |
$155/tonne |
$164/tonne |
Volume Data
|
Q2’24 Adjusted |
Q3’24 QPR Outlook |
Q3’24 Updated Outlook |
Integrated Gas |
|
|
|
Production (kboe/d) |
980 |
920 - 980 |
920 - 960 |
LNG liquefaction volumes (MT) |
6.9 |
6.8 - 7.4 |
7.3 - 7.7 |
Upstream |
|
|
|
Production (kboe/d) |
1,783 |
1,580 - 1,780 |
1,740 - 1,840 |
Marketing |
|
|
|
Sales volumes (kb/d) |
2,868 |
2,700 - 3,200 |
2,750 - 3,150 |
Chemicals & Products |
|
|
|
Refinery utilisation |
92% |
83% - 91% |
79% - 83% |
Chemicals utilisation |
80% |
73% - 81% |
73% - 77% |
Underlying Opex
$ billions |
Q2’24 |
Q2’24 Adjusted |
Q3’24 Updated Outlook |
Production and manufacturing expenses |
5.6 |
|
|
Selling, distribution and administrative expenses |
3.1 |
|
|
Research and development |
0.3 |
|
|
Operating Expenses (Opex) |
9.0 |
9.0 |
|
Less: Identified Items |
|
0.3 |
|
Underlying Opex |
|
8.7 |
|
of which: |
|
|
|
Integrated Gas |
1.1 |
1.0 |
1.1 - 1.3 |
Upstream |
2.3 |
2.2 |
1.9 - 2.5 |
Marketing |
2.7 |
2.6 |
2.5 - 2.9 |
Chemicals and Products |
1.9 |
2.0 |
2.1 - 2.5 |
Renewables and Energy
Solutions |
0.7 |
0.7 |
|
Depreciation, depletion and amortisation
$ billions |
Q2’24 |
Q2’24 Adjusted |
Q3’24 Updated Outlook |
Depreciation, Depletion & Amortisation |
7.6 |
7.6 |
|
Less: Identified Items |
|
1.9 |
|
Pre-tax depreciation (as Adjusted) |
|
5.6 |
|
of which: |
|
|
|
Integrated Gas |
1.4 |
1.4 |
1.2 - 1.6 |
Upstream |
2.8 |
2.8 |
2.3 - 2.9 |
Marketing |
1.6 |
0.5 |
0.4 - 0.8 |
Chemicals and Products |
1.5 |
0.9 |
0.8 - 1.0 |
Renewables and Energy
Solutions |
0.2 |
0.1 |
|
Tax Charge
$ billions |
Q2’24 |
Q2’24 Adjusted |
Q3’24 Updated Outlook |
Taxation Charge |
3.8 |
3.8 |
|
Less: Identified Items and Cost of supplies adjustment |
|
(0.2) |
|
Taxation Charge (as Adjusted) |
|
3.9 |
|
of which: |
|
|
|
Integrated Gas |
0.9 |
0.9 |
0.8 - 1.1 |
Upstream |
2.3 |
2.3 |
2.0 - 2.8 |
Marketing |
0.1 |
0.4 |
0.2 - 0.5 |
Chemicals and Products |
0.5 |
0.3 |
(0.3) - 0.1 |
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 2nd Quarter 2024 and half
year unaudited results (Link).
$ billions |
Q2’24 |
Q2’24 Adjusted |
Q3’24 Updated Outlook |
Income/(loss) attributable to Shell plc
shareholders |
3.5 |
3.5 |
|
Add: Current cost of supplies adjustment attributable to Shell plc
shareholders |
|
0.1 |
|
Less: Identified items attributable to Shell plc shareholders |
|
(2.7) |
|
Adjusted Earnings |
|
6.3 |
|
of which: |
|
|
|
Renewables and Energy
Solutions |
(0.1) |
(0.2) |
(0.4) - 0.2 |
Corporate |
(1.7) |
(0.6) |
(0.7) - (0.5) |
Enquiries
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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
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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
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things, statements concerning the potential exposure of Shell to
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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, October 7, 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 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.
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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.
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