Shell PLC · LSE:SHEL
Shell — Q4 2022 Earnings Presentation
37 slides from Shell's earnings presentation, Feb 2, 2023
Slide 1: Fourth Quarter and Full Year 2022 Results
#PoweringProgress FOURTH QUARTER AND FULL YEAR 2022 RESULTS Strong results, disciplined capital allocation Shell plc February 2, 2023
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: Key messages
Q4 2022 Key messages Strong results – financial & carbon Enhanced shareholder distributions 2023 outlook: disciplined capital allocation Q4 2022 Total shareholder distributions Cash capex Adjusted Earnings1 of $9.8 billion $26 billion in 2022 $23-27 billion in 2023 CFFO of $22.4 billion > 35% of CFF
Slide 4: The Shell investment case: generating shareholder value
GENERATING THE SHELL INVESTMENT CASE SHAREHOLDER VALUE Growing value through a dynamic portfolio and disciplined capital allocation POWERING PROGRESS RESPECTING N A T U R E Our strategy to accelerate the POWERING LIVES Protecting the environment, reducing waste and transition to net-zero emissions,
Slide 5: Disciplined focus on value creation
FINANCIAL FRAMEWORK Disciplined focus on value creation 2023 cash capex within $23-27 billion Targeting AA credit metrics through the cycle Includes inorganic capex Capital Resilient Continued focus on Net debt reduction in upcycle discipline balance Divest for value Marketing Integrated Gas
Slide 6: Our progress
CARBON Our progress 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 1,
Slide 7: Strong financial performance continues
FINANCIAL RESULTS Q4 AND FULL YEAR 2022 Strong financial performance continues Q4 2022 Full year 2022 $10.4 billion Income attributable to Shell plc shareholders $42.3 billion $9.8 billion Adjusted Earnings $39.9 billion $20.6 billion Adjusted EBITDA $84.3 billion $22.4 billion Cash flow from operat
Slide 8: Strong performance mainly driven by Integrated Gas
Q4 2022 FINANCIAL RESULTS Strong performance mainly driven by Integrated Gas Adjusted Earnings Q3 2022 to Q4 2022 Cash conversion Q4 2022 $ billion $ billion $10.4 billion working capital movement 14 28 3.6 12 24 7.5 4.1 0.6 0.0 20 10 (2.8) (0.4) (0.0) (0.1) 6.1 (2.1) 8 16 2.4 0.5 6 12 0.6 (7.2) 22.
Slide 9: Strong performance in volatile times
FULL YEAR 2022 FINANCIAL RESULTS Strong performance in volatile times Adjusted Earnings 2021 to 2022 Cash conversion full year 2022 $ billion $ billion 50 100 19.0 0.6 2.0 0.3 40 2.6 80 (2.2) 9.3 23.3 (8.9) (0.7) (5.4) 30 60 7.1 2.1 20 40 84.3 39.9 68.4 10 19.3 20 39.9 0 0 1 Shell plc | February 2,
Slide 10: Disciplined capital expenditure across segments
2022 DELIVERY Disciplined capital expenditure across segments Marketing Growth $4.8 billion ~139,000 (Marketing & R&ES) EV charge points $8.3 billion +62% vs 2021 R&ES C&P $3.5 billion $3.8 billion Transition >2x increase vs 2021 (IG & C&P) 2022 $25 billion 6.4 GW of renewable power generation $8.1
Slide 11: Investing purposefully in energy transition
LOW-CARBON ENERGY & NON-ENERGY PRODUCTS Investing purposefully in energy transition 2022 total expenditure 2022 share of Energy Transition spend 2023 Energy Transition spend $64 billion 30% in Energy > 1/3rd in Energy Transition spend Transition spend Growth Transition Upstream ET opex ET capex Othe
Slide 12: Strong performance mainly driven by Integrated Gas
Q4 2022 FINANCIAL RESULTS Additional information available in the Strong performance mainly driven by Q4 2022 Quarterly Press Release Integrated Gas Adjusted Earnings Adjusted EBITDA CFFO $ billion Q4 2022 Q3 2022 Q4 2022 Q3 2022 Q4 2022 Q3 2022 Integrated Gas 6.0 2.3 8.3 5.4 6.4 6.7 Upstream 3.1 5.
Slide 13: Strong performance in volatile times
FULL YEAR 2022 FINANCIAL RESULTS Strong performance in volatile times Adjusted Earnings Adjusted EBITDA CFFO $ billion 2022 2021 2022 2021 2022 2021 Integrated Gas 16.1 9.0 26.6 16.8 27.7 13.2 Upstream 17.3 8.0 42.1 27.2 29.6 21.6 Marketing 2.8 3.5 5.3 6.0 2.4 5.0 Chemicals & 4.7 2.1 8.6 5.6 12.9 3.
Slide 14: HSSE performance
PRELIMINARY RESULTS HSSE performance Goal Zero on safety Operational spills Injuries (TRCF) per million working hours Million working hours Thousand tonnes # of spills 1.5 800 3 300 2 200 400 1 100 0.5 0 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 2017 2018 20
Slide 15: SEC proved reserves position
PRELIMINARY RESULTS SEC proved reserves position Reserves performance in 2022 Proved reserves 2022 vs 2021 billion boe RRR RRR 3-year average Reserves/Production 12 +120% +58% ~8.8 years 10 1.0 0.3 RRR RRR 3-year average (excl. A&D) (excl. A&D) +16% vs 2021 8 (1.1) +26% +39% 6 9.4 9.6 billion boe 20
Slide 16: Portfolio high-grading
2022 DELIVERY Portfolio high-grading Project start-ups Completed/announced acquisitions Completed divestments Announced intent to divest/withdraw Shell Neft Salym Nature Energy PCK Schwedt refinery Sakhalin-2 Aera Energy Shell Polymers Monaca Hydrogen electrolyser Landmark fuel and convenience store
Slide 17: Pipeline of major projects
Pipeline of major projects Shell Peak Shell- Projects under construction Country production/Capacity/ share % operated Products Start-up 2023-2024 Mero 2 [A] Brazil 19.3 180 kboe/d Mero 3 [A] Brazil 19.3 180 kboe/d Vito USA 63 100 kboe/d Whale USA 60 100 kboe/d Sprng Energy (multiple) [B] India
Slide 18: Upcoming events and useful links
Upcoming events: Useful links: Feb 16, 2023 Annual and Quarterly Databook Shell LNG Outlook 2023 Shell Energy Transition Strategy Mar 22, 2023 Annual ESG Update Nigeria briefing notes 2021 ESG performance data May 4, 2023 Q1 2023 results War in Ukraine: Shell’s Response May 23, 2023 Annual General M
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Slide 20: Powering Progress in action
STRATEGY UPDATE Power i n g Pr ogr es s i n acti on Renewables & Energy Marketing Integrated Gas Chemicals & Products Upstream Solutions Integrated energy and Delivering the energy of today Profitably decarbonising Integrated clean energy A world leader in LNG: chemicals parks delivering low- while
Slide 21: IG Adjusted Earnings trending with LNG markers
INTEGRATED GAS IG Adjust ed Ear nings t r ending wit h LNG mar ker s $ billion $/bbl Million tonnes Million tonnes LNG sales vol. less Shell share of LNG liquifaction vol. Adjusted Earnings Avg 4Q rolling , Adjusted Earnings 70% JCC-3 / 30% JKM (RHS) Shell share of LNG liquefaction volumes Avg 4Q ro
Slide 22: Differentiated return expectations by business
CAPITAL ALLOCATION DIF FERE NT IA TE D RETURN EXPECTATIONS Project level approach BY BUSINESS GROWTH PILLAR: TRANSITION PILLAR: UPSTREAM PILLAR: THE FUTURE OF ENERGY ENABLING OUR STRATEGY FUNDING OUR STRATEGY Marketing Renewables and Integrated Gas Chemicals Upstream Energy Solutions and Products TY
Slide 23: Strategy Day 2021 disclosure overview
STRATEGY DAY 2021 DISCLOSURE OVERVIEW 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 TWh power sales
Slide 24: Strategy Day 2021 disclosure overview
STRATEGY DAY 2021 DISCLOSURE OVERVIEW 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 production from ~100
Slide 25: 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 26: 2023 policy review: strategy and link to remuneration (LTIP)
REMUNERATION 2023 POLICY REVIEW : STRATEGY AND LINK TO REMUNERATIO N (LTIP) 2022 LTIP 2023+ LTIP Financial delivery AND Disciplined capital spending Absolute measures 40% Relative measures 60% 20% 20% Relative Absolute CFFO FCF TO Relative Absolute 20% TSR Energy transition 20% 20% AND Growing the f
Slide 27: 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 February plc 2, 2023 Representative of a range of typical emissions sources within Shell's value chain, which also include other indirect emissions not pictured. 27
Slide 28: 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 29: Reducing net carbon intensity and net absolute emissions
CARBON REDUCIN G NET CARBON INTENSI T Y AND NET ABSO LUTE EMISSIO NS Decarbonising our operations and helping our customers meet their changing energy needs Scope 1 & 2 emissions in 2022: ~57 mtpa CO2e (preliminiary) Net Carbon Intensity (Scope 1, 2 and 3) Absolute emissions (Scope 1 and 2 ) gCO2e/M
Slide 30: World leader in LNG: resilient cash generation into a lower carbon future
INTEGRATED GAS STRATEGY W O RLD LEADER IN LNG: RESILIENT CASH GENERATION INTO A LOW ER CARBON FUTURE Lead the market Run the business Grow the business Leverage world-class innovation, flexibility and LNG Unmatched portfolio delivers results through the cycle Selective investment in competitiv
Slide 31: 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 32: Good 2021 results overcoming supply disruptions and price volatility
RUN THE BUSINESS G O O D 2 021 RESULTS OVERCOMIN G S UPPL Y DISRUPTIO N S AND PRICE VOLATILIT Y 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 Volatile price enviro
Slide 33: Further transforming Energy and Chemicals Park Rotterdam
CHEMICALS AND PRODUCTS FURTHER TRANSFORMI N G ENERGY AND CHEMICALS PARK RO TTERDAM 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 farm Hydrogen Integrat
Slide 34: Delivering low-carbon solutions through integrated energy and chemicals parks
CHEMICALS AND PRODUCTS DELIVERIN G L OW -CARBO N SOLUTIONS THRO UG H INTEG RATED ENERG Y AND CHEMICALS PARKS Transition to 5 core Energy and Chemicals Parks Delivering synergies through integrating Refining and Chemicals, bringing customers and assets together Expanding to low-carbon product off
Slide 35: Transforming our assets for the customer of the future
CHEMICALS AND PRODUCTS TRANSFO RMI N G OUR ASSETS FOR THE CUSTO MER O F THE FUTURE 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 to ~45 mtpa by 2030
Slide 36: Delivering the energy of today while funding the energy of tomorrow
UPSTREAM SUSTAINING CASH DELIVERY DELIVERIN G THE ENERGY O F TO DAY W HILE INTO THE 2030s FUND I N G THE ENERGY OF TOMORROW Focusing the portfolio Prioritising 8 core advantaged positions that generate more than 80% of Upstream CFFO UK Core positions to attract ~80% of Cash capex Kazakhstan Ma
Slide 37: Actively reviewing our operational response and portfolio options for onshore oil in Nigeria
NIGERIA ACTIVELY REVIEW ING OUR OPERATIONAL RESPO NSE AND PO RTFOL I O OPTIONS FOR ONS HORE O IL IN NIG ERIA Shell has been in discussion with the Nigerian government to review options regarding the future of our onshore portfolio. Shell intends to continue to develop and invest in our deep-wate