Shell PLC · LSE:SHEL
Shell — Q1 2022 Earnings Presentation
50 slides from Shell's earnings presentation, May 5, 2022
Slide 1: First Quarter 2022 Results
#PoweringProgress FIRST QUARTER 2022 RESULTS STRONG RESULTS IN VOLATILE TIMES Shell plc May 5, 2022
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: The Shell Investment Case
GENERATING THE SHELL INVESTMENT CASE SHAREHOLDER VALUE Growing value through a dynamic portfolio and disciplined capital allocation POWERING PROGRESS R E S P E C T IN G N A T U R E Our strategy to accelerate the POWERING LIVES Protecting the environment, reducing waste and transition to net-zero emi
Slide 4: Q1 2022 Key Messages
POWERING PROGRESS Q1 2 02 2 K EY M ESSAG ES Taking decisive action Strong Q1 2022 results Robust Financial Framework Announced intent to exit from joint ventures with Adjusted Earnings of $9.1 billion in Q1 2022 Accelerated shareholder distributions: Gazprom and related entities CFFO of $14.
Slide 5: Providing Energy Security, Accelerating Energy Transition
STRATEGY UPDATE P RO V I D I N G EN ERG Y S E CU RI T Y, A CCE L E RATI N G E N E RG Y T RA N SI TI ON Improving EV charging MoU signed with Crowley, aiming to experience across China support alternative energy and Europe to help solutions for shoreside and terminal accelerate energy transition oper
Slide 6: Accelerating Powering Progress
STRATEGY UPDATE A CCEL ERAT I N G P OWE RI NG P RO G RE SS Renewables & Energy Marketing Integrated Gas Chemicals & Products Upstream Solutions Integrated energy and Delivering the energy of Profitably decarbonising Integrated clean energy A world leader in LNG: chemicals parks delivering today whil
Slide 7: New Reporting Segments
ENHANCING DISCLOSURES AND IMPROVING TRANSPARENCY N EW REP O RTI N G S E G ME N TS Introduction of Quarterly Update Note Quarterly Press Release Enhanced quarterly disclosures New reporting segments Q3 Q2 Q1 Q1 2019 2020 2021 2022 Previous segments New segments Reporting scope Mobility Lubricants Sec
Slide 8: Renewables and Energy Solutions: Helping Customers Decarbonise
RENEWABLES AND ENERGY SOLUTIONS H E L P I N G CU S T O MERS D E CA RB O NI SE WI T H I N T EG RA TED E N E RG Y S O L U TI O N S Strategy Building an integrated power business to serve businesses and consumers by leveraging our portfolio of renewable generation, trading and retail positions Crea
Slide 9: Indicative Chemical Margin
ENHANCING DISCLOSURES AND IMPROVING TRANSPARENCY I N D I CA T I V E CH EM I CAL M A RG I N Hub Material Volume in % wt Global Indicative Chemical Margin Marker Gas Products NWE TTF Natural gas -4.0% $/tonne USGC Henry Hub Natural gas -12.5% USGC Mont Ethane -4.0% Belvieu Marker Oil Products Naphtha
Slide 10: Volatile Business Environment
MACRO V OL A TI LE B U S I N ESS EN V I RO N MEN T $/MMBtu Oil and Gas Prices Shell Indicative Refining and Chemical Margins $/bbl $/MMBtu $/bbl $/tonne Shell plc | May 5, 2022 Data based on monthly averages. 10
Slide 11: Strong Results in Volatile Times
Q1 2022 FINANCIAL RESULTS Q1 2022 average Brent price: S T RON G RES U LTS I N V OL A TI L E T I M ES $102/bbl Income attributable to Shell plc Includes post-tax charges of $3.9 billion related to the withdrawal from Russian oil and gas $7.1 billion shareholders activities Reflects higher tradin
Slide 12: Shell Adjusted Earnings and Cash Conversion
Q1 2022 FINANCIAL RESULTS S H EL L A D JU S T ED EA RN I N GS A N D CA S H CO N V ERSI O N Adjusted Earnings Q4 2021 to Q1 2022 Cash conversion Q1 2022 $ billion $ billion (7.4) working capital movement 0.3 0.3 1.3 1.4 2.2 0.6 0.1 3.8 0.1 1.9 (0.4) 5.5 (6.4) (2.9) 0.6 Shell plc | May 5, 2022 *Non-co
Slide 13: Strong Results Across All Segments
Q1 2022 FINANCIAL RESULTS Additional information available in S T RON G RES U LTS A CROS S A L L S EG MEN TS the Q1 2022 Quarterly Press Release Adjusted Earnings Adjusted EBITDA CFFO $ billion Q1 2022 Q4 2021 Q1 2022 Q4 2021 Q1 2022 Q4 2021 Integrated Gas 4.1 4.0 6.3 6.1 6.4 6.5 Upstream 3.5 2.8 9.
Slide 14: Integrated Business Model Delivering Resilient EBITDA and Cash
CASH POTENTIAL I N T EG RATED B U S I N ESS M O D EL D EL I V ERI N G RES I L I EN T EB I T D A A N D CA S H Adjusted EBITDA Track record of strong CFFO $ billion $ billion Peer range Shell Shell plc | May 5, 2022 Right graph: Peer range comprises ExxonMobil, Chevron, BP and TotalEnergies, CFFO for
Slide 15: Accelerated Shareholder Distributions and Net Debt Reduction
Q1 2022 FINANCIAL RESULTS A CCEL ERAT ED S H A REH OL D ER D I S T RI B UTI O N S A N D N ET D EB T RED U CT I O N Cash dividends and Share buybacks Net debt Q4 2021 to Q1 2022 $ billion $ billion (22.2) (0.5) 0.7 0.8 (0.7) 5.4 5.1 7.4 *Dividends paid to Shell shareholders Shell plc | May 5, 2022 15
Slide 16: Taking Decisive Action: Removal of Russian Hydrocarbons
PROGRESSING REMOVAL OF RUSSIAN HYDROCARBONS FROM SUPPLY CHAIN T A K I N G D ECI S I V E A CT I ON Announced intent to: Main assets in Russia Phased unwinding of supply Withdraw from ventures in Russia with Stopped all spot purchases of Russian crude, liquefied natural gas (LNG), and cargoes of r
Slide 17: Robust Financial Framework
CAPITAL ALLOCATION ROB U S T F I N A N CI A L F RA MEWO RK Clear capital allocation framework Operationalising the framework $19-22 billion of base Cash capex per annum to sustain our strategy 1 st Base Cash capex Inorganic capex included in the range PRIORITY Ordinary progressive dividend ~4%
Slide 18: Our Climate Targets
CARBON O U R CL I M A TE T A RG ETS 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 emiss
Slide 19: Reducing Net Carbon Intensity and Net Absolute Emissions
CARBON RED U CI N G N ET CA RB O N I N T EN S I TY A N D N ET A B S OLUT E EM I S SI O N S Decarbonising our operations and helping our customers meet their changing energy needs Net Carbon Intensity (Scope 1, 2 and 3) Absolute emissions (Scope 1 and 2 ) gCO2e/MJ mtpa CO2e -20% -50% -2.5% -18.1% 79
Slide 20: Continuing Portfolio High Grading
DIVESTMENTS CON T I N U I N G P ORT F OL I O H I G H G RA D I N G Shell Neft Gasnor Salym Fredericia refinery Duvernay shales PCK Schwedt refinery Sakhalin-2 Puget Sound Permian Mobile refinery Egypt Western Desert Deer Park refinery Malampaya OML 17 Completed divestments in 2021 QGC infrastructure
Slide 21: Marketing Major Projects
M A RK ETI N G M A J O R P RO J E CT S Shell Shell- Project Country Products share % operated Under construction – Start-up 2022-2023 Shell Bovarius USA 100 Renewable Fuels – RNG Shell Galloway USA 100 Renewable Fuels – RNG Varennes Carbon LanzaJet USA 15.4 Renewable Fuels Biofuels Plant Rotterd
Slide 22: Integrated Power and Hydrogen Portfolio and Projects
I N T EG RATED P OWE R A N D H Y D RO G E N P ORT F OLI O A N D P ROJE CT S UK NL Norway Spain France Germany Project Country Shell share % Capacity, MW Project Type Renewable generation – Capacity under construction and/or committed for sale Gangarri Australia 100 120 Solar Crosswind NL 80 760 Offs
Slide 23: Carbon Capture and Storage and Nature-Based Projects
CA RB ON CA P T U RE A N D S T ORAG E A N D N A T U RE -B ASED P ROJE CT S Northern CO2 captured Lights Announced projects Country Shell share % Shell-operated and/or stored, mtpa Technology Centre Mongstad CCS projects – Under construction Northern Lights (Phase 1) Norway 33.30% 1.5 JV CCS projects
Slide 24: Integrated Gas Portfolio & Major Projects
I N T EG RATED G A S P O RT F O LI O & M A J O R P ROJE CT S Peak LNG Shell Shell- Project Country production capacity share % operated kboe/d mtpa Under construction – Start-up 2022-2023 Arrow - Surat Gas Australia 50 backfill Gorgon - Jansz Australia 25 backfill Oman Gas Oman 53 120 LNGC Dragon
Slide 25: Chemicals and Products Portfolio & Major Projects
CH EM I CAL S A N D P RO D U CT S P O RT FO LI O & M A JOR P ROJE CT S Shell Products Shell- Project Country share % operated Under construction – Start-up 2022 Pennsylvania Petrochemicals USA 100 1.5 mtpa polyethylene Complex Under construction – Start-up 2023+ Moerdijk energy efficiency The Neth
Slide 26: Upstream Portfolio & Major Projects
U P S TREAM P O RT F O LI O & M A J O R P RO JE CT S Shell Peak production Shell- Project Country share % kboe/d operated Under construction – Start-up 2022-2023 Mero 2 [A] Brazil 19.3 180 Timi Malaysia 75 50 Pierce post Depressurisation UK 93 30 UK Penguins Redevelopment UK 50 45 Vito USA 63
Slide 27: Upcoming Events, Useful Links, Corporate Reports
Upcoming events: Useful links: May 10, 2022 Annual ESG Update Strategy Day 2021 ESG performance data May 24, 2022 Annual General Meeting Annual and Quarterly Databook Simplified Share Structure July 28, 2022 Q2 2022 results Shell Energy Transition Strategy War in Ukraine: Shell’s Response Nigeria br
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Slide 29: Capex Evolving Towards Growth Pillar
CAPITAL ALLOCATION CA P EX E V O L VI N G T O WA RD S G RO WT H P I L L A R Portfolio level approach Cash capex evolution SUSTAINING OUR STRATEGY – Net debt above $65 billion Cash Priority: Strengthen balance sheet and maintain ~4% dividend per share growth annually, subject to Board approval Cash
Slide 30: 2021 Delivery and Outlook
CAPITAL ALLOCATION – NEXT PHASE 2 02 1 D EL I V ERY A N D O U T L O OK GROWTH PILLAR: TRANSITION PILLAR: UPSTREAM PILLAR: THE FUTURE OF ENERGY ENABLING OUR STRATEGY FUNDING OUR STRATEGY Renewables Net debt end-2021: Integrated Chemicals and Shell Marketing and Energy Upstream $53 billion Gas Product
Slide 31: Differentiated Return Expectations by Business
CAPITAL ALLOCATION D I F F ERENT I ATED RE T U RN E X P E CT ATI O NS Project level approach B Y B U S I N ESS GROWTH PILLAR: TRANSITION PILLAR: UPSTREAM PILLAR: THE FUTURE OF ENERGY ENABLING OUR STRATEGY FUNDING OUR STRATEGY Marketing Renewables and Integrated Gas Chemicals Upstream Energy Solution
Slide 32: Progress as of 2021
STRATEGY DAY 2021 P ROG RESS A S OF 2 02 1 Customer Growth Energy Transition 40 million 32 million 55,000 ~55 mtpa ~55% Halved crude Customers served at Shell-branded Reduction in Gas share of daily 46,000 capacity at ~45% retail service stations retail service stations traditional fuel hydrocarbon
Slide 33: Profitably Decarbonising with Our Customers Sector by Sector
VALUE GENERATION THROUGH INTEGRATION P RO F I T ABL Y D ECA RB ON I SI N G WI T H O U R CU S T OMERS S E CT OR B Y S E CT OR Mobility offers on the go Fuel-efficient lubricants & E-fluids Carbon offsetting Telematics & Energy provision Energy-efficient digital solutions lubricants & maintenance solu
Slide 34: Energy Transition Spend
NON-ENERGY PRODUCTS & DECARBONISATION OF CUSTOMERS EN ERG Y T RA N S I TI ON S P EN D 2021 2021 2022 $55 bln total ~ 2/3rd of $55 bln ~ 1/3rd Energy expenditure in Opex Transition Spend Energy Transition Spend: Opex is an important value Expected to be up by ~20% in 2022 vs 2021 driver in less cap
Slide 35: Strategy Day 2021 Disclosure Overview
S T RA TEG Y D A Y 2 02 1 D I S CL OS U RE OV ERVI EW 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
Slide 36: Strategy Day 2021 Disclosure Overview
S T RA TEG Y D A Y 2 02 1 D I S CL OS U RE OV ERVI EW 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 produ
Slide 37: 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 38: We report our emissions in line with the Greenhouse Gas Protocol
We report our emissions in line with the Greenhouse Gas Protocol Initiative Royal Shell Dutch plc |Shell Mayplc 5, 2022 Representative of a range of typical emissions sources within Shell's value chain, which also include other indirect emissions not pictured. 38
Slide 39: 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 40: Marketing: Performing Strongly and a Platform for Future Growth
MARKETING P ERF ORMI N G S T RO N G LY A N D A P L A TFORM F O R F U T U RE G RO WT H Title Strategic delivery on track; resilient growth through cycle Differentiated offerings contributing >50% Adjusted Earnings % of Shell 2020 gross margin contribution in % $ billion Adjusted Earnings Main-grade M
Slide 41: Integrated Power Portfolio
RENEWABLES AND ENERGY SOLUTIONS I N T EG RATED P O WE R P O RT F O LI O – D EL I V ERI N G CU S T O MER- CE NTRI C E N E RG Y S OL U TI ON S A new Shell business established in 2016 More than 650 professionals, around a third being external hires with experience across the power sector, and more
Slide 42: A Customer-First Strategy
RENEWABLES AND ENERGY SOLUTIONS A CU S T OMER- FI RST S T RA TEG Y – I N T EG RATED CL EA N E N E RG Y S Y S TEMS D RI V E H I G H E R RE T U RN S Simplifying customer Our Ambition decarbonisation A leading provider of clean Power-as-a-Service journeys by offering Our customer-first strategy will
Slide 43: Creating a Clean Hydrogen Market
RENEWABLES AND ENERGY SOLUTIONS CREA T I N G A CL EA N H Y D RO G EN M A RK ET T O S ERV E I N D U S T RY A N D H EA VY - DU TY T RA N SPO RT Clean hydrogen1 global demand projections Our hydrogen strategy Million tonnes per annum Orchestrate integrated hydrogen hubs to serve industry and heavy-du
Slide 44: Integrated Clean Energy Systems: Rotterdam Example
RENEWABLES AND ENERGY SOLUTIONS I N T EG RATED CL EA N E N E RG Y S Y S TEMS – RO T T ERD AM EX A MPL E SHELL HYDROGEN STATIONS Customer-centric approach DATA Digitally-enabled product platforms CENTRES Customer-demand-backed asset development Example: WIND FARM HOLLANDSE KUST (NOORD) Rotterda
Slide 45: World Leader in LNG: Resilient Cash Generation
INTEGRATED GAS STRATEGY WO RL D L EA D ER I N L N G : RE S I L I E NT CA S H G EN ERAT I ON I N T O A L O WE R CA RB O N F U T U RE Lead the market Run the business Grow the business Leverage world-class innovation, flexibility and LNG Unmatched portfolio delivers results through the cycle Sel
Slide 46: Good 2021 Results Overcoming Supply Disruptions and Price Volatility
RUN THE BUSINESS G O O D 2021 RES ULT S O V E RCO MI N G S U P PL Y D I S RU P TI ONS A N D P RI CE V O L A TI LI TY 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
Slide 47: Grow Our Unmatched LNG Supply Portfolio
INTEGRATED GAS G RO W O U R U N M A TCHE D L N G S U P P LY P ORT F OLI O Yamal LNG Unit technical cost Gasnor $ per MMBtu LNG Canada Sakhalin LNG Venture Global Sabine Pass LNG Elba Island Egypt LNG Qatargas 4 Qalhat LNG Key Atlantic LNG Nigeria LNG Oman LNG Shell equity Malaysia LNG Brunei LNG (ex
Slide 48: Delivering Low-Carbon Solutions through Energy and Chemicals Parks
CHEMICALS AND PRODUCTS D EL I V ERI N G L OW- CA RB O N S O L U TI O N S T H ROU G H I N T E G RA TED E N ERG Y A N D CH E M I CALS P A RK S Transition to 5 core Energy and Chemicals Parks Delivering synergies through integrating Refining and Chemicals, bringing customers and assets together Exp
Slide 49: Transforming Our Assets for the Customer of the Future
CHEMICALS AND PRODUCTS T RA N SF ORMI N G OU R A S S ET S F O R T H E CU S T OME R OF T H E F U T U RE 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
Slide 50: Delivering the Energy of Today While Funding the Energy of Tomorrow
UPSTREAM SUSTAINING CASH DELIVERY D EL I V ERI N G T H E E N E RG Y O F T O D A Y WH I L E INTO THE 2030s F U N D I N G T H E EN E RG Y O F T O M O RROW Focusing the portfolio Prioritising 8 core advantaged positions that generate more than 80% of Upstream CFFO UK Core positions to attract ~80%