Shell PLC · LSE:SHEL
Shell — Q2 2022 Earnings Presentation
48 slides from Shell's earnings presentation, Jul 28, 2022
Slide 1: Second Quarter 2022 Results
#PoweringProgress SECOND QUARTER 2022 RESULTS DISCIPLINE DELIVERING RESULTS: MORE CASH, MORE RESILIENCE Shell plc July 28, 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: Q2 Key Messages
POWERING PROGRESS Q2 2 02 2 K EY M ES SAGES Delivering strong results Energy security and transition Enhanced shareholder distributions Strong performance in a turbulent macro Powering Progress with focused investment in Accelerated shareholder distributions environment energy security and acc
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 Partnered with Accenture and MoU* signed with Collaboration* with key Japanese LNG Amex GBT for the launch of one ZeroAvia, leader in buyers, Tokyo Gas and Osaka Gas, to of the world’s first and la
Slide 6: Powering Progress in Action
STRATEGY UPDATE P OWERI N G P RO G RESS I N A CT I O N 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 while fu
Slide 7: H1 2022 Outperforming the Macro
Brent Henry Hub H1 2022 OUTPERFORMING THE MACRO $/bbl $/MMBtu F O CU S E D T RA N SF ORMATI O N H1 2013 107.5 3.7 H1 2022 108.1 6.0 Comparing H1 2022 to H1 2013 when Brent price was similar Increased Discipline Better Results Greater Resilience Integrated value delivery 39% lower* 65% increase 32% r
Slide 8: Enhanced Business Delivery
Brent Henry Hub H1 2022 OUTPERFORMING THE MACRO $/bbl $/MMBtu EN H A N CED B U S I N ESS D EL I V ERY H1 2013 107.5 3.7 H1 2022 108.1 6.0 Growing customer-facing businesses, delivering low-carbon products and driving energy transition Marketing Renewables and Energy Solutions Platform for future gro
Slide 9: Our Carbon Progress
CARBON OU R P ROG RESS 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
Slide 10: HSSE Performance
H1 2022 H S S E P ERF ORMAN CE Goal Zero on safety Operational spills Injuries (TRCF) per million working hours Million working hours Thousand tonnes # of spills TRCF Working hours (RHS) Volume of spills Number of spills (RHS) GHG emissions Process safety Million tonnes CO2e Million tonnes CO2e # of
Slide 11: Volatile Business Environment
MACRO $/MMBtu V OL A TI LE B U S I N ESS EN V I RO N MEN T Oil and Gas Prices Shell Indicative Refining and Chemical Margins $/bbl $/MMBtu $/bbl $/tonne Shell plc | July 28, 2022 Data based on monthly averages. 11
Slide 12: Strong Results in Volatile Times
Q2 2022 FINANCIAL RESULTS Q2 2022 average Brent price: S T RON G RES U LTS I N V OL A TI L E T I M ES $114/bbl Income attributable to Shell plc Includes post-tax net impairment reversals of $4.3 billion following the revision of oil and gas $18.0 billion shareholders prices Compared to Q1 2022,
Slide 13: Shell Adjusted Earnings and Cash Conversion
Q2 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 Q1 2022 to Q2 2022 Cash conversion Q2 2022 $ billion $ billion 0.4 0.9 1.5 0.0 (0.0) (0.3) Shell plc | July 28, 2022 *Non-controlling interest 13
Slide 14: Strong Results Across All Segments
Q2 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 Q2 2022 Quarterly Press Release Adjusted Earnings Adjusted EBITDA CFFO $ billion Q2 2022 Q1 2022 Q2 2022 Q1 2022 Q2 2022 Q1 2022 Integrated Gas 3.8 4.1 6.5 6.3 8.2 6.4 Upstream 4.9 3.5 11
Slide 15: 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 | July 28, 2022 Left graph: excludes Corporate 15 Right graph: Peer range comprises ExxonMobil, Chev
Slide 16: Accelerated Shareholder Distributions and Net Debt Reduction
Q2 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 Q1 2022 to Q2 2022 $ billion $ billion (22.9) (0.2) 2.1 1.1 7.4 (0.8) 7.0 4.2 *Dividends paid to Shell shareholders Shell plc | July 28, 2022
Slide 17: Stepping Up Shareholder Distributions
CAPITAL ALLOCATION S T EP PI N G U P S H A REH OL D ER D I S T RI B UTI O N S $8.5 billion share buyback programme announced for H1 2022 H1 2022 Q3 2022 completed, including $5.5 billion from the Permian asset sale proceeds Shareholder announcements announcements distributions $6 billion share b
Slide 18: Continuing Portfolio Focus and High-Grading
DIVESTMENTS CON T I N U I N G P ORT F OL I O F OCU S A N D H I G H - G RAD I NG Shell Neft Gasnor Salym Fredericia refinery Duvernay shales PCK Schwedt refinery Sakhalin-2 Puget Sound Permian Mobile refinery Egypt Western Desert Deer Park refinery OML 17 Malampaya Nigeria onshore Completed divestmen
Slide 19: Progressing Removal of Russian Hydrocarbons from Supply Chain
PROGRESSING REMOVAL OF RUSSIAN HYDROCARBONS FROM SUPPLY CHAIN DECISIVE ACTION IN FAST-EVOLVING GEOPOLITICAL ENVIRONMENT CONTINUED CARE FOR STAFF IN IMPACTED COUNTRIES Phased unwinding of supply Stopped all spot purchases of Russian crude, liquefied natural gas Announced intent to: Main assets in R
Slide 20: 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 21: 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 22: Building a Hydrogen Economy
RENEWABLES AND ENERGY SOLUTIONS B U I L D I N G A H Y D RO G E N E CO N O M Y SHELL HYDROGEN REFUELLING Building Value Chains at Scale, leveraging Shell’s Capabilities STATIONS DATA Holland Hydrogen I 200 MW Electrolyser FID announced in CENTRES July 2022 Europe’s largest renewable hydrogen plan
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 Lights Shell CO2 captured Shell- Announced projects Country Technology share % and/or stored, mtpa operated Centre Mongstad CCS projects – Under construction Northern Lights (Phase 1) Norway 33.3% 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+ Mossmorran Rotterdam Moerdijk energ
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 UK 50 45 Penguins Redevelopment Kazakhstan V
Slide 27: Upcoming Events and Useful Links
Upcoming events: Useful links: Oct 6, 2022 Strategy Day 2021 Shell Insights: Marketing Business Update Annual and Quarterly Databook Oct 27, 2022 Shell Energy Transition Strategy Q3 2022 results Nigeria briefing notes 2021 ESG performance data Simplified Share Structure War in Ukraine: Shell’s Respo
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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: 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 33: 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 34: 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 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 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 36: 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 37: We Report Our Emissions in Line with the Greenhouse Gas Protocol
We report our emissions in line with the Greenhouse Gas Protocol Initiative Royal Dutch Shell plc Representative of a range of typical emissions sources within Shell's value chain, which also include other indirect emissions not pictured. 37
Slide 38: 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 39: Reducing Net Carbon Intensity and Net Absolute Emissions
CARBON REDUCING NET CARBON INTENSITY AND NET ABSOLUTE EMISSIONS 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 83 77 11 68 63 72 8 Doubl
Slide 40: Powering Progress in Action
STRATEGY POWERING PROGRESS IN ACTION POWERING LIVES RESPECTING NATURE ORGANISATIONAL EFFICIENCY Board: 50% Directors are women up from 38% in 2020, Disposed 30% lesser hazardous and non-hazardous waste in A smarter, leaner, more focused organisation with exceeding FTSE Women Leaders Review target of
Slide 41: 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 42: 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 43: 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 44: Further Transforming Energy and Chemicals Park Rotterdam
CHEMICALS AND PRODUCTS F U RT HER T RA N S FORMI N G E N E RG Y A N D CH E M I CA LS P A RK ROT T E RD AM 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 f
Slide 45: Delivering Low-Carbon Solutions Through Integrated 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 46: 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 47: 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%
Slide 48: Actively Reviewing Our Operational Response and Portfolio Options for Onshore Oil in Nigeria
NIGERIA A CT I V ELY REV I EWI N G O U R O P E RA TI O NAL RE S P ON SE A N D P ORT F OLI O OP T I O N S F O R O N S H O RE O I L I N N I G E RI A Shell has been in discussion with the Nigerian government to review options regarding the future of our onshore portfolio. Shell intends to continue