UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2023
Commission File Number: 1-32575
Shell plc
(Exact name of registrant as specified
in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
Shell Centre
London, SE1 7NA
United Kingdom
(Address of principal executive
office)
________________________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ] Form 40-F [ ]
Shell third quarter 2023 update note
The following is an update to the third quarter 2023 outlook and gives an overview of our current expectations for the third quarter. Outlooks presented may vary from the actual third quarter 2023 results and are subject to finalisation of those results, which are scheduled to be published on November 2, 2023. Unless otherwise indicated, all outlook statements exclude identified items. See appendix for previous quarter historical data.
Integrated Gas
$ billions | Q3’23 Outlook | Comment |
Adjusted EBITDA: | ||
Production (kboe/d) | 880 - 920 | Production and LNG liquefaction outlook reflects scheduled maintenance (including Prelude and Trinidad and Tobago). |
LNG liquefaction volumes (MT) | 6.6 - 7.0 | |
Underlying opex | 1.1 - 1.3 | |
Adjusted Earnings: | ||
Pre-tax depreciation | 1.2 - 1.6 | |
Taxation charge | 0.7 - 1.0 | |
Other Considerations: | ||
Trading & Optimisation: expected to be higher compared to Q2’23. |
Upstream
$ billions | Q3’23 Outlook | Comment |
Adjusted EBITDA: | ||
Production (kboe/d) | 1,700 - 1,800 | |
Underlying opex | 2.1 - 2.6 | |
Adjusted Earnings: | ||
Pre-tax depreciation | 2.7 - 3.1 | |
Taxation charge | 2.1 - 2.9 | |
Other Considerations: | ||
The share of profit / (loss) of joint ventures and associates in Q3’23 is expected to be around zero. Q3’23 exploration well-write offs are expected to be ~$0.2 billion. |
Marketing
$ billions | Q3’23 Outlook | Comment |
Adjusted EBITDA: | ||
Sales volumes (kb/d) | 2,450 - 2,850 | |
Underlying opex | 2.1 - 2.5 | |
Adjusted Earnings: | ||
Pre-tax depreciation | 0.3 - 0.7 | |
Taxation charge | 0.2 - 0.4 | |
Other Considerations: | ||
Marketing results: expected to be similar to Q3’22. |
Chemicals & Products
$ billions | Q3’23 Outlook | Comment |
Adjusted EBITDA: | ||
Indicative refining margin | $16/bbl | |
Indicative chemicals margin | $116/tonne | The chemicals sub-segment adjusted earnings are expected to be in line with Q2’23. |
Refinery utilisation | 82% - 86% | |
Chemicals utilisation | 68% - 72% | |
Underlying opex | 2.8 - 3.2 | |
Adjusted Earnings: | ||
Pre-tax depreciation | 0.8 - 1.0 | |
Taxation charge | 0.0 - 0.5 | |
Other Considerations: | ||
Trading & Optimisation: expected to be higher than Q2’23. |
Renewables and Energy Solutions
$ billions | Q3’23 Outlook | Comment |
Adjusted Earnings | (0.3) - 0.3 |
Corporate
$ billions | Q3’23 Outlook | Comment |
Adjusted Earnings | (0.6) - (0.4) |
Shell Group
$ billions | Q3’23 Outlook | Comment |
CFFO: | ||
Tax Paid | 2.7 - 3.5 | |
Working Capital | (4) - 0 | Working capital estimations inherently have a broad range of uncertainty. |
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 26, 2023.
Enquiries
Media International: +44 (0) 207 934 5550
Media Americas: +1 832 337 4355
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. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”. 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.
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 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 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’’,
“milestones”, ‘‘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 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; 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, 2022 (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, October 6, 2023. 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”, 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 only controls its own emissions. The use of the term Shell’s “Net Carbon Intensity” is 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 Net Carbon Intensity (NCI) targets over the next ten
years. However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI target, as these targets
are 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.
The contents of websites referred to in this announcement do not 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.
LEI number of Shell plc: 21380068P1DRHMJ8KU70
Appendix
Indicative Margins
Q2’23 | Q3’23 Updated Outlook | |
Indicative refining margin | $9/bbl | $16/bbl |
Indicative chemicals margin | $153/tonne | $116/tonne |
Underlying Opex
$ billions | Q2’23 | Q2’23 Adjusted | Q3’23 Updated Outlook |
Production and manufacturing expenses | 6.0 | ||
Selling, distribution and administrative expenses | 3.3 | ||
Research and development | 0.3 | ||
Operating Expenses (Opex) | 9.7 | 9.7 | |
Less: Identified Items | 0.0 | ||
Underlying Opex | 9.6 | ||
of which: | |||
Integrated Gas | 1.2 | 1.2 | 1.1 - 1.3 |
Upstream | 2.3 | 2.3 | 2.1 - 2.6 |
Marketing | 2.3 | 2.3 | 2.1 - 2.5 |
Chemicals & Products | 2.9 | 2.9 | 2.8 - 3.2 |
Renewables and Energy Solutions | 0.9 | 0.9 |
Depreciation, depletion and amortisation
$ billions | Q2’23 | Q2’23 Adjusted | Q3’23 Updated Outlook |
Depreciation, Depletion & Amortisation | 7.9 | 7.9 | |
Less: Identified Items | 2.2 | ||
Pre-tax depreciation (as Adjusted) | 5.7 | ||
of which: | |||
Integrated Gas | 3.3 | 1.4 | 1.2 - 1.6 |
Upstream | 2.9 | 2.8 | 2.7 - 3.1 |
Marketing | 0.5 | 0.5 | 0.3 - 0.7 |
Chemicals & Products | 1.0 | 0.9 | 0.8 - 1.0 |
Renewables and Energy Solutions | 0.2 | 0.1 |
Tax Charge
$ billions | Q2’23 | Q2’23 Adjusted | Q3’23 Updated Outlook |
Taxation Charge | 2.2 | 2.2 | |
Less: Identified Items | (0.5) | ||
Taxation Charge (as Adjusted) | 2.8 | ||
of which: | |||
Integrated Gas | 0.3 | 0.8 | 0.7 - 1.0 |
Upstream | 1.6 | 1.7 | 2.1 - 2.9 |
Marketing | 0.3 | 0.2 | 0.2 - 0.4 |
Chemicals & Products | (0.1) | (0.0) | 0.0 - 0.5 |
Renewables and Energy Solutions | 0.2 | 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 2023 and half year unaudited results (Link).
$ billions | Q2’23 | Q2’23 Adjusted | Q3’23 Updated Outlook |
Income/(loss) attributable to Shell plc shareholders | 3.1 | 3.1 | |
Add: Current cost of supplies adjustment attributable to Shell plc shareholders | 0.3 | ||
Less: Identified items attributable to Shell plc shareholders | (1.6) | ||
Adjusted Earnings | 5.1 | ||
of which: | |||
Renewables and Energy Solutions | 0.5 | 0.2 | (0.3) - 0.3 |
Corporate | (0.7) | (0.7) | (0.6) - (0.4) |
Volume Data
Q2’23 | Q3’23 Updated Outlook | |
Integrated Gas | ||
Production (kboe/d) | 985 | 880 - 920 |
LNG liquefaction volumes (MT) | 7.2 | 6.6 - 7.0 |
Upstream | ||
Production (kboe/d) | 1,701 | 1,700 - 1,800 |
Marketing | ||
Sales volumes (kb/d) | 2,607 | 2,450 - 2,850 |
Chemicals & Products | ||
Refinery utilisation | 85% | 82% - 86% |
Chemicals utilisation | 70% | 68% - 72% |
This Report on Form 6-K is incorporated by reference into:
(a) | the Registration Statement on Form F-3 of Shell plc and Shell International Finance B.V. (Registration Numbers 333-254137 and 333-254137-01); and |
(b) | the Registration Statements on Form S-8 of Shell plc (Registration Numbers 333-262396 and 333-272192). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Shell plc | ||
(Registrant) | ||
Date: October 6, 2023 | /s/ Caroline Omloo | |
Caroline Omloo | ||
Company Secretary | ||