Royal Dutch Shell plc Shell First Quarter 2020 Update Note
March 31 2020 - 02:00AM
UK Regulatory
TIDMRDSA TIDMRDSB
The Hague, March 31, 2020 - This is an update to the first quarter 2020
outlook provided in the fourth quarter results announcement on January
30, 2020. The impacts presented here may vary from the actual results
and are subject to finalisation of the first quarter 2020 results.
Unless otherwise indicated, presented earnings impacts relate to
earnings on a current cost of supplies basis, attributable to
shareholders, excluding identified items.
Integrated Gas
-- Production is expected to be between 920 and 970 thousand barrels of oil
equivalent per day, this includes the additional volumes from the Egypt
offshore assets that were previously reported in the Upstream segment
-- LNG liquefaction volumes are expected to be between 8.8 and 9.2 million
tonnes
-- Dividend payments from joint ventures and associates are expected to be
lower than in other quarters, as is typically the case in the first
quarter
-- Trading and optimisation results are expected to be average and
approximately in line with the fourth quarter 2019
-- More than 90% of our term contracts for LNG sales in 2019 were oil price
linked with a price-lag of typically 3-6 months
-- CFFO in Integrated Gas can be impacted by margining resulting from
movements in the forward commodity curves. At the time of issue, we
expect margining inflows not significantly different from those received
in the fourth quarter 2019
Upstream
-- Production is expected to be between 2,650 and 2,720 thousand barrels of
oil equivalent per day, this includes the impact from the transfer of the
Egypt offshore assets to the Integrated Gas segment and the transfer of
Oil Sands to the Oil Products segment
-- Upstream margins are impacted by the weak macro environment. Upstream
results, excluding identified items, are also negatively impacted by the
effects of a weak Brazilian Real on taxation, a non-cash item
Oil Products
-- Refinery utilisation is expected to be between 80% and 84% with
availability expected to be between 93% and 96%
-- Refining margins are expected to be weaker compared with the fourth
quarter 2019
-- Oil Products sales volumes are expected to be between 6,000 and 7,000
thousand barrels per day
-- Marketing margins in the first quarter are expected to remain strong, as
the impact on demand from COVID-19 is not expected to be significant at
the Shell Group level in the first quarter
-- A material working capital release is expected largely driven by the
change in quarter-end prices impacting inventory values
-- CFFO excluding working capital movements is expected to be impacted by
the higher cash cost of sales
-- In February, we completed the divestment of the Martinez refinery
Chemicals
-- Chemicals manufacturing plant utilisation is expected to be between 82%
and 87% and availability is expected to be between 94% and 97%
-- Chemicals sales volumes are expected to be between 3,700 and 4,000
thousand tonnes
-- Chemicals cracker and intermediate margins are expected to improve
compared to the fourth quarter 2019
Corporate
-- Corporate segment earnings excluding identified items are expected to be
a net expense at the lower end of the $800 to 875 million range for the
first quarter. This excludes the impact of currency exchange rate effects
Other
-- Based on changes to our oil price outlook for 2020, post-tax impairment
charges in the range of $400-800 million are expected for the first
quarter. Impairment charges are reported as identified items
-- As per previous disclosures, CFFO price sensitivity at Shell Group level
is still estimated to be $6 billion per annum for each $10 per barrel
Brent price movement
-- Note that this price sensitivity is indicative and is most
applicable to smaller price changes than we currently witness as
well as in relation to the full-year results
-- We will replace Oil Products and Chemicals plant availability with
utilisation metrics going forward to improve transparency on refinery and
chemicals production volumes. Utilisation is defined as the actual usage
of the plants as a percentage of the rated capacity
-- As a result of COVID-19, we have seen and expect significant uncertainty
with macro-economic conditions with regards to prices and demand for oil,
gas and related products. Furthermore, recent global developments and
uncertainty in oil supply have caused further volatility in commodity
markets. The impact of the dynamically evolving business environment on
first quarter results is being primarily reflected in March with a
relatively minor impact in the first two months. We expect to provide
further updates about the impact on our outlook in the first quarter
results announcement
-- Shell's liquidity remains strong. Reflecting the Shell Group's prudent
balance sheet policy and to enhance financial flexibility, Shell has a
new $12 billion revolving credit facility commitment. This is in addition
to the $10 billion credit facility signed in December 2019. Together with
cash and cash equivalents of circa $20 billion, available liquidity will
rise from $30 billion to more than $40 billion. In addition, the Shell
Group has access to extensive commercial paper programmes
Consensus
The consensus collection for quarterly earnings and CFFO excluding
working capital movements, managed by VARA research, is scheduled to be
opened for submission on April 8, 2020, closed on April 22, 2020, and
made public on April 23, 2020.
Note the change compared with previous quarters where we have published
CFFO including working capital movements.
Royal Dutch Shell plc
Enquiries:
Investor Relations:
Europe + 31 (0) 70 377 4540
North America +1 832 337 2034
Media:
International +44 (0) 207 934 5550
Americas +1 832 337 4355
Cautionary Note
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate legal entities. In this announcement
"Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our" are
also used to refer to Royal Dutch 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 Royal Dutch
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. 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.
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 Royal Dutch 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 Royal Dutch 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", "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 Royal Dutch 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, 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
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 Royal Dutch Shell's Form 20-F for the
year ended December 31, 2019 (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, March 31, 2020. Neither Royal Dutch
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.
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. U.S. 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 Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
(END) Dow Jones Newswires
March 31, 2020 02:00 ET (06:00 GMT)
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