TIDMSHELL
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR
UNAUDITED RESULTS
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SUMMARY OF UNAUDITED RESULTS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
18,040 7,116 3,428 +154 Income/(loss) attributable to Shell plc shareholders 25,156 9,087 +177
11,472 9,130 5,534 +26 Adjusted Earnings A 20,601 8,768 +135
23,150 19,028 13,623 +22 Adjusted EBITDA(2) A 42,177 25,195 +67
18,655 14,815 12,617 +26 Cash flow from operating activities 33,470 20,910 +60
(6,207) (4,273) (2,946) Cash flow from investing activities (10,481) (3,535)
12,448 10,542 9,671 Free cash flow G 22,989 17,375
7,024 5,064 4,383 Cash capital expenditure C 12,088 8,357
9,547 9,457 8,470 +1 Operating expenses F 19,004 17,905 +6
9,270 9,256 8,505 -- Underlying operating expenses F 18,526 17,228 +8
14.3% 9.3% 3.2% ROACE on a Net income basis D 14.3% 3.2%
ROACE on an Adjusted Earnings plus Non-controlling
12.4% 10.6% 4.9% interest (NCI) basis D 12.4% 4.9%
46,357 48,489 65,735 Net debt E 46,357 65,735
19.3% 21.3% 27.7% Gearing E 19.3% 27.7%
2,898 2,962 3,254 -2 Total production available for sale (thousand boe/d) 2,930 3,371 -13
2.42 0.94 0.44 +157 Basic earnings per share ($) 3.34 1.17 +185
1.54 1.20 0.71 +28 Adjusted Earnings per share ($) B 2.74 1.13 +142
0.25 0.25 0.24 -- Dividend per share ($) 0.50 0.41 +21
--------- --------- --------- -------- ------------------------------------------------------ ------------- ---------- --------- --------
1. Q2 on Q1 change.
2.With effect from Q3 2021, Adjusted EBITDA includes the
non-controlling interest component of Adjusted Earnings. Prior
period comparatives have been revised.
Quarter Analysis
Income attributable to Shell plc shareholders, compared with the
first quarter 2022, mainly reflected higher realised prices, higher
refining margins, and higher gas and power trading and optimisation
results, partly offset by lower LNG trading and optimisation
results.
Second quarter 2022 income attributable to Shell plc
shareholders included post-tax net impairment reversals of $4.3
billion following the revision of Shell's mid- and long-term
commodity price assumptions reflecting the current energy market
demand and supply fundamentals (see Note 8 to the Condensed
Consolidated Interim Financial Statements), and net mark-to-market
gains of $1.0 billion. These are included in identified items
amounting to $5.2 billion in the quarter.
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as income attributable to Shell plc shareholders and
adjusted for the above identified items of $5.2 billion and the
cost of supplies adjustment of $1.4 billion.
Cash flow from operating activities for the second quarter 2022
was $18.7 billion, and reflected working capital outflow of $4.2
billion, tax payments of $3.2 billion, and net derivative outflows
of $0.7 billion. Working capital outflow is driven by an increase
in inventory due to price and volumes (increase of $6.8 billion),
and an increase in current receivables, partly offset by an
increase in current payables.
Cash flow from investing activities for the quarter was an
outflow of $6.2 billion.
Net debt and Gearing: At the end of the second quarter 2022, net
debt was $46.4 billion, compared with $48.5 billion at the end of
the first quarter 2022, mainly driven by free cash flow, partly
offset by dividends, share buybacks, and lease additions. Gearing
was 19.3% at the end of the second quarter 2022, compared with
21.3% at the end of the first quarter 2022, driven by net debt
reduction and higher equity.
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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Shareholder distributions
Total shareholder distributions in the quarter amounted to $7.4
billion. The $8.5 billion share buyback programme for the first
half of 2022 was completed on July 5, 2022. Dividends declared to
Shell plc shareholders for the second quarter 2022 amount to $0.25
per share. Today, Shell announces a share buyback programme of $6
billion which is expected to be completed by the third quarter 2022
results announcement. With the current energy sector outlook and
subject to Board approval, shareholder distributions are expected
to remain in excess of 30% of cash flow from operating
activities.
Half Year Analysis
Income attributable to Shell plc shareholders, compared with the
first half 2021, mainly reflected higher realised prices, higher
refining margins, higher trading and optimisation results, partly
offset by lower volumes, and lower Chemicals margins.
First half 2022 income attributable to Shell plc shareholders
included post-tax net impairment reversals of $1.7 billion and
provisions for onerous contracts of $0.5 billion. These are
included in identified items amounting to $1.1 billion in the half
year.
Adjusted Earnings and Adjusted EBITDA for the first half 2022
were driven by the same factors as income attributable to Shell plc
shareholders and adjusted for identified items of positive $1.1
billion and the cost of supplies adjustment of $3.5 billion.
Cash flow from operating activities for the first half 2022 was
$33.5 billion, and reflected working capital outflow of $11.7
billion, and tax payments of $5.3 billion.
Cash flow from investing activities for the first half 2022 was
an outflow of $10.5 billion.
This announcement, together with supplementary financial and
operational disclosure and a separate press release for this
quarter, is available at www.shell.com/investors1.
1. Not incorporated by reference.
SECOND QUARTER 2022 PORTFOLIO DEVELOPMENTS
Withdrawal from Russian oil and gas activities
We refer to Note 9 to the Condensed Consolidated Interim
Financial Statements.
Integrated Gas
In May 2022, we announced that Shell Australia Pty Ltd and its
joint venture partner, SGH Energy, have taken a final investment
decision to approve the development of the Crux natural gas field,
off the coast of Western Australia.
In July 2022, we were selected by QatarEnergy as a partner in
the North Field expansion project in Qatar.
Upstream
In April 2022, we announced that we have signed the
production-sharing contract (PSC) to formally acquire a 25% stake
in the Atapu Field in Brazil.
In May 2022, we announced the start of production of the FPSO
Guanabara in the Mero field, in the offshore Santos Basin in
Brazil.
In July 2022, we announced the final investment decision to
develop the Jackdaw gas field in the UK North Sea, following
regulatory approval earlier this year.
Marketing
In May 2022, we completed the sale of Shell Neft LLC, Shell's
retail stations and lubricants business in Russia, to PJSC
LUKOIL.
In June 2022, we completed the acquisition of certain
company-owned fuel and convenience retail sites from the Landmark
group of companies in the USA, including supply agreements for the
independently operated fuel and convenience sites.
Chemicals and Products
In July 2022, we announced that Shell USA, Inc. and Shell
Midstream Partners, L.P. had executed a definitive agreement and
plan of merger, pursuant to which Shell USA, Inc. will acquire all
of the common units representing limited partner interests in Shell
Midstream Partners, L.P. held by the public.
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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Renewables and Energy Solutions
In April 2022, we signed an agreement with Actis Solenergi
Limited to acquire 100% of Solenergi Power Private Limited and with
it, the Sprng Energy group of companies in India.
In July 2022, we announced the final investment decision to
build Holland Hydrogen I, which will be Europe's largest renewable
hydrogen plant once operational in 2025.
Page 2
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
8,103 3,079 969 +163 Segment earnings 11,183 3,421 +227
4,346 (1,013) (636) Identified items A 3,332 245
3,758 4,093 1,605 -8 Adjusted Earnings A 7,850 3,176 +147
6,529 6,315 3,318 +3 Adjusted EBITDA A 12,844 6,741 +91
8,176 6,443 2,191 +27 Cash flow from operating activities 14,619 4,753 +208
919 863 765 Cash capital expenditure C 1,782 1,662
144 120 165 +20 Liquids production available for sale (thousand b/d) 132 179 -26
Natural gas production available for sale (million
4,642 4,504 4,817 +3 scf/d) 4,573 4,918 -7
944 896 995 +5 Total production available for sale (thousand boe/d) 920 1,026 -10
7.66 8.00 7.49 -4 LNG liquefaction volumes (million tonnes) 15.66 15.65 --
15.21 18.29 15.92 -17 LNG sales volumes (million tonnes) 33.50 32.30 +4
------- --------- ------- -------- ------------------------------------------------------ ------------- -------- ------- --------
1.Q2 on Q1 change.
The Integrated Gas segment includes liquefied natural gas (LNG),
conversion of natural gas into gas-to-liquids (GTL) fuels and other
products. The segment includes natural gas and liquids exploration
and extraction, and the operation of the upstream and midstream
infrastructure necessary to deliver gas and liquids to market as
well as the marketing, trading and optimisation of LNG, including
LNG as a fuel for heavy-duty vehicles.
Quarter Analysis
Segment earnings, compared with the first quarter 2022, mainly
reflected higher production (increase of $109 million, post-tax),
more than offset by the net of lower trading and optimisation
results and assets realising higher prices (decrease of $296
million, post-tax).
Second quarter 2022 segment earnings included impairment
reversals of $2,508 million (see Note 8 to the Condensed
Consolidated Interim Financial Statements), gains of $1,979 million
due to the fair value accounting of commodity derivatives primarily
due to gas price developments, partly offset by charges of $326
million due to provisions for onerous contracts. As part of Shell's
normal business, commodity derivative hedge contracts are entered
into for mitigation of economic exposures on future purchases and
sales. As these commodity derivatives are measured at fair value,
this creates an accounting mismatch over periods. These gains and
losses are part of identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, variation margins cash
inflows, the positive impact of timing differences between cash
flows of derivatives and physical transactions, and working capital
inflows, partly offset by tax payments.
Total oil and gas production, compared with the first quarter
2022, increased by 5% due to lower maintenance in Pearl GTL and
Prelude, partly offset by the derecognition of Sakhalin-related
volumes. LNG liquefaction volumes decreased by 4% mainly due to the
derecognition of Sakhalin-related volumes, partly offset by lower
maintenance.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly
reflected higher margins (increase of $5,623 million, post-tax)
reflecting higher realised prices and higher trading and
optimisation results, partly offset by lower total oil and gas
production (decrease of $612 million, post-tax).
First half 2022 segment earnings included gains of $3,562
million due to the fair value accounting of commodity derivatives,
and net gains of $780 million from impairments and impairment
reversals, partly offset by charges of $387 million due to
provisions for onerous contracts. These gains and losses are part
of identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the first half 2022 was
primarily driven by Adjusted EBITDA, and the positive impact of
derivatives, partly offset by tax payments.
Total oil and gas production, compared with the first half 2021,
decreased by 10% due to higher maintenance in Pearl GTL and
Prelude, the derecognition of Sakhalin-related volumes, and a
divestment in Canada.
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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UPSTREAM
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
6,391 3,095 2,458 +106 Segment earnings 9,486 3,370 +181
1,479 (355) (53) Identified items A 1,124 (74)
4,912 3,450 2,511 +42 Adjusted Earnings A 8,362 3,444 +143
11,167 8,977 6,696 +24 Adjusted EBITDA A 20,144 11,956 +68
8,110 5,964 4,972 +36 Cash flow from operating activities 14,074 8,864 +59
2,858 1,707 1,693 Cash capital expenditure C 4,565 3,174
1,325 1,403 1,555 -6 Liquids production available for sale (thousand b/d) 1,364 1,556 -12
3,428 3,606 3,767 -5 Natural gas production available for sale (million 3,517 4,248 -17
scf/d)
1,917 2,025 2,205 -5 Total production available for sale (thousand boe/d) 1,970 2,289 -14
-------- ------- ------- -------- ------------------------------------------------------ ------------- -------- -------- --------
1.Q2 on Q1 change.
The Upstream segment includes exploration and extraction of
crude oil, natural gas and natural gas liquids. It also markets and
transports oil and gas, and operates the infrastructure necessary
to deliver them to the market.
Quarter Analysis
Segment earnings, compared with the first quarter 2022, mainly
reflected higher realised oil and gas prices (increase of $1,417
million, post-tax), and share of profit of joint ventures and
associated gain relating to storage and working gas transfer
effects ($480 million, post-tax).
Second quarter 2022 segment earnings included a net gain from
impairments and impairment reversals of $1,682 million (see Note 8
to the Condensed Consolidated Interim Financial Statements), partly
offset by a $252 million charge related to the impact of the
weakening Brazilian real on a deferred tax position. These gains
and losses are part of identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, partly offset by the timing
impact of dividends from joint ventures and associates and tax
payments.
Total production, compared with the first quarter 2022,
decreased mainly due to scheduled maintenance.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly
reflected higher realised oil and gas prices (increase of $5,930
million, post-tax), partly offset by lower volumes (reduction of
$1,823 million, post-tax), mainly as a result of divestments.
First half 2022 segment earnings included a net gain from
impairments and impairment reversals of $1,285 million, partly
offset by losses of $346 million due to the fair value accounting
of commodity derivatives. These gains and losses are included in
identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the first half of 2022
was primarily driven by Adjusted EBITDA, partly offset by the
timing impact of dividends from joint ventures and associates and
tax payments.
Total production, compared with the first half 2021, decreased
due to the impact of divestments and scheduled maintenance. The
impact of field decline was offset by growth from new fields.
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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MARKETING
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
Segment
836 165 977 +408 earnings(2) 1,000 1,633 -39
85 (572) 22 Identified items A (487) (125)
Adjusted
751 737 955 +2 Earnings(2) A 1,488 1,757 -15
1,452 1,323 1,710 +10 Adjusted EBITDA(2) A 2,775 3,136 -12
Cash flow from
operating
(454) (530) 1,133 +14 activities (984) 1,959 -150
Cash capital
1,620 473 467 expenditure C 2,092 850
Marketing sales
volumes (thousand
2,515 2,372 2,406 +6 b/d) 2,444 2,313 +6
------- ------- ------- -------- ------------------ ------------- ------- ------- --------
1.Q2 on Q1 change.
2.Segment earnings, Adjusted Earnings and Adjusted EBITDA are
presented on a CCS basis (see Note 2).
The Marketing segment comprises the Mobility, Lubricants, and
Sectors & Decarbonisation businesses. The Mobility business
operates Shell's retail network including electric vehicle charging
services. The Lubricants business produces, markets and sells
lubricants for road transport, and machinery used in manufacturing,
mining, power generation, agriculture and construction. The Sectors
& Decarbonisation business sells fuels, speciality products and
services including low-carbon energy solutions to a broad range of
commercial customers including the aviation, shipping, commercial
road transport and agricultural sectors.
Quarter Analysis
Segment earnings, compared with the first quarter 2022,
reflected higher Marketing margins (increase of $127 million,
post-tax) including higher Mobility sales volumes due to
seasonality, partly offset by lower Lubricants margins due to
higher feedstock costs. These were partly offset by tax charges
mainly linked to hyperinflation (increase of $96 million,
post-tax).
Second quarter 2022 segment earnings included a net gain of $128
million from impairments and impairment reversals, and reversals of
provisions for expected credit losses of $103 million. These net
gains were partly offset by net losses of $99 million related to
the sale of assets and a loss of $60 million due to the fair value
accounting of commodity derivatives. These gains and losses are
part of identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by working capital outflows of $2,272 million,
partly offset by Adjusted EBITDA, and non-cash cost-of-sales
adjustments of $396 million.
Marketing sales volumes (comprising hydrocarbon sales), compared
with the first quarter 2022, increased mainly due to seasonal
effects in Mobility, and Sectors & Decarbonisation.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly
reflected higher operating expenses (increase of $338 million,
post-tax), with Marketing margins in line with the first half
2021.
Half year 2022 segment earnings included net losses of $230
million from impairments and impairment reversals, net losses of
$98 million related to the sale of assets, provisions for onerous
contracts of $62 million, provisions for expected credit losses of
$57 million and losses of $42 million due to the fair value
accounting of commodity derivatives. These losses are part of
identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the half year 2022 was
primarily driven by working capital outflows of $4,215 million, and
tax payments of $222 million, partly offset by Adjusted EBITDA, and
non-cash cost-of-sales adjustments of $664 million.
Marketing sales volumes (comprising hydrocarbon sales), compared
with the first half 2021, increased mainly due to demand recovery
in Aviation (within Sectors & Decarbonisation).
Page 5
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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CHEMICALS AND PRODUCTS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
2,131 1,072 (508) +99 Segment earnings(2) 3,203 152 +2002
96 (96) (1,496) Identified items A 1 (1,618)
2,035 1,168 989 +74 Adjusted Earnings(2) A 3,203 1,770 +81
3,184 2,006 1,909 +59 Adjusted EBITDA(2) A 5,191 3,612 +44
Cash flow from
2,728 3,673 2,180 -26 operating activities 6,402 2,557 +150
Cash capital
1,226 998 1,311 expenditure C 2,224 2,329
1,342 1,397 1,833 -4 Refinery processing 1,370 1,792 -24
intake (thousand
b/d)
1,596 1,598 2,145 -- Refining & Trading 1,597 2,045 -22
sales volumes
(thousand b/d)
3,054 3,330 3,609 -8 Chemicals sales 6,384 7,192 -11
volumes (thousand
tonnes)
------- ------- --------- -------- --------------------- ------------- ------- --------- ---------
1.Q2 on Q1 change.
2.Segment earnings, Adjusted Earnings and Adjusted EBITDA are
presented on a CCS basis (see Note 2).
The Chemicals and Products segment includes chemicals
manufacturing plants with their own marketing network, and
refineries which turn crude oil and other feedstocks into a range
of oil products which are moved and marketed around the world for
domestic, industrial and transport use. The segment also includes
the Pipeline business, Trading of crude oil, oil products and
petrochemicals, and Oil Sands activities (the extraction of bitumen
from mined oil sands and its conversion into synthetic crude
oil).
Quarter Analysis
Segment earnings, compared with the first quarter 2022,
reflected higher Products margins (increase of $1,096 million,
post-tax) reflecting higher realised Refining margins including the
effects of dislocation in product markets, partly offset by lower
contributions from trading and optimisation, as well as lower
operating expenses (decrease of $111 million, post-tax). These were
partly offset by lower Chemicals margins (decrease of $160 million,
post-tax) due to higher feedstock and utility costs as well as
higher turnarounds.
Second quarter 2022 segment earnings included gains of $74
million due to the fair value accounting of commodity derivatives,
and gains of $64 million related to the sale of assets. These gains
were partly offset by impairment charges of $41 million. These
gains and losses are part of identified items (see Reference
A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified items.
Adjusted Earnings for the second quarter were a loss of $158
million for Chemicals and positive earnings of $2,193 million for
Products.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, non-cash cost-of-sales
adjustments of $1,579 million, the timing of payments relating to
emissions and biofuel programmes of $557 million, a long-term
payable for a volume purchase contract of $507 million, and
dividends from joint ventures and associates of $462 million. These
inflows were partly offset by working capital outflows of $3,673
million.
Chemicals manufacturing plant utilisation was 78% (previous
methodology: 71%) compared with 85% (previous methodology: 78%) in
the first quarter 2022, due to higher turnarounds.
Refinery utilisation was 84% (previous methodology: 69%)
compared with 81% (previous methodology: 71%) in the first quarter
2022, due to turnaround completion in the second quarter 2022.
With effect from the second quarter 2022, the methodology
applied in calculating both Chemicals manufacturing plant
utilisation and Refinery utilisation has been revised to further
align with industry disclosures. The revisions include moving from
stream days capacity (defined as the maximum throughput, excluding
the impact of maintenance or operational outages) to calendar days
capacity (defined as the throughput including typical limitations
such as maintenance over an extended period of time). Furthermore,
Refinery utilisation is now specific to the capacity of the crude
distillation unit (except for Scotford Refinery which uses the
capacity of the hydrocracker), and no longer the capacity across
all refinery units.
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected
higher Products margins (increase of $3,055 million, post-tax)
reflecting higher realised Refining margins and higher
contributions from trading and optimisation, as well as lower
depreciation charges (decrease of $165 million, post-tax). These
were partly offset by lower Chemicals margins (decrease of $1,447
million, post-tax) and higher operating expenses (increase of $331
million, post-tax).
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
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Half year 2022 segment earnings included gains of $172 million
related to the sale of assets, and gains of $94 million related to
the remeasurement of redundancy and restructuring costs. These net
gains were partly offset by charges of $159 million related to the
fair value accounting of commodity derivatives, and impairment
charges of $87 million. These gains and losses are part of
identified items (see Reference A).
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified items.
Adjusted Earnings for the first half 2022 were a loss of $127
million for Chemicals and positive earnings of $3,330 million for
Products.
Cash flow from operating activities for the half year 2022 was
primarily driven by Adjusted EBITDA, non-cash cost-of-sales
adjustments of $4,173 million, the timing of payments relating to
emissions and biofuel programmes of $991 million, a long-term
payable for a volume purchase contract of $507 million, and
dividends from joint ventures and associates of $390 million. These
inflows were partly offset by working capital outflows of $4,738
million, and cash outflows related to commodity derivatives of $653
million.
Chemicals manufacturing plant utilisation was 82% (previous
methodology: 75%) compared with 88% (previous methodology: 81%) in
the first half 2021, due to higher turnarounds.
Refinery utilisation was 82% (previous methodology: 70%)
compared with 82% (previous methodology: 74%) in the first half
2021, due to the impact of divestments and turnarounds.
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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RENEWABLES AND ENERGY SOLUTIONS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 %(1) Reference 2022 2021 %
(173) (1,536) (564) +89 Segment earnings (1,709) (282) -507
(898) (1,880) (551) Identified items A (2,778) (167)
725 344 (13) +111 Adjusted Earnings A 1,069 (115) +1030
1,013 521 89 +95 Adjusted EBITDA A 1,534 23 +6645
(558) (459) 1,686 -22 Cash flow from operating activities (1,017) 1,846 -155
321 985 117 Cash capital expenditure C 1,307 286
54 57 61 -5 External power sales (terawatt hours)(2) 111 125 -12
188 257 197 -27 Sales of pipeline gas to end-use customers (terawatt 445 458 -3
hours)(3)
------- --------- ------- -------- -------------------------------------------------------- ------------- --------- ------- ---------
1.Q2 on Q1 change.
2.Physical power sales to third parties; excluding financial
trades and physical trade with brokers, investors, financial
institutions, trading platforms, and wholesale traders.
3.Physical natural gas sales to third parties; excluding
financial trades and physical trade with brokers, investors,
financial institutions, trading platforms, and wholesale traders.
Excluding sales of natural gas by other segments and LNG sales.
The Renewables and Energy Solutions segment includes Shell's
Integrated Power activities, comprising electricity generation,
marketing, trading and optimisation of power and pipeline gas, and
digitally enabled customer solutions. The segment also includes
production and marketing of hydrogen, development of commercial
carbon capture & storage hubs, trading of carbon credits and
investment in nature-based projects that avoid or reduce
carbon.
Quarter Analysis
Segment earnings, compared with the first quarter 2022, mainly
reflected higher trading and optimisation results for gas and
power, due to extraordinary gas and power price volatility, across
North America, Europe and Australia, and favourable movements in
joint venture earnings related to tax.
Identified items (post-tax): Second quarter 2022 segment
earnings included net losses of $898 million due to the fair value
accounting of commodity derivatives. As part of Shell's normal
business, commodity derivative hedge contracts are entered into for
mitigation of economic exposures on future purchases, sales and
inventory. As these commodity derivatives are measured at fair
value, this creates an accounting mismatch over periods. See
Reference A.
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the second quarter 2022
was primarily driven by net cash outflows related to derivatives,
partly offset by Adjusted EBITDA, and working capital inflows.
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected
higher trading and optimisation results for gas and power, due to
the extraordinary market environment, and lower operating
expenses.
Identified items (post-tax): First half 2022 segment earnings
included net charges of $2,778 million due to the fair value
accounting of commodity derivates.
Adjusted Earnings and Adjusted EBITDA were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the first half 2022 was
primarily driven by working capital outflows, net cash outflows
related to derivatives, partly offset by Adjusted EBITDA.
Additional Growth Measures
Quarters Half year
Q2 2022 Q1 2022 Q2 2021 %(1) 2022 2021 %
Renewable power
generation
capacity
(gigawatt):
-- In
1.1 1.0 1.2 +5 operation(2) 1.1 1.2 -10
4.6 3.6 3.1 +28 -- Under 4.6 3.1 +50
construction
and/or committed
for sale(3)
------ ------ ------ -------- ---------------- ----- ------ ------ -------
1.Q2 on Q1 change.
2.Shell's equity share of renewable generation capacity post
commercial operation date.
3.Shell's equity share of renewable generation capacity under
construction and/or committed for sale under long-term offtake
agreements (PPA).
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RESULTS
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CORPORATE
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 Reference 2022 2021
Segment
(529) (736) (592) earnings (1,264) (1,124)
Identified
97 (187) (193) items A (90) (59)
Adjusted
(626) (548) (399) Earnings A (1,174) (1,065)
Adjusted
(197) (114) (101) EBITDA A (310) (274)
Cash flow from
operating
652 (277) 454 activities 375 932
------- -------- -------- -------------- ------------- --------- ---------
The Corporate segment covers the non-operating activities
supporting Shell, comprising Shell's holdings and treasury
organisation, its self-insurance activities and its headquarters
and central functions. All finance expense and income and related
taxes are included in Corporate segment earnings rather than in the
earnings of business segments.
Quarter Analysis
Segment earnings, compared with the first quarter 2022,
reflected favourable movements in tax credits and lower net
interest expense, partly offset by unfavourable currency exchange
rate effects.
Second quarter 2022 segment earnings included a gain of $99
million from the deferred tax impact of the weakening Brazilian
real on financing positions, which is part of identified items (see
Reference A).
Adjusted Earnings are derived from segment earnings, adjusted
for identified items. Adjusted EBITDA were mainly driven by
unfavourable currency exchange effects.
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected
unfavourable movements in tax credits, partly offset by lower net
interest expense.
First half 2022 segment earnings included a loss of $87 million
from the deferred tax impact of the strengthening Brazilian real on
financing positions, which is part of identified items (see
Reference A).
Adjusted Earnings are derived from segment earnings, adjusted
for identified items. Adjusted EBITDA were mainly driven by
unfavourable currency exchange effects.
OUTLOOK FOR THE THIRD QUARTER 2022
Cash capital expenditure is expected to be in line with the $23
- $27 billion range for the full year.
Integrated Gas production is expected to be approximately 890 -
940 thousand boe/d.
LNG liquefaction volumes are expected to be approximately 6.9 -
7.5 million tonnes.
Third quarter 2022 outlook includes substantially more planned
maintenance compared with second quarter 2022 and uncertainty
around the impact of "Permitted Industrial Actions" at Prelude.
Upstream production is expected to be approximately 1,750 -
1,950 thousand boe/d in the third quarter 2022.
The third quarter production outlook reflects that Salym-related
volumes in Russia are no longer recognised.
Marketing sales volumes are expected to be approximately 2,350 -
2,850 thousand b/d.
Refinery utilisation is expected to be approximately 90% -
98%.
Chemicals manufacturing plant utilisation is expected to be
approximately 82% - 90%.
The utilisation ranges presented use the revised methodology
(please refer to 'Chemicals and Products' in the 'Performance by
Segment' section).
Chemicals sales volumes are expected to be approximately 3,100 -
3,600 thousand tonnes.
Corporate Adjusted Earnings are expected to be a net expense of
approximately $450 - $650 million in the third quarter 2022 and a
net expense of approximately $2,000 - $2,400 million for the full
year 2022. This excludes the impact of currency exchange rate
effects.
FORTHCOMING EVENTS
The "Shell Insights: Marketing Business Update" event is
scheduled for October 6, 2022. Third quarter 2022 results and
dividends are scheduled to be announced on October 27, 2022.
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RESULTS
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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
100,059 84,204 60,515 Revenue(1, 4) 184,263 116,181
Share of profit/(loss)
of joint ventures and
2,031 (303) 1,114 associates4 1,728 2,108
Interest and other
993 (737) 134 income/(expenses)(2, 4) 257 2,590
Total revenue and other
103,083 83,164 61,764 income/(expenses) 186,247 120,879
66,658 55,657 39,717 Purchases 122,315 74,086
Production and
6,359 6,029 5,162 manufacturing expenses 12,389 11,970
Selling, distribution
and administrative
2,924 3,239 3,107 expenses4 6,163 5,569
264 189 201 Research and development 452 366
370 269 332 Exploration 639 617
Depreciation, depletion
(348) 6,295 8,223 and amortisation(4, 5) 5,947 14,119
695 711 893 Interest expense 1,406 1,784
76,923 72,388 57,634 Total expenditure 149,311 108,512
Income/(loss) before
26,160 10,776 4,130 taxation 36,936 12,367
7,922 3,457 571 Taxation charge/(credit) 11,379 3,024
Income/(loss) for the
18,238 7,319 3,559 period(1) 25,557 9,343
Income/(loss)
attributable to
non-controlling
198 203 131 interest 401 255
Income/(loss)
attributable to Shell
18,040 7,116 3,428 plc shareholders 25,156 9,087
Basic earnings per share
2.42 0.94 0.44 ($)(3) 3.34 1.17
Diluted earnings per
2.40 0.93 0.44 share ($)(3) 3.31 1.16
--------- --------- --------- ------------------------ ---------- ---------
1. See Note 2 "Segment information".
2. See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
3. See Note 3 "Earnings per share".
4. See Note 9 "Withdrawal from Russian oil and gas activities".
5. See Note 8 "Impairments and reversals of impairments".
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
18,238 7,319 3,559 Income/(loss) for the period 25,557 9,343
Other comprehensive income/(loss) net of tax:
Items that may be reclassified to income in later
periods:
(2,644) 259 575 -- Currency translation differences (2,385) (277)
(24) (41) (2) -- Debt instruments remeasurements (65) (16)
(98) 267 (84) -- Cash flow hedging gains/(losses) 169 48
211 50 (51) -- Net investment hedging gains/(losses) 261 120
9 212 (20) -- Deferred cost of hedging 222 (54)
-- Share of other comprehensive income/(loss) of joint
(22) 190 (7) ventures and associates 168 (63)
(2,567) 938 410 Total (1,630) (242)
Items that are not reclassified to income in later
periods:
5,712 1,718 1,675 -- Retirement benefits remeasurements 7,430 6,303
(457) 24 10 -- Equity instruments remeasurements (433) 50
-- Share of other comprehensive income/(loss) of joint
36 (74) (42) ventures and associates (38) (67)
5,291 1,668 1,643 Total 6,959 6,285
2,724 2,606 2,053 Other comprehensive income/(loss) for the period 5,330 6,044
20,962 9,925 5,612 Comprehensive income/(loss) for the period 30,887 15,386
327 218 145 Comprehensive income/(loss) attributable to non-controlling 545 266
interest
20,635 9,707 5,467 Comprehensive income/(loss) attributable to Shell 30,342 15,121
plc shareholders
--------- ------- ------- --------------------------------------------------------------- --------- --------
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CONDENSED CONSOLIDATED BALANCE SHEET
$ million
June 30, 2022 December 31, 2021
Assets
Non-current assets
Intangible assets 25,540 24,693
Property, plant and equipment (3) 200,122 194,932
Joint ventures and associates 23,264 23,415
Investments in securities 3,507 3,797
Deferred tax(1) 8,575 12,426
Retirement benefits(1) 14,973 8,471
Trade and other receivables 5,853 7,065
Derivative financial instruments(2) 839 815
282,674 275,614
Current assets
Inventories 36,087 25,258
Trade and other receivables 66,708 53,208
Derivative financial instruments(2) 23,257 11,369
Cash and cash equivalents 38,970 36,970
165,022 126,805
Assets classified as held for sale(1) 203 1,960
165,224 128,765
Total assets 447,898 404,379
Liabilities
Non-current liabilities
Debt 77,220 80,868
Trade and other payables 3,829 2,075
Derivative financial instruments(2) 3,238 887
Deferred tax(1) 16,145 12,547
Retirement benefits(1) 8,693 11,325
Decommissioning and other provisions 25,798 25,804
134,922 133,506
Current liabilities
Debt 6,521 8,218
Trade and other payables 75,445 63,173
Derivative financial instruments(2) 28,881 16,311
Income taxes payable 4,506 3,254
Decommissioning and other provisions 2,943 3,338
118,295 94,294
Liabilities directly associated with assets classified
as held for sale(1) 382 1,253
118,678 95,547
Total liabilities 253,600 229,053
Equity attributable to Shell plc shareholders 190,500 171,966
Non-controlling interest 3,799 3,360
Total equity 194,299 175,326
Total liabilities and equity 447,898 404,379
--------------------------------------------------------- ------------- -----------------
1. See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
2. See Note 6 "Derivative financial instruments and debt excluding lease liabilities".
3. See Note 8 "Impairments and reversals of impairments".
Page 11
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Shell plc shareholders
Shares
held
Share in Other Retained Non-controlling Total
$ million capital1 trust reserves(2) earnings Total interest equity
At January 1,
2022 641 (610) 18,909 153,026 171,966 3,360 175,326
Comprehensive
income/(loss)
for the period -- -- 5,186 25,156 30,342 545 30,887
Transfer from
other
comprehensive
income -- -- 13 (13) -- -- --
Dividends(3) -- -- -- (3,680) (3,680) (110) (3,790)
Repurchases of
shares4 (27) -- 27 (8,544) (8,544) -- (8,544)
Share-based
compensation -- 427 (137) 175 465 -- 465
Other changes -- -- -- (49) (49) 3 (47)
At June 30, 2022 614 (184) 23,998 166,072 190,500 3,799 194,299
At January 1,
2021 651 (709) 12,752 142,616 155,310 3,227 158,537
Comprehensive
income/(loss)
for the period -- -- 6,033 9,087 15,121 266 15,386
Transfer from
other
comprehensive
income -- -- (15) 15 -- -- --
Dividends(3) -- -- -- (2,620) (2,620) (265) (2,886)
Share-based
compensation -- 350 (219) 59 190 -- 190
Other changes -- -- -- (2) (2) 16 15
At June 30, 2021 651 (358) 18,552 149,155 167,999 3,244 171,243
---------------- -------- ------ ----------- -------- ------- --------------- -------
1. See Note 4 "Share capital".
2. See Note 5 "Other reserves".
3. The amount charged to retained earnings is based on prevailing exchange rates on payment date.
4. Includes shares committed to repurchase under an irrevocable contract and repurchases subject to settlement at the end of the quarter.
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CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
26,160 10,776 4,130 Income before taxation for the period 36,936 12,367
Adjustment for:
551 599 797 -- Interest expense (net) 1,150 1,554
(348) 6,295 8,223 -- Depreciation, depletion and amortisation3 5,947 14,119
189 79 108 -- Exploration well write-offs 268 244
-- Net (gains)/losses on sale and revaluation of non-current
(334) (193) 55 assets and businesses (527) (2,018)
(2,031) 303 (1,114) -- Share of (profit)/loss of joint ventures and associates (1,728) (2,108)
1,245 926 782 -- Dividends received from joint ventures and associates 2,171 1,361
(6,833) (4,914) (2,495) -- (Increase)/decrease in inventories (11,747) (5,921)
(4,066) (10,005) (4,080) -- (Increase)/decrease in current receivables (14,071) (10,909)
6,656 7,495 5,016 -- Increase/(decrease) in current payables 14,150 10,881
(1,779) 3,495 2,173 -- Derivative financial instruments 1,716 2,358
123 247 47 -- Retirement benefits 370 156
571 (9) (124) -- Decommissioning and other provisions 562 (46)
1,706 1,876 561 -- Other(1) 3,582 1,145
(3,155) (2,155) (1,465) Tax paid (5,310) (2,274)
18,655 14,815 12,617 Cash flow from operating activities 33,470 20,910
(6,677) (4,237) (4,232) Capital expenditure (10,914) (8,117)
(264) (755) (115) Investments in joint ventures and associates (1,019) (184)
(83) (72) (36) Investments in equity securities (156) (57)
Proceeds from sale of property, plant and equipment
783 557 1,162 and businesses 1,340 4,268
Proceeds from joint ventures and associates from sale,
51 138 4 capital reduction and repayment of long-term loans 190 279
4 12 108 Proceeds from sale of equity securities 16 139
160 92 110 Interest received 252 209
293 753 799 Other investing cash inflows 1,046 1,510
(474) (762) (746) Other investing cash outflows (1,236) (1,583)
(6,207) (4,273) (2,946) Cash flow from investing activities (10,481) (3,535)
Net increase/(decrease) in debt with maturity period
640 131 (34) within three months 772 79
Other debt:
35 101 57 -- New borrowings 135 166
(2,531) (2,541) (3,901) -- Repayments (5,072) (9,607)
(1,090) (657) (1,162) Interest paid (1,747) (1,968)
(828) (483) (57) Derivative financial instruments (1,311) (506)
2 3 -- Change in non-controlling interest 5 15
Cash dividends paid to:
(1,851) (1,950) (1,310) -- Shell plc shareholders(2) (3,802) (2,602)
(63) (47) (140) -- Non-controlling interest (110) (265)
(5,541) (3,472) -- Repurchases of shares (9,013) (216)
Shares held in trust: net sales/(purchases) and dividends
78 (103) (2) received (25) (65)
(11,150) (9,019) (6,550) Cash flow from financing activities (20,168) (14,970)
(688) (134) (2) Effects of exchange rate changes on cash and cash (822) (130)
equivalents
609 1,389 3,119 Increase/(decrease) in cash and cash equivalents 1,999 2,275
38,360 36,970 30,985 Cash and cash equivalents at beginning of period 36,970 31,830
38,970 38,360 34,104 Cash and cash equivalents at end of period 38,970 34,104
---------- ---------- --------- -------------------------------------------------------------------- ---------- ----------
1.See Note 7 "Other notes to the unaudited Condensed
Consolidated Interim Financial Statements".
2.Cash dividends paid represents the payment of net dividends
(after deduction of withholding taxes where applicable) and payment
of withholding taxes on dividends paid in the previous quarter.
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RESULTS
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3.See Note 8 "Impairments and reversals of impairments".
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial
Statements ("Interim Statements") of Shell plc ("the Company") and
its subsidiaries (collectively referred to as "Shell") have been
prepared in accordance with IAS 34 Interim Financial Reporting as
issued by the International Accounting Standards Board ("IASB") and
adopted by the UK, and on the basis of the same accounting
principles as those used in the Company's Annual Report and
Accounts (pages 228 to 283) and Form 20-F (pages 204 to 261) for
the year ended December 31, 2021 as filed with the Registrar of
Companies for England and Wales, the Autoriteit Financiële Markten
(the Netherlands) and the US Securities and Exchange Commission,
and should be read in conjunction with these filings.
The financial information presented in the unaudited Interim
Statements does not constitute statutory accounts within the
meaning of section 434(3) of the Companies Act 2006 ("the Act").
Statutory accounts for the year ended December 31, 2021 were
published in Shell's Annual Report and Accounts, a copy of which
was delivered to the Registrar of Companies for England and Wales,
and in Shell's Form 20-F. The auditor's report on those accounts
was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Act.
Going concern
These unaudited Interim Statements have been prepared on the
going concern basis of accounting. In assessing the appropriateness
of the going concern assumption over the period to December 31,
2023 (the "going concern period"), management have stress tested
Shell's most recent financial projections to incorporate a range of
potential future outcomes by considering Shell's principal risks,
potential downside pressures on commodity prices and cash
preservation measures, including reduced future operating costs,
capital expenditure, shareholder distributions and increased
divestments. This assessment confirmed that Shell has adequate
cash, other liquid resources and undrawn credit facilities to
enable it to meet its obligations as they fall due in order to
continue its operations during the going concern period. Therefore,
the Directors consider it appropriate to continue to adopt the
going concern basis of accounting in preparing these unaudited
Interim Statements.
Key accounting considerations, significant judgements and
estimates
Future long-term commodity price assumptions and management's
view on the future development of refining margins represent a
significant estimate. Future long-term commodity price assumptions
were subject to change in the second quarter 2022, resulting in
reversal of impairment losses recognised previously. See Note
8.
Changes to IFRS not yet adopted
IFRS 17 Insurance contracts was issued in 2017, with amendments
published in 2020 and 2021, and is required to be adopted for
annual reporting periods beginning on or after January 1, 2023.
Shell is in the process of implementing the standard. The standard
is not expected to have a significant effect on future financial
reporting.
2. Segment information
As from January 1, 2022, onwards reporting segments are aligned
with Shell's Powering Progress strategy. The Renewables and Energy
Solutions business is now reported separately from Integrated Gas.
Oil Products and Chemicals were reorganised into two segments --
Marketing and Chemicals and Products. The shales assets in Canada
are now reported as part of the Integrated Gas segment instead of
the Upstream segment. Prior period comparatives have been revised
to conform with current year presentation. The reporting segment
changes have no impact on a Shell Group level.
Segment earnings are presented on a current cost of supplies
basis (CCS earnings), which is the earnings measure used by the
Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance. On this basis, the
purchase price of volumes sold during the period is based on the
current cost of supplies during the same period after making
allowance for the tax effect. CCS earnings therefore exclude the
effect of changes in the oil price on inventory carrying amounts.
Sales between segments are based on prices generally equivalent to
commercially available prices.
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INFORMATION BY SEGMENT
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Third-party
revenue
12,403 14,074 5,537 Integrated Gas 26,477 11,559
2,253 1,531 2,281 Upstream 3,784 4,217
34,121 26,136 20,165 Marketing 60,257 36,742
Chemicals and
39,793 33,420 28,861 Products 73,213 54,752
Renewables and
Energy
11,477 9,026 3,658 Solutions 20,503 8,885
12 16 12 Corporate 28 26
Total third-party
100,059 84,204 60,515 revenue(1) 184,263 116,181
Inter-segment
revenue
4,176 3,532 1,871 Integrated Gas 7,708 3,470
13,951 11,940 8,793 Upstream 25,892 15,852
153 101 55 Marketing 254 108
Chemicals and
718 667 505 Products 1,385 875
Renewables and
Energy
1,522 1,242 785 Solutions 2,764 1,668
-- -- -- Corporate -- --
CCS earnings
8,103 3,079 969 Integrated Gas 11,183 3,421
6,391 3,095 2,458 Upstream 9,486 3,370
836 165 977 Marketing 1,000 1,633
Chemicals and
2,131 1,072 (508) Products 3,203 152
Renewables and
Energy
(173) (1,536) (564) Solutions (1,709) (282)
(529) (736) (592) Corporate (1,264) (1,124)
Total CCS
16,759 5,140 2,741 earnings 21,899 7,171
---------- --------- --------- ----------------- ---------- ---------
1.Includes revenue from sources other than from contracts with
customers, which mainly comprises the impact of fair value
accounting of commodity derivatives. Second quarter 2022 included
income of $3,477 million (Q1 2022: $1,700 million losses; Q2 2021:
$340 million losses). This amount includes both the reversal of
prior losses of $2,094 million (Q1 2022: $2,867 million losses; Q2
2021: $374 million losses) related to sales contracts and prior
gains of $1,982 million (Q1 2022: $2,137 million gains; Q2 2021:
$434 million gains) related to purchase contracts that were
previously recognised and where physical settlement took place in
the second quarter 2022.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Income/(loss)
attributable to
Shell plc
18,040 7,116 3,428 shareholders 25,156 9,087
Income/(loss)
attributable to
non-controlling
198 203 131 interest 401 255
Income/(loss) for
18,238 7,319 3,559 the period 25,557 9,343
Current cost of
supplies
adjustment:
(1,929) (2,794) (994) Purchases (4,723) (2,625)
496 682 208 Taxation 1,178 562
Share of
profit/(loss) of
joint ventures and
(46) (68) (33) associates (114) (108)
Current cost of
supplies
(1,479) (2,180) (818) adjustment (3,659) (2,172)
of which:
Attributable to
Shell plc
(1,363) (2,090) (793) shareholders (3,453) (2,108)
Attributable to
non-controlling
(116) (89) (25) interest (205) (64)
16,759 5,140 2,741 CCS earnings 21,899 7,171
of which:
16,677 5,026 2,634 CCS earnings 21,703 6,980
attributable to
Shell plc
shareholders
82 114 106 CCS earnings 196 191
attributable to
non-controlling
interest
--------- --------- --------- ------------------- ---------- ---------
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3. Earnings per share
EARNINGS PER SHARE
Quarters Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Income/(loss) attributable to Shell plc shareholders
18,040 7,116 3,428 ($ million) 25,156 9,087
Weighted average number of shares used as the basis
for determining:
7,453.2 7,603.0 7,790.1 Basic earnings per share (million) 7,527.7 7,786.1
7,518.5 7,661.6 7,835.9 Diluted earnings per share (million) 7,589.6 7,834.2
--------- --------- --------- -------------------------------------------------------- --------- ---------
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH(1)
Number of shares Nominal value ($ million)
Ordinary Ordinary
A B shares A B shares Total
At January 1, 2022 4,101,239,499 3,582,892,954 345 296 641
Repurchases of shares before assimilation -- (34,106,548) -- (3) (3)
Assimilation of ordinary A and B shares into ordinary
shares on January 29, 2022 (4,101,239,499) (3,548,786,406) 7,650,025,905 (345) (293) 638 --
Repurchases of B shares on January 27 and 28, 2022,
cancelled as ordinary shares on February 2 and 3,
2022 (507,742) -- --
Repurchases of shares after assimilation (294,476,534) (25) (25)
At June 30, 2022 7,355,041,629 614 614
At January 1, 2021 4,101,239,499 3,706,183,836 345 306 651
At June 30, 2021 4,101,239,499 3,706,183,836 345 306 651
-------------------------------------------------------- --------------- --------------- ------------- ----- ----- -------- -----
1. Share capital at June 30, 2022 also included 50,000 issued
and fully paid sterling deferred shares of GBP1 each.
On January 29, 2022, as part of the simplification announced on
December 20, 2021, the Company's A shares and B shares assimilated
into a single line of ordinary shares. This is reflected in the
above table.
At Shell plc's Annual General Meeting on May 24, 2022, the Board
was authorised to allot ordinary shares in Shell plc, and to grant
rights to subscribe for, or to convert, any security into ordinary
shares in Shell plc, up to an aggregate nominal amount of EUR177
million (representing 2,530 million ordinary shares of EUR0.07
each), and to list such shares or rights on any stock exchange.
This authority expires at the earlier of the close of business on
August 24, 2023, and the end of the Annual General Meeting to be
held in 2023, unless previously renewed, revoked or varied by Shell
plc in a general meeting.
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5. Other reserves
OTHER RESERVES
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve reserve reserve reserve income Total
At January 1, 2022 37,298 154 139 964 (19,646) 18,909
Other comprehensive income/(loss) attributable to
Shell plc shareholders -- -- -- -- 5,186 5,186
Transfer from other comprehensive income -- -- -- -- 13 13
Repurchases of shares -- -- 27 -- -- 27
Share-based compensation -- -- -- (137) -- (137)
At June 30, 2022 37,298 154 168 827 (14,447) 23,998
At January 1, 2021 37,298 154 129 906 (25,735) 12,752
Other comprehensive income/(loss) attributable to
Shell plc shareholders -- -- -- -- 6,033 6,033
Transfer from other comprehensive income -- -- -- -- (15) (15)
Share-based compensation -- -- -- (219) -- (219)
At June 30, 2021 37,298 154 129 687 (19,717) 18,552
---------------------------------------------------- ------- ------- ---------- ------- ------------- ------
The merger reserve and share premium reserve were established as
a consequence of Shell plc (formerly Royal Dutch Shell plc)
becoming the single parent company of Royal Dutch Petroleum Company
and The "Shell" Transport and Trading Company, p.l.c., now The
Shell Transport and Trading Company Limited, in 2005. The merger
reserve increased in 2016 following the issuance of shares for the
acquisition of BG Group plc. The capital redemption reserve was
established in connection with repurchases of shares of Shell plc.
The share plan reserve is in respect of equity-settled share-based
compensation plans.
6. Derivative financial instruments and debt excluding lease
liabilities
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2021, presented in the Annual Report and
Accounts and Form 20-F for that year, Shell is exposed to the risks
of changes in fair value of its financial assets and liabilities.
The fair values of the financial assets and liabilities are defined
as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Methods and assumptions used
to estimate the fair values at June 30, 2022, are consistent with
those used in the year ended December 31, 2021, though the carrying
amounts of derivative financial instruments measured using
predominantly unobservable inputs have changed since that date.
The table below provides the comparison of the fair value with
the carrying amount of debt excluding lease liabilities, disclosed
in accordance with IFRS 7 Financial Instruments: Disclosures.
DEBT EXCLUDING LEASE LIABILITIES
$ million June 30, 2022 December 31, 2021
Carrying amount 56,709 61,579
Fair value(1) 54,304 67,066
-------------------------------- ------------- -----------------
1. Mainly determined from the prices quoted for these securities.
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7. Other notes to the unaudited Condensed Consolidated Interim
Financial Statements
Consolidated Statement of Income
Interest and other income
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
993 (737) 134 Interest and other income/(expenses) 257 2,590
of which:
144 111 95 Interest income 255 230
Dividend income (from investments in equity
198 1 34 securities) 199 35
Net gains on sales and revaluation of non-current
334 193 (55) assets and businesses 527 2,018
Net foreign exchange gains/(losses) on financing
166 15 4 activities 182 90
151 (1,057) 56 Other (907) 217
------- --------- ------- ----------------------------------------------------- ------- -------
For the first quarter 2022, Other includes the write-down of the
loan to Nord Stream 2 amounting to $1,126 million. See Note 9.
Condensed Consolidated Balance Sheet
Application of IAS 29 Financial Reporting in Hyperinflationary
Economies
As from the second quarter 2022, Shell applies IAS 29 Financial
Reporting in Hyperinflationary Economies (IAS 29) for its Turkish
lira functional currency entities. The application of IAS 29 had no
significant impact.
Deferred tax
$ million
June 30, 2022 December 31, 2021
Non-current assets
Deferred tax 8,575 12,426
Non-current liabilities
Deferred tax 16,145 12,547
Net deferred liability (7,570) (121)
-------------------------- ------------- -----------------
The presentation in the balance sheet takes into consideration
the offsetting of deferred tax assets and deferred tax liabilities
within the same tax jurisdiction, where this is permitted. The
overall deferred tax position in a particular tax jurisdiction
determines if a deferred tax balance related to that jurisdiction
is presented within deferred tax assets or deferred tax
liabilities.
Shell's net deferred tax position was a liability of $7,570
million at June 30, 2022 (December 31, 2021: $121 million). The
increase in the net liability since December 31, 2021, was mainly
driven by utilisation of tax losses ($2.4 billion), pension
remeasurements ($2.4 billion) and impairment reversals ($1.8
billion).
On July 14, 2022, the Energy (Oil & Gas) Profits Levy Act
2022 (EPL) was enacted in the United Kingdom which applies an
additional tax on the profits earned by oil and gas companies from
the production of oil and gas on the United Kingdom Continental
Shelf. The new tax will be applied to income generated after May
26, 2022 and its introduction is expected to have a negative impact
of some $400 million on the deferred tax position recognised in the
balance sheet at June 30, 2022.
Assets classified as held for sale
$ million
June 30, 2022 December 31, 2021
Assets classified as held for sale 203 1,960
Liabilities directly associated with assets classified
as held for sale 382 1,253
--------------------------------------------------------- ------------- -----------------
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Assets classified as held for sale and associated liabilities at
June 30, 2022 relate to one entity held for sale. The major classes
of assets and liabilities classified as held for sale are Property,
plant and equipment ($129 million; December 31, 2021: $896 million)
and Trade and other payables ($228 million; December 31, 2021: $375
million).
Retirement benefits
$ million
June 30, 2022 December 31, 2021
Non-current assets
Retirement benefits 14,973 8,471
Non-current liabilities
Retirement benefits 8,693 11,325
Surplus/(deficit) 6,280 (2,854)
-------------------------- ------------- -----------------
Amounts recognised in the balance sheet in relation to defined
benefit plans include both plan assets and obligations that are
presented on a net basis on a plan-by-plan basis. The change of the
net retirement benefit liability as at December 31, 2021, into the
net retirement benefit asset as at June 30, 2022, is mainly driven
by an increase of the market yield on high-quality corporate bonds
in the USA, the UK and Eurozone as well as a decrease in long-term
UK and Eurozone inflation rate expectations since the end of Q1
2022 partly offset by losses on plan assets.
Consolidated Statement of Cash Flows
Cash flow from operating activities - Other
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
1,706 1,876 561 Other 3,582 1,145
---------- --------- --------- ------------- ----------- -------
Cash flow from operating activities - Other for the second
quarter 2022 includes $685 million of net inflows (first quarter
2022: $490 million; second quarter 2021: $710 million) due to the
timing of payments relating to emissions and biofuel programmes in
Europe and North America and $425 million (first quarter 2022: $115
million; second quarter 2021: $11 million) in relation to reversal
of currency losses on Cash and cash equivalents. In the first
quarter 2022, it also included $1,126 million for the write-down of
the Nord Stream 2 loan (see Note 9).
8. Impairments and reversals of impairments
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Depreciation,
depletion and
(348) 6,295 8,223 amortisation 5,947 14,119
of which:
5,608 5,388 5,890 Depreciation 10,997 11,702
153 907 2,334 Impairments 1,059 2,622
Impairment
(6,109) -- (1) reversals (6,109) (205)
---------- --------- --------- ----------------- ---------- --------
The gain in the second quarter 2022 resulting from reversals of
impairments recognised previously was mainly triggered by revision
of Shell's mid- and long-term commodity price assumptions
reflecting the current energy market demand and supply
fundamentals.
In the second quarter 2022, gains from reversals were recognised
of $6,169 million pre-tax (first quarter 2022: zero, second quarter
2021: $1 million), of which $6,109 million (first quarter 2022:
zero, second quarter 2021: $1 million) recognised in depreciation,
depletion and amortisation and $60 million (first quarter 2022:
zero, second quarter 2021: zero) recognised in share of profit of
joint ventures and associates.
Gains from reversals of impairments of $6,109 million pre-tax
($4,355 million post-tax) are mainly related to i) Integrated Gas
for $3,450 million pre-tax ($2,448 million post-tax), mainly
relating to the QGC Integrated Gas asset, ii) Upstream for $2,523
million pre-tax ($1,771 million post-tax), mainly related to two
offshore projects in Brazil and an asset in the US Gulf of Mexico,
and iii) to Marketing for $136 million pre-tax ($136 million
post-tax).
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For impairment testing purposes and potential reversal of
impairments recognised previously, the respective carrying amounts
of property, plant and equipment and intangible assets were
compared with their value in use. Cash flow projections used in the
determination of value in use were made using management's
forecasts of commodity prices, market supply and demand,
operational and capital expenditures, potential costs associated
with operational GHG emissions and expected production volumes. The
discount rate applied is based on a nominal post-tax weighted
average cost of capital (WACC) of 5% (2021: 5%) for the Renewables
and Energy Solutions segment and a nominal post-tax WACC of 6.5%
(2021: 6.5%) for all other segments.
Oil and gas price assumptions applied for impairment testing in
Integrated Gas and Upstream are reviewed and, where necessary,
adjusted on a periodic basis. Reviews include comparison with
available market data and forecasts that reflect developments in
demand such as global economic growth, technology efficiency, and
policy measures. Factors impacting supply include consideration of
investment and resource potential, cost of development of new
supply, and behaviour of major resource holders. The near-term
commodity price assumptions applied in the relevant impairment
testing in the second quarter 2022 were as follows:
Commodity price assumptions [A] 2023 2024 2025 2026
Brent crude oil ($/b) 80 70 70 71
Henry Hub natural gas ($/MMBtu) 4.00 3.50 3.50 3.98
[A] Money of the day.
For periods after 2026, the real-term price assumptions applied
were $65 per barrel (/b) for Brent crude oil and $4.00 per million
British thermal units (/MMBtu) for Henry Hub natural gas.
9. Withdrawal from Russian oil and gas activities
Following the invasion of Ukraine by Russia, Shell announced in
the first quarter 2022 its intent to:
a.Withdraw from its ventures in Russia with Gazprom and related
entities, and to end its involvement in the Nord Stream 2 pipeline
project;
b.Withdraw from its service station and lubricants operations in
Russia. Shell is working on a plan to help to achieve this in a
phased manner, ensuring it is done safely for Shell's staff and
operations;
c.Orderly withdrawal from its involvement in all Russian
hydrocarbons, including crude oil, petroleum products, gas and LNG
in a phased manner, aligned with new government guidance. Since
these announcements, Shell has stopped all spot purchases of
Russian crude, liquefied natural gas, and of cargoes of refined
products directly exported from Russia. Shell will not renew
long-term contracts for Russian oil, unless under explicit
government direction, but is still legally obliged to take delivery
of crude bought under contracts that were signed before the
invasion. By the end of this year, all of Shell's long-term 3rd
party purchases of Russian crude will stop, except for two
contracts with a small, independent Russian producer. All of
Shell's contracts to purchase refined products exported from Russia
will also end. Shell still has long-term contractual commitments
for Russian LNG. Reducing European reliance on piped natural gas
supplies from Russia is also a very complex challenge that requires
concerted action by governments, as well as energy suppliers and
customers.
Subsequently, this led to recognition of net pre-tax charges of
$4,235 million (post-tax: $3,894 million) in the first quarter 2022
and of net pre-tax negative charges of $111 million (post-tax: $136
million) in the second quarter 2022. These were recognised in:
Q2 2022 Q1 2022 Half year 2022
Revenue (133) (335) (468)
Share of profit of
joint ventures and
associates -- (1,614) (1,614)
Interest and other
income/(expenses) (71) (1) (1,126) (1,197)
Selling,
distribution and
administrative
expenses 115 (219) (104)
Depreciation,
depletion and
amortisation 163 (858) (695)
Other 37 (83) (46)
Income/(loss) before
taxation 111 (4,235) (4,124)
Taxation
charge/(credit) 25 341 366
Income/(loss) for
the period 136 (3,894) (3,758)
-------------------- ------- --- ------- --------------
1.Mainly related to the loss following release of currency
translation adjustments ($376 million) for Shell Neft and Gydan,
partly offset by Sakhalin dividends received ($165 million) and
termination of leases ($140 million).
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In relation to the assets with a potential exposure to Shell's
intended exit from all Russian hydrocarbons, including those assets
for which the above charges were recognised in the first and second
quarters 2022, the remaining balance sheet carrying amount as at
June 30, 2022 is $0.2 billion (March 31, 2022: $1 billion).
Further details are provided below.
Integrated Gas
Sakhalin-2
Shell has a 27.5% (minus one share) interest in Sakhalin Energy
Investment Company Ltd. (SEIC), the project operator of Sakhalin-2,
an integrated oil and gas project located on Sakhalin island,
Russia. Other ownership interests are Gazprom 50% (plus one share),
Mitsui 12.5%, Mitsubishi 10%. Up to March 31, 2022, this investment
was accounted for as an associate applying the equity method.
Following the first quarter announcements, the recoverable amount
of the investment was estimated as the risk-adjusted dividends
declared on Sakhalin's 2021 results, of which the first part was
received in April 2022. This resulted in recognition of an
impairment charge of $1,614 million in the first quarter 2022.
Significant influence over the Sakhalin-2 investment has been lost
from April 1, 2022, with the resignation of Shell's executive
directors and withdrawal of managerial and technical staff, leading
to recognition, without financial impact, of the investment as a
financial asset accounted for at fair value from that date, with
subsequent changes in fair value recognised in other comprehensive
income.
On June 30, 2022, a Russian Presidential Decree was passed that
aims to transfer licences and assets of SEIC into a newly created
Russian company that would assume the rights and obligations of
SEIC. The decree states that the foreign shareholders will be
invited to receive shares in that entity equivalent to their
shareholding in SEIC. Shell is assessing its rights and still
working towards reaching an acceptable agreement that enables Shell
to withdraw in line with all applicable legal requirements and
agreements. Following the receipt of dividends in the second
quarter 2022 and the Presidential Decree, appropriate fair value
adjustments to the investment value have been recognised, against
other comprehensive income. The remaining carrying value of the
investment is zero as at June 30, 2022.
Nord Stream 2
Shell is one of five energy companies which have each committed
to provide financing and guarantees for up to 10% of the total cost
of the project. Following the first quarter announcements, Shell
assessed the recoverability of the loan to Nord Stream 2, leading
to a full write-down in the first quarter 2022 of the loan
amounting to $1,126 million.
Upstream
Salym
Shell has a 50% interest in Salym Petroleum Development N.V.
(Salym), a joint operation with GazpromNeft that is developing the
Salym fields in the Khanty Mansiysk Autonomous District of western
Siberia. Shell consolidates its share in the joint operation.
Following the first quarter announcements, Shell assessed the
recoverability of the Salym carrying amounts, leading to full
impairment amounting to $233 million in the first quarter 2022. In
July 2022, the Shell directors on Salym resigned. Following recent
events, joint control was lost early in the third quarter 2022 and
as of that date Salym will be accounted for as a financial asset at
fair value, with a carrying value of zero.
Gydan
Shell had a 50% interest in LLC Gydan Energy, a joint operation
with GazpromNeft to explore and develop blocks in the Gydan
peninsula, in north-western Siberia. This project is in the
exploration phase, with no production. Following the first quarter
announcements, Shell assessed the recoverability of the Gydan
carrying amounts, leading to full impairment amounting to $153
million and other charges of $35 million in the first quarter 2022.
During the second quarter 2022, all rights and obligations for
Shell's 50% interest have been transferred to GazpromNeft with an
insignificant impact on the income statement.
Marketing
Shell Neft's retail network consisted of 240 sites owned by
Shell Neft and 171 sites owned by dealers and Shell Neft operated a
lubricant blending plant. Shell Neft was a 100% Shell-owned
subsidiary and was fully consolidated until the date of the
disposal. Following the first quarter announcements, Shell assessed
the recoverability of Shell Neft carrying amounts, resulting in an
impairment of non-current assets of $358 million and other charges
of $236 million. In the second quarter 2022, Shell transferred all
shares of Shell Neft to Lukoil leading to net charges of $83
million, including the release of currency translation losses ($343
million).
Other
Marked to market risk adjustments of $335 million related to
long-term offtake natural gas contracts, an impairment of
right-of-use assets of $114 million and other charges of $36
million were recognised in the first quarter 2022. In the
second
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quarter 2022, further Marked to market risk adjustments of $133
million were recognised following changes demanded to the
contractual payment mechanism leading to the suspension by Gazprom
of gas deliveries under these long-term offtake contracts. Finally,
$140 million was recognised in income from the derecognition of
lease liabilities following the termination of lease arrangements
for which the right-of-use assets were impaired in the first
quarter 2022.
10. Post-balance sheet events
On July 25, 2022, Shell announced that it will acquire all of
the common units representing limited partner interests in Shell
Midstream Partners, L.P. (NYSE: SHLX) held by the public at $15.85
per Public Common Unit in cash for a total value of approximately
$1.96 billion. Shell currently owns approximately 68.5% of SHLX
common units. The transaction is expected to close in the fourth
quarter 2022, subject to customary closing conditions. In the
consolidated statement of cash flows this transaction will be
reflected as 'cash flow from financing activities'. Should this
full transaction complete, the Net debt of Shell will increase by
up to the value of the transaction, all else being equal.
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ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings and Adjusted earnings before interest,
taxes, depreciation and amortisation (EBITDA)
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.
We define "Adjusted EBITDA" 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. Management uses
this measure to evaluate Shell's performance in the period and over
time.
ADJUSTED EARNINGS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
18,040 7,116 3,428 Income/(loss) attributable to Shell plc shareholders 25,156 9,087
Add: Current cost of supplies adjustment attributable
(1,363) (2,090) (793) to Shell plc shareholders (Note 2) (3,453) (2,108)
Less: Identified items attributable to Shell plc
5,205 (4,104) (2,899) shareholders 1,101 (1,788)
11,472 9,130 5,534 Adjusted Earnings 20,601 8,768
Of which:
3,758 4,093 1,605 Integrated Gas 7,850 3,176
4,912 3,450 2,511 Upstream 8,362 3,444
751 737 955 Marketing 1,488 1,757
2,035 1,168 989 Chemicals and Products 3,203 1,770
725 344 (13) Renewables and Energy Solutions 1,069 (115)
(626) (548) (399) Corporate (1,174) (1,065)
(82) (114) (115) Less: Non-controlling interest (196) (199)
--------- --------- --------- --------------------------------------------------------- --------- ---------
ADJUSTED EBITDA
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
11,472 9,130 5,534 Adjusted Earnings 20,601 8,768
82 114 115 Add: Non-controlling interest 196 199
Add: Taxation charge/(credit) excluding tax impact
5,248 3,719 1,178 of identified items 8,966 2,728
Add: Depreciation, depletion and amortisation excluding
5,608 5,388 5,890 impairments 10,997 11,702
189 79 108 Add: Exploration well write-offs 268 244
695 711 893 Add: Interest expense excluding identified items 1,406 1,784
144 111 95 Less: Interest income 255 230
23,150 19,028 13,623 Adjusted EBITDA(1) 42,177 25,195
Of which:
6,529 6,315 3,318 Integrated Gas 12,844 6,741
11,167 8,977 6,696 Upstream 20,144 11,956
1,452 1,323 1,710 Marketing 2,775 3,136
3,184 2,006 1,909 Chemicals and Products 5,191 3,612
1,013 521 89 Renewables and Energy Solutions 1,534 23
(197) (114) (101) Corporate (310) (274)
-------- -------- -------- ----------------------------------------------------------- -------- --------
1.With effect from Q3 2021, Adjusted EBITDA includes the
non-controlling interest component of Adjusted Earnings. Prior
period comparatives have been revised.
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Identified items
Identified items comprise: divestment gains and losses,
impairments, redundancy and restructuring, provisions for onerous
contracts, fair value accounting of commodity derivatives and
certain gas contracts and the impact of exchange rate movements on
certain deferred tax balances, and other items.
IDENTIFIED ITEMS
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Identified items before tax
351 193 (55) Divestment gains/(losses) 544 2,018
6,016 (2,521) (2,333) Impairment reversals/(impairments) 3,496 (2,417)
(11) 59 68 Redundancy and restructuring 48 (679)
(334) (203) -- Provisions for onerous contracts (537) --
Fair value accounting of commodity derivatives and
1,114 (1,289) (1,373) certain gas contracts (175) (985)
248 (1,287) (29) Other (1,039) 2
7,384 (5,048) (3,722) Total identified items before tax 2,336 (2,062)
(2,179) 944 815 Total tax impact of identified items (1,235) 265
Identified items after tax
205 161 (83) Divestment gains/(losses) 366 1,328
4,276 (2,529) (1,787) Impairments 1,747 (1,881)
(5) 60 45 Redundancy and restructuring 54 (441)
(314) (190) -- Provisions for onerous contracts (504) --
Fair value accounting of commodity derivatives and
1,014 (777) (1,181) certain gas contracts 237 (816)
(218) 168 121 Impact of exchange rate movements on tax balances (50) 11
247 (996) (23) Other (749) 2
5,205 (4,104) (2,908) Impact on CCS earnings 1,101 (1,796)
Of which:
4,346 (1,013) (636) Integrated Gas 3,332 245
1,479 (355) (53) Upstream 1,124 (74)
85 (572) 22 Marketing (487) (125)
96 (96) (1,496) Chemicals and Products 1 (1,618)
(898) (1,880) (551) Renewables and Energy Solutions (2,778) (167)
97 (187) (193) Corporate (90) (59)
-- -- (8) Impact on CCS earnings attributable to non-controlling -- (8)
interest
5,205 (4,104) (2,899) Impact on CCS earnings attributable to Shell plc 1,101 (1,788)
shareholders
--------- --------- --------- ----------------------------------------------------------- --------- ---------
The identified items categories above may include after-tax
impacts of identified items of joint ventures and associates which
are fully reported within "Share of profit of joint ventures and
associates" in the Consolidated Statement of Income, and fully
reported as identified items before tax in the table above.
Identified items related to subsidiaries are consolidated and
reported across appropriate lines of the Consolidated Statement of
Income. Only pre-tax identified items reported by subsidiaries are
taken into account in the calculation of underlying operating
expenses (Reference F).
Provisions for onerous contracts: Provisions for onerous
contracts that relate to businesses that Shell has exited or to
redundant assets or assets that cannot be used.
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as
power and environmental products. Shell also enters into contracts
for tolling, pipeline and storage capacity. Derivative contracts
are entered into for mitigation of resulting economic exposures
(generally price exposure) and these derivative contracts are
carried at period-end market price (fair value), with movements in
fair value recognised in income for the period. Supply and purchase
contracts entered into for operational purposes, as well as
contracts for tolling, pipeline and storage capacity, are, by
contrast, recognised when the transaction occurs; furthermore,
inventory is carried at historical cost or net realisable value,
whichever is lower. As a consequence, accounting mismatches occur
because: (a) the supply or purchase transaction is recognised in a
different period, or (b) the inventory is measured on a different
basis. In addition, certain contracts are, due to pricing or
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delivery conditions, deemed to contain embedded derivatives or
written options and are also required to be carried at fair value
even though they are entered into for operational purposes. The
accounting impacts are reported as identified items.
Impacts of exchange rate movements on tax balances represent the
impact on tax balances of exchange rate movements arising on (a)
the conversion to dollars of the local currency tax base of
non-monetary assets and liabilities, as well as losses (this
primarily impacts the Upstream and Integrated Gas segments) and (b)
the conversion of dollar-denominated inter-segment loans to local
currency, leading to taxable exchange rate gains or losses (this
primarily impacts the Corporate segment).
Other identified items represent other credits or charges that
based on Shell management's assessment hinder the comparative
understanding of Shell's financial results from period to
period.
B. Adjusted Earnings per share
Adjusted Earnings per share is calculated as Adjusted Earnings
(see Reference A), divided by the weighted average number of shares
used as the basis for basic earnings per share (see Note 3).
C. Cash capital expenditure
Cash capital expenditure represents cash spent on maintaining
and developing assets as well as on investments in the period.
Management regularly monitors this measure as a key lever to
delivering sustainable cash flows. 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.
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
6,677 4,237 4,232 Capital expenditure 10,914 8,117
Investments in joint
ventures and
264 755 115 associates 1,019 184
Investments in
83 72 36 equity securities 156 57
Cash capital
7,024 5,064 4,383 expenditure 12,088 8,357
Of which:
919 863 765 Integrated Gas 1,782 1,662
2,858 1,707 1,693 Upstream 4,565 3,174
1,620 473 467 Marketing 2,092 850
Chemicals and
1,226 998 1,311 Products 2,224 2,329
Renewables and
Energy
321 985 117 Solutions 1,307 286
81 37 30 Corporate 118 58
---------- --------- --------- -------------------- ----------- -------
D. Return on average capital employed
Return on average capital employed ("ROACE") measures the
efficiency of Shell's utilisation of the capital that it employs.
Shell uses two ROACE measures: ROACE on a Net income basis and
ROACE on an Adjusted Earnings plus Non-controlling interest (NCI)
basis, both adjusted for after-tax interest expense.
Both measures refer to Capital employed which consists of total
equity, current debt and non-current debt.
ROACE on a Net income basis
In this calculation, the sum of income for the current and
previous three quarters, adjusted for after-tax interest expense,
is expressed as a percentage of the average capital employed for
the same period.
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$ million Quarters
Q2 2022 Q1 2022 Q2 2021
Income - current and previous three quarters 36,844 22,165 5,933
Interest expense after tax - current and previous
three quarters 2,397 2,575 2,668
Income before interest expense - current and previous
three quarters 39,241 24,740 8,601
Capital employed -- opening 271,319 269,323 265,435
Capital employed -- closing 278,039 265,581 271,319
Capital employed -- average 274,679 267,452 268,377
ROACE on a Net income basis 14.3% 9.3% 3.2%
-------------------------------------------------------- -------- ------- -------
ROACE on an Adjusted Earnings plus Non-controlling interest
(NCI) basis
In this calculation, the sum of Adjusted Earnings (see Reference
A) plus non-controlling interest (NCI) excluding identified items
for the current and previous three quarters, adjusted for after-tax
interest expense, is expressed as a percentage of the average
capital employed for the same period.
$ million Quarters
Q2 2022 Q1 2022 Q2 2021
Adjusted Earnings - current and previous three quarters
(Reference A) 31,122 25,184 10,115
Add: Income/(loss) attributable to NCI - current and
previous three quarters 675 608 371
Add: Current cost of supplies adjustment attributable
to NCI - current and previous three quarters (260) (170) (90)
Less: Identified items attributable to NCI (Reference
A) - current and previous three quarters (11) (19) (18)
Adjusted Earnings plus NCI excluding identified items
- current and previous three quarters 31,548 25,642 10,414
Add: Interest expense after tax - current and previous
three quarters 2,397 2,575 2,668
Adjusted Earnings plus NCI excluding identified items
before interest expense - current and previous three
quarters 33,945 28,217 13,081
Capital employed - average 274,679 267,452 268,377
ROACE on an Adjusted Earnings plus NCI basis 12.4% 10.6% 4.9%
---------------------------------------------------------- -------- ------- -------
E. Gearing
Gearing is a measure of Shell's capital structure and is defined
as net debt as a percentage of total capital. 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. Management
considers this adjustment useful because it reduces the volatility
of net debt caused by fluctuations in foreign exchange and interest
rates, and eliminates the potential impact of related collateral
payments or receipts. Debt-related derivative financial instruments
are a subset of the derivative financial instrument assets and
liabilities presented on the balance sheet. Collateral balances are
reported under "Trade and other receivables" or "Trade and other
payables" as appropriate.
$ million Quarters
June 30, 2022 March 31, 2022 June 30, 2021
Current debt 6,521 7,027 13,042
Non-current debt 77,220 79,021 87,034
Total debt 83,741 86,048 100,076
Of which lease liabilities 27,032 26,816 28,340
Add: Debt-related derivative financial instruments:
net liability/(asset) 2,882 1,269 (912)
Add: Collateral on debt-related derivatives: net
liability/(asset) (1,296) (467) 675
Less: Cash and cash equivalents (38,970) (38,360) (34,104)
Net debt 46,357 48,489 65,735
Add: Total equity 194,299 179,533 171,243
Total capital 240,655 228,022 236,978
Gearing 19.3% 21.3% 27.7%
------------------------------------------------------ -------- --- -------- --- -------- ---
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F. Operating expenses
Operating expenses is a measure of Shell's cost management
performance, comprising the following items from the Consolidated
Statement of Income: production and manufacturing expenses;
selling, distribution and administrative expenses; and research and
development expenses.
Underlying operating expenses is a measure 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.
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Production and manufacturing
6,359 6,029 5,162 expenses 12,389 11,970
Selling, distribution and
2,924 3,239 3,107 administrative expenses 6,163 5,569
264 189 201 Research and development 452 366
9,547 9,457 8,470 Operating expenses 19,004 17,905
Of which identified items:
Redundancy and
restructuring
(10) 59 68 (charges)/reversal 49 (679)
(267) (117) (31) (Provisions)/reversal (384) (31)
-- (144) (2) Other (143) 33
(277) (201) 35 (478) (677)
9,270 9,256 8,505 Underlying operating expenses 18,526 17,228
--------- --------- --------- ------------------------------- --------- --------
G. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the business. It is defined
as the sum of "Cash flow from operating activities" and "Cash flow
from investing activities".
Cash flows from acquisition and divestment activities are
removed from Free cash flow to arrive at the Organic free cash
flow, a measure used by management to evaluate the generation of
free cash flow without these activities.
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
18,655 14,815 12,617 Cash flow from operating activities 33,470 20,910
(6,207) (4,273) (2,946) Cash flow from investing activities (10,481) (3,535)
12,448 10,542 9,671 Free cash flow 22,989 17,375
838 708 1,274 Less: Divestment proceeds (Reference I) 1,546 4,686
Add: Tax paid on divestments (reported under "Other
-- -- 24 investing cash outflows") -- 24
Add: Cash outflows related to inorganic capital
2,060 513 2 expenditure1 2,573 92
13,670 10,347 8,424 Organic free cash flow2 24,017 12,805
--------- --------- --------- ------------------------------------------------------- ---------- ---------
1.Cash outflows related to inorganic capital expenditure
includes portfolio actions which expand Shell's activities through
acquisitions and restructuring activities as reported in capital
expenditure lines in the Consolidated Statement of Cash Flows.
2.Free cash flow less divestment proceeds, adding back outflows
related to inorganic expenditure.
H. Cash flow from operating activities excluding working capital movements
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 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.
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Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
18,655 14,815 12,617 Cash flow from operating activities 33,470 20,910
(6,833) (4,914) (2,495) (Increase)/decrease in inventories (11,747) (5,921)
(4,066) (10,005) (4,080) (Increase)/decrease in current receivables (14,071) (10,909)
6,656 7,495 5,016 Increase/(decrease) in current payables 14,150 10,881
(4,243) (7,425) (1,559) (Increase)/decrease in working capital (11,667) (5,949)
22,898 22,240 14,176 Cash flow from operating activities excluding working 45,138 26,859
capital movements
--------- ---------- --------- --------------------------------------------------------- ---------- ----------
I. Divestment proceeds
Divestment proceeds represent cash received from divestment
activities in the period. Management regularly monitors this
measure as a key lever to deliver sustainable cash flow.
Quarters $ million Half year
Q2 2022 Q1 2022 Q2 2021 2022 2021
Proceeds from sale of property, plant and equipment
783 557 1,162 and businesses 1,340 4,268
Proceeds from joint ventures and associates from sale,
51 138 4 capital reduction and repayment of long-term loans 190 279
4 12 108 Proceeds from sale of equity securities 16 139
838 708 1,274 Divestment proceeds 1,546 4,686
------- --------- ---------- ---------------------------------------------------------- --------- ---------
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SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
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PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting Shell are
described in the Risk Factors section of the Annual Report and
Accounts (pages 22 to 33) and Form 20-F (pages 23 to 32) for the
year ended December 31, 2021 and are summarised below. There are no
material changes in those Risk Factors for the remaining 6 months
of the financial year.
STRATEGIC RISKS
--We are exposed to macroeconomic risks including fluctuating
prices of crude oil, natural gas, oil products and chemicals.
--Our ability to deliver competitive returns and pursue
commercial opportunities depends in part on the accuracy of our
price assumptions.
--Our ability to achieve our strategic objectives depends on how
we react to competitive forces.
--Rising concerns about climate change and effects of the energy
transition could continue to lead to a fall in demand and
potentially lower prices for fossil fuels. Climate change could
also have a physical impact on our assets and supply chains. This
risk may also lead to additional legal and/or regulatory measures,
resulting in project delays or cancellations, potential additional
litigation, operational restrictions and additional compliance
obligations.
--If we fail to stay in step with the pace and extent of
society's changing demands for energy as it transitions to a
low-carbon future, we could fail in sustaining and developing our
business.
--We seek to execute divestments in pursuing our strategy. We
may be unable to divest these assets successfully in line with our
strategy.
--We operate in more than 70 countries that have differing
degrees of political, legal and fiscal stability. This exposes us
to a wide range of political developments that could result in
changes to contractual terms, laws and regulations. We and our
joint arrangements and associates also face the risk of litigation
and disputes worldwide.
OPERATIONAL RISKS
--Russia's invasion of Ukraine has affected the safety and
security of our people and operations in these and neighbouring
countries. The sanctions and export controls and the evolving
geopolitical situation have caused wide-ranging challenges to our
operations.
--The estimation of proved oil and gas reserves involves
subjective judgements based on available information and the
application of complex rules. This means subsequent downward
adjustments are possible.
--Our future hydrocarbon production depends on the delivery of
large and integrated projects and our ability to replace proved oil
and gas reserves.
--The nature of our operations exposes us, and the communities
in which we work, to a wide range of health, safety, security and
environment risks.
--A further erosion of the business and operating environment in
Nigeria could have a material adverse effect on us.
--An erosion of our business reputation could have a material
adverse effect on our brand, our ability to secure new resources or
access capital markets, and on our licence to operate.
--We rely heavily on information technology systems in our
operations.
--Our business exposes us to risks of social instability,
criminality, civil unrest, terrorism, piracy, cyber disruption and
acts of war that could have a material adverse effect on our
operations.
--Production from the Groningen field in the Netherlands causes
earthquakes that affect local communities.
--We are exposed to treasury and trading risks, including
liquidity risk, interest rate risk, foreign exchange risk and
credit risk. We are affected by the global macroeconomic
environment and the conditions of financial and commodity
markets.
--Our future performance depends on the successful development
and deployment of new technologies and new products.
--We have substantial pension commitments, the funding of which
is subject to capital market risks and other factors.
--We mainly self-insure our hazard risk exposures. Consequently,
we could incur significant financial losses from different types of
risks that are not insured with third-party insurers.
--Many of our major projects and operations are conducted in
joint arrangements or with associates. This could reduce our degree
of control and our ability to identify and manage risks.
CONDUCT RISKS
--We are exposed to conduct risk in our trading operations.
--Violations of antitrust and competition laws carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
--Violations of anti-bribery, tax-evasion and anti-money
laundering laws carry fines and expose us and/or our employees to
criminal sanctions and civil suits.
--Violations of data protection laws carry fines and expose us
and/or our employees to criminal sanctions and civil suits.
--Violations of trade compliance laws and regulations, including
sanctions, carry fines and expose us and our employees to criminal
proceedings and civil suits.
OTHER (generally applicable to an investment in securities)
--The Company's Articles of Association determine the
jurisdiction for shareholder disputes. This could limit shareholder
remedies.
Page 29
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RESULTS
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FIRST QUARTER 2022 PORTFOLIO DEVELOPMENTS
Intent to withdraw from Russian oil and gas activities
We refer to Note 9 to the Condensed Consolidated Interim
Financial Statements.
Integrated Gas
In March 2022, we announced that production has started on Block
22 and NCMA-4 in the North Coast Marine Area in Trinidad and
Tobago.
Upstream
In March 2022, we announced that production has started at
PowerNap, a subsea development in the US Gulf of Mexico.
In April 2022, we announced that we have signed the
production-sharing contract (PSC) to formally acquire a 25% stake
in the Atapu Field in Brazil.
In May 2022, we announced the start of production of the FPSO
Guanabara in the Mero field, in the offshore Santos Basin in
Brazil.
Chemicals and Products
In January 2022, we completed the sale of our interest in Deer
Park Refining Limited Partnership in the USA.
In February 2022, we announced a non-binding offer to purchase
all remaining common units held by the public representing limited
partner interests in Shell Midstream Partners, L.P.
Renewables and Energy Solutions
In January 2022, we announced that Shell and ScottishPower won
bids to develop 5 GW of floating wind power in the UK.
In January 2022, we started up a power-to-hydrogen electrolyser
with 20 MW production capacity in China.
In February 2022, we completed the acquisition of online energy
retailer Powershop Australia.
In February 2022, we announced that Atlantic Shores Offshore
Wind, our joint venture with EDF Renewables North America, became
the provisional winner of Block OCS-0541 in the New York Bight
offshore wind auction.
In April 2022, we signed an agreement with Actis Solenergi
Limited to acquire 100% of Solenergi Power Private Limited and with
it, the Sprng Energy group of companies in India.
RESPONSIBILITY STATEMENT
It is confirmed that to the best of our knowledge: (a) the
Condensed Consolidated Interim Financial Statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as
issued by the International Accounting Standards Board ("IASB") and
as adopted by the UK; (b) the interim management report includes a
fair review of the information required by Disclosure Guidance and
Transparency Rule (DTR) 4.2.7R (indication of important events
during the first six months of the financial year, and their impact
on the Condensed Consolidated Interim Financial Statements, and
description of principal risks and uncertainties for the remaining
six months of the financial year); and (c) the interim management
report includes a fair review of the information required by DTR
4.2.8R (disclosure of related parties transactions and changes
thereto).
The Directors of Shell plc are shown on pages 121-126 in the
Annual Report and Accounts and on pages 119 to 127 in the Form 20-F
for the year ended December 31, 2021 save for the following
changes:
Jessica Uhl: stepped down on March 31, 2022.
Sinead Gorman: appointed Chief Financial Officer with effect
from April 1, 2022.
Gerrit Zalm: stepped down following the conclusion of the 2022
Annual General Meeting, held on May 24, 2022.
On behalf of the Board
Ben van Beurden Sinead Gorman
Chief Executive Officer Chief Financial Officer
July 28, 2022 July 28, 2022
Page 30
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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INDEPENT REVIEW REPORT TO SHELL PLC
Conclusion
We have been engaged by Shell plc to review the Condensed
Consolidated Interim Financial Statements ("Interim Statements") in
the 2nd quarter 2022 and half year unaudited results ("half-yearly
financial report") for the six months ended June 30, 2022, which
comprise the Consolidated Statement of Income, the Consolidated
Statement of Comprehensive Income, the Condensed Consolidated
Balance Sheet, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and Notes 1 to 10. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the Interim Statements.
Based on our review, nothing has come to our attention that
causes us to believe that the Interim Statements in the half-yearly
financial report for the six months ended June 30, 2022 are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements ("ISRE") 2410 (UK), "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
From January 1, 2021, Shell's financial statements are prepared
in accordance with UK-adopted international accounting standards.
The Interim Statements included in the half-yearly financial report
have been prepared in accordance with International Accounting
Standard 34 Interim Financial Reporting, as issued by the
International Accounting Standards Board and as adopted by the
UK.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Directors' responsibilities
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the Directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to Shell plc a conclusion on the Interim
Statements in the half-yearly financial report. Our conclusion,
including our Conclusions related to Going Concern are based on
procedures that are less extensive than audit procedures, as
described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to Shell plc in accordance with
guidance contained in the International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Financial Reporting Council. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
Shell plc, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
July 28, 2022
Page 31
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
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CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
All peak production figures in Portfolio Developments are quoted at
100% expected production. The numbers presented throughout this
announcement may not sum precisely to the totals provided and
percentages may not precisely reflect the absolute figures, due to
rounding.
The companies in which Shell plc directly and indirectly owns
investments are separate legal entities. In this Unaudited
Condensed Interim Financial Report, "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
Unaudited Condensed Interim Financial Report 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.
Forward-Looking Statements
This Unaudited Condensed Interim Financial Report 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 Unaudited Condensed Interim Financial Report,
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 Unaudited Condensed Interim Financial Report 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, 2021 (available at
www.shell.com/investor and www.sec.gov). These risk factors also
expressly qualify all forward-looking statements contained in this
Unaudited Condensed Interim Financial Report and should be
considered by the reader. Each forward-looking statement speaks
only as of the date of this Unaudited Condensed Interim Financial
Report, July 28, 2022. 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
Unaudited Condensed Interim Financial Report.
Shell's net carbon footprint
Also, in this Unaudited Condensed Interim Financial Report we
may refer to Shell's "Net Carbon Footprint" or "Net Carbon
Intensity", which include 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 Footprint" or "Net Carbon Intensity" are 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 Footprint (NCF) targets over the next ten
years. However, Shell's operating plans cannot reflect our 2050
net-zero emissions target and 2035 NCF 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 Unaudited Condensed Interim Financial Report may contain
certain forward-looking non-GAAP measures such as cash capital
expenditure and divestments. 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 Unaudited Condensed
Interim Financial Report do not form part of this Unaudited
Condensed Interim Financial Report.
We may have used certain terms, such as resources, in this
Unaudited Condensed Interim Financial Report 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.
This announcement contains inside information.
July 28, 2022
Page 32
SHELL PLC 2nd QUARTER 2022 AND HALF YEAR UNAUDITED
RESULTS
-----------------------------------------------------
The information in this announcement reflects the
unaudited consolidated financial position and results of
Shell plc. Company No. 4366849, Registered Office: Shell
Centre, London, SE1 7NA, England, UK.
----------------------------------------------------------
Contacts:
- Linda M. Coulter, Company Secretary
- Media: International +44 (0) 207 934 5550; USA +1 832 337
4355
LEI number of Shell plc: 21380068P1DRHMJ8KU70
Classification: Inside Information
Page 33
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July 28, 2022 02:00 ET (06:00 GMT)
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