Shell plc publishes second quarter 2022 press release

London, July 28, 2022

"With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future.

And, crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance. We are increasing shareholder distributions through a $6 billion share buyback programme which is expected to be completed by Q3 2022 results."

Shell plc Chief Executive Officer, Ben van Beurden

DISCIPLINE DELIVERING RESULTS: MORE CASH, MORE RESILIENCE

• Strong performance in a turbulent economic environment with Adjusted Earnings of $11.5 billion in Q2 2022. Adjusted EBITDA of $23.1 billion in Q2 2022 versus $19.0 billion in Q1 2022. 
• Announced $6 billion share buybacks are expected to be completed by Q3 2022 results; total distributions significantly in excess of 30% of CFFO for the last four quarters. With the current energy sector outlook and subject to Board approval, shareholder distributions are expected to remain in excess of 30% of CFFO.
• In the first half of 2022 shareholder distributions have doubled from those in the first half of 2013, a decade ago, when Brent prices were similar, with increased discipline, integrated value delivery and improved resilience driving better results.
• Strengthening energy security through natural gas investments in Pierce and Jackdaw (UK), participation in the North Field LNG expansion (Qatar) and Crux FID (Australia). Positioning for the future of energy with a final investment decision for Holland Hydrogen I (Netherlands) and progressing the completion of the acquisition of Sprng Energy (India).
• Disciplined cash capex: expected to be in the $23 - 27 billion range in 2022.

$ million		Adj. Earnings1	Adj. EBITDA	CFFO	Cash capex
Integrated Gas		3,758	6,529	8,176	919
Upstream		4,912	11,167	8,110	2,858
Marketing		751	1452	(454)	1,620
Mobility		413	938		1,223
Lubricants		225	333		206
Sectors & Decarbonisation		113	181		191
Chemicals & Products		2,035	3,184	2,728	1,226
Chemicals		(158)	2		848
Products		2,193	3,182		378
Renewables & Energy Solutions		725	1,013	(558)	321
Corporate		(626)	(197)	652	81
Less: Non-controlling interest		82
Shell	Q2 2022	11,472	23,150	18,655	7,024
	Q1 2022	9,130	19,028	14,815	5,064

¹ Income/(loss) attributable to shareholders for Q2 2022 is $ 18.0 billon. Reconciliation of non-GAAP measures can be found in the unaudited results, available on www.shell.com/investors.

• CFFO increased by $3.8 billion versus Q1 2022 to $18.7 billion, driven by higher Adjusted EBITDA and lower working capital outflows. In Q2 2022, Tax paid & other includes tax payments of $3.2 billion, offset by current cost of supplies adjustment and other movements. Working capital in Q2 2022 is mainly impacted by inventory price and volume hurt of $6.8 billion, offset by favourable accounts receivable and payable movements and initial margin inflows.
• Net debt reduced by ~$2.1 billion (~4%), to $46.4 billion in Q2 2022.

$ billion	Q2 2021	Q3 2021	Q4 2021	Q1 2022	Q2 2022
Divestment proceeds	1.3	1.3	9.1	0.7	0.8
Free cash flow	9.7	12.2	10.7	10.5	12.4
Net debt	65.7	57.5	52.6	48.5	46.4

Q2 2022 FINANCIAL PERFORMANCE DRIVERS

INTEGRATED GAS

Key data	Q1 2022	Q2 2022	Q3 2022 outlook
Realised liquids price ($/bbl)	88.76	90.37	—
Realised gas price ($/mscf)	10.31	11.28	—
Production (kboe/d)	896	944	890 - 940
LNG liquefaction volumes (MT)	8.00	7.66	6.9 - 7.5
LNG sales volumes (MT)	18.29	15.21	—

• Adjusted Earnings below Q1 2022, reflecting lower trading and optimisation results as well as impact of Sakhalin derecognition partly offset by higher realised prices and Pearl Train 1 and Prelude returning to operations in Q2 2022.
  • Trading and optimisation results in Q2 2022 were strong, but lower than Q1 2022, driven by lower sales volumes and fewer portfolio optimisation opportunities.
• Q3 2022 outlook includes substantially more planned maintenance compared with Q2 2022 and uncertainty around the impact of "Permitted Industrial Actions" at Prelude.

UPSTREAM

Key data	Q1 2022	Q2 2022	Q3 2022 outlook
Realised liquids price ($/bbl)	88.63	101.42	—
Realised gas price ($/mscf)	8.79	13.85	—
Liquids production (kboe/d)	1,403	1,325	—
Gas production (mscf/d)	3,606	3,428	—
Total production (kboe/d)	2,025	1,917	1,750 - 1,950

• Production was lower than in Q1 2022, mainly driven by higher scheduled maintenance.
• Adjusted Earnings benefited from higher prices and a gain related to storage and working gas transfer effects in a joint venture. 
• The Q3 2022 production outlook reflects that Salym-related volumes in Russia are no longer recognised.

MARKETING

Key data	Q1 2022	Q2 2022	Q3 2022 outlook
Marketing sales volumes (kb/d)	2,372	2,515	2,350 - 2,850
Mobility (kb/d)	1,591	1,672	—
Lubricants (kb/d)	92	86	—
Sectors & Decarbonisation (kb/d)	690	757	—

• Marketing margins were higher than in Q1 2022, with seasonal impact of higher volumes in Mobility, partly offset by lower Lubricants margins due to higher feedstock costs.
• Marketing Adjusted Earnings also impacted by deferred tax charges.

CHEMICALS & PRODUCTS

Key data	Q1 2022	Q2 2022	Q3 2022 outlook
Refining & Trading sales volumes (kb/d)	1,598	1,596	—
Chemicals sales volumes (kT)	3,330	3,054	3,100 - 3,600
Refinery utilisation **(%)	81	84	90 - 98
Chemicals manufacturing plant utilization ** (%)	85	78	82 - 90
Global indicative refining margin ($/bbl)	10	28	—
Global indicative chemical margin ($/t)	98	86	—

• Higher realised refining margins reflecting the dislocation in product markets, particularly middle distillates.
• Trading and optimisation results in Q2 2022 were strong as demand outpaced supply, but below exceptional Q1 2022 results.
• Lower chemicals margins due to higher feedstock and utility costs and higher turnaround activities.

**With effect from Q2 2022, the methodology applied in calculating both Chemicals manufacturing plant utilisation and Refinery utilisation has been revised. For details, see the Quarterly Results Announcement.

RENEWABLES & ENERGY SOUTIONS

Key data	Q1 2022	Q2 2022
Adj. Earnings ($ billion)*	0.3	0.7
Adj. EBITDA ($ billion)	0.5	1.0
External power sales (TWh)	57	54
Sales of pipeline gas to end-use customers (TWh)	257	188
Renewable power generation capacity	4.6	5.7
in operation (GW)	1.0	1.1
under construction and/or committed for sale (GW)	3.6	4.6

*Segment Earnings for Q2 2022 is -$ 0.2 billion. Reconciliation of non-GAAP measures can be found in the unaudited results, available on www.shell.com/investors

• Exceptionally strong Adjusted Earnings and Adjusted EBITDA resulting from higher trading and optimisation margins for gas and power, due to extraordinary gas and power price volatility in North America, Europe and Australia.
• Final investment decision taken to build a 200 MW electrolyser Holland Hydrogen I, Europe’s largest renewable hydrogen plant once operational in 2025.
• Progressing with the acquisition of Sprng Energy group, one of India’s leading renewable power platforms.
• Signed 10-year renewable energy supply agreement with Air Liquide to provide 52 GWh of solar energy per year to power industrial and medical gas production operations in Italy.
• Launched the Shell Energy brand into the residential power market in the United States of America, offering 100% renewable electricity plans to eligible customers in Texas.
• Acquired minority stake in Carbonext, Brazil’s largest developer of REDD+ carbon credit generating projects.

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. 

CORPORATE

Key data	Q1 2022	Q2 2022	Q3 2022 outlook
Adjusted Earnings ($ million)	(548)	(626)	(650) - (450)

• The Adjusted Earnings outlook is a net expense of $2,000 - 2,400 million for the full year 2022. This excludes the impact of currency exchange rate effects.

UPCOMING INVESTOR EVENTS

6 October 2022	Shell Insights: Marketing Business Update
27 October 2022	Third quarter 2022 results and dividends

USEFUL LINKS

Results materials Q2 2022

Quarterly Databook Q2 2022

Dividend announcement Q2 2022

Webcast registration Q2 2022

ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES

This announcement includes certain measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP) such as IFRS, including Adjusted Earnings, Adjusted EBITDA, CFFO excluding working capital movements, Cash capital expenditure, free cash flow, Divestment proceeds and Net debt. This information, along with comparable GAAP measures, is useful to investors because it provides a basis for measuring Shell plc’s operating performance and ability to retire debt and invest in new business opportunities. Shell plc’s management uses these financial measures, along with the most directly comparable GAAP financial measures, in evaluating the business performance.

This announcement contains a forward-looking Non-GAAP measure for cash capital expenditure. We are unable to provide a reconciliation of this forward-looking Non-GAAP measure to the most comparable GAAP financial measure because certain information needed to reconcile the Non-GAAP measure to the most comparable GAAP financial measure is dependent on future events some of which are outside the control of the company, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measure 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 estimated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements.

 CAUTIONARY STATEMENT

All amounts shown throughout this announcement are unaudited. 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 announcement “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, re