Shell third quarter 2021 update note

Shell third quarter 2021 update note

The following is an update to the third quarter 2021 outlook. Impacts presented may vary from the actual results and are subject to finalisation of the third quarter 2021 results, published on October 28, 2021. Unless otherwise indicated, all outlook statements exclude identified items.

Hurricane Ida in the US Gulf of Mexico had an impact on our operations and is expected to have an aggregate adverse impact of around $400 million on Adjusted Earnings and CFFO in the third quarter 2021. Individual segmental impacts on Adjusted Earnings are further detailed below.

Integrated Gas

Adjusted EBITDA

  • Production is expected to be between 890 and 950 thousand barrels of oil equivalent per day.
  • LNG liquefaction volumes are expected to be between 7.0 and 7.5 million tonnes, reflecting feedgas constraints and additional maintenance.
  • Trading and optimisation results are expected to be higher compared to the second quarter 2021.
  • Underlying Opex is expected to be similar to the second quarter 2021.

Adjusted Earnings

  • Pre-tax depreciation is expected to be between $1.3 and $1.4 billion.
  • Taxation charge is expected to be between $500 and $900 million.

Cash flow from operations

  • CFFO excluding working capital is expected to be significantly impacted by large variation margin inflows on the back of the prevailing gas and electricity price environment; these inflows are expected to be higher than the second quarter 2021.
  • Tax paid is expected to be between $200 and $400 million.

Upstream

Adjusted EBITDA

  • Production is expected to be between 2,025 and 2,100 thousand barrels of oil equivalent per day including impacts from Hurricane Ida (~90kboe/d).
  • Underlying Opex is expected to be between $100 and $350 million higher than the second quarter 2021.

Adjusted Earnings

  • Pre-tax depreciation is expected to be between $3.1 and $3.4 billion.
  • Pre-tax exploration well write-offs are expected to be between $300 and $400 million.
  • Taxation charge is expected to be between $1.2 and $1.7 billion. Second quarter 2021 taxation charge included a one-off release of a non-cash tax provision of approximately $600 million.
  • As a result of Hurricane Ida, Adjusted Earnings is expected to be adversely impacted by between $200 and $300 million.
  • Adjusted Earnings is not expected to be significantly impacted by the prevailing strong gas price environment.

Cash flow from operations

  • Tax paid is expected to be between $900 and $1,100 million.

Oil Products

Adjusted EBITDA

  • Marketing margins are expected to be in line with the second quarter 2021.
  • Refining indicative margin is around $5.70/bbl, higher than the $4.17/bbl in second quarter 2021.
  • Sales volumes are expected to be between 4,300 and 5,300 thousand barrels per day.
  • Refinery utilisation is expected to be between 70% and 74%, lower compared to the second quarter 2021, due to the impact of Hurricane Ida.
  • Trading and optimisation results are expected to be similar to the second quarter 2021.
  • Underlying Opex is expected to be up to $100 million higher than the second quarter 2021.

Adjusted Earnings

  • Pre-tax depreciation is expected to be between $800 and $1,000 million.
  • Taxation charge is expected to be between $100 and $500 million.
  • As a result of Hurricane Ida, Adjusted Earnings is expected to be adversely impacted by between $50 and $100 million.

Cash flow from operations

  • Tax paid is expected to be between $100 and $250 million.
  • Working capital outflows are expected due to the higher commodity price environment.

Chemicals

Adjusted EBITDA

  • Chemicals margins as well as associated JV earnings are expected to be lower than the second quarter 2021 by $100 to $200 million, primarily due to weaker intermediate margins.
  • Chemical sales volumes are expected to be between 3,400 and 3,700 thousand tonnes.
  • Chemicals manufacturing plant utilisation is expected to be between 74% and 78%, lower compared to second quarter 2021 due to the impact of Hurricane Ida.
  • Underlying Opex is expected to be up to $100 million higher than the second quarter 2021.

Adjusted Earnings

  • Pre-tax depreciation is expected to be between $250 and $300 million.
  • Taxation charge is expected to be up to $150 million.
  • As a result of Hurricane Ida, Adjusted Earnings is expected to be adversely impacted by around $100 million.

Cash flow from operations

  • CFFO is expected to be negatively impacted by $200 to $300 million, compared to second quarter 2021, due to lower dividends from Joint Venture and Associates.
  • Tax paid is expected to be up to $50 million.

Corporate

Corporate segment Adjusted Earnings are expected to be a net expense of $650 to $750 million for the third quarter. This excludes the impact of currency exchange rate effects.


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