Royal Dutch Shell third quarter 2021 results
Adjusted Earnings for the quarter were $4.1 billion. Cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders for the third quarter 2021 was negative $0.5 billion. Hurricane Ida impacted our operations, with an aggregate adverse impact of around $0.4 billion on Adjusted Earnings. At the end of the third quarter 2021, net debt was $57.5 billion, compared with $65.7 billion at the end of the second quarter 2021, mainly driven by free cash flow generation in the quarter, partly offset by dividends and share buybacks. Gearing was 25.6% at the end of the third quarter 2021, compared with 27.7% at the end of the second quarter 2021, mainly driven by net debt reduction.
Dividends declared to Royal Dutch Shell plc shareholders for the quarter amount to $0.24 per share. During the quarter, $1.0 billion of share buybacks were completed out of a total target of $2 billion in the second half of 2021. Additional shareholder distributions of $7 billion related to the Permian sale to start in 2022, post deal completion.
Q3 2021 Financial Performance Drivers
INTEGRATED GAS, RENEWABLES AND ENERGY SOLUTIONS
Adjusted Earnings benefited from higher realised prices, partly offset by lower earnings contribution from the Renewables & Energy Solutions business due to lower margins in North America.
Strong cash flow, with CFFO excluding working capital of $7.9 billion, benefiting from $4.3 billion derivatives cash inflows from variation margin in gas and power trading due to significant price increases. These variation margin inflows could reverse in future quarters.
UPSTREAM
Adjusted Earnings benefited from higher prices, offset by lower volumes. Q2 2021 included a one-off release of a non-cash tax provision of approximately $600 million.
Continued strong cash conversion, with CFFO excluding working capital of $5.9 billion.
Higher cash generation than in Q2 2021, despite 8% lower production due to seasonality and Hurricane Ida.
OIL PRODUCTS
Strong Marketing Adjusted Earnings driven by higher volumes.
Refinery processing intake and utilisation impacted by planned maintenance and Hurricane Ida.
Trading and optimisation contributions to earnings lower when compared to second quarter 2021.
Strong cash conversion with CFFO excluding working capital of $3.3 billion.
CHEMICALS
Adjusted Earnings impacted by Hurricane Ida as well as lower spreads in both base and intermediate product lines resulting in lower margins and JV earnings.
Strong cash conversion despite timing effects of dividends from joint ventures and associates.
CORPORATE
Corporate segment Adjusted Earnings were a net expense of $732 million in line with expectations.
The full year estimate for Corporate Adjusted Earnings is a net expense of $2,450 – 2,550 million. This excludes the impact of currency exchange rate effects.
Net debt decreased by $8.2 billion to $57.5 billion in Q3 2021 driven by improvement in the macroeconomic environment and commodity derivatives inflows, partly offset by a working capital outflow.
“This quarter we’ve generated record cash flow, maintained capital discipline and announced our intention to distribute $7 billion to our shareholders from the sale of our Permian assets. Today, we also set a new 2030 target to halve the absolute emissions from our operations, compared to 2016 levels on a net basis. Altogether, this is clear evidence of how we are accelerating our Powering Progress strategy, purposefully and profitably.”
Royal Dutch Shell Chief Executive Officer, Ben van Beurden
QUALITY PORTFOLIO DELIVERING RECORD CASH
Highest ever CFFO excl. working capital of $17.5 billion, supported by outstanding cash generation across the businesses and boosted by commodity derivatives.
Disciplined cash capex of $13.2 billion in the first nine months; expected to be around $20 billion in 2021.
Share buybacks of $1.0 billion in Q3 2021 out of a total target of $2 billion in the second half of 2021. Additional shareholder distributions of $7 billion related to the Permian sale to start in 2022, post deal completion.
An absolute emissions reduction target of 50% by 2030, compared to 2016 levels on a net basis, covering all Scope 1 and 2 emissions under Shell’s operational control.
Information Source: Read More
Oil and gas, press , | Energy, Climate, Renewable, Wind, Biomass, Sustainability, Oil Price, LPG, Solar
