1. T3 in T2
Quarterly Review1
Shell plc shareholder-attributable earnings, through the second quarter of 2023, mainly reflected higher refining margins, higher purchased oil prices, higher LNG optimization and marketing effects, and higher upstream production, partially offset by lower embodied fuel volumes.
Shell plc shareholders’ third-quarter 2023 earnings also included impairment fees, largely offset by favorable movements due to fair price accounting for commodity derivatives. These favorable fees and movements are included in the known portions equivalent to a net loss of $0. 1 billion for the quarter. This compares to known pieces in the second quarter of 2023, which amounted to a net loss of $1. 6 billion and were primarily similar to net impairment fees and reversals of $1. 7 billion.
Adjusted profit and adjusted EBITDA2 were determined through the same points as the profit attributable to shareholders of Shell plc and were adjusted to account for the above-mentioned parts and the material adjustment charge of a negative amount of $1 billion.
Cash from operating activities for the third quarter of 2023 was $12. 3 billion and was primarily driven through adjusted EBITDA and current capital inflows of $0. 4 billion, partially offset through tax invoices of $3. 2 billion and derivatives of $2. 5 billion. Working capital inflows basically reflect movements in the accounts. Accounts receivable and payable, partially offset by inventory movements due to higher costs and volumes. Cash from investing activities for the quarter was $4. 8 billion and included monetary capital expenditures of $5. 6 billion and divestiture gains of $0. 3 billion.
Net debt and leverage: At the end of the third quarter of 2023, net debt stood at $40. 5 billion, to $40. 3 billion at the end of the second quarter of 2023. Leverage stood at 17. 3% at the end of the third quarter of 2023 and is in line with the end of the second quarter of 2023.
Distributions to shareholders
Total distributions to shareholders during the quarter were $4. 9 billion, adding $2. 7 billion in percentage buybacks and $2. 2 billion in cash dividends paid to Shell plc to shareholders. The dividends declared to Shell plc to shareholders for the third quarter of 2023 amount to $0. 3310 percent. Shell has now completed $3 billion in percentage buybacks announced in the second quarter 2023 earnings announcement. Shell today announced a $3. 5 billion online buyback program that is expected to end during the fourth quarter 2023 earnings announcement.
Nine-month analysis1
Shell plc’s shareholder-attributable earnings for the first nine months of 2022 reflect lower oil and fuel prices, lower volumes and lower refining margins, partially offset by higher marketing margins and improved LNG trading and optimization results.
Earnings for the first nine months of 2023 attributable to Shell plc shareholders also included impairment and reversal fees of $2. 3 billion that are included in known pieces amounting to a loss of $2. 2 billion. This compares to known pieces in the first nine months of 2022, which accounted for a loss of $300 million.
Adjusted earnings and adjusted EBITDA2 for the first nine months of 2023 were determined through the same points as earnings attributable to Shell plc shareholders and adjusted for known parts and the negative material adjustment charge of $0. 2 billion. The first nine months of 2023 were $41. 6 billion, driven primarily by adjusted EBITDA and current capital inflows of $4. 5 billion, partially offset by tax bills of $10. 1 billion and derivatives of $5. 1 billion.
Cash flows from investing activities during the first nine months of 2023 were an outflow of $12. 1 billion and included monetary capital expenditures of $17. 3 billion, disposal income of $2. 5 billion, and other net mutual funds of $1. 2 billion.
This unaudited condensed interim monetary report, in combination with further monetary and operational data for this quarter, is available at www. shell. com/investors3.
EVOLUTION OF THE PORTFOLIO IN THE THIRD QUARTER OF 2023
Built-in gas
In October 2023, we finalized the previously announced sale of our 35% stake in the Masela production sharing contract in Indonesia to Indonesian corporations PT Pertamina Hulu Energi and PETRONAS Masela Sdn. Bhd. La stake includes the Abadi fuel project.
In October 2023, we and our corporate partners Oman LNG LLC signed an amended shareholders’ agreement for Oman LNG LLC (Oman LNG), extending the business beyond 2024. We will be the largest personal shareholder of Oman LNG, with a 30% stake.
Upstream
In August 2023, we announced the start of fuel production on the Timi platform in Malaysia under the SK318 production-sharing agreement (75% Shell stake).
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PERFORMANCE BY SEGMENT
Integrated fuel includes liquefied herbal fuel (LNG), conversion of herbal fuel to liquid fuel (GTL) and other products. This includes the exploration and extraction of herbal fuels and liquids, as well as the operation of upstream and intermediate infrastructure. necessary to deliver them to the market. Integrated Gas also includes the marketing, marketing and optimisation of LNG as a fuel for heavy trucks.
Quarterly Analysis1
Segment earnings, through the second quarter of 2023, reflect the combined effect of the increased contribution of marketing and optimization and higher learned costs in liquid products (increase of $368 million), in a component offset by a decrease in volumes (decrease of $159 million). .
The segment’s earnings in the third quarter of 2023 also included unfavorable movements of $340 million due to the popularity of fair pricing of commodity derivatives. As a component of Shell’s overall operations, commodity derivatives hedging contracts are entered into to mitigate the economic hazards associated with long-term buying and selling. Because those commodity derivatives are measured at a fair price, this creates an accounting lag across periods. These unfavorable movements are among the known data and are compared to the second quarter of 2023, which included net impairment and reversal fees of $1,438 million and unfavorable movements of $293. million due to fair price accounting for commodity derivatives.
Adjusted profit and adjusted EBITDA2 were decided through the same points as segment profit and adjusted to account for known items.
Cash flows from operating activities for the quarter were primarily driven through adjusted EBITDA and current equity of $348 million, partially offset by revenue source tax bills of $679 million and net money used in derivatives of $454 million.
Total oil and fuel production, compared to the second quarter of 2023, decreased by 9%, primarily due to increased planned maintenance in Prelude, Trinidad and Tobago, and the effects of the fuel sharing contract. production at Pearl GTL. LNG liquefaction volumes decreased by 4%, mainly due to increased maintenance at Prelude.
Nine-month analysis1
Segment profit, through the first nine months of 2022, reflects reduced volumes (reduced $540 million) and the net effect of reduced learned costs and increased contribution from marketing and optimization (reduced $172 million) , partially offset by a reduction in operating expenses (minimum of $159 million).
The segment’s earnings for the first nine months of 2023 also included unfavorable movements of $2. 821 billion due to the good popularity of commodity derivatives and net impairment fees and reversals of $1. 7 billion. These unfavorable movements, as well as net provisions and impairment reversals, are among the pieces. Compared to the first nine months of 2022, which included favorable moves of $6. 98 billion due to the fair popularity of commodity derivatives and gains of $779 million from net provisions and impairment reversals. partially offset through other effects of $608 million, which mainly included loan impairments, as well as $387 million of onerous provision charges.
Adjusted profit and adjusted EBITDA2 were decided through the same points as segment profit and adjusted to account for known items.
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Cash flows from operating activities during the first nine months of 2023 were primarily driven by adjusted EBITDA and current capital inflows of $2,677 million, offset by similar net cash outflows. derivatives for $3,071 million and tax invoices for $2,843 million.
Total oil and fuel production, compared to the first nine months of 2022, increased by 3%, primarily due to decreased maintenance at Pearl GTL, Trinidad and Tobago, and the commissioning of new fields in Oman and Canada, partially offset by lower accounts for Sakhalin-related volumes and the effects of the production-sharing agreement on Pearl GTL. LNG liquefaction volumes decreased by 7%, mainly due to lower accounts for Sakhalin-related volumes.
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The Upstream segment includes the exploration and extraction of crude oil, herbal fuel, and herbal fuel liquids. It also markets and transports oil and fuel and operates the infrastructure to deliver them to market.
Quarterly Review1
The segment’s earnings, compared to the second quarter of 2023, primarily reflect higher learned liquid costs (up $525 million) and higher volumes (up $392 million). The segment’s earnings for the third quarter of 2023 also included statutory provisions of $169 million and similar rates. of $62 million. The effect of the depreciation of the Brazilian real on a tax-deferred position. These losses are among the known parties and are compared to the second quarter of 2023, which included $127 million of rates similar to the Brazilian oil export tax. and a $65 million impairment-like rate, partially offset through $92 million gains similar to the strengthening effect. Genuine Brazilian in a tax-deferred position.
Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known items.
Cash flows from operating activities for the quarter came primarily from adjusted EBITDA, partially offset by revenue source tax bills of $2. 09 billion.
Total production, compared to the same quarter of 2023, was higher basically due to increased functionality in Deep Water.
Nine-month analysis1
The segment’s earnings, compared to the first nine months of 2022, primarily reflect lower oil and fuel costs (decrease of $4,641 million), lower volumes (decrease of $1,654 million) and the comparative adverse effect of $1,037 million similar to the transfer of garage and operating fuels. Partially offset by lower operating expenses (decrease of $673 million).
Segment earnings for the first nine months of 2023 also included $188 million of impairment charges, $169 million of statutory provisions, and $132 million of deferred tax expense due to amendments to IAS 12, offset by $106 million of gains similar to the popularity of fair pricing of commodity derivatives. These gains and losses are among the known pieces and are compared to the first nine months of 2022, which included a gain of $982 million in net impairment fees and reversals, and $529 million of losses due to fair price accounting for commodity derivatives.
Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known items.
Cash from operating activities for the first nine months of 2023 was primarily due to adjusted EBITDA and higher tax bills of $6,455 million, partially offset by current capital inflows of $374 million.
Total production, compared to the first nine months of 2022, decreased mainly due to the effect of divestments and the decrease in boxes, partially offset by the increase in new boxes.
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Marketing includes Mobility, Lubricants and Sectors
Quarterly Review1
Segment earnings, through the second quarter of 2023, reflect one-time tax expenses (up $105 million) and higher operating expenses (up $67 million). Commercialization margins were in line with the second quarter of 2023 and included lower margins on mobility fuels due to higher raw curtain prices and lower lubricant margins, offset by higher margins across sectors and decarbonization.
Adjusted profit and adjusted EBITDA2 were decided through the same points as segment profit and adjusted to account for known items.
Cash from operating activities for the quarter was primarily attributable to adjusted EBITDA, timing of emissions and biofuels program invoices of $90 million and non-cash change in sales charge (CCS) of $70 million. These inflows were partially offset by capital outflows of $533 million and tax bills of $224 million.
Marketing sales volumes (including hydrocarbon sales), compared to the same quarter of 2023, were higher mainly due to seasonality in Aviation.
Nine-month analysis1
The segment’s profit, compared to the first nine months of 2022, reflects higher marketing margins ($1,097 million cumulative) due to higher margins and unit volumes. These items were partially offset by higher operating expenses (accrued $613 million), adding the effect of asset acquisitions and higher volumes, as well as higher depreciation and amortization expenses (accrued $174 million). The segment’s profit for the first nine months of 2023 also included earnings of $298 million similar to indirect revenue. tax credits and favorable movements of $51 million similar to fair price accounting for commodity derivatives. These gains are among the known pieces and are compared to the first nine months of 2022, which included losses of $236 million from net write-downs and reversals, net losses of $111 million similar to asset sales, unfavorable movements, losses of $88 million due to fair pricing. contabilidad. de commodity derivatives and provisions for onerous contracts for $62 million.
Adjusted profit and adjusted EBITDA2 were decided through the same points as segment profit and adjusted to account for known items.
Cash from operating activities during the first nine months of 2023 was primarily due to adjusted EBITDA and the schedule of emissions and biofuels program invoices of $279 million. These inflows were partially offset by current capital outflows of $971 million, tax bills of $464 million, and changes in non-cash sales charges (CCS) of $140 million.
Marketing sales volumes (including hydrocarbon sales), compared to the first nine months of 2022, were higher primarily due to a higher call for acquisitions of aviation and mobility assets.
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The Chemicals & Products segment includes chemical production plants with their own marketing network and refineries that transform crude oil and other feedstocks into a diversity of petroleum products that are transported and advertised internationally for domestic, commercial, and transportation use. The segment also includes pipeline operations, marketing and optimization of crude oil, petroleum products and petrochemicals, as well as tar sands activities (the extraction of bitumen from mined tar sands and its conversion into crude oil).
Quarterly Analysis1
Segment earnings, through the second quarter of 2023, reflect higher product margins (increase of $849 million), primarily driven by higher refining margins due to a decrease in global product supply and higher marketing and optimization margins. Segment earnings also reflected higher margins in the Chemicals Segment (increase of $55 million), adding higher revenue from joint ventures and associates. In addition, the third quarter of 2023 reflects a decrease in operating expenses (decrease of $68 million).
Segment gains for the third quarter of 2023 also included losses of $79 million from net impairments and reversals, legal provisions of $74 million, and $53 million from unfavorable movements due to fair price accounting for commodity derivatives. These losses are among the known pieces and are compared to the second quarter of 2023, which included losses of $76 million from impairments and net reversals. Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known parts. In the third quarter of 2023, Chemicals reported a negative adjusted revenue source of $329 million and Products reported a positive adjusted revenue source of $1. 71 billion.
Cash from operating activities for the quarter was primarily due to changes in adjusted EBITDA and non-cash sales charges (CCS) of $1. 28 billion. These changes were partially offset by the synchronization of biofuels and emissions systems-like invoices of $634 million, current capital. money outflows of $619 million and commodity derivatives-like money outflows of $372 million.
Utilization of chemical production plants 70%, in line with the second quarter of 2023.
Refinery usage 84%, compared to 85% in the second quarter of 2023.
Nine-month analysis1
Segment earnings, through the first nine months of 2022, reflected lower product margins (decrease of $577 million), primarily due to lower refining margins, partially offset by higher marketing and optimization margins. Segment earnings also reflected higher depreciation and amortization expense (up $466 million) and higher operating expenses (up $107 million), with depreciation and amortization and operating expenses adding the start of operations at Shell Polymers Monaca in the U. S. and the U. S. U. S. These points were partially offset through higher chemical margins (a cumulative $409 million).
Segment profit for the first nine months of 2023 also included losses of $227 million from net write-downs and reversals, legal provisions of $74 million, and favorable movements of $84 million similar to fair accounting commodity derivatives. These gains and losses are among the known pieces and are compared to the first nine months of 2022 which included gains of $181 million similar to the sale of assets, gains of $87 million similar to the revaluation of severance and restructuring prices, favorable movements of $67 million. . similar to fair accounting for commodity derivatives and losses of $142 million on net write-downs and reversals.
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Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known items. In the first nine months of 2023, Chemicals reported negative adjusted earnings of $1,130 million and Products reported positive adjusted earnings of $4,737 million.
Cash from operating activities during the first nine months of 2023 was primarily due to adjusted EBITDA, changes in non-cash sales charges (CCS) of $401 million, inflows from commodity derivatives of $235 million, and dividends (net of earnings) from joint ventures. and subsidiaries of $78 million. These inflows were partially offset by working capital outflows of $744 million, a payment schedule similar to emissions and biofuels systems of $254 million, and tax bills of $211 million.
Chemical production plant usage 70%, compared to 79% in the first nine months of 2022, mainly due to unplanned maintenance and economic optimization in the first nine months of 2023.
Refinery utilization 87%, compared to 84% in the first nine months of 2022, due to decreased planned maintenance.
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Renewable energy and energy responses come with activities such as renewable energy generation, marketing, marketing, and optimization of electric power and pipelines, as well as carbon credits and virtual visitor responses. It also comes with hydrogen production and commercialization, carbon capture progression, and garage business centers, which invest in nature-based projects that reduce carbon emissions, and Shell Ventures, which invests in corporations that are running to drive energy and mobility transformation.
Quarterly Analysis1
Segment profit, compared to the second quarter of 2023, reflects decreasing margins (decrease of $170 million) due primarily to seasonal effects primarily in Europe and similar to marketing and optimization, as well as higher operating expense costs (increase of $88 million). The third quarter 2023 segment profit also reflects favorable movements of $506 million similar to the fair price accounting of commodity derivatives, a gain of $312 million primarily similar to a renewed fuel source contract in the past (see note 8), partially offset by losses of $76. million in asset sales and $75 million in commissions and net reversals due to impairment. As a component of Shell’s overall business, commodity derivative hedging contracts are entered into to mitigate relevant economic hazards in long-term purchases, sales and inventories. Since those commodity derivatives are fairly priced, this creates an accounting hole over the periods. These favorable movements and losses are among the known items and compare to the second quarter of 2023, which included favorable movements of $310 million due to fair price accounting for commodity derivatives.
Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known items. Most of the renewables and electric responses businesses posted losses in the third quarter of 2023, partially offset by a positive adjusted marketing and optimization result. Payments of $258 million, partially offset by current capital inflows of $1,188 million.
Nine-month analysis1
Segment earnings, compared to the first nine months of 2022, reflected declining margins ($420 million decrease) basically similar to fuel and electric power trading and optimization, partially offset through energy trading and higher operating expenses (increase of $291 million).
The segment’s earnings for the first nine months of 2023 also included favorable moves of $2. 632 billion due to fair accounting of commodity derivatives. These favorable movements are among the known data and are compared to the first nine months of 2022, which included unfavorable movements of $7. 192 billion due to fair accounting of commodity derivatives.
Adjusted earnings and adjusted EBITDA2 were determined through the same points as segment earnings and adjusted for known items. Most of the renewables and electric response businesses posted losses in the first nine months of 2023, partly offset through a positive adjustment. result of negotiation and optimization. Cash flows from operating activities during the first nine months of 2023 were primarily driven by current capital inflows of $4,693 million and adjusted EBITDA, partially offset by net outflows of similar cash outflows of $1,719 million.
1. All sources of income are after-tax, unless otherwise noted.
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2. Adjusted EBITDA excludes taxes. Additional Growth Measures
1. Segment earnings, adjusted earnings and adjusted EBITDA are presented on a CCS basis (see note 2). The Corporate segment covers the non-operating activities that support Shell, aggregating Shell’s holdings and treasury organization, its self-insurance activities, and its primary workplace and core functions. All finance charges, benefits, and similar taxes are included in the profit of the corporate segment and not in the profit of the business segment.
Quarterly review1
The segment’s result, through the second quarter of 2023, reflects favorable progress in net interest expense and foreign exchange impacts.
Adjusted EBITDA2 is basically explained by favorable currency effects.
Nine-month analysis1
The segment’s result, compared to the first nine months of 2022, is mainly due to the unfavorable evolution of tax credits, partially offset by favorable exchange rate effects.
EBITDA2 adjusted primarily for favorable exchange rate shocks.
OUTLOOK FOR THE FOURTH QUARTER OF 2023 Monetary capital expenditures for the full year 2023 are expected to range from approximately $23 billion to $25 billion.
Integrated fuel production is expected to be approximately 870 to 930,000 boe/d. LNG liquefaction volumes are expected to be around 6. 7 to 7. 3 million tonnes. The outlook reflects the current activity at Prelude and the decline in liquefaction volumes expected in Egypt.
Upstream production is expected to be between 1,750 and 1,950,000 boe/d. Production is expected to close the Groningen fuel field. Marketed sales volumes are expected to be approximately 2,250 to 2,750 thousand bbls/d.
Refinery utilization is expected to be approximately 75-83% due to planned activities in North America. The use of chemical production plants is expected to be around 62-70%.
The company’s adjusted earnings are expected to be net of approximately $550 million to $750 million in the fourth quarter of 2023 and net of approximately $2. 75 billion to $2. 95 billion for the full year 2023. This excludes the impact of foreign investments. exchange and accounting effects at fair value.
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Fourth quarter 2023 and full year 2023 effects and dividends are expected to be announced on February 1, 2024.
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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. See Note 2 “Segmented Information”. 2. See Note 8 “Other Notes to Unaudited Interim Condensed Consolidated Monetary Statements”. 3. See Note Four “Earnings Consistent with Participation”.
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1. See Note 8 “Other Notes to the Unaudited Interim Condensed Consolidated Monetary Statements”.
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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Preparation Basics
These unaudited condensed consolidated interim monetary statements (“Interim Statements”) of Shell plc (“the Company”) and its subsidiaries (collectively “Shell”) have been prepared in accordance with International Accounting Standard 34 relating to monetary reporting published through International Accounting Standard 34. Accounting Standards Board (“IASB”) and followed in the United Kingdom, and on the basis of the same accounting principles as those used in the Company’s annual report and accounts (pages 237 to 307) for the financial year ending December 31. 2022 filed with the Companies Office of England and Wales and the Autoriteit Financiële Markten (Netherlands) and Form 20-F (pages 216 to 287) for the tax year ended December 31, 2022 filed with the United States Securities and ExchangeCommission, and read in conjunction with those documents.
The monetary data presented in the unaudited condensed consolidated interim monetary statements do not constitute statutory accounts within the meaning of segment 434(3) of the Companies Act 2006 (“the Act”). The statutory accounts for the year ended 31 December 2022 have been published in Shell’s annual report and accounts, a copy of which has been filed with the Registrar of Companies of England and Wales, as well as on Shell’s Form 20-F. The auditor’s report on those accounts was unqualified and did not include any reference to issues to which the auditor had drawn attention by unqualified insistence on the report and did not involve an agreement under segments 498(2) or 498(3) of the Act.
In consolidation, the assets and liabilities of non-dollar-denominated entities are translated into dollars at end-of-period exreplace rates, while their statements of sources of income, other integral sources of income, and cash flows are translated at average exreplace rates. In 2022, this conversion was made at quarterly average rates. As of January 1, 2023, this conversion was done at average monthly rates. This update had no impact on Shell’s financial reporting.
New criteria followed in 2023
IFRS 17 Insurance Contracts (IFRS 17), issued in 2017, with amendments issued in 2020 and 2021, was followed on January 1, 2023. The adoption of IFRS 17 had no effect on Shell’s financial reporting.
Deferred tax on assets and liabilities resulting from a joint transaction (Amendments to IAS 12 Income Taxes (IAS 12)), published in May 2021, continued with effect from 1 January 2023. The adoption of these amendments did not have a significant effect on Shell’s business. Financial report.
International Tax Reform – Model Rules Pillar II (Amendments to IAS 12), published on 23 May 2023, entered into force on that date. The amendments to IAS 12 introduce mandatory and transitional exemptions from the accounting of deferred taxes resulting from the law implementing the OECD standards. On June 20, 2023, the United Kingdom almost followed the second pillar. As required by the amendments to IAS 12, Shell has implemented the exception to the popularity and disclosure of deferred tax assets and liabilities similar to the Pillar II income tax source. . Important Accounting Considerations, Judgments and Estimates
Assumptions about long-term gross costs and management’s view of long-term adjustments in refining margins constitute a significant estimate. Future assumptions about long-term raw material costs will most likely be updated in the second quarter of 2023. These assumptions continue to apply for impairment testing purposes in the third quarter of 2023.
The rate used to evaluate the use price represents a significant estimate. The implemented rate is due to be replaced in the second quarter of 2023.
2. Segmented information
Segment earnings are presented on the basis of the existing materials charge (CCS benefit), which is the measure of profit used by the CEO for the purpose of making decisions about resource allocation and comparing performance. On this basis, the acquisition value of the volumes sold at the time are based on the existing load of materials at the same time after taking into account the tax effect. CCS effects, therefore, exclude the effect of oil value adjustments on the usage load of inventories. based on values that are sometimes equivalent to the values that can be held commercially.
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3. Reconciliation of the profits of the time with CCS profits, operating expenses, general debt, and monetary capital expenditures.
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4. Earnings consistent with the stock
5. Share capital
1. The percentage capital as at 31 December 2022 also included 50,000 deferred percentages in issued and fully paid up pounds of £1 each, which were repaid on 27 March 2023. At the time of redemption, the deferred GBP percentages were treated as cancelled and the issued percentages of the Company’s capital were reduced through the nominal price of the repurchased percentages in accordance with segment 688 of the UK Companies Act 2006. On January 29, 2022, as a component of the simplification announced on December 20, 2021, Company A’s percentages and B’s percentages were treated as a single line of common percentages. This is reflected in the table above.
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At the Annual General Meeting of Shell plc on 23 May 2023, the Board was authorised to allocate shares of Shell plc and to grant rights to subscribe to or convert any securities into shares of Shell plc, up to an aggregate nominal amount of approximately €161. million (representing approximately 2,307 million stocks of €0. 07 each), and have such stocks or rights indexed on any stock exchange. This authorisation expires at the close of business on 22 August 2024 or at the end of the Annual General Meeting to be held in 2024, whichever occurs first, unless it has been renewed, revoked or amended in the past through Shell plc at a General Meeting.
6. Other Bookings
The Merger Reserve and the Issue Premium Reserve were created as a result of Shell plc (formerly Royal Dutch Shell plc) becoming the sole 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 percentages for the acquisition of BG Group plc. The capital redemption reserve was established through percentage buybacks from Shell plc. The percentage plan reserve relates to the percentage settled with stocks. Payment plans based on
7. Monetary tools and liabilities derived from lease liabilities.
As disclosed in the consolidated monetary statements for the year ended December 31, 2022, presented in the Annual Report and Financial Statements and Form 20-F for that year, Shell is exposed to the dangers of adjustments in the reasonable cost of its monetary assets and liabilities. Fair costs of monetary assets and liabilities are explained as the value that would be gained by selling an asset or paid to move a liability in an orderly transaction between market participants on the valuation date. The strategies and assumptions used to estimate fair costs as of September 30, 2023 are consistent with those used in the year ended December 31, 2022, the attrition costs of derived monetary tools measured using more commonly unobservable data have been replaced since that date. The replacement in derivative monetary tools between December 31, 2022 and September 30, 2023 represents a $9,713 million cut in existing assets and a $14,335 million cut in existing liabilities.
The following table compares the reasonable amount to the spent amount of unleased debt presented in accordance with IFRS 7 Financial Instruments: Disclosures.
1. Our decision is based primarily on the quoted prices of such securities.
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8. Other Notes to the Unaudited Interim Condensed Consolidated Monetary Statements
Consolidated Statement of Operations
Interest & Income
Shopping
Purchases in the third quarter of 2023 included pre-tax credits of $408 million ($312 million after-tax), primarily similar to the offset of claims in the third quarter of 2023, which led to the write-down of a net position accrued with respect to a fuel supply contract novated in the past (see note 6 of the consolidated monetary statements for the year ended December 31, 2022).
Depreciation, depletion, and depreciation.
Impairments recorded in the third quarter of 2023 of $359 million pre-tax ($299 million after tax) relate primarily to assets in the Renewable Energy and Energy Solutions and Chemicals and Products segments. Impairments recorded in the second quarter of 2023 of $2. 49 billion before tax ($1. 91 billion after tax) were primarily generated through a replacement in the implemented reduction rate and relate primarily to an Integrated Gas asset located in North America and smaller impairments across all segments. Pretax impairments of $466 million ($368 million after tax) in the third quarter of 2022 were primarily similar to classifying an upstream asset as held for sale. Condensed Consolidated Balance Sheet
Goodwill
Goodwill as of September 30, 2023: goodwill of $1,464 million identified in the first quarter of 2023, similar to the acquisition of Nature Energy Biogas A/S. Accounting is provisional and is expected to be completed in the fourth quarter of 2023.
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Tax Deferred
The presentation of the balance sheet takes into account the offsetting of deferred tax assets and deferred tax liabilities within the same tax jurisdiction, where permitted. The overall deferred tax position in a specific tax jurisdiction determines whether a deferred tax balance similar to that jurisdiction is presented among deferred tax assets or deferred tax liabilities.
Shell’s net deferred tax position represented a liability of $10,353 million as of September 30, 2023 (December 31, 2022: $8,371 million). The net accrual in net deferred tax liability is primarily due to relief in deferred tax assets due to the use of deferred taxes.
Assets held for sale
Assets classified as held for sale and related liabilities as of September 30, 2023 relate primarily to renewable energy allocations and energy responses and an embodied fuel allocation for sale. The main categories of assets and liabilities classified as held for sale as of September 30, 2023 are Industry and Other Accounts Receivable ($594 million; December 31, 2022: $95 million), Property, Plant and Apparatus ($372 million; December 31, 2022: $2,526 million) and Accounts Payable and Other Accounts Payable ($776 million; December 31, 2022: $278 million). Non-Controlling Interests
The increase in minority interests is primarily due to dividend payments to minority shareholders in the second quarter of 2023.
Consolidated Statement of Cash Flows
Operating Cash Flows – Other
Cash flows from operating activities – Other for the third quarter of 2023 included outflows of $630 million (Q2 2023: inflows of $764 million; Q3 2022: inflows of $625 million) due to the timing of similar bills for emissions and biofuels systems in Europe. and North America and $336 million (Q2 2023: $29 million; Q3 2022: $478 million), similar to the reversal of foreign exchange losses in money and money equivalents.
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Other investment money inflows
Other investment money inflows in the second quarter of 2023 are basically similar to repayments of short-term debt securities and short-term loans.
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ALTERNATIVE PERFORMANCE MEASURES (NON-GAAP)
A. Adjusted Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)
The ‘adjusted profit’ measure is intended to facilitate a comparative understanding of Shell’s monetary functionality from one era to the next through the effects of oil cost adjustments on the use values of inventories and the effects of identified parts. In some cases, these pieces are driven through external points and may, separately or collectively, hinder the comparative understanding of Shell’s monetary effects from one era to the next. This measure excludes gains attributable to non-controlling interests.
We describe “Adjusted EBITDA” as “period income/(loss)” adjusted for the existing supply charge; known pieces; tax expense/(credit); depreciation, amortization and depletion; Cancellations of exploration wells and net interest expenses. All pieces come with the component of non-controlling interests. Management uses this measure to compare Shell functionality over era and time.
1. See Note 2 “Segmented Information”.
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Identified Elements
Known items include: gains and losses on dispositions, impairments, layoffs and restructurings, provisions for onerous contracts, popularity of fair pricing of commodity derivatives and certain fuel contracts and the effect of exchange rate adjustments on certain balances of deferred taxes, and others. parts. The known parts in the table below are presented in net value.
1. These are basically credits related to a previously novated fuel source contract (see Note 8), partially offset by the popularity of a legal provision. The parts categories mentioned above would possibly come with the after-tax effects of the known parts of joint ventures and associates, which are presented in their entirety under the heading “Share of profits/(losses) of joint ventures and associates” in the Consolidated Statement of Operations, and are presented in their entirety as known parts which are included in the pre-tax profit/(loss) in the table above. The identified parts similar to subsidiaries are consolidated and presented on the appropriate lines of the Consolidated Statement of Operations. Only known pre-tax items reported through subsidiaries are taken into account in the calculation of underlying operating expenses (Reference F).
Contract provisions: provisions for contracts similar to discontinued operations or redundant or unusable assets.
Fair accounting of commodity derivatives and safe fuels contracts: In the general course of its business, Shell enters into contracts for the procurement or acquisition of oil and fuel products, as well as energy and environmental products. Shell also enters into contracts for tolls, pipelines and garage capacity. Derivative contracts are entered into to mitigate the resulting economic exposures (typically value exposures) and those derivative contracts are identified at the end of the period.
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Fair price, with fair price adjustments identified in the profit or loss for the period. On the other hand, source and acquisition contracts entered into for operational purposes, as well as toll, pipeline and garage capacity contracts, are recognized at the time of the final touch of the transaction; In addition, inventories are recorded at the old charge or at the net realization price, whichever is less. As a result, accounting mismatches occur because: (a) the originating or acquisition transaction is recorded in another period, or (b) the shares are priced at a fair price even if they are entered into for operational purposes. Accounting effects are presented in known items.
The effect of exchange rate adjustments on tax balances is the effect on tax balances of exchange rate adjustments resulting from (a) the conversion of non-cash assets and liabilities into dollars of the local currency tax base. as well as losses (this basically affects the Upstream and Integrated Gas sectors) and (b) the conversion of dollar-denominated cross-sector loans into local currency, resulting in taxable foreign exchange gains or losses (this basically has an effect on the Corporate sector).
The other known pieces constitute other credits or fees that, in the opinion of Shell’s management, prevent the comparison of Shell’s monetary effects from one era to another.
B. Adjusted earnings consistent with participation
Adjusted earnings consistent with consistent percentages are calculated as adjusted earnings (see footnote A) divided by the weighted average number of percentage-consistent percentages used as the basis for fundamental earnings consistent with consistent percentages (see Note 4).
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C. Cash Capital Expenditures
Capital expenditures constitute money spent on the maintenance and progression of assets, as well as on investments in the period. Management monitors this metric as a key lever to generate sustainable cash flows. Cash capital expenditures are the sum of the following lines in the Consolidated Statement of Cash Flows: capital expenditures, investments in joint ventures and associates, and investments in equity securities.
D. Return on average capital employed
Return on average capital employed (“ROACE”) measures the potency of Shell’s use of the capital it employs. Shell uses two measures of ROACE: ROACE based on the net source of revenue and ROACE based on adjusted earnings plus non-controlling interest (NCI), either adjusted for after-tax interest expense.
Both measures refer to contracted capital, which includes total capital, existing debt, and non-existing debt.
ROACE on Net Income In this calculation, the sum of the current and prior 3 quarters’ revenues, adjusted for after-tax interest expense, is expressed as a percentage of the average contracted capital for the same period.
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ROACE on Adjusted Earnings Plus Minority Interest (NCI)
In this calculation, the sum of adjusted earnings (see footnote A) plus the known portions of non-controlling interests (NCI) for the current quarter and the trailing 3 quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital. . employees during the same period.
E. Leverage and Net Debt
Leverage is a measure of Shell’s equity distribution and is explained as net debt expressed as a percentage of total equity. Net debt is explained as the sum of existing and non-existing liabilities minus money and money equivalents, adjusted for the fair price of monetary derivatives. tools used to hedge debt-like foreign exchange and interest rate hazards, and relevant collateral balances. Management considers this adjustment to be useful as it reduces the volatility of net debt caused by fluctuations in exchange and interest rates, and eliminates the potential risks of having an effect on similar bills or guarantee payments. Debt-like derivative monetary tools are a subset of the assets and liabilities of derivative monetary instruments reported on the balance sheet. Collateral balances are reported under “Trade and Other Accounts Receivable” or “Accounts Receivable”. and Other Accounts Payable,” as applicable.
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F. Operating and underlying expenses
Operating expenses are a measure of Shell’s charge control functionality and come with the following pieces in the Consolidated Statement of Operations: production and production expenses; sales, distribution and administration charges; and study and progression expenses.
Underlying operating expenses are a measure to facilitate a comparative understanding of functionality from one era to another through the effects of known parts that, separately or together, would possibly cause volatility, in some cases driven by external factors.
G. Free Cash Flow and Organic Free Cash Flow
Free money is used to evaluate the money available for financing activities, adding dividend and debt service bills, after investment in the maintenance and development of the business. It is explained as the sum of “cash flows from operating activities” and “cash flows from investments. ” Activities”.
Cash from procurement and disposition activities is removed from loose cash and converted into loose biological money. Provide a measure used through control to assess the generation of loose cash without such activities.
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H. Cash flows from operating activities and cash flows from operating activities: current capital
Working capital movements are explained as the sum of the following items in consolidated cash flows: (i) (increase)/decrease in inventories, (ii) (increase)/decrease in existing accounts receivable, and (iii) increase/decrease in existing liabilities.
Cash from operating activities, excluding current capital movements, is a measure used through Shell to analyze its operating money generation over time, excluding the temporary effects of adjustments to operating inventories and accounts receivable and payable from one era to the next.
I. Proceeds of disposals
Disposal income is money earned from disposal activities during the period. Management monitors this metric as a key lever for generating sustainable cash flow.
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CAUTION
All amounts reported in this unaudited condensed interim monetary report are unaudited. All peak production figures at Portfolio Developments are displayed at one hundred percent of expected production. The figures presented in this unaudited abstract interim monetary report may not accurately match the totals provided and the percentages may not reflect as they should reflect the absolute figures due to rounding.
The corporations in which Shell plc has direct and indirect investments are separate legal entities. In this unaudited abstract interim monetary report, “Shell”, “Shell Group” and “Group” are used for convenience when references to Shell plc and its subsidiaries are made infrequently. Likewise, the words “we”, “us” and “our” are also used infrequently to refer to Shell plc and its subsidiaries or those who work for them. These terms are also used when it is not useful to identify the specific entity(ies). “Subsidiaries”, “Phantom Subsidiaries” and “Phantom Companies”, as used in this unaudited condensed interim monetary report, refer to entities over which Shell plc exercises direct or indirect control. Unincorporated entities and arrangements over which Shell exercises joint control are rarely 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 without control or joint control are called “associates”. The term “Shell Interest” is used for convenience to imply the direct and/or indirect interest held through Shell in an unincorporated entity or company, after excluding any third party interest.
Forward-Looking Statements
This unaudited condensed interim monetary report comprises forward-looking data (within the meaning of the Private Securities Litigation Reform Act of 1995) relating to the monetary position, effects of Shell’s operations and businesses. All advertisements that are not factually old are, or could possibly be considered, forward-looking advertisements. Forward-looking statements are long-term expectations that are based on management’s existing expectations and assumptions and involve known and unknown threats and uncertainties that may also cause actual effects, functionality or occasions to differ materially from those expressed. or implicit in those s. Forward-looking statements include, among other things, those relating to Shell’s prospective exposure to market position threats and those expressing management’s expectations, beliefs, estimates, forecasts, allocations and assumptions. These forecasts are known by the use of words and expressions such as “target”, “ambition”, “anticipate”, “believe”, “may also”, “estimate”, “expect”, “objectives”, “intend to “. “, “possibly”, “milestones”, “goals”, “perspectives”, “plan”, “probably”, “assignment”, “threats”, “schedule”, “seek”, “deserve”, “objective”. “, “will” and similar terms and expressions. There are a number of points that may also have effects on Shell’s long-term operations and cause those effects to differ materially from those expressed in the forward-looking statements included in this unaudited document. condensed interim financial report that aggregates (without limitation): (a) crude oil and natural gas price fluctuations; (b) adjustments in demands for Shell products; (c) currency fluctuations; (d) effects on drilling and production; (e) reserve estimates; (f) percentage loss of market position and industry competition; (g) environmental and physical threats; (h) threats related to the identity of the homes and potential suitable acquisition targets, and the success of the negotiation and consummation of such transactions; (i) the threat of doing business in emerging countries and subject to foreign sanctions; j) legislative, judicial, fiscal and regulatory developments, adding regulatory measures to fight climate change; k) economic and monetary market position situations in various countries and regions; (l) political threats, including threats of expropriation and renegotiation of the terms of contracts with government entities, delays or progress in the approval of allocations and delays in the reimbursement of percentage costs; (m) threats related to the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) adjustments in business situations. There can be no assurance that long-term dividend bills will meet or exceed dividend bills. All forward-looking statements contained in this unaudited condensed interim monetary report are expressly qualified in their entirety by the caveats contained or referred to in this section. Readers deserve not to place undue reliance on forward-looking advertisements. Additional threat points that could possibly have long-term effects are contained in Shell plc’s Form 20-F for the year ended December 31, 2022 (available at www. shell. com/investor and www. sec. gov). These threat points also expressly qualify all future projections contained in this unaudited condensed interim monetary report and deserve consideration by the reader. Each forward-looking statement speaks only as of the date of this unaudited condensed interim monetary report, November 2, 2023. Neither Shell plc nor any of its subsidiaries undertakes any legal responsibility to publicly update or revise any forward-looking matrix after new information, in the long term. occasions or other information. In light of such threats, effects may also 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 Intensity
In addition, in this unaudited abstract interim monetary report, we would possibly refer to Shell’s “net carbon intensity,” which includes Shell’s carbon emissions from the production of our energy products, the carbon emissions of our suppliers when they supply energy for that production, and our customers’ carbon emissions associated with the use of the energy products we sell. Shell only controls its own emissions. The use of Shell’s term “net carbon intensity” is for convenience only and is not intended to recommend that those emissions are those of Shell plc or its subsidiaries.
Shell’s net-zero goal
Shell’s operating plan, outlook and budgets are planned for a ten-year era and are updated annually. They reflect the existing economic environment and what we can expect over the next ten years. As a result, they reflect our reach. 1, Scope 2 and Net Carbon Intensity (NCI) for the next ten years. However, Shell’s operating plans cannot reflect our 2050 net zero emissions target and our 2035 NCI target, as those targets are out of our hands. It was about plans. In the future, as the company moves towards net 0 emissions, we will expect Shell’s operating plans to reflect this movement. However, if the company fails to achieve net-0 emissions by 2050, there is now a significant threat of Shell doing so. not achieve this objective.
Forward-looking non-GAAP measures
This unaudited condensed interim financial report would likely involve certain non-GAAP forward-looking measures, such as monetary capital expenditures and divestitures. We are unable to provide a reconciliation of those forward-looking non-GAAP measures to the most comparable GAAP monetary measures because certain inputs to reconcile those non-GAAP measures to the most comparable GAAP monetary measures depend on long-term events. some of which are outside Shell’s control, such as oil and fuel prices, interest rates and exchange rates. Furthermore, estimating those GAAP measures with the precision necessary to provide a meaningful reconciliation is incredibly complicated and also cannot be completed without excessive effort. Non-GAAP measures relating to long-term periods that cannot be reconciled with the maximum comparable GAAP monetary measure are calculated in a manner consistent with the accounting policies implemented in the consolidated monetary statements of Shell plc.
The contents of this unaudited condensed interim monetary report are not part of this unaudited condensed interim monetary report.
We may have used safe terms, such as resources, in this unaudited condensed interim financial report that the U. S. Securities and Exchange Commission has issued for the Securities and Exchange Commission. The U. S. Securities and Exchange Commission (SEC) strictly prohibits us from adding in our filings with the SEC. Investors are encouraged to thoroughly review the information contained in our Form 20-F, File No. 1-32575, available on the SEC website www. sec. gov.
This internal information from the unaudited condensed interim monetary report.
November 2, 2023
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Contacts:
– Caroline J. M. Omloo, secretary
– Media: International (0) 207 934 5550; U. S. 1-832-337-4355
Shell plc LEI number: 21380068P1DRHMJ8KU70
Classification: Insider Information
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