Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, MISCELLANEOUS, MISCELLANEOUS

Shell Plc 3rd Quarter 2023 Unaudited Results


               
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
    
                           
 
SUMMARY OF UNAUDITED RESULTS
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
7,044    3,134    6,743    +125 Income/(loss) attributable to Shell plc shareholders   18,887    31,899    -41
6,224    5,073    9,454    +23 Adjusted Earnings A 20,944    30,055    -30
16,336    14,435    21,512    +13 Adjusted EBITDA A 52,204    63,689    -18
12,332    15,130    12,539    -18 Cash flow from operating activities   41,622    46,009    -10
(4,827)   (3,015)   (5,049)    Cash flow from investing activities   (12,080)   (15,530)   
7,505    12,116    7,490     Free cash flow G 29,542    30,479    
5,649    5,130    5,426     Cash capital expenditure C 17,280    17,515    
10,097    9,653    9,359    +5 Operating expenses F 29,062    28,363    +2
9,735    9,607    9,893    +1 Underlying operating expenses F 28,635    28,419    +1
12.0% 11.6% 17.3%   ROACE on a Net income basis D 12.0% 17.3%  
12.5% 13.4% 14.7%   ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis D 12.5% 14.7%  
82,147    84,366    81,990     Total debt E 82,147    81,990    
40,470    40,310    48,343     Net debt E 40,470    48,343    
17.3% 17.3% 20.3%   Gearing E 17.3% 20.3%  
2,706    2,731    2,766    -1 Total production available for sale (thousand boe/d)   2,779    2,875    -3
1.06    0.46    0.93 +130 Basic earnings per share ($)   2.78    4.29    -35
0.93    0.75    1.30    +24 Adjusted Earnings per share ($) B 3.08    4.04    -24
0.3310    0.3310    0.2500    ? Dividend per share ($)   0.9495    0.7500    +27
                                     

1.Q3 on Q2 change

Quarter Analysis1

Income attributable to Shell plc shareholders, compared with the second quarter 2023, mainly reflected higher refining margins, higher realised oil prices, higher LNG trading and optimisation results, and higher Upstream production, partly offset by lower Integrated Gas volumes.

Third quarter 2023 income attributable to Shell plc shareholders also included impairment charges, largely offset by favourable movements due to the fair value accounting of commodity derivatives. These charges and favourable movements are included in identified items amounting to a net loss of $0.1 billion in the quarter. This compares with identified items in the second quarter 2023 which amounted to a net loss of $1.6 billion and mainly related to net impairment charges and reversals of $1.7 billion.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as income attributable to Shell plc shareholders and adjusted for the above identified items and the cost of supplies adjustment of negative $1.0 billion.

Cash flow from operating activities for the third quarter 2023 was $12.3 billion, and primarily driven by Adjusted EBITDA, and a working capital inflow of $0.4 billion, partly offset by tax payments of $3.2 billion, and derivatives of $2.5 billion. The working capital inflow mainly reflected accounts receivable and payable movements, partly offset by inventory movements due to higher prices and higher volumes.
Cash flow from investing activities for the quarter was an outflow of $4.8 billion, and included cash capital expenditure of $5.6 billion, and divestment proceeds of $0.3 billion.

Net debt and Gearing: At the end of the third quarter 2023, net debt was $40.5 billion, compared with $40.3 billion at the end of the second quarter 2023. Gearing was 17.3% at the end of the third quarter 2023 and in line with the end of the second quarter 2023.


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

Shareholder distributions

Total shareholder distributions in the quarter amounted to $4.9 billion comprising repurchases of shares of $2.7 billion and cash dividends paid to Shell plc shareholders of $2.2 billion. Dividends declared to Shell plc shareholders for the third quarter 2023 amount to $0.3310 per share. Shell has now completed $3 billion of share buybacks announced in the second quarter 2023 results announcement. Today, Shell announces a share buyback programme of $3.5 billion which is expected to be completed by the fourth quarter 2023 results announcement.

Nine Months Analysis1

Income attributable to Shell plc shareholders, compared with the first nine months 2022, reflected lower realised oil and gas prices, lower volumes, and lower refining margins, partly offset by higher Marketing margins, and higher LNG trading and optimisation results.

First nine months 2023 income attributable to Shell plc shareholders also included net impairment charges and reversals of $2.3 billion which are included in identified items amounting to a net loss of $2.2 billion. This compares with identified items in the first nine months 2022 which amounted to a net loss of $0.3 billion.

Adjusted Earnings and Adjusted EBITDA2 for the first nine months 2023 were driven by the same factors as income attributable to Shell plc shareholders and adjusted for identified items and the cost of supplies adjustment of negative $0.2 billion.
Cash flow from operating activities for the first nine months 2023 was $41.6 billion, and primarily driven by Adjusted EBITDA, and working capital inflow of $4.5 billion, partly offset by tax payments of $10.1 billion, and derivatives of $5.1 billion.

Cash flow from investing activities for the first nine months 2023 was an outflow of $12.1 billion and included cash capital expenditure of $17.3 billion, divestment proceeds of $2.5 billion, and net other investing cash inflows of $1.2 billion.

This Unaudited Condensed Interim Financial Report, together with supplementary financial and operational disclosure for this quarter, is available at www.shell.com/investors3.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.
  3. Not incorporated by reference.

THIRD QUARTER 2023 PORTFOLIO DEVELOPMENTS

Integrated Gas

In October 2023, we completed the previously announced sale of our participating interest of 35% in Indonesia's Masela production-sharing contract to Indonesia's PT Pertamina Hulu Energi and PETRONAS Masela Sdn. Bhd. The participating interest includes the Abadi gas project.

In October 2023, we and our partners in the Oman LNG LLC venture signed an amended shareholders' agreement for Oman LNG LLC (Oman LNG) extending the business beyond 2024. We will remain the largest private shareholder in Oman LNG, with a 30% shareholding.

Upstream

In August 2023, we announced that gas production has started at the Timi platform in Malaysia under the SK318 production-sharing contract (Shell interest 75%).

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

PERFORMANCE BY SEGMENT

                           
 
INTEGRATED GAS     
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
2,154    754    5,736    +186 Segment earnings2   5,318    16,919    -69
(375)   (1,744)   3,417     Of which: Identified items A (4,625)   6,750    
2,529    2,498    2,319    +1 Adjusted Earnings2 A 9,944    10,169    -2
4,871    4,827    5,393    +1 Adjusted EBITDA2 A 17,180    18,237    -6
4,009    3,628    6,664    +11 Cash flow from operating activities A 13,923    21,283    -35
1,099    1,089    956     Cash capital expenditure C 3,000    2,739    
122    142    123    -14 Liquids production available for sale (thousand b/d)   134    129    +4
4,517    4,895    4,645    -8 Natural gas production available for sale (million scf/d)   4,744    4,597    +3
900    985    924    -9 Total production available for sale (thousand boe/d)   952    922    +3
6.88    7.17    7.24    -4 LNG liquefaction volumes (million tonnes)   21.23    22.90    -7
16.01    16.03    15.66    ? LNG sales volumes (million tonnes)   49.01    49.16    ?
  1. Q3 on Q2 change
  2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

Integrated Gas includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. It includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure necessary to deliver these to market. Integrated Gas also includes the marketing, trading and optimisation of LNG, including LNG as a fuel for heavy-duty vehicles.

Quarter Analysis1

Segment earnings, compared with the second quarter 2023, reflected the combined effect of higher contributions from trading and optimisation and higher realised prices from liquid products (increase of $368 million), partly offset by lower volumes (decrease of $159 million).

Third quarter 2023 segment earnings also included unfavourable movements of $340 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 and sales. As these commodity derivatives are measured at fair value, this creates an accounting mismatch over periods. These unfavourable movements are part of identified items and compare with the second quarter 2023 which included net impairment charges and reversals of $1,438 million and unfavourable movements of $293 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings and Adjusted EBITDA2 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, and working capital inflows of $348 million, partly offset by tax payments of $679 million, and net cash outflows related to derivatives of $454 million.

Total oil and gas production, compared with the second quarter 2023, decreased by 9% mainly due to higher planned maintenance at Prelude, in Trinidad and Tobago and production-sharing contract effects in Pearl GTL. LNG liquefaction volumes decreased by 4% mainly due to higher maintenance at Prelude.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, reflected lower volumes (decrease of $540 million), and the net effect of lower realised prices and higher contributions from trading and optimisation (decrease of $172 million), partly offset by lower operating expenses (decrease of $159 million).

First nine months 2023 segment earnings also included unfavourable movements of $2,821 million due to the fair value accounting of commodity derivatives and net impairment charges and reversals of $1,700 million. These unfavourable movements and net impairment charges and reversals are part of identified items and compare with the first nine months 2022 which included favourable movements of $6,980 million due to the fair value accounting of commodity derivatives, and gains of $779 million from net impairment charges and reversals, partly offset by other impacts of $608 million, which mainly comprised loan write-downs, as well as charges of $387 million due to provisions for onerous contracts.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, and working capital inflow of $2,677 million, partly offset by net cash outflows related to derivatives of $3,071 million, and tax payments of $2,843 million.

Total oil and gas production, compared with the first nine months 2022, increased by 3% mainly due to lower maintenance in Pearl GTL, Trinidad and Tobago, and ramp-up of new fields in Oman and Canada, partly offset by derecognition of Sakhalin-related volumes, and production-sharing contract effects in Pearl GTL. LNG liquefaction volumes decreased by 7% mainly due to the derecognition of Sakhalin-related volumes.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                           
 
UPSTREAM      
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
1,983    1,586    5,357    +25 Segment earnings2   6,349    14,843    -57
(238)   (98)   (539)    Of which: Identified items A (357)   585    
2,221    1,684    5,896    +32 Adjusted Earnings2 A 6,706    14,258    -53
7,412    6,447    12,539    +15 Adjusted EBITDA2 A 22,696    32,682    -31
5,336    4,519    8,343    +18 Cash flow from operating activities A 15,663    22,417    -30
2,007    2,029    1,733     Cash capital expenditure C 5,906    6,298    
1,311    1,283    1,273    +2 Liquids production available for sale (thousand b/d)   1,313    1,333    -1
2,564    2,425    2,995    +6 Natural gas production available for sale (million scf/d)   2,687    3,341    -20
1,753    1,701    1,789    +3 Total production available for sale (thousand boe/d)   1,776    1,909    -7
                              
  1. Q3 on Q2 change
  2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).

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 Analysis1

Segment earnings, compared with the second quarter 2023, mainly reflected higher realised liquids prices (increase of $525 million) and higher volumes (increase of $392 million).
Third quarter 2023 segment earnings also included legal provisions of $169 million and charges of $62 million related to the impact of the weakening Brazilian real on a deferred tax position. These losses are part of identified items, and compare with the second quarter 2023 which included charges of $127 million due to Brazil oil export tax and a $65 million charge relating to impairments, partly offset by gains of $92 million related to the impact of the strengthening Brazilian real on a deferred tax position.

Adjusted Earnings and Adjusted EBITDA2 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 tax payments of $2,090 million.

Total production, compared with the second quarter 2023, increased mainly due to higher performance in Deep Water.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, mainly reflected lower realised oil and gas prices (decrease of $4,641 million), lower volumes (decrease of $1,654 million), and the comparative adverse impact of $1,037 million relating to storage and working gas transfer effects, partly offset by lower operating expenses (decrease of $673 million).

First nine months 2023 segment earnings also included charges of $188 million from impairments, legal provisions of $169 million and deferred tax charges of $132 million due to amendments to IAS 12, partly offset by gains of $106 million due to fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first nine months 2022 which included a gain of $982 million related to net impairment charges and reversals, and losses of $529 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA and higher tax payments of $6,455 million, partly offset by a working capital inflow of $374 million.

Total production, compared with the first nine months 2022, decreased mainly due to the impact of divestments and field decline, partly offset by ramp-up of new fields.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                           
 
MARKETING     
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
702    970    757    -28 Segment earnings²   2,809    1,758    +60
(18)   76    (63)    Of which: Identified items A 320    (550)   
720    894    820    -20 Adjusted Earnings² A 2,488    2,308    +8
1,519    1,604    1,505    -5 Adjusted EBITDA2 A 4,700    4,280    +10
880    1,412    2,299    -38 Cash flow from operating activities A 3,378    1,315    +157
917    670    746     Cash capital expenditure C 4,273    2,838    
2,654    2,607    2,581    +2 Marketing sales volumes (thousand b/d)   2,570    2,490    +3
                             
  1. Q3 on Q2 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, marine, and agricultural sectors.

Quarter Analysis1

Segment earnings, compared with the second quarter 2023, reflected one-off tax charges (increase of $105 million), and higher operating expenses (increase of $67 million). Marketing margins were in line with the second quarter 2023 and included lower Mobility fuel margins due to rising feedstock costs and lower Lubricants margins, offset by higher Sectors & Decarbonisation margins.

Adjusted Earnings and Adjusted EBITDA2 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, the timing of payments relating to emissions and biofuel programmes of $90 million, and non-cash cost-of-sales (CCS) adjustments of $70 million. These inflows were partly offset by working capital outflows of $533 million and tax payments of $224 million.

Marketing sales volumes (comprising hydrocarbon sales), compared with the second quarter 2023, increased mainly due to seasonality in Aviation.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, reflected higher Marketing margins (increase of $1,097 million) due to higher unit margins and volumes. These were partly offset by higher operating expenses (increase of $613 million) including the impact of asset acquisitions and higher volumes, and higher depreciation charges (increase of $174 million).
First nine months 2023 segment earnings also included gains of $298 million related to indirect tax credits, and favourable movements of $51 million due to the fair value accounting of commodity derivatives. These gains are part of identified items and compare with the first nine months 2022 which included losses of $236 million from net impairments and reversals, net losses of $111 million related to the sale of assets, unfavourable movements of $88 million due to the fair value accounting of commodity derivatives, and provisions for onerous contracts of $62 million.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.

Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, and the timing of payments relating to emissions and biofuel programmes of $279 million. These inflows were partly offset by working capital outflows of $971 million, tax payments of $464 million, and non-cash cost-of-sales (CCS) adjustments of $140 million.

Marketing sales volumes (comprising hydrocarbon sales), compared with the first nine months 2022, increased mainly due to improved demand in Aviation and Mobility asset acquisitions.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                           
 
CHEMICALS AND PRODUCTS     
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
1,173    349    980    +236 Segment earnings²   3,322    4,183    -21
(207)   (100)   208     Of which: Identified items A (285)   208    
1,380    450    772    +207 Adjusted Earnings² A 3,607    3,975    -9
2,591    1,300    1,797    +99 Adjusted EBITDA2 A 6,940    6,988    -1
2,379    2,110    3,385    +13 Cash flow from operating activities A 6,779    9,787    -31
879    669    828     Cash capital expenditure C 2,160    3,051    
1,334    1,335    1,434    ? Refinery processing intake (thousand b/d)   1,360    1,391    -2
1,548    1,466    1,803    +6 Refining & Trading sales volumes (thousand b/d)   1,573    1,666    -6
2,998    2,828    2,879    +6 Chemicals sales volumes (thousand tonnes)   8,656    9,264    -7
                              
  1. Q3 on Q2 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 and optimisation 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 Analysis1

Segment earnings, compared with the second quarter 2023, reflected higher Products margins (increase of $849 million) mainly driven by higher refining margins due to lower global product supply and higher margins from trading and optimisation. Segment earnings also reflected higher Chemicals margins (increase of $55 million) including higher income from joint ventures and associates. In addition, the third quarter 2023 reflected lower operating expenses (decrease of $68 million).

Third quarter 2023 segment earnings also included losses of $79 million from net impairments and reversals, legal provisions of $74 million, and unfavourable movements of $53 million due to the fair value accounting of commodity derivatives. These losses are part of identified items, and compare with the second quarter 2023 which included losses of $76 million from net impairments and reversals.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the third quarter 2023, Chemicals had negative adjusted earnings of $329 million and Products had positive adjusted earnings of $1,710 million.

Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, and non-cash cost-of-sales (CCS) adjustments of $1,280 million. These inflows were partly offset by the timing of payments relating to emissions and biofuel programmes of $634 million, working capital outflows of $619 million, and cash outflows relating to commodity derivatives of $372 million.

Chemicals manufacturing plant utilisation was 70%, in line with the second quarter 2023.

Refinery utilisation was 84% compared with 85% in the second quarter 2023.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, reflected lower Products margins (decrease of $577 million) mainly driven by lower refining margins partly offset by higher margins from trading and optimisation. The segment earnings also reflected higher depreciation charges (increase of $466 million), and higher operating expenses (increase of $107 million) with both depreciation and operating expenses including the start-up of operations at Shell Polymers Monaca in the USA. These were partly offset by higher Chemicals margins (increase of $409 million).

First nine months 2023 segment earnings also included losses of $227 million from net impairments and reversals, legal provisions of $74 million and favourable movements of $84 million related to the fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the first nine months 2022 which included gains of $181 million related to the sale of assets, gains of $87 million related to the remeasurement of redundancy and restructuring costs, favourable movements of $67 million related to the fair value accounting of commodity derivatives, and losses of $142 million from net impairments and reversals.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. In the first nine months 2023, Chemicals had negative adjusted earnings of $1,130 million and Products had positive adjusted earnings of $4,737 million.

Cash flow from operating activities for the first nine months 2023 was primarily driven by Adjusted EBITDA, non-cash cost-of-sales (CCS) adjustments of $401 million, cash inflows relating to commodity derivatives of $235 million, and dividends (net of profits) from joint ventures and associates of $78 million. These inflows were partly offset by working capital outflows of $744 million, the timing of payments relating to emissions and biofuel programmes of $254 million, and tax payments of $211 million.

Chemicals manufacturing plant utilisation was 70% compared with 79% in the first nine months 2022, mainly due to unplanned maintenance and economic optimisation in the first nine months 2023.

Refinery utilisation was 87% compared with 84% in the first nine months 2022, due to lower planned maintenance.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                           
 
RENEWABLES AND ENERGY SOLUTIONS     
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022 %
600    530    (4,023)   +13 Segment earnings2   3,329    (5,732)   +158
667    301    (4,406)    Of which: Identified items A 2,778    (7,184)   
(67)   228    383    -129 Adjusted Earnings2 A 551    1,452    -62
79    438    530    -82 Adjusted EBITDA2 A 1,186    2,064    -43
(34)   3,192    (8,051)   -101 Cash flow from operating activities A 4,249    (9,068)   +147
659    556    1,086     Cash capital expenditure C 1,655    2,393    
76    67    67    +14 External power sales (terawatt hours)3   211    177    +19
170    172    157    -1 Sales of pipeline gas to end-use customers (terawatt hours)4   563    603    -7
                              
  1. Q3 on Q2 change
  2. Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
  3. Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
  4. 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.

Renewables and Energy Solutions includes activities such as renewable power generation, the marketing and trading and optimisation of power and pipeline gas, as well as carbon credits, and digitally enabled customer solutions. It also includes the production and marketing of hydrogen, development of commercial carbon capture and storage hubs, investment in nature-based projects that avoid or reduce carbon emissions, and Shell Ventures, which invests in companies that work to accelerate the energy and mobility transformation.

Quarter Analysis1

Segment earnings, compared with the second quarter 2023, reflected lower margins (decrease of $170 million) mainly due to seasonal impacts primarily in Europe and from trading and optimisation, and higher operating expenses (increase of $88 million).
Third quarter 2023 segment earnings also included favourable movements of $506 million due to the fair value accounting of commodity derivatives, a gain of $312 million mainly related to a previously novated gas supply contract (see Note 8), partly offset by losses of $76 million on the sale of assets, and $75 million of net impairment charges and reversals. 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. These favourable movements and losses are part of identified items and compare with the second quarter 2023 which included favourable movements of $310 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Most Renewables and Energy Solutions activities were loss-making in the third quarter 2023, partly offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the quarter was primarily driven by cash outflows related to derivatives of $1,407 million, and tax payments of $258 million, partly offset by working capital inflows of $1,188 million.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, reflected lower margins (decrease of $420 million) mainly from trading and optimisation for gas and power partly offset by Energy Marketing, and higher operating expenses (increase of $291 million).

Nine months 2023 segment earnings also included favourable movements of $2,632 million due to the fair value accounting of commodity derivatives. These favourable movements are part of identified items and compare with the first nine months 2022 which included unfavourable movements of $7,192 million due to the fair value accounting of commodity derivatives.

Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Most Renewables and Energy Solutions activities were loss-making for the first nine months 2023, partly offset by positive adjusted earnings from trading and optimisation.
Cash flow from operating activities for the first nine months 2023 was primarily driven by working capital inflows of $4,693 million, and Adjusted EBITDA, partly offset by net cash outflows related to derivatives of $1,719 million.

1.All earnings amounts are shown post-tax, unless stated otherwise.

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3rd QUARTER 2023 UNAUDITED RESULTS

2.Adjusted EBITDA is without taxation.
Additional Growth Measures

                        
Quarters   Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022 %
     Renewable power generation capacity (gigawatt):    
2.5    2.5    2.2    ? ? In operation2 2.5    2.2    +13
4.9    4.6    3.0    +6 ? Under construction and/or committed for sale3 4.9    3.0    +62
  1. Q3 on Q2 change
  2. Shell's equity share of renewable generation capacity post commercial operation date. It excludes Shell's equity share of associates where information cannot be obtained.
  3. Shell's equity share of renewable generation capacity under construction and/or committed for sale under long-term offtake agreements (PPA). It excludes Shell's equity share of associates where information cannot be obtained.
                     
 
CORPORATE    
Quarters $ million   Nine months
Q3 2023 Q2 2023 Q3 2022   Reference 2023 2022
(460)   (701)   (543)   Segment earnings1   (2,225)   (1,807)  
22    (48)   28    Of which: Identified items A (50)   (62)  
(482)   (654)   (571)   Adjusted Earnings1 A (2,175)   (1,745)  
(136)   (180)   (251)   Adjusted EBITDA1 A (499)   (562)  
(238)   269    (100)   Cash flow from operating activities A (2,372)   276   

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 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 Analysis1

Segment earnings, compared with the second quarter 2023, reflected favourable movements in net interest expense and currency exchange rate effects.

Adjusted EBITDA2 was mainly driven by favourable currency exchange rate effects.

Nine Months Analysis1

Segment earnings, compared with the first nine months 2022, were primarily driven by unfavourable movements in tax credits, partly offset by favourable currency exchange rate effects.

Adjusted EBITDA2 was mainly driven by favourable currency exchange rate effects.

  1. All earnings amounts are shown post-tax, unless stated otherwise.
  2. Adjusted EBITDA is without taxation.

OUTLOOK FOR THE FOURTH QUARTER 2023
Cash capital expenditure for full year 2023 is expected to be within ~$23 - $25 billion.

Integrated Gas production is expected to be approximately 870 - 930 thousand boe/d. LNG liquefaction volumes are expected to be approximately 6.7 - 7.3 million tonnes. Outlook reflects ongoing maintenance at Prelude and lower expected liquefaction volumes from Egypt.

Upstream production is expected to be approximately 1,750 - 1,950 thousand boe/d. Production outlook reflects the closure of the Groningen gas field.
Marketing sales volumes are expected to be approximately 2,250 - 2,750 thousand b/d.

Refinery utilisation is expected to be approximately 75% - 83%, due to planned maintenance activities in North America. Chemicals manufacturing plant utilisation is expected to be approximately 62% - 70%.

Corporate Adjusted Earnings are expected to be a net expense of approximately $550 - $750 million in the fourth quarter 2023 and a net expense of approximately $2,750 - $2,950 million for the full year 2023. This excludes the impact of currency exchange rate and fair value accounting effects.

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3rd QUARTER 2023 UNAUDITED RESULTS

FORTHCOMING EVENTS
Fourth quarter 2023 and full year 2023 results and dividends are scheduled to be announced on February 1, 2024.

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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

                  
 
CONSOLIDATED STATEMENT OF INCOME   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
76,350    74,578    95,749    Revenue1 237,888    280,011   
747    629    2,512    Share of profit/(loss) of joint ventures and associates 2,957    4,240   
913    813    498    Interest and other income/(expenses)2 2,207    755   
78,011    76,020    98,759    Total revenue and other income/(expenses) 243,052    285,006   
49,144    51,492    70,684    Purchases 158,138    192,999   
6,384    6,041    5,910    Production and manufacturing expenses 18,433    18,298   
3,447    3,314    3,229    Selling, distribution and administrative expenses 9,811    9,392   
267    297    220    Research and development 817    672   
436    444    424    Exploration 1,283    1,063   
5,911    7,872    6,124    Depreciation, depletion and amortisation2 20,069    12,071   
1,131    1,211    734    Interest expense 3,507    2,140   
66,720    70,671    87,324    Total expenditure 212,058    236,635   
11,291    5,348    11,435    Income/(loss) before taxation 30,993    48,371   
4,115    2,195    4,587    Taxation charge/(credit) 11,891    15,966   
7,176    3,154    6,848    Income/(loss) for the period¹ 19,102    32,405   
132    20    104    Income/(loss) attributable to non-controlling interest 215    505   
7,044    3,134    6,743    Income/(loss) attributable to Shell plc shareholders 18,887    31,899   
1.06    0.46    0.93    Basic earnings per share ($)3 2.78    4.29   
1.05    0.46    0.92    Diluted earnings per share ($)3 2.75    4.25   

1.    See Note 2 "Segment information".
2.    See Note 8 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
3.    See Note 4 "Earnings per share".

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
7,176    3,154    6,848    Income/(loss) for the period 19,102    32,405   
    Other comprehensive income/(loss) net of tax:   
    Items that may be reclassified to income in later periods:   
(1,460)   (267)   (3,456)   ? Currency translation differences (1,174)   (5,841)  
  (7)   (25)   ? Debt instruments remeasurements 13    (90)  
141    100    (57)   ? Cash flow hedging gains/(losses) 61    112   
   183    ? Net investment hedging gains/(losses) (44)   444   
(39)   (53)   11    ? Deferred cost of hedging (94)   233   
(72)   (10)   30    ? Share of other comprehensive income/(loss) of joint ventures and associates (118)   198   
(1,429)   (229)   (3,315)   Total (1,357)   (4,945)  
    Items that are not reclassified to income in later periods:   
180    (24)   126    ? Retirement benefits remeasurements 125    7,556   
(38)   16    (21)   ? Equity instruments remeasurements (15)   (454)  
17    (24)   12    ? Share of other comprehensive income/(loss) of joint ventures and associates (15)   (26)  
159    (32)   117    Total 95    7,076   
(1,270)   (261)   (3,198)   Other comprehensive income/(loss) for the period (1,262)   2,131   
5,906    2,893    3,649    Comprehensive income/(loss) for the period 17,840    34,536   
149    (15)   (38)   Comprehensive income/(loss) attributable to non-controlling interest 217    507   
5,757    2,908    3,687    Comprehensive income/(loss) attributable to Shell plc shareholders 17,622    34,029   
                     

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
         
 
CONDENSED CONSOLIDATED BALANCE SHEET
$ million   
  September 30, 2023 December 31, 2022
Assets   
Non-current assets   
Goodwill1 17,345    16,039   
Other intangible assets 8,288    9,662   
Property, plant and equipment 197,043    198,642   
Joint ventures and associates 24,477    23,864   
Investments in securities 3,329    3,362   
Deferred tax1 5,537    7,815   
Retirement benefits 9,654    10,200   
Trade and other receivables 6,049    6,920   
Derivative financial instruments² 524    582   
  272,247    277,086   
Current assets   
Inventories 30,230    31,894   
Trade and other receivables 52,077    66,510   
Derivative financial instruments² 14,724    24,437   
Cash and cash equivalents 43,031    40,246   
  140,062    163,087   
Assets classified as held for sale1 1,189    2,851   
  141,251    165,938   
Total assets 413,498    443,024   
Liabilities   
Non-current liabilities   
Debt 72,028    74,794   
Trade and other payables 3,920    3,432   
Derivative financial instruments² 3,257    3,563   
Deferred tax1 15,891    16,186   
Retirement benefits 6,837    7,296   
Decommissioning and other provisions 23,492    23,845   
  125,423    129,116   
Current liabilities   
Debt 10,119    9,001   
Trade and other payables 67,188    79,357   
Derivative financial instruments² 9,444    23,779   
Income taxes payable 4,372    4,869   
Decommissioning and other provisions 3,223    2,910   
  94,345    119,916   
Liabilities directly associated with assets classified as held for sale1 786    1,395   
  95,131    121,311   
Total liabilities 220,555    250,427   
Equity attributable to Shell plc shareholders 191,199    190,472   
Non-controlling interest1 1,745    2,125   
Total equity 192,943    192,597   
Total liabilities and equity 413,498    443,024   
            
  1.     See Note 8 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
  2.     See Note 7 "Derivative financial instruments and debt excluding lease liabilities".

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                           
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
  Equity attributable to Shell plc shareholders    
$ million Share capital1 Shares held in trust Other reserves² Retained earnings Total Non-controlling interest   Total equity
At January 1, 2023 584    (726)   21,132    169,482    190,472    2,125     192,597   
Comprehensive income/(loss) for the period    (1,263)   18,886    17,622    217     17,840   
Transfer from other comprehensive income    (111)   111       
Dividends³     (6,193)   (6,193)   (636)    (6,829)  
Repurchases of shares4 (30)    30    (11,058)   (11,058)     (11,058)  
Share-based compensation   466    (18)   (100)   349      349   
Other changes       37     45   
At September 30, 2023 555    (261)   19,769    171,136    191,199    1,745     192,943   
At January 1, 2022 641    (610)   18,909    153,026    171,966    3,360     175,326   
Comprehensive income/(loss) for the period    2,130    31,899    34,029    507     34,536   
Transfer from other comprehensive income    13    (13)      
Dividends3     (5,497)   (5,497)   (164)    (5,662)  
Repurchases of shares4 (43)    43    (14,523)   (14,523)     (14,523)  
Share-based compensation   444    18    133    594      594   
Other changes     (46)   (46)   11     (35)  
At September 30, 2022 598    (167)   21,113    164,978    186,523    3,715     190,237   
                             
  1.     See Note 5 "Share capital".
  2.     See Note 6 "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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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                     
 
CONSOLIDATED STATEMENT OF CASH FLOWS   
Quarters $ million Nine months
Q3 2023   Q2 2023 Q3 2022   2023 2022
11,291     5,348    11,435    Income before taxation for the period 30,993    48,371   
     Adjustment for:   
513     612    389    ? Interest expense (net) 1,789    1,539   
5,911     7,872    6,124    ? Depreciation, depletion and amortisation1 20,069    12,071   
186     204    218    ? Exploration well write-offs 626    486   
74     (53)   (93)   ? Net (gains)/losses on sale and revaluation of non-current assets and businesses (24)   (621)  
(747)    (629)   (2,512)   ? Share of (profit)/loss of joint ventures and associates (2,957)   (4,240)  
749     884    814    ? Dividends received from joint ventures and associates 2,529    2,985   
(3,151)    1,171    484    ? (Increase)/decrease in inventories 2,237    (11,263)  
(1,126)    8,289    (98)   ? (Increase)/decrease in current receivables 13,105    (14,168)  
4,711     (4,619)   (4,544)   ? Increase/(decrease) in current payables (10,841)   9,606   
(2,807)    (907)   3,334    ? Derivative financial instruments (6,050)   5,050   
   14    (87)   ? Retirement benefits 31    282   
70     (236)   (744)   ? Decommissioning and other provisions (250)   (183)  
(150)    954    1,258    ? Other1 474    4,841   
(3,191)    (3,773)   (3,438)   Tax paid (10,108)   (8,748)  
12,332     15,130    12,539    Cash flow from operating activities 41,622    46,009   
(5,259)    (4,614)   (5,268)   Capital expenditure (16,033)   (16,182)  
(350)    (436)   (95)   Investments in joint ventures and associates (1,093)   (1,114)  
(40)    (80)   (63)   Investments in equity securities (154)   (218)  
184     362    39    Proceeds from sale of property, plant and equipment and businesses 2,024    1,379   
68     100    203    Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans 425    392   
   18    36    Proceeds from sale of equity securities 28    52   
586     522    253    Interest received 1,555    505   
701     1,908    496    Other investing cash inflows1 3,308    1,542   
(724)    (794)   (650)   Other investing cash outflows (2,141)   (1,886)  
(4,827)    (3,015)   (5,049)   Cash flow from investing activities (12,080)   (15,530)  
88     (186)   (206)   Net increase/(decrease) in debt with maturity period within three months (185)   566   
     Other debt:   
187     362    103    ? New borrowings 964    239   
(3,368)    (1,774)   (1,171)   ? Repayments (6,596)   (6,243)  
(1,049)    (1,158)   (747)   Interest paid (3,076)   (2,494)  
(26)    (152)   (843)   Derivative financial instruments 22    (2,155)  
     Change in non-controlling interest (22)   
     Cash dividends paid to:   
(2,179)    (1,983)   (1,818)   ? Shell plc shareholders (6,192)   (5,620)  
(51)    (575)   (54)   ? Non-controlling interest (636)   (164)  
(2,725)    (3,624)   (4,950)   Repurchases of shares (10,640)   (13,963)  
(30)    86    (25)   Shares held in trust: net sales/(purchases) and dividends received (176)   (50)  
(9,147)    (9,003)   (9,707)   Cash flow from financing activities (26,535)   (29,876)  
(421)    (93)   (774)   Effects of exchange rate changes on cash and cash equivalents (222)   (1,596)  
(2,063)    3,020    (2,992)   Increase/(decrease) in cash and cash equivalents 2,785    (993)  
45,094     42,074    38,970    Cash and cash equivalents at beginning of period 40,246    36,970   
43,031     45,094    35,978    Cash and cash equivalents at end of period 43,031    35,978   
                        

1.See Note 8 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".

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3rd QUARTER 2023 UNAUDITED RESULTS

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 International Accounting Standard 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 237 to 307) for the year ended December 31, 2022 as filed with the Registrar of Companies for England and Wales and the Autoriteit Financiële Markten (the Netherlands) and Form 20-F (pages 216 to 287) for the year ended December 31, 2022 as filed with the US Securities and Exchange Commission, and should be read in conjunction with these filings.

The financial information presented in the unaudited Condensed Consolidated Interim Financial 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, 2022 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.

On consolidation, assets and liabilities of non-dollar entities are translated to dollars at period-end rates of exchange, while their statements of income, other comprehensive income and cash flows are translated at average rates. Until the end of 2022 this translation was performed at quarterly average rates. As from January 1, 2023 this translation is performed at monthly average rates. This change had no significant impact on Shell's financial reporting.

New standards adopted in 2023

IFRS 17 Insurance contracts (IFRS 17) as issued in 2017, with amendments published in 2020 and 2021, was adopted as from January 1, 2023. The adoption of IFRS 17 had no significant effect on Shell's financial reporting.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income taxes (IAS 12)), published in May 2021, was adopted as from January 1, 2023. The adoption of these amendments had no significant effect on Shell's financial reporting.

International Tax Reform ? Pillar Two Model Rules (Amendments to IAS 12) as issued on May 23, 2023, was adopted as from that date. The amendments to IAS 12 introduce a temporary mandatory relief from accounting for deferred tax that arises from legislation implementing OECD Pillar Two. On June 20, 2023, the United Kingdom substantively enacted Pillar Two. As required by the amendments to IAS 12, Shell has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
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 2023. These assumptions continue to apply for impairment testing purposes in the third quarter 2023.

The discount rate applied in assessing value in use represents a significant estimate. The discount rate applied was subject to change in the second quarter 2023.

2. Segment information

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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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
 
INFORMATION BY SEGMENT   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
    Third-party revenue   
8,338    7,938    14,471    Integrated Gas 27,208    40,948   
1,617    1,533    1,623    Upstream 5,212    5,407   
29,577    26,573    31,965    Marketing 82,430    92,222   
27,779    28,656    37,649    Chemicals and Products 88,490    110,862   
9,032    9,866    10,031    Renewables and Energy Solutions 34,517    30,534   
  12    10    Corporate 31    38   
76,350    74,578    95,749    Total third-party revenue1 237,888    280,011   
    Inter-segment revenue   
2,472    2,940    5,666    Integrated Gas 8,946    13,374   
10,277    8,859    13,164    Upstream 30,282    39,056   
154    123    169    Marketing 439    423   
569    508    696    Chemicals and Products 1,642    2,081   
894    771    1,992    Renewables and Energy Solutions 3,140    4,756   
    Corporate   
    CCS earnings   
2,154    754    5,736    Integrated Gas 5,318    16,919   
1,983    1,586    5,357    Upstream 6,349    14,843   
702    970    757    Marketing 2,809    1,758   
1,173    349    980    Chemicals and Products 3,322    4,183   
600    530    (4,023)   Renewables and Energy Solutions 3,329    (5,732)  
(460)   (701)   (543)   Corporate (2,225)   (1,807)  
6,152    3,488    8,264    Total CCS earnings2 18,901    30,163   
                     
  1. Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Third quarter 2023 included income of $3,530 million (second quarter 2023: $4,247 million income; third quarter 2022: $440 million losses). This amount includes both the reversal of prior gains of $2,583 million (second quarter 2023: $27 million gains; third quarter 2022: $4,233 million losses) related to sales contracts and prior losses of $965 million (second quarter 2023: $88 million losses; third quarter 2022: $4,114 million gains) related to purchase contracts that were previously recognised and where physical settlement took place in the third quarter 2023.
  2. See Note 3 "Reconciliation of income for the period to CCS Earnings, Operating expenses, Total Debt, and Cash capital expenditure".

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

3. Reconciliation of income for the period to CCS Earnings, Operating expenses, Total Debt, and Cash capital expenditure

                  
 
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
7,044    3,134    6,743    Income/(loss) attributable to Shell plc shareholders 18,887    31,899   
132    20    104    Income/(loss) attributable to non-controlling interest 215    505   
7,176    3,154    6,848    Income/(loss) for the period 19,102    32,405   
    Current cost of supplies adjustment:   
(1,304)   383    1,800    Purchases (275)   (2,923)  
327    (96)   (433)   Taxation 60    745   
(47)   47    51    Share of profit/(loss) of joint ventures and associates 14    (63)  
(1,024)   334    1,417    Current cost of supplies adjustment (201)   (2,242)  
    Of which:   
(969)   326    1,354    Attributable to Shell plc shareholders (162)   (2,099)
(55)    62    Attributable to non-controlling interest (39)   (143)
6,152    3,488    8,264    CCS earnings 18,901    30,163   
    Of which:   
6,075    3,460    8,098    CCS earnings attributable to Shell plc shareholders 18,725    29,800   
77    27    167    CCS earnings attributable to non-controlling interest 176    363   
                  
 
RECONCILIATION OF OPERATING EXPENSES   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
6,384    6,041    5,910    Production and manufacturing expenses 18,433    18,298   
3,447    3,314    3,229    Selling, distribution and administrative expenses 9,811    9,392   
267    297    220    Research and development 817    672   
10,097    9,653    9,359    Operating expenses 29,062    28,363   
                    


                  
 
RECONCILIATION OF TOTAL DEBT   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
September 30, 2023 June 30, 2023 September 30, 2022   September 30, 2023 September 30, 2022
10,119    12,114    8,046    Current debt 10,119    8,046   
72,028    72,252    73,944    Non-current debt 72,028    73,944   
82,147    84,366    81,990    Total debt 82,147    81,990   

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
 
RECONCILIATION OF CASH CAPITAL EXPENDITURE   
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
5,259    4,614    5,268    Capital expenditure 16,033    16,182   
350    436    95    Investments in joint ventures and associates 1,093    1,114   
40    80    63    Investments in equity securities 154    218   
5,649    5,130    5,426    Cash capital expenditure 17,280    17,515   
    Of which:   
1,099    1,089    956    Integrated Gas 3,000    2,739   
2,007    2,029    1,733    Upstream 5,906    6,298   
917    670    746    Marketing 4,273    2,838   
879    669    828    Chemicals and Products 2,160    3,051   
659    556    1,086    Renewables and Energy Solutions 1,655    2,393   
87    117    78    Corporate 285    196   
                     

4. Earnings per share

                  
 
EARNINGS PER SHARE
Quarters   Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
7,044    3,134    6,743    Income/(loss) attributable to Shell plc shareholders ($ million) 18,887    31,899   
      
    Weighted average number of shares used as the basis for determining:   
6,668.1    6,793.4    7,276.7    Basic earnings per share (million) 6,792.5    7,443.1   
6,736.7    6,854.2    7,341.3    Diluted earnings per share (million) 6,856.7    7,505.9   

5. Share capital

                           
 
ISSUED AND FULLY PAID ORDINARY SHARES OF ?0.07 EACH1
  Number of shares   Nominal value ($ million)
  A B Ordinary shares   A B Ordinary shares Total
At January 1, 2023    7,003,503,393       584    584   
Repurchases of shares    (357,368,014)      (30)   (30)  
At September 30, 2023    6,646,135,379       555    555   
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    (481,555,025)      (40)   (40)  
At September 30, 2022    7,167,963,138       598    598   

1.Share capital at December 31, 2022, also included 50,000 issued and fully paid sterling deferred shares of £1 each, which were redeemed on March 27, 2023. Upon redemption, the sterling deferred shares were treated as cancelled and the Company's issued share capital was reduced by the nominal value of the shares redeemed in accordance with section 688 of the UK Companies Act 2006.
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.

         Page 20


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

At Shell plc's Annual General Meeting on May 23, 2023, 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 approximately ?161 million (representing approximately 2,307 million ordinary shares of ?0.07 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 22, 2024, or the end of the Annual General Meeting to be held in 2024, unless previously renewed, revoked or varied by Shell plc in a general meeting.

6. Other reserves

                     
 
OTHER RESERVES
$ million Merger reserve Share premium reserve Capital redemption reserve Share plan reserve Accumulated other comprehensive income Total
At January 1, 2023 37,298    154    196    1,140    (17,656)   21,132   
Other comprehensive income/(loss) attributable to Shell plc shareholders      (1,263)   (1,263)  
Transfer from other comprehensive income      (111)   (111)  
Repurchases of shares    30      30   
Share-based compensation     (18)    (18)  
At September 30, 2023 37,298    154    227    1,121    (19,029)   19,769   
At January 1, 2022 37,298    154    139    964    (19,646)   18,909   
Other comprehensive income/(loss) attributable to Shell plc shareholders      2,130    2,130   
Transfer from other comprehensive income      13    13   
Repurchases of shares    43      43   
Share-based compensation     18     18   
At September 30, 2022 37,298    154    183    981    (17,502)   21,113   

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.

7. Derivative financial instruments and debt excluding lease liabilities

As disclosed in the Consolidated Financial Statements for the year ended December 31, 2022, 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 September 30, 2023, are consistent with those used in the year ended December 31, 2022, though the carrying amounts of derivative financial instruments measured using predominantly unobservable inputs have changed since that date. The movement of the derivative financial instruments between December 31, 2022 and September 30, 2023 is a decrease of $9,713 million for the current assets and a decrease of $14,335 million for the current liabilities.

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 September 30, 2023 December 31, 2022
Carrying amount 54,293    56,152   
Fair value¹ 49,264    51,959   

1.    Mainly determined from the prices quoted for these securities.

         Page 21


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

8. Other notes to the unaudited Condensed Consolidated Interim Financial Statements

Consolidated Statement of Income

Interest and other income

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
913    813    498    Interest and other income/(expenses) 2,207    755   
    Of which:   
618    599    346    Interest income 1,718    601   
  29     Dividend income (from investments in equity securities) 36    202   
(75)   65    93    Net gains/(losses) on sales and revaluation of non-current assets and businesses 35    621   
168     (12)   Net foreign exchange gains/(losses) on financing activities (60)   170   
195    113    69    Other 478    (838)  

Purchases

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
49,144    51,492    70,684    Purchases 158,138    192,999   

Purchases in the third quarter 2023 include a credit of $408 million pre-tax ($312 million post-tax) mainly related to set-off of claims in the third quarter 2023 leading to derecognition of a net payable position in respect of a previously novated gas supply contract (see Note 6 to the Consolidated Financial Statements for the year ended December 31, 2022).

Depreciation, depletion and amortisation

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
5,911    7,872    6,124    Depreciation, depletion and amortisation 20,069    12,071   
    Of which:   
5,716 5,708 5,665 Depreciation 17,120    16,662   
359 2,490 466 Impairments 3,438    1,525   
(163) (326) (8) Impairment reversals (489)   (6,117)  

Impairments recognised in the third quarter 2023 of $359 million pre-tax ($299 million post-tax) mainly relate to various assets in Renewables and Energy Solutions and Chemicals and Products. Impairments recognised in the second quarter 2023 of $2,490 million pre-tax ($1,910 million post-tax) were mainly triggered by a change in the discount rate applied and mainly relate to an asset in Integrated Gas located in North America and various smaller impairments across segments. Impairments of $466 million pre-tax ($368 million post-tax) in the third quarter 2022 mainly relate to the classification of an Upstream asset as held for sale.
Condensed Consolidated Balance Sheet

Goodwill

         
 
$ million   
  September 30, 2023 December 31, 2022
Goodwill 17,345    16,039   

Goodwill as at September 30, 2023, includes $1,464 million goodwill recognised in the first quarter 2023, related to the acquisition of Nature Energy Biogas A/S. The accounting is provisional and is expected to be completed in the fourth quarter 2023.

         Page 22


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

Deferred tax

         
 
$ million   
  September 30, 2023 December 31, 2022
Non-current assets   
Deferred tax 5,537    7,815   
Non-current liabilities   
Deferred tax 15,891    16,186
Net deferred liability (10,353)   (8,371)  

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 $10,353 million at September 30, 2023 (December 31, 2022: $8,371 million). The net increase in the net deferred tax liability is mainly driven by a reduction of the deferred tax asset due to the utilisation of deferred tax.

Assets classified as held for sale

         
 
$ million   
  September 30, 2023 December 31, 2022
Assets classified as held for sale 1,189    2,851   
Liabilities directly associated with assets classified as held for sale 786    1,395   

Assets classified as held for sale and associated liabilities at September 30, 2023, principally relate to various Renewables and Energy Solutions projects and an Integrated Gas project held for sale. The major classes of assets and liabilities classified as held for sale at September 30, 2023, are Trade and other receivables ($594 million; December 31, 2022: $95 million), Property plant and equipment ($372 million; December 31, 2022: $2,526 million) and Trade and other payables ($776 million; December 31, 2022: $278 million).
Non-controlling interest

         
 
$ million   
  September 30, 2023 December 31, 2022
Non-controlling interest 1,745    2,125   

The change in non-controlling interest is mainly driven by dividend payments to non-controlling shareholders during the second quarter 2023.

Consolidated Statement of Cash Flows

Cash flow from operating activities - Other

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
(150)   954    1,258    Other 474    4,841   

Cash flow from operating activities - Other for the third quarter 2023 includes $630 million of net outflows (second quarter 2023: $764 million net inflows; third quarter 2022: $625 million net inflows) due to the timing of payments relating to emissions and biofuel programmes in Europe and North America and $336 million (second quarter 2023: $29 million; third quarter 2022: $478 million) in relation to reversal of currency exchange losses on Cash and cash equivalents.

         Page 23


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

Other investing cash inflows

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
701    1,908    496    Other investing cash inflows 3,308    1,542   

Other investing cash inflows in the second quarter 2023 mainly relate to repayments of short-term debt securities and short-term loans.

         Page 24


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES

A.Adjusted Earnings and Adjusted earnings before interest, taxes, depreciation and amortisation ("Adjusted 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 Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
7,044    3,134    6,743    Income/(loss) attributable to Shell plc shareholders 18,887    31,899   
(969)   326    1,354    Add: Current cost of supplies adjustment attributable to Shell plc shareholders1 (162)   (2,099)  
    Of which:   
(56)   49    (11)   Marketing 112    (515)  
(913)   277    1,365    Chemicals and Products (273)   (1,584)  
6,075    3,460    8,098    CCS earnings attributable to Shell plc shareholders1 18,725    29,800   
    Of which:   
2,154    754    5,736    Integrated Gas 5,318    16,919   
1,983    1,586    5,357    Upstream 6,349    14,843   
702    970    757    Marketing 2,809    1,758   
1,173    349    980    Chemicals and Products 3,322    4,183   
600    530    (4,023)   Renewables and Energy Solutions 3,329    (5,732)  
(460)   (701)   (543)   Corporate (2,225)   (1,807)  
77    27    167    Less: Non-controlling interest 176    363   
(149)   (1,613)   (1,356)   Less: Identified items attributable to Shell plc shareholders (2,219)   (255)  
    Of which:   
(375)   (1,744)   3,417    Integrated Gas (4,625)   6,750   
(238)   (98)   (539)   Upstream (357)   585   
(18)   76    (63)   Marketing 320    (550)  
(207)   (100)   208    Chemicals and Products (285)   208   
667    301    (4,406)   Renewables and Energy Solutions 2,778    (7,184)  
22    (48)   28    Corporate (50)   (62)  
    Less: Non-controlling interest   
6,224    5,073    9,454    Adjusted Earnings 20,944    30,055   
    Of which:   
2,529    2,498    2,319    Integrated Gas 9,944    10,169   
2,221    1,684    5,896    Upstream 6,706    14,258   
720    894    820    Marketing 2,488    2,308   
1,380    450    772    Chemicals and Products 3,607    3,975   
(67)   228    383    Renewables and Energy Solutions 551    1,452   
(482)   (654)   (571)   Corporate (2,175)   (1,745)  
77    27    165    Less: Non-controlling interest 176    361   

1. See Note 2 "Segment information".

         Page 25


 

     
   
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
 
ADJUSTED EBITDA
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
6,224    5,073    9,454    Adjusted Earnings 20,944    30,055   
77    27    165    Add: Non-controlling interest 176    361   
3,621    2,813    5,621    Add: Taxation charge/(credit) excluding tax impact of identified items 11,553    14,587   
    Of which:   
845    831    1,549    Integrated Gas 2,771    3,764   
2,155    1,688    3,414    Upstream 6,707    8,910   
288    243    285    Marketing 797    791   
232    (48)   318    Chemicals and Products 565    861   
65    101    49    Renewables and Energy Solutions 334    349   
37    (2)    Corporate 379    (88)  
5,716    5,708    5,665    Add: Depreciation, depletion and amortisation excluding impairments 17,120    16,662   
    Of which:   
1,413    1,447    1,440    Integrated Gas 4,300    4,130   
2,771    2,778    3,014    Upstream 8,358    8,945   
495    454    393    Marketing 1,383    1,157   
951    914    716    Chemicals and Products 2,763    2,156   
82    110    97    Renewables and Energy Solutions 303    261   
    Corporate 13    13   
186    203    218    Add: Exploration well write-offs 625    486   
    Of which:   
35    23    81    Integrated Gas 59    133   
151    180    137    Upstream 566    353   
1,130    1,210    734    Add: Interest expense excluding identified items 3,504    2,139   
    Of which:   
51    29    20    Integrated Gas 110    56   
119    120    85    Upstream 372    235   
23    12     Marketing 40    25   
41    (5)   (1)   Chemicals and Products 39    12   
   (2)   Renewables and Energy Solutions   
895    1,053    625    Corporate 2,941    1,811   
618    599    346    Less: Interest income 1,718    601   
    Of which:   
   16    Integrated Gas   16   
    Upstream 13    16   
    Marketing   
13    11     Chemicals and Products 33    16   
   (3)   Renewables and Energy Solutions   (3)  
590    582    318    Corporate 1,657    556   
16,336    14,435    21,512    Adjusted EBITDA 52,204    63,689   
    Of which:   
4,871    4,827    5,393    Integrated Gas 17,180    18,237   
7,412    6,447    12,539    Upstream 22,696    32,682   
1,519    1,604    1,505    Marketing 4,700    4,280   
2,591    1,300    1,797    Chemicals and Products 6,940    6,988   
79    438    530    Renewables and Energy Solutions 1,186    2,064   
(136)   (180)   (251)   Corporate (499)   (562)  
(1,351)   430    1,850    Less: Current cost of supplies adjustment before taxation (261)   (2,986)  
                     

         Page 26


 

     
   
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
    Of which:   
(70)   54    (28)   Marketing 140    (691)  
(1,280)   376    1,878    Chemicals and Products (401)   (2,295)  
(13)   327    (1,687)   Joint ventures and associates (dividends received less profit) (167)   (2,800)  
    Of which:   
(40)   119    (236)   Integrated Gas 32    (610)  
43    28    (1,543)   Upstream (443)   (2,843)  
(15)   26     Marketing 91    125   
(23)   112    128    Chemicals and Products 78    518   
21    41    (43)   Renewables and Energy Solutions 72    
    Corporate   
(2,549)   (777)   1,135    Derivative financial instruments (5,112)   2,676   
    Of which:   
(454)   (201)   3,591    Integrated Gas (3,071)   7,053   
(20)    47    Upstream   (35)  
  (15)   (67)   Marketing (28)   (49)  
(372)   (206)   410    Chemicals and Products 235    (243)  
(1,407)   (170)   (2,695)   Renewables and Energy Solutions (1,719)   (3,676)  
(304)   (193)   (151)   Corporate (528)   (375)  
(3,191)   (3,773)   (3,438)   Tax paid (10,108)   (8,748)  
    Of which:   
(679)   (1,279)   (845)   Integrated Gas (2,843)   (2,112)  
(2,090)   (2,346)   (2,372)   Upstream (6,455)   (6,060)  
(224)   (169)   (112)   Marketing (464)   (333)  
52    (113)   (44)   Chemicals and Products (211)   (71)  
(258)   (86)   (11)   Renewables and Energy Solutions (350)   (50)  
  220    (54)   Corporate 214    (121)  
(35)   507    1,025    Other 42    4,031   
    Of which:   
(38)   (46)   (67)   Integrated Gas (52)   195   
(87)   (391)   15    Upstream (510)   282   
55    103    30    Marketing 190    (95)  
(531)   714    551    Chemicals and Products 80    2,616   
342    11    (138)   Renewables and Energy Solutions 367    (158)  
223    116    635    Corporate (34)   1,191   
433    4,840    (4,157)   (Increase)/decrease in working capital 4,502    (15,825)  
    Of which:   
348    208    (1,174)   Integrated Gas 2,677    (1,479)  
78    772    (343)   Upstream 374    (1,610)  
(533)   (83)   910    Marketing (971)   (3,304)  
(619)   679    2,421    Chemicals and Products (744)   (2,316)  
1,188    2,958    (5,694)   Renewables and Energy Solutions 4,693    (7,256)  
(30)   306    (279)   Corporate (1,528)   141   
12,332    15,130    12,539    Cash flow from operating activities 41,622    46,009   
    Of which:   
4,009    3,628    6,664    Integrated Gas 13,923    21,283   
5,336    4,519    8,343    Upstream 15,663    22,417   
880    1,412    2,299    Marketing 3,378    1,315   
2,379    2,110    3,385    Chemicals and Products 6,779    9,787   
(34)   3,192    (8,051)   Renewables and Energy Solutions 4,249    (9,068)  
(238)   269    (100)   Corporate (2,372)   276   
                     

         Page 27


 

   
 
SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

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 in the table below are presented on a net basis.

                     
 
IDENTIFIED ITEMS
Quarters $ million Nine months
Q3 2023   Q2 2023 Q3 2022   2023 2022
     Identified items included in Income/(loss) before taxation   
(75)    65    92    Divestment gains/(losses) 35    636   
(196)    (2,164)   (458)   Impairment reversals/(impairments) (2,952)   3,038   
(20)    (24)   (26)   Redundancy and restructuring (54)   22   
    29    Provisions for onerous contracts (24)   (508)  
258     130    (2,199)   Fair value accounting of commodity derivatives and certain gas contracts 939    (2,374)  
50    1 (142)   608    Other 116    (432)  
17     (2,136)   (1,955)   Total identified items included in Income/(loss) before taxation (1,941)   381   
167     (523)   (601)   Less: total identified items included in Taxation charge/(credit) 278    634   
     Identified items included in Income/(loss) for the period   
(68)    50    99    Divestment gains/(losses) 50    465   
(167)    (1,661)   (363)   Impairment reversals/(impairments) (2,284)   1,384   
(14)    (17)   (29)   Redundancy and restructuring (35)   25   
    17    Provisions for onerous contracts (18)   (487)  
121     46    (998)   Fair value accounting of commodity derivatives and certain gas contracts 52    (761)  
(51)    45    (81)   Impact of exchange rate movements on tax balances   (131)  
29     (77)    Other   (749)  
(149)    (1,613)   (1,354)   Impact on CCS earnings (2,219)   (253)  
     Of which:   
(375)    (1,744)   3,417    Integrated Gas (4,625)   6,750   
(238)    (98)   (539)   Upstream (357)   585   
(18)    76    (63)   Marketing 320    (550)  
(207)    (100)   208    Chemicals and Products (285)   208   
667     301    (4,406)   Renewables and Energy Solutions 2,778    (7,184)  
22     (48)   28    Corporate (50)   (62)  
       Impact on CCS earnings attributable to non-controlling interest    
(149)    (1,613)   (1,356)   Impact on CCS earnings attributable to Shell plc shareholders (2,219)   (255)  

1.Mainly consists of a credit in relation to a previously novated gas supply contract (see Note 8) partly offset by the recognition of a legal provision.
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 / (loss) of joint ventures and associates" in the Consolidated Statement of Income, and fully reported as identified items included in Income/(loss) before taxation 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

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3rd QUARTER 2023 UNAUDITED RESULTS

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 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 4).

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

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 Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
5,259    4,614    5,268    Capital expenditure 16,033    16,182   
    Of which:   
958    803    918    Integrated Gas 2,458    2,614   
2,013    1,936    1,743    Upstream 5,701    6,069   
893    656    733    Marketing 4,225    2,702   
803    663    828    Chemicals and Products 2,077    3,049   
523    483    993    Renewables and Energy Solutions 1,382    1,654   
68    72    54    Corporate 190    94   
350    436    95    Investments in joint ventures and associates 1,093    1,114   
    Of which:   
141    286    38    Integrated Gas 543    124   
(6)   93    (10)   Upstream 205    229   
24    14    13    Marketing 47    136   
76      Chemicals and Products 82    
114    46    48    Renewables and Energy Solutions 205    616   
  (6)    Corporate 11    
40    80    63    Investments in equity securities 154    218   
    Of which:   
    Integrated Gas   
    Upstream   
    Marketing   
    Chemicals and Products   
21    27    45    Renewables and Energy Solutions 68    122   
19    51    18    Corporate 84    96   
5,649    5,130    5,426    Cash capital expenditure 17,280    17,515   
    Of which:   
1,099    1,089    956    Integrated Gas 3,000    2,739   
2,007    2,029    1,733    Upstream 5,906    6,298   
917    670    746    Marketing 4,273    2,838   
879    669    828    Chemicals and Products 2,160    3,051   
659    556    1,086    Renewables and Energy Solutions 1,655    2,393   
87    117    78    Corporate 285    196   

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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3rd QUARTER 2023 UNAUDITED RESULTS
 
            
 
$ million Quarters
  Q3 2023 Q2 2023 Q3 2022
Income - current and previous three quarters 29,571 29,242 44,009
Interest expense after tax - current and previous three quarters 3,204 2,941 2,273
Income before interest expense - current and previous three quarters 32,775 32,183 46,282
Capital employed ? opening 272,227 278,039 262,074
Capital employed ? closing 275,090 276,460 272,227
Capital employed ? average 273,659 277,250 267,150
ROACE on a Net income basis 12.0% 11.6% 17.3%
               

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
  Q3 2023 Q2 2023 Q3 2022
Adjusted Earnings - current and previous three quarters (Reference A) 30,758 33,988 36,446
Add: Income/(loss) attributable to NCI - current and previous three quarters 275 247 649
Add: Current cost of supplies adjustment attributable to NCI - current and previous three quarters (12) 105 (180)
Less: Identified items attributable to NCI (Reference A) - current and previous three quarters 13 15 (9)
Adjusted Earnings plus NCI excluding identified items - current and previous three quarters 31,008 34,325 36,924
Add: Interest expense after tax - current and previous three quarters 3,204 2,941 2,273
Adjusted Earnings plus NCI excluding identified items before interest expense - current and previous three quarters 34,211 37,265 39,197
Capital employed - average 273,659 277,250 267,150
ROACE on an Adjusted Earnings plus NCI basis 12.5% 13.4% 14.7%

E.    Gearing and Net debt

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
  September 30, 2023 June 30, 2023 September 30, 2022
Current debt 10,119    12,114    8,046   
Non-current debt 72,028    72,252    73,944   
Total debt 82,147    84,366    81,990   
Of which lease liabilities 27,854    27,587    26,560   
Add: Debt-related derivative financial instruments: net liability/(asset) 3,116    2,773    4,470   
Add: Collateral on debt-related derivatives: net liability/(asset) (1,762)   (1,736)   (2,139)  
Less: Cash and cash equivalents (43,031)   (45,094)   (35,978)  
Net debt 40,470    40,310    48,343   
Add: Total equity 192,943    192,094    190,237   
Total capital 233,414    232,404    238,581   
Gearing 17.3  % 17.3  % 20.3  %

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3rd QUARTER 2023 UNAUDITED RESULTS

F.    Operating expenses and Underlying 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 Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
6,384    6,041    5,910    Production and manufacturing expenses 18,433    18,298   
    Of which:   
1,125    1,082    1,157    Integrated Gas 3,341    3,697   
2,266    2,095    2,078    Upstream 6,591    6,940   
213    195    152    Marketing 643    641   
2,021    2,069    1,908    Chemicals and Products 5,965    5,406   
760    598    680    Renewables and Energy Solutions 1,878    1,643   
(1)    (64)   Corporate 14    (27)  
3,447    3,314    3,229    Selling, distribution and administrative expenses 9,811    9,392   
    Of which:   
52    45    41    Integrated Gas 123    169   
  58    25    Upstream 120    157   
2,123    2,051    1,867    Marketing 5,970    5,306   
828    787    884    Chemicals and Products 2,436    2,657   
286    257    226    Renewables and Energy Solutions 787    671   
152    116    186    Corporate 375    432   
267    297    220    Research and development 817    672   
    Of which:   
30    26    30    Integrated Gas 84    76   
135    122    74    Upstream 365    288   
59    68    47    Marketing 183    134   
47    52    53    Chemicals and Products 139    120   
(4)   29    17    Renewables and Energy Solutions 45    55   
    Corporate   
10,097    9,653    9,359    Operating expenses 29,062    28,363   
    Of which identified items:   
(19)   (23)   (26)   Redundancy and restructuring (charges)/reversal (51)   23   
(343)   (23)   561    (Provisions)/reversal (376)   177   
    Other   (143)  
(362)   (45)   535    Total identified items (426)   57   
9,735    9,607    9,893    Underlying operating expenses 28,635    28,419   

G.    Free cash flow and Organic 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.

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3rd QUARTER 2023 UNAUDITED RESULTS
 
                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
12,332    15,130    12,539    Cash flow from operating activities 41,622    46,009   
(4,827)   (3,015)   (5,049)   Cash flow from investing activities (12,080)   (15,530)  
7,505    12,116    7,490    Free cash flow 29,542    30,479   
259    480    278    Less: Divestment proceeds (Reference I) 2,477    1,824   
(3)     Add: Tax paid on divestments (reported under "Other investing cash outflows")   ?   
  166    661    Add: Cash outflows related to inorganic capital expenditure1 2,316    3,234   
7,246    11,804    7,872    Organic free cash flow2 29,381    31,890   
                     
  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 and 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.

                  
 
Quarters $ million Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
12,332    15,130    12,539    Cash flow from operating activities 41,622    46,009   
    Of which:   
4,009    3,628    6,664    Integrated Gas 13,923    21,283   
5,336    4,519    8,343    Upstream 15,663    22,417   
880    1,412    2,299    Marketing 3,378    1,315   
2,379    2,110    3,385    Chemicals and Products 6,779    9,787   
(34)   3,192    (8,051)   Renewables and Energy Solutions 4,249    (9,068)  
(238)   269    (100)   Corporate (2,372)   276   
(3,151)   1,171    484    (Increase)/decrease in inventories 2,237    (11,263)  
(1,126)   8,289    (98)   (Increase)/decrease in current receivables 13,105    (14,168)  
4,711    (4,619)   (4,544)   Increase/(decrease) in current payables (10,841)   9,606   
433    4,840    (4,157)   (Increase)/decrease in working capital 4,502    (15,825)  
11,899    10,290    16,696    Cash flow from operating activities excluding working capital movements 37,120    61,834   

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 Nine months
Q3 2023 Q2 2023 Q3 2022   2023 2022
184    362 39 Proceeds from sale of property, plant and equipment and businesses 2,024 1,379
68    100 203 Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans 425 392
  18 36 Proceeds from sale of equity securities 28 52
259    480 278 Divestment proceeds 2,477 1,824

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS

CAUTIONARY STATEMENT

All amounts shown throughout this Unaudited Condensed Interim Financial Report are unaudited. All peak production figures in Portfolio Developments are quoted at 100% expected production. The numbers presented throughout this Unaudited Condensed Interim Financial Report 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, 2022 (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, November 2, 2023. 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 Intensity

Also, in this Unaudited Condensed Interim Financial Report we may refer to Shell's "Net Carbon Intensity", which includes 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 Intensity" is 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 Intensity (NCI) targets over the next ten years. However, Shell's operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI 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 Unaudited Condensed Interim Financial Report contains inside information.

November 2, 2023

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SHELL PLC

3rd QUARTER 2023 UNAUDITED RESULTS
 
   
The information in this Unaudited Condensed Interim Financial Report reflects the unaudited consolidated financial position and results of Shell plc. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK.
      

Contacts:

- Caroline J.M. Omloo, Company Secretary

- Media: International +44 (0) 207 934 5550; USA +1 832 337 4355

LEI number of Shell plc: 21380068P1DRHMJ8KU70

Classification: Inside Information

         Page 35



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