Shell enhances quarterly disclosures

Royal Dutch Shell plc (Shell) introduces the publication of a quarterly update, starting with the third quarter 2019. We will additionally publish the quarterly consensus collected for cash flow from operations (CFFO). Jessica Uhl, CFO of Royal Dutch Shell said: “In response to feedback from our investor community we are introducing this new quarterly process. This is a further step in Shell’s ongoing journey to enhance disclosures and increase transparency”.

Third quarter 2019 update

This is an update to the third quarter 2019 outlook provided in the second quarter results announcement on August 1, 2019. The impacts presented here may vary from the actual results and are subject to finalisation of the third quarter 2019 results which are scheduled to be released on 31 October 2019.

Presented earnings impacts relate to earnings on a current cost of supplies basis, attributable to shareholders excluding identified items unless stated otherwise.

Integrated Gas

• Production is expected to be between 930 and 960 thousand barrels of oil equivalent per day
• LNG liquefaction volumes are expected to be between 9.00 and 9.30 million tonnes
• For the third quarter, we expect to deliver strong trading and optimisation performance
• Note that more than 80% of our term contracts for LNG sales in 2018 were oil price linked with a price-lag of typically 3-6 months, as per previous disclosures
• Note that, as in previous quarters, CFFO in Integrated Gas can be impacted by margining resulting from movements in the forward commodity curves

Upstream

• Production is expected to be between 2,600 and 2,650 thousand barrels of oil equivalent per day
• During the third quarter there have been additional well write-offs in the range of $250-$350 million compared to Q3 2018, for which no cash impact is expected
• Natural Gas Liquids and gas prices continue to be disconnected from Brent compared to Q3 2018
• In July, we completed the divestment of the Caesar-Tonga asset and our Upstream interests in Denmark

Downstream

• Refinery availability is expected to be between 90% and 92%
• Oil Products sales volumes are expected to be between 6,700 and 7,350 thousand barrels per day
• Chemicals manufacturing plant availability is expected to be between 90% and 92%
• Chemicals sales volumes are expected to be between 3,900 and 4,000 thousand tonnes
• We expect chemicals cracker and intermediate margins to be materially unchanged from Q2 2019
• In September, we completed the divestment of our interest in the SASREF refining joint venture

Corporate

• Corporate earnings excluding identified items are expected to be a net charge between $700 – 850 million, this excludes the impact of currency exchange rate effects
• Currency exchange rate movements, including a weakening of the Brazilian Real, is expected to have a negative earnings impact on top of the provided range

Other

• As per previous disclosures, price sensitivity at Shell group level is $6 billion per annum per $10 per barrel Brent price movement
• Note that this price sensitivity is appropriate for smaller price changes, and is best used for full-year numbers

Consensus

The consensus collection for quarterly earnings and CFFO, managed by VARA research, is scheduled to be opened for submission on 10 October 2019, close on 23 October 2019, and made public on 24 October 2019.

Source of information

Date