Shell second quarter 2020 update note - Seite 2

• Refinery utilisation is expected to be between 67% and 71%
• Realised gross refining margins are expected to be significantly lower compared with the first quarter 2020 and are expected to be offset by higher trading and optimisation results
• Oil Products sales volumes are expected to be between 3,500 and 4,500 thousand barrels per day, driven by a significant drop in demand related to the impact of COVID-19
• Updates related to receivables provisions are expected to have a negative earnings impact in the range of $200 to $300 million. No cash impact is expected in the second quarter
• Working capital in Oil Products are typically impacted by movements between the quarter opening and closing price of crude along with changes in inventory volumes. Inventory volumes are expected to be higher compared with the end of the first quarter 2020, impacting working capital negatively

Chemicals

• Chemicals manufacturing plant utilisation is expected to be between 75% and 79%
• Chemicals sales volumes are expected to be between 3,400 and 3,700 thousand tonnes

Corporate

• Corporate segment earnings excluding identified items are expected to be a net expense at the lower end of the $800 to $875 million range for the second quarter. This excludes the impact of currency exchange rate effects
• CFFO is expected to be impacted by a working capital outflow in respect of margining and settlement of operational foreign exchange instruments

Revised commodity price and margin outlook and impairments

In the second quarter 2020, Shell has revised its mid and long-term price and refining margin outlook reflecting the expected effects of the COVID-19 pandemic and related macroeconomic as well as energy market demand and supply fundamentals. This has resulted in the review of a significant portion of Shell’s Upstream, Integrated Gas and Refining tangible and intangible assets.

The Refining asset valuation updates reflect Shell’s strategy to reshape and focus its refining portfolio to support the decarbonization of its energy product mix, leveraging assets and value chains in key markets. The Upstream and Integrated Gas asset valuation updates, including of related exploration and evaluation assets, are largely driven by the change in long-term prices with some impacts due to a changed view on the development attractiveness. A revision in the decommissioning and restoration provision discount rate assumption from 3% to 1.75%, reflecting a lower interest rate environment, has impacted the asset values tested for impairment.