Shell second quarter 2021 update note

Strong cash generation supports additional shareholder distributions in the second half of 2021

The Hague, July 7, 2021 − As a result of strong operational and financial delivery, combined with an improved macro-economic outlook, Shell will move to the next phase of its capital allocation framework and, subject to final Board approval, increase total shareholder distributions to within the range of 20-30% of CFFO, starting at the Q2 results announcement. The level of additional distributions will be determined with full visibility of the Q2 financial results.

In the second quarter, Shell expects to have further reduced its net debt, although the extent of the reduction will be moderated by working capital movements. In conjunction with the increased distributions, Shell will retire its net debt milestone of $65 billion and will continue to target further strengthening of its balance sheet and AA credit metrics. 2021 cash capex will remain below $22 billion.

Shell second quarter 2021 update note

The following is an update to the second quarter 2021 outlook. The impacts presented here may vary from the actual results and are subject to finalisation of the second quarter 2021 results, which will be announced on July 29, 2021. Unless otherwise indicated, all outlook statements exclude identified items.

Integrated Gas

Adjusted EBITDA

• Production is expected to be between 900 and 960 thousand barrels of oil equivalent per day.
• LNG liquefaction volumes are expected to be between 7.1 and 7.7 million tonnes, reflecting additional unplanned maintenance activities, which are expected to impact trading and optimisation results.
• Trading and optimisation results are expected to be significantly below average and similar to the first quarter 2021.
• Underlying opex is expected to be between $400 and $500 million lower than the first quarter 2021, which included higher provisions related to counterparty credit risk.

Adjusted Earnings

• Pre-tax depreciation is expected to be between $1.3 and $1.4 billion.
• Taxation charge is expected to be between $300 and $600 million.

Cash flow from operations

• Tax paid is expected to be between $200 and $400 million.
• CFFO excluding working capital is expected to be positively impacted by cash flows related to variation margin.

Upstream

Adjusted EBITDA

• Production is expected to be between 2,225 and 2,300 thousand barrels of oil equivalent per day.
• Any positive impacts from currency effects are expected to be offset by higher Underlying opex from increased planned maintenance activities compared with the first quarter 2021.

Adjusted Earnings