• Strong Q4 2021 Adjusted Earnings of $6.4 billion, supported by higher commodity prices. Continued strong CFFO excluding working capital of $11.1 billion in Q4 2021. Total CFFO excluding working capital amounted to $55 billion in 2021.
• Disciplined cash capex: $20 billion in 2021 and expected to be at the lower end of $23-27 billion range in 2022.
• Net debt reduced to $52.6 billion by end-2021, a $23 billion reduction compared with 2020.
• Share buybacks of $3.5 billion announced in 2021. Dividend expected to be increased by ~4% to $0.25 per share for Q1 2022.
• Stepping up pace of distributions by announcing a share buyback programme of $8.5 billion for the first half of 2022, including the remaining $5.5 billion of Permian divestment proceeds.

Shell plc Chief Executive Officer, Ben van Beurden:
"2021 was a momentous year for Shell. We launched our Powering Progress strategy and simplified our share structure and organisation. Progress made in 2021 will enable us to be bolder and move faster. We have a compelling strategy, with customers at its core. We have ambitious plans to generate shareholder value, to decarbonise our products and to provide energy to our customers while respecting nature.

We delivered very strong financial performance in 2021, and our financial strength and discipline underpin the transformation of our company. Today we are stepping up our distributions with the announcement of an $8.5 billion share buyback programme and we expect to increase our dividend per share by around 4% for Q1 2022." 

Fourth quarter 2021 income attributable to Shell plc shareholders was $11.5 billion, which included non-cash gains of $3.2 billion due to the fair value accounting of commodity derivatives and net gains on sale of assets of $3.0 billion, partly offset by post-tax impairment charges of $0.8 billion.

Adjusted Earnings for the quarter were $6.4 billion. Cost of supplies adjustment attributable to Shell plc shareholders for the fourth quarter 2021 was negative $0.4 billion.

Cash flow from operating activities for the fourth quarter 2021 was $8.2 billion, which included negative working capital movements of $3.0 billion and negative impacts of $2.7 billion related to commodity derivatives. Cash flow from investing activities for the quarter was an inflow of $2.6 billion, mainly driven by proceeds from sale of property, plant and equipment and businesses of $8.8 billion, mostly due to the Permian sale in the USA, partly offset by capital expenditure of $6.2 billion.

Compared with the third quarter 2021, current quarter Adjusted Earnings reflected higher contributions from LNG trading and optimisation and higher realised oil, gas and LNG prices. This was partly offset by lower chemicals and marketing margins.

At the end of the fourth quarter 2021, net debt was $52.6 billion, compared with $57.5 billion at the end of the third quarter 2021, mainly driven by free cash flow generation in the quarter, which included divestment proceeds from the Permian sale in the USA. This was partly offset by dividends and share buybacks. Gearing was 23.1% at the end of the fourth quarter 2021, compared with 25.6% at the end of the third quarter 2021, mainly driven by net debt reduction and higher earnings. 

FOURTH QUARTER 2021 PORTFOLIO DEVELOPMENTS

Integrated Gas

• In December 2021, Shell completed the acquisition of solar and energy storage developer Savion in the USA.
• In December 2021, Shell signed a gas concession agreement for Block 10 in Oman.
• In January 2022, Shell and ScottishPower won bids to develop 5GW of floating wind power in the UK.
• In January 2022, Shell started up a hydrogen hydrolyser with 20MW production capacity in China.
• In February Shell completed the acquisition of online energy retailer Powershop Australia.

Upstream

• In December 2021, Shell completed the sale of the Permian business in the USA.

Oil Products

• In October 2021, Shell signed an agreement to acquire 248 company-owned fuel and convenience retail sites from the Landmark group of companies, whose convenience stores operate in Texas under the Timewise brand. The agreement also includes supply agreements with an additional 117 independently operated fuel and convenience sites, with the deal expected to complete in the first half of 2022.
• In January 2022, Shell completed the sale of their interest in Deer Park Refining Limited Partnership in the USA.

RESERVES UPDATE

Shell expects that SEC proved oil and gas reserves additions before taking into account production will be approximately 1.5 billion boe, and that 2021 production will be approximately 1.2 billion boe. As a result, total proved reserves on an SEC basis are expected to be approximately 9.4 billion boe. Acquisitions and divestments of 2021 reserves are expected to account for a net reduction of approximately 0.2 billion boe.

The proved Reserves Replacement Ratio on an SEC basis is expected to be 120% for the year and 43% for the 3-year average. Excluding the impact of acquisitions and divestments, the proved Reserves Replacement Ratio is expected to be 138% for the year and 56% for the 3-year average.

OUTLOOK

• Cash capital expenditure for the full year 2022 is expected to be at the lower end of the $23 billion to $27 billion range.
• Integrated Gas production is expected to be approximately 760 - 820 thousand boe/d due to turnaround activities and LNG liquefaction volumes are expected to be approximately 7.7 - 8.3 million tonnes.
• Upstream production is expected to be approximately 2,000 - 2,200 thousand boe/d.
• Refinery utilisation is expected to be approximately 71% - 79%.
• Oil Products sales volumes are expected to be approximately 4,100 - 5,400 thousand b/d (of which, Marketing: 2,300 - 2,800 thousand b/d and Refining & Trading: 1,800 - 2,600 thousand b/d).

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