Highlights

• Strong performance in a turbulent economic environment with Adjusted Earnings of $11.5 billion in Q2 2022. Adjusted EBITDA of $23.1 billion in Q2 2022 versus $19.0 billion in Q1 2022.  
• Announced $6 billion share buybacks are expected to be completed by Q3 2022 results; total distributions significantly in excess of 30% of CFFO for the last four quarters. With the current energy sector outlook and subject to Board approval, shareholder distributions are expected to remain in excess of 30% of CFFO.
• In the first half of 2022 shareholder distributions have doubled from those in the first half of 2013, a decade ago, when Brent prices were similar, with increased discipline, integrated value delivery and improved resilience driving better results. 
• Strengthening energy security through natural gas investments in Pierce and Jackdaw (UK), participation in the North Field LNG expansion (Qatar) and Crux FID (Australia). Positioning for the future of energy with a final investment decision for Holland Hydrogen I (Netherlands) and progressing the completion of the acquisition of Sprng Energy (India).
• Disciplined cash capex: expected to be in the $23 - 27 billion range in 2022.
• CFFO increased by $3.8 billion versus Q1 2022 to $18.7 billion, driven by higher Adjusted EBITDA and lower working capital outflows. In Q2 2022, Tax paid & other includes tax payments of $3.2 billion, offset by current cost of supplies adjustment and other movements. Working capital in Q2 2022 is mainly impacted by inventory price and volume hurt of $6.8 billion, offset by favourable accounts receivable and payable movements and initial margin inflows.
• Net debt reduced by ~$2.1 billion (~4%), to $46.4 billion in Q2 2022.

Shell plc Chief Executive Officer, Ben van Beurden, commented:
"With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future.

And, crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance. We are increasing shareholder distributions through a $6 billion share buyback programme which is expected to be completed by Q3 2022 results."

Quarter Analysis

Income attributable to Shell plc shareholders, compared with the first quarter 2022, mainly reflected higher realised prices, higher refining margins, and higher gas and power trading and optimisation results, partly offset by lower LNG trading and optimisation results.

Second quarter 2022 income attributable to Shell plc shareholders included post-tax net impairment reversals of $4.3 billion following the revision of Shell's mid- and long-term commodity price assumptions reflecting the current energy market demand and supply fundamentals (see Note 8 to the Condensed Consolidated Interim Financial Statements), and net mark-to-market gains of $1.0 billion. These are included in identified items amounting to $5.2 billion in the quarter.

Adjusted Earnings and Adjusted EBITDA were driven by the same factors as income attributable to Shell plc shareholders and adjusted for the above identified items of $5.2 billion and the cost of supplies adjustment of $1.4 billion.

Cash flow from operating activities for the second quarter 2022 was $18.7 billion, and reflected working capital outflow of $4.2 billion, tax payments of $3.2 billion, and net derivative outflows of $0.7 billion. Working capital outflow is driven by an increase in inventory due to price and volumes (increase of $6.8 billion), and an increase in current receivables, partly offset by an increase in current payables.

Cash flow from investing activities for the quarter was an outflow of $6.2 billion.

Net debt and Gearing: At the end of the second quarter 2022, net debt was $46.4 billion, compared with $48.5 billion at the end of the first quarter 2022, mainly driven by free cash flow, partly offset by dividends, share buybacks, and lease additions. Gearing was 19.3% at the end of the second quarter 2022, compared with 21.3% at the end of the first quarter 2022, driven by net debt reduction and higher equity.

Upstream

• In April 2022, Shell signed the production-sharing contract (PSC) to formally acquire a 25% stake in the Atapu Field in Brazil.
• The company announced the start of production of the FPSO Guanabara in the Mero field, in the offshore Santos Basin in Brazil in May 2022.
• A final investment decision to develop the Jackdaw gas field in the UK North Sea was announced in July 2022, following regulatory approval earlier this year.

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