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ROYAL DUTCH SHELL PLC 3RD QUARTER 2021 UNAUDITED RESULTS

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Royal Dutch Shell reported a Q3 2021 loss of $0.4 billion attributable to shareholders, contrasting with a gain of $3.4 billion in Q2 2021. Adjusted Earnings were $4.1 billion, with cash flow from operating activities at $16 billion. Despite operational challenges from Hurricane Ida, higher energy prices drove a 139% rise in Adjusted Earnings year-over-year. Net debt decreased to $57.5 billion, resulting in a gearing ratio of 25.6%. The company plans $7 billion in additional shareholder distributions in 2022 following a $9.5 billion asset sale in the Permian Basin.

Positive
  • Adjusted Earnings increased to $4.1 billion.
  • Cash flow from operating activities reached $16 billion.
  • Net debt reduced to $57.5 billion, improving financial stability.
  • Planned $7 billion in shareholder distributions from asset sales.
Negative
  • Reported a loss of $0.4 billion attributable to shareholders for Q3 2021.
  • Operational disruptions from Hurricane Ida impacted earnings by approximately $0.4 billion.
  • Segment earnings in Integrated Gas showed a loss of $3.2 billion.


 

               
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS
    



 

                           
 
SUMMARY OF UNAUDITED RESULTS
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020%
(447) 3,428  489  -113Income/(loss) attributable to shareholders 8,640  (17,666) +149
(988) 2,634  177  -138CCS earnings attributable to shareholdersNote 25,992  (15,443) +139
4,130  5,534  955  -25Adjusted Earnings²A12,898  4,453  +190
13,460  13,623  7,998   Adjusted EBITDA (CCS basis)A38,656  28,159   
16,025  12,617  10,403  +27Cash flow from operating activities 36,935  27,818  +33
(3,804) (2,946) (2,833)  Cash flow from investing activities (7,339) (7,871)  
12,221  9,671  7,571   Free cash flowG29,596  19,947   
4,840  4,383  3,737   Cash capital expenditureC13,197  12,324   
8,359  8,470  8,095  -1Operating expensesF26,264  25,137  +4
8,696  8,505  7,854  +2Underlying operating expensesF25,924  23,958  +8
2.9%3.2%(4.9)% ROACE (Net income basis)D2.9%(4.9)% 
6.1%4.9%3.9% ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basisD6.1%3.9% 
57,492  65,735  73,463   Net debtE57,492  73,463   
25.6%27.7%31.4% GearingE25.6%31.4% 
3,068  3,254  3,081  -6Total production available for sale (thousand boe/d) 3,269  3,392  -4
(0.06) 0.44  0.06-114Basic earnings per share ($) 1.11  (2.27) +149
0.53  0.71  0.12  -25Adjusted Earnings per share ($)B1.66  0.57  +191
0.24  0.24  0.1665  Dividend per share ($) 0.6535  0.4865  +34



1.     Q3 on Q2 change.

2.     Adjusted Earnings is defined as income/(loss) attributable to shareholders plus cost of supplies adjustment (see Note 2) and excluding identified items (see Reference A).


 

Third quarter 2021 income attributable to Royal Dutch Shell plc shareholders was a loss of $0.4 billion, which included non-cash charges of $5.2 billion due to the fair value accounting of commodity derivatives and post-tax impairment charges of $0.3 billion, partly offset by net gains on sale of assets of $0.3 billion.


 

Adjusted Earnings for the quarter were $4.1 billion. Cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders for the third quarter 2021 was negative $0.5 billion. Hurricane Ida impacted our operations, with an aggregate adverse impact of around $0.4 billion on Adjusted Earnings.


 

Cash flow from operating activities for the third quarter 2021 was $16.0 billion, which included positive impacts of $4.0 billion from commodity derivatives partly offset by negative working capital movements of $1.4 billion. Cash flow from investing activities for the quarter was an outflow of $3.8 billion, mainly driven by capital expenditure and partly offset by proceeds from sale of property, plant and equipment and businesses.


 

Compared with the second quarter 2021, current quarter Adjusted Earnings reflected comparative adverse one-off tax impacts, lower production volumes partly due to the impact of Hurricane Ida, and comparative lower contributions from trading and optimisation. This was partly offset by higher oil, LNG and gas prices.


 

At the end of the third quarter 2021, net debt was $57.5 billion, compared with $65.7 billion at the end of the second quarter 2021, mainly driven by free cash flow generation in the quarter, partly offset by dividends and share buybacks. Gearing was 25.6% at the end of the third quarter 2021, compared with 27.7% at the end of the second quarter 2021, mainly driven by net debt reduction.


 

Dividends declared to Royal Dutch Shell plc shareholders for the quarter amount to $0.24 per share. During the quarter, $1.0 billion of share buybacks were completed out of a total target of $2 billion in the second half of 2021. Additional shareholder distributions of $7 billion related to the Permian sale to start in 2022, post deal completion.






 


   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS





 

This announcement, together with supplementary financial and operational disclosure and a separate press release for this quarter, is available at www.shell.com/investors1.


 

1. Not incorporated by reference.

 

THIRD QUARTER 2021 PORTFOLIO DEVELOPMENTS

 

Integrated Gas

In July 2021, we signed a memorandum of understanding with Deutsche Telekom to advance digital innovation as both companies accelerate their transitions to net-zero emissions.


 

In July 2021, we started production on Block 5C in the East Coast Marine Area (ECMA) in Trinidad and Tobago.


 

 

Upstream

In July 2021, we announced the final investment decision for Whale, a deep-water development in the US Gulf of Mexico.

In August 2021, we announced a final investment decision taken by the Libra consortium, operated by Petrobras, to contract the Mero-4 floating production, storage and offloading vessel to be deployed at the Mero field in offshore Brazil.


 

In August 2021, we announced a final investment decision on the Timi gas development project in Malaysia.


 

In September 2021, we reached an agreement for the sale of the Permian business in the USA for a base consideration of $9.5 billion in cash. The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions to start in 2022, post deal completion, with the remainder used for further strengthening of the balance sheet.


 

In September 2021, we completed the sale of upstream assets in Egypt’s Western Desert for a base consideration of $646 million.

 

Oil Products

In July 2021, we announced the start-up of Europe's largest polymer electrolyte membrane hydrogen electrolyser at the Energy and Chemicals Park Rheinland, Germany, producing green hydrogen.

In July 2021, we reached an agreement for the sale of the non-operated 37.5% shareholding in the Germany PCK Schwedt Refinery.


 

In August 2021, we marked the start of trading in shares of Raízen S.A. on the São Paulo Stock Exchange (B3), following the successful execution of an initial public offering.


 

In September 2021, we announced a final investment decision to build an 820,000-tonnes-a-year biofuels facility at the Energy and Chemicals Park Rotterdam, Netherlands.


 

In October 2021, we 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.


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




PERFORMANCE BY SEGMENT

 

                           
 
INTEGRATED GAS    
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020%
(3,247) 422  (151) -869Segment earnings (297) (6,298) +95
(4,927) (1,187) (920)  Of which: Identified itemsA(5,002) (9,572)  
1,680  1,609  768  +4Adjusted EarningsA4,705  3,274  +44
3,768  3,364  2,349   Adjusted EBITDA (CCS basis)A10,339  8,999   
5,674  3,761  2,323  +51Cash flow from operating activities 11,926  8,972  +33
7,871  4,350  2,396  +81Cash flow from operating activities excluding working capital movementsH15,874  8,619  +84
1,272  880  1,020   Cash capital expenditureC3,167  2,638   
166  162  143  +2Liquids production available for sale (thousand b/d) 166  152  +9
4,476  4,502  4,067  -1Natural gas production available for sale (million scf/d) 4,532  4,343  +4
938  938  844  0Total production available for sale (thousand boe/d) 947  901  +5
7.39  7.49  7.80  -1LNG liquefaction volumes (million tonnes) 23.04  25.03  -8
15.18  15.92  17.63  -5LNG sales volumes (million tonnes) 47.48  54.73  -13



1.Q3 on Q2 change.


 

Third quarter segment earnings amounted to a loss of $3,247 million and Adjusted Earnings for the quarter were $1,680 million. As part of our normal business, commodity derivative hedge contracts are entered into for mitigation of future purchases, sales and inventory. As these commodity derivatives are fair value accounted for, this creates an accounting mismatch over periods. As a result, this quarter included losses of $4,929 million due to the fair value accounting of commodity derivatives (primarily due to gas price developments) and are part of identified items (see Reference A).

Cash flow from operating activities excluding working capital movements for the quarter was $7,871 million, primarily driven by Adjusted EBITDA of $3,768 million and derivatives cash inflows of $4,280 million driven by variation margin in gas and power trading due to significant gas and electricity price increases. As these variation margin cash inflows reflect underlying hedges, this effect could reverse in future quarters.


 

Compared with the second quarter 2021, Integrated Gas Adjusted Earnings primarily reflected higher realised prices for LNG, oil and gas. This was partly offset by comparative lower earnings contribution from the Renewables & Energy Solutions business due to lower margins in North America and comparative adverse one-off tax impacts.

Compared with the second quarter 2021, total oil and gas production remained at a similar level due to lower maintenance activities, offset by field decline and lower demand. LNG liquefaction volumes decreased by 1% due to feedgas constraints and cargo timing, partly offset by lower maintenance activities.

Nine months segment earnings amounted to a loss of $297 million. This included losses of $5,447 million due to the fair value accounting of commodity derivatives. These are mainly related to gas and power trading in Europe to hedge supply and purchase contracts as well as inventory and to physical future global LNG sales that are partially hedged through paper derivative positions. There were also post-tax impairment charges of $588 million, partly offset by gains on sale of assets of $1,094 million. These gains and losses are part of identified items (see Reference A). Adjusted Earnings for the nine months were $4,705 million.


 

Cash flow from operating activities excluding working capital movements for the first nine months of 2021 was $15,874 million, primarily driven by Adjusted EBITDA of $10,339 million and cash inflows of $6,768 million from commodity derivatives.


 

Compared with the first nine months 2020, Integrated Gas Adjusted Earnings primarily reflected higher realised prices for oil, gas and LNG as well as one-off favourable tax impacts. This was partly offset by lower contributions from trading and optimisation.


 

Compared with the first nine months 2020, total oil and gas production increased by 5% mainly due to the restart of production at the Prelude floating LNG operations in Australia, production sharing contract effects and increased demand, partly offset by field decline. LNG liquefaction volumes decreased by 8% due to feedgas constraints and higher maintenance activities, partly offset by the restart of production at the Prelude floating LNG operations in Australia.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                           
 
UPSTREAM     
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020%
1,274  2,415  (1,110) -47Segment earnings 4,786  (8,694) +155
(412) (53) (226)  Of which: Identified itemsA(332) (6,590)  
1,686  2,469  (884) -32Adjusted EarningsA5,118  (2,104) +343
6,766  6,714  2,911   Adjusted EBITDA (CCS basis)A18,866  9,421   
5,777  5,056  2,101  +14Cash flow from operating activities 14,940  8,026  +86
5,889  5,444  2,629  +8Cash flow from operating activities excluding working capital movementsH16,035  6,894  +133
1,502  1,696  1,245   Cash capital expenditureC4,732  5,642   
1,497  1,558  1,520  -4Liquids production available for sale (thousand b/d) 1,544  1,619  -5
3,387  4,082  3,960  -17Natural gas production available for sale (million scf/d) 4,192  4,768  -12
2,081  2,262  2,203  -8Total production available for sale (thousand boe/d) 2,267  2,441  -7



1.    Q3 on Q2 change.


 

Third quarter segment earnings were $1,274 million. This included a net charge of $192 million related to the impact of the weakening Brazilian real on a deferred tax position, losses of $181 million due to the fair value accounting of commodity derivatives and post-tax impairment charges of $116 million, partly offset by a gain of $51 million related to remeasurement of redundancy and restructuring costs. These net losses are part of identified items (see Reference A). Adjusted Earnings were $1,686 million.

Cash flow from operating activities for the quarter was $5,777 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, partly offset by negative working capital movements.


 

Compared with the second quarter 2021, Upstream Adjusted Earnings reflected the comparative adverse impact of a one-off release of a tax provision in Nigeria in the second quarter, higher well write-offs and lower volumes. These were partly offset by higher realised oil and gas prices.


 

Compared with the second quarter 2021, total production decreased by 8%, mainly due to the effects of Hurricane Ida and unfavourable seasonal effects.


 

Nine months segment earnings were $4,786 million. This included losses of $378 million due to the fair value accounting of commodity derivatives, a net charge of $99 million related to the impact of the weakening Brazilian real on a deferred tax position, and post-tax impairment charges of $72 million, partly offset by a net gain of $240 million related to the sale of assets. These net gains are part of identified items (see Reference A). Adjusted Earnings were $5,118 million.


 

Cash flow from operating activities for the first nine months of 2021 was $14,940 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, partly offset by negative working capital movements.


 

Compared with the first nine months 2020, Upstream Adjusted Earnings reflected higher realised oil and gas prices, the one-off release of a tax provision in Nigeria and lower depreciation.


 

Compared with the first nine months 2020, total production decreased by 7%, mainly due to the impact of divestments and higher maintenance activities.


 


 


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                           
 
OIL PRODUCTS    
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020%
1,362  33  2,092  +4065Segment earnings² 2,044  1,281  +60
150  (1,267) 411  
 
Of which: Identified items A(1,344) (4,174)  
1,212  1,299  1,680  -7Adjusted Earnings²A3,389  5,454  -38
    Of which:    
(3) 112  55  -102Refining & Trading³  1,713  -100
1,215  1,187  1,626  +2Marketing³ 3,384  3,742  -10
2,360  2,608  2,520   Adjusted EBITDA (CCS basis)A7,080  9,134   
    Of which:    
415  676  228   Refining & Trading³ 1,558  3,425   
1,945  1,932  2,293   Marketing³ 5,522  5,710   
3,757  2,213  5,131  +70Cash flow from operating activities 6,863  9,647  -29
3,262  3,365  3,476  -3Cash flow from operating activities excluding working capital movementsH9,939  6,259  +59
976  882  832   Cash capital expenditureC2,527  2,019   
1,629  1,833  1,972  -11Refinery processing intake (thousand b/d) 1,737  2,104  -17
4,665  4,552  4,740  +3Oil Products sales volumes (thousand b/d) 4,462  4,686  -5



1.    Q3 on Q2 change.

2.    Earnings are presented on a CCS basis (see Note 2).

3.    With effect from Q1 2021, changes are made in the cost and activity allocation between Marketing and Refining & Trading. This resulted in a net Q3 2021 charge of $120 million (nine months 2021: $339 million) to Refining & Trading, with an offsetting amount in Marketing. This change does not impact consolidated Oil Products Adjusted Earnings.


 


 

Third quarter segment earnings were $1,362 million. This included a gain of $301 million related to the dilution of interest in the Raizen joint venture, partly offset by post-tax impairment charges of $138 million. These net gains are part of identified items (see Reference A). Adjusted Earnings were $1,212 million.

Cash flow from operating activities for the third quarter 2021 was $3,757 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, as well as positive working capital movements due to lower volumes held in inventory.


 

Compared with the second quarter 2021, Oil Products Adjusted Earnings reflected lower contributions from trading and optimisation, partly offset by favourable deferred tax movements.


 

Oil Products sales volumes increased due to favourable seasonal effects and continued demand recovery.


 

•Refining & Trading Adjusted Earnings reflected lower refinery processing intake and utilisation due to planned maintenance and the impact of Hurricane Ida, as well as lower contributions from trading and optimisation.

•Marketing Adjusted Earnings reflected higher sales volumes.


 

Refinery utilisation was 71% compared with 76% in the second quarter 2021, due to higher planned maintenance and the impact of Hurricane Ida.


 

Nine months segment earnings were $2,044 million. This included post-tax impairment charges of $1,268 million, losses of $158 million due to the fair value accounting of commodity derivatives, and redundancy and restructuring costs of $134 million, partly offset by a gain of $301 million related to the dilution of interest in the Raizen joint venture. These net losses are part of identified items (see Reference A). Adjusted Earnings were $3,389 million.


 

Cash flow from operating activities for the first nine months of 2021 was $6,863 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, partly offset by negative working capital movements and cash outflows for commodity derivatives.


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




Compared with the first nine months 2020, Oil Products Adjusted Earnings reflected lower contributions from trading and optimisation and higher operating expenses. These were partly offset by higher marketing volumes and Oil Sands margins.


 

Oil Products sales volumes decreased due to lower trading volumes compared with the first nine months of 2020.


 

•Refining & Trading Adjusted Earnings reflected lower contributions from trading and optimisation and higher operating expenses. These were partly offset by higher Oil Sands margins and lower depreciation.

•Marketing Adjusted Earnings reflected higher operating expenses and favourable tax impacts in the first nine months of 2020, offset by higher sales volumes.


 

Refinery utilisation was 73% compared with 72% in the first nine months of 2020.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                           
 
CHEMICALS    
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020%
357  462  131  -23Segment earnings² 1,509  441  +242
(38) (208) (96)  Of which: Identified itemsA(286) (140)  
395  670  227  -41Adjusted Earnings²A1,795  581  +209
715  1,036  466   Adjusted EBITDA (CCS basis)A2,792  1,439   
840  1,133  335  -26Cash flow from operating activities 2,297  891  +158
684  1,225  488  -44Cash flow from operating activities excluding working capital movementsH2,953  981  +201
1,053  895  595   Cash capital expenditureC2,678  1,810   
3,549  3,609  3,823  -2Chemicals sales volumes (thousand tonnes) 10,741  11,318  -5



1.    Q3 on Q2 change.

2.    Earnings are presented on a CCS basis (see Note 2).


 

Third quarter segment earnings were $357 million. This included post-tax impairment charges, and a legal provision. These net losses are part of identified items (see Reference A). Adjusted earnings were $395 million.

Cash flow from operating activities for the quarter was $840 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as positive working capital movements, partly offset by the timing impact of dividends from Joint Ventures and Associates.


 

Compared with the second quarter 2021, Chemicals Adjusted Earnings reflected the operational impact of Hurricane Ida, lower intermediate and base chemicals margins, as well as lower income from Joint Ventures and Associates.


 

Chemicals manufacturing plant utilisation was 78% compared with 82% in the second quarter 2021, due to the impact of Hurricane Ida and higher planned maintenance.


 

Nine months segment earnings were $1,509 million. This included post-tax impairment charges of $227 million, and legal provisions of $37 million. These net losses are part of identified items (see Reference A). Adjusted earnings were $1,795 million.


 

Cash flow from operating activities for the first nine months was $2,297 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, partly offset by negative working capital movements.


 

Compared with the first nine months 2020, Chemicals Adjusted Earnings reflected higher realised margins in base chemicals and intermediates from a stronger price environment.


 

Chemicals manufacturing plant utilisation was 79% compared with 81% for the first nine months 2020 due to the impact of Hurricane Ida.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS





 

 

                     
 
CORPORATE   
Quarters$ million Nine months
Q3 2021Q2 2021Q3 2020 Reference20212020
(623) (592) (739) Segment earnings (1,747) (1,998) 
109  (193) 52  Of which: Identified itemsA50  578  
(732) (399) (792) Adjusted EarningsA(1,797) (2,576) 
(147) (101) (247) Adjusted EBITDA (CCS basis)A(421) (834) 
(22) 454  514  Cash flow from operating activities 909  282  
(233) (208) (33) Cash flow from operating activities excluding working capital movementsH(471) 118  



Third quarter segment earnings were an expense of $623 million. This included a gain of $108 million from the deferred tax impact of the weakening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were a net expense of $732 million.

Compared with the second quarter 2021, Adjusted Earnings reflected unfavourable movements in tax credits and currency exchange rate effects, partly offset by lower operating and net interest expenses.

Nine months segment earnings were an expense of $1,747 million. This included a gain of $50 million from the deferred tax impact of the weakening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were a net expense of $1,797 million.

Compared with the first nine months 2020, Adjusted Earnings reflected lower net interest expense and favourable currency exchange rate effects.

 

OUTLOOK FOR THE FOURTH QUARTER 2021

Cash capital expenditure was $13.2 billion for the first nine months 2021 and is expected to be around $20 billion for the full year 2021.

 

Integrated Gas production is expected to be approximately 940 - 980 thousand boe/d and LNG liquefaction volumes are expected to benefit from lower maintenance activities and be approximately 8.0 - 8.6 million tonnes.

 

Upstream production is expected to be approximately 2,100 - 2,350 thousand boe/d.

 

Refinery utilisation is expected to be approximately 68% - 76%.

Oil Products sales volumes are expected to be approximately 4,200 - 5,200 thousand b/d.

 

Chemicals manufacturing plant utilisation is expected to be approximately 73% - 81%.

Chemicals sales volumes are expected to be approximately 3,500 - 3,900 thousand tonnes.

 

Corporate Adjusted Earnings are expected to be a net expense of approximately $650 - $750 million in the fourth quarter 2021 and a net expense of approximately $2,450 - $2,550 million for the full year 2021. This excludes the impact of currency exchange rate effects.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




FORTHCOMING EVENTS


 

Fourth quarter 2021 and full year results and dividends are scheduled to be announced on February 3, 2022. First quarter 2022 results and dividends are scheduled to be announced on May 5, 2022. Second quarter 2022 and half year results and dividends are scheduled to be announced on July 28, 2022. Third quarter 2022 results and dividends are scheduled to be announced on October 27, 2022.

 


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

                  
 
CONSOLIDATED STATEMENT OF INCOME  
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
60,044  60,515  44,021  Revenue¹176,224  136,554  
1,014  1,114  461  Share of profit of joint ventures and associates3,122  1,154  
497  134  234  Interest and other income²3,087  458  
61,555  61,764  44,717  Total revenue and other income182,434  138,167  
44,260  39,717  27,276  Purchases118,346  88,582  
5,322  5,162  5,496  Production and manufacturing expenses17,292  17,299  
2,892  3,107  2,366  Selling, distribution and administrative expenses8,461  7,130  
145  201  233  Research and development511  708  
526  332  222  Exploration1,143  1,239  
6,358  8,223  7,689  Depreciation, depletion and amortisation²20,477  42,871  
859  893  992  Interest expense2,643  3,181  
60,362  57,634  44,275  Total expenditure168,874  161,009  
1,193  4,130  442  Income/(loss) before taxation13,560  (22,842) 
1,510  571  (104) Taxation charge/(credit)4,535  (5,265) 
(317) 3,559  546  Income/(loss) for the period¹9,025  (17,578) 
130  131  57  Income/(loss) attributable to non-controlling interest385  88  
(447) 3,428  489  Income/(loss) attributable to Royal Dutch Shell plc shareholders8,640  (17,666) 
(0.06) 0.44  0.06  Basic earnings per share ($)³1.11  (2.27) 
(0.06) 0.44  0.06  Diluted earnings per share ($)³1.10  (2.27) 



1.    See Note 2 “Segment information”.

2.    See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.

3.    See Note 3 “Earnings per share”.


 

 

                  
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
(317) 3,559  546  Income/(loss) for the period9,025  (17,578) 
   Other comprehensive income/(loss) net of tax:  
   Items that may be reclassified to income in later periods:  
(943) 575  1,246  – Currency translation differences(1,219) (1,101) 
(1) (2)  – Debt instruments remeasurements(17) 20  
102  (84) 75  – Cash flow hedging gains/(losses)150  (214) 
89  (51) (153) – Net investment hedging gains/(losses)209  (253) 
16  (20) (59) – Deferred cost of hedging(38) 97  
(104) (7) (51) – Share of other comprehensive income/(loss) of joint ventures and associates(167) (80) 
(841) 410  1,063  Total(1,083) (1,530) 
   Items that are not reclassified to income in later periods:  
291  1,675  (580) – Retirement benefits remeasurements6,594  (3,747) 
(25) 10  36  – Equity instruments remeasurements25  (24) 
41  (42) 45  – Share of other comprehensive income/(loss) of joint ventures and associates(26) 112  
307  1,643  (499) Total6,592  (3,659) 
(534) 2,053  564  Other comprehensive income/(loss) for the period5,510  (5,189) 
(851) 5,612  1,111  Comprehensive income/(loss) for the period14,535  (22,767) 
85  145  82  Comprehensive income/(loss) attributable to non-controlling interest351   
(937) 5,467  1,029  Comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders14,184  (22,768) 





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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

         
 
CONDENSED CONSOLIDATED BALANCE SHEET
$ million  
 September 30, 2021December 31, 2020 4
Assets  
Non-current assets  
Intangible assets22,344  22,710  
Property, plant and equipment196,261  209,700  
Joint ventures and associates23,724  22,451  
Investments in securities3,662  3,222  
Deferred tax14,542  16,311  
Retirement benefits18,009  2,474  
Trade and other receivables7,605  7,641  
Derivative financial instruments²1,052  2,805  
 277,199  287,315  
Current assets  
Inventories24,596  19,457  
Trade and other receivables46,366  33,625  
Derivative financial instruments²14,613  5,783  
Cash and cash equivalents38,073  31,830  
 123,648  90,695  
Assets classified as held for sale17,922  1,258  
 131,570  91,953  
Total assets408,769  379,268  
Liabilities  
Non-current liabilities  
Debt84,705  91,115  
Trade and other payables2,224  2,304  
Derivative financial instruments²571  420  
Deferred tax12,159  10,463  
Retirement benefits1,311,835  15,605  
Decommissioning and other provisions26,361  27,116  
 137,856  147,023  
Current liabilities  
Debt10,686  16,899  
Trade and other payables³59,722  44,572  
Derivative financial instruments²26,118  5,308  
Income taxes payable³2,809  3,111  
Decommissioning and other provisions3,139  3,622  
 102,473  73,512  
Liabilities directly associated with assets classified as held for sale11,758  196  
 104,230  73,708  
Total liabilities242,086  220,731  
Equity attributable to Royal Dutch Shell plc shareholders163,390  155,310  
Non-controlling interest3,293  3,227  
Total equity166,683  158,537  
Total liabilities and equity408,769  379,268  



1.    See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".

2.    See Note 6 “Derivative financial instruments and debt excluding lease liabilities”.

3. As from January 1, 2021 the 'Retirement benefits' liability has been classified under non-current liabilities (previously partly presented within current liabilities) and taxes payable not related to income tax are presented within 'Trade and other payables' (previously 'Taxes payable'). Prior period comparatives have been revised to conform with current year presentation. See Note 7.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




4. For Q3 2021, assets held for sale are presented separately. Prior period comparatives have been revised to conform with current year presentation.


 


 


 

 

                        
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 Equity attributable to Royal Dutch Shell plc shareholders  
$ millionShare capital¹Shares held in trustOther reserves²Retained earningsTotalNon-controlling interestTotal equity
At January 1, 2021651  (709) 12,752  142,616  155,310  3,227  158,537  
Comprehensive income/(loss) for the period—  —  5,544  8,640  14,184  351  14,535  
Transfer from other comprehensive income—  —  (14) 14  —  —  —  
Dividends³—  —  —  (4,475) (4,475) (305) (4,780) 
Repurchases of shares4(4) —   (2,003) (2,003) —  (2,003) 
Share-based compensation—  350  (68) 93  375  —  375  
Other changes in non-controlling interest—  —  —  (1) (1) 20  19  
At September 30, 2021647  (359) 18,218  144,884  163,390  3,293  166,683  
At January 1, 2020657  (1,063) 14,451  172,431  186,476  3,987  190,463  
Comprehensive income/(loss) for the period—  —  (5,102) (17,666) (22,768)  (22,767) 
Transfer from other comprehensive income—  —  185  (185) —  —  —  
Dividends3—  —  —  (5,956) (5,956) (242) (6,198) 
Repurchases of shares(6) —   (1,214) (1,214) —  (1,214) 
Share-based compensation—  539  (237) (230) 73  —  73  
Other changes in non-controlling interest—  —  —  557  557  (573) (16) 
At September 30, 2020651  (523) 9,303  147,737  157,168  3,173  160,341  



1.    See Note 4 “Share capital”.

2.    See Note 5 “Other reserves”.

3.    The amount charged to retained earnings is based on prevailing exchange rates on payment date.

4. Includes shares committed to repurchase and repurchases subject to settlement at the end of the quarter.


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                  
 
CONSOLIDATED STATEMENT OF CASH FLOWS  
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
1,193  4,130  442  Income before taxation for the period13,560  (22,842) 
   Adjustment for:  
723  797  814  – Interest expense (net)2,277  2,600  
6,358  8,223  7,689  – Depreciation, depletion and amortisation20,477  42,871  
323  108  14  – Exploration well write-offs567  615  
(298) 55  (103) – Net (gains)/losses on sale and revaluation of non-current assets and businesses(2,316) (124) 
(1,014) (1,114) (461) – Share of (profit)/loss of joint ventures and associates(3,122) (1,154) 
956  782  468  – Dividends received from joint ventures and associates2,318  1,609  
(538) (2,495) 405  – (Increase)/decrease in inventories(6,459) 6,286  
(2,859) (4,080) (540) – (Increase)/decrease in current receivables(13,768) 9,733  
1,950  5,016  1,583  – Increase/(decrease) in current payables12,831  (11,073) 
10,116  2,173  233  – Derivative financial instruments12,474  899  
(113) 47  152  – Retirement benefits43  355  
(206) (124) 43  – Decommissioning and other provisions(252) 333  
894  561  265  – Other2,038  363  
(1,459) (1,465) (601) Tax paid(3,733) (2,653) 
16,025  12,617  10,403  Cash flow from operating activities36,935  27,818  
(4,648) (4,232) (3,679) Capital expenditure(12,764) (11,379) 
(151) (115) (34) Investments in joint ventures and associates(335) (754) 
(41) (36) (23) Investments in equity securities(98) (190) 
1,122  1,162  571  Proceeds from sale of property, plant and equipment and businesses5,390  2,395  
168   159  Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans1447  1,129  
 108  139  Proceeds from sale of equity securities145  274  
93  110  112  Interest received302  422  
929  799  588  Other investing cash inflows2,440  2,617  
(1,283) (746) (665) Other investing cash outflows(2,866) (2,384) 
(3,804) (2,946) (2,833) Cash flow from investing activities(7,339) (7,871) 
(33) (34) (176) Net increase/(decrease) in debt with maturity period within three months46  236  
   Other debt:  
23  57  4,745  – New borrowings189  20,986  
(4,077) (3,901) (2,688) – Repayments(13,684) (12,523) 
(788) (1,162) (831) Interest paid(2,756) (2,952) 
(268) (57) 419  Derivative financial instruments(774) 662  
 —  —  Change in non-controlling interest19  (40) 
   Cash dividends paid to:  
(1,812) (1,310) (1,236) – Royal Dutch Shell plc shareholders2(4,414) (6,117) 
(40) (140) (65) – Non-controlling interest(305) (242) 
(971) —  —  Repurchases of shares(1,187) (1,702) 
34  (2)  Shares held in trust: net sales/(purchases) and dividends received(32) (198) 
(7,930) (6,550) 169  Cash flow from financing activities(22,900) (1,892) 
(322) (2) 36  Effects of exchange rate changes on cash and cash equivalents(453) (395) 
3,969  3,119  7,775  Increase/(decrease) in cash and cash equivalents6,244  17,659  
34,104  30,985  27,939  Cash and cash equivalents at beginning of period31,830  18,055  
38,073  34,104  35,714  Cash and cash equivalents at end of period38,073  35,714  



1. As from 2021 renamed from 'Proceeds from sale of joint ventures and associates'.


 

2. Cash dividends paid represents the payment of net dividends (after deduction of withholding taxes where applicable) and payment of withholding taxes on dividends paid in the previous quarter.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

1. Basis of preparation

These unaudited Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc (“the Company”) and its subsidiaries (collectively referred to as “Shell”) have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and as adopted by the UK. For periods beginning on or after January 1, 2021, Shell's (interim) financial statements are prepared in accordance with UK-adopted international accounting standards which were established as a result of the UK's exit from the European Union. As applied to Shell there are no material differences from International Financial Reporting Standards as issued by the IASB. Except for the application of UK-adopted international accounting standards these Interim Statements have been prepared on the basis of the same accounting principles as those used in the Annual Report and Accounts (pages 216 to 264) and Form 20-F (pages 164 to 211) for the year ended December 31, 2020 as filed with the Registrar of Companies for England and Wales and the US Securities and Exchange Commission, respectively, and should be read in conjunction with these filings.

The financial information presented in the unaudited Interim Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 (“the Act”). Statutory accounts for the year ended December 31, 2020 were published in Shell’s Annual Report and Accounts, a copy of which was delivered to the Registrar of Companies for England and Wales, and in Shell's Form 20-F. The auditor’s report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or 498(3) of the Act.

Key accounting considerations, significant judgements and estimates

Future commodity price assumptions and management's view on the future development of refining margins represent a significant estimate and both were subject to change in 2020, resulting in the recognition of impairments in 2020. These assumptions continue to apply for impairment testing purposes in the third quarter 2021.


 


 

 

2. Segment information

Segment earnings are presented on a current cost of supplies basis (CCS earnings), which is the earnings measure used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance. On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings therefore exclude the effect of changes in the oil price on inventory carrying amounts. Sales between segments are based on prices generally equivalent to commercially available prices.



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                  
 
INFORMATION BY SEGMENT  
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
   Third-party revenue  
6,994  9,247  7,684  Integrated Gas27,499  25,277  
2,368  2,242  1,670  Upstream6,551  5,191  
46,281  44,570  31,823  Oil Products129,233  97,716  
4,390  4,444  2,831  Chemicals12,904  8,335  
11  12  13  Corporate36  35  
60,044  60,515  44,021  Total third-party revenue¹176,224  136,554  
   Inter-segment revenue  
1,887  1,794  864  Integrated Gas5,032  2,313  
9,191  8,924  5,111  Upstream25,370  15,704  
3,094  3,017  1,547  Oil Products8,567  4,480  
1,663  1,633  715  Chemicals4,483  2,065  
—  —  —  Corporate—  —  
   CCS earnings  
(3,247) 422  (151) Integrated Gas(297) (6,298) 
1,274  2,415  (1,110) Upstream4,786  (8,694) 
1,362  33  2,092  Oil Products2,044  1,281  
357  462  131  Chemicals1,509  441  
(623) (592) (739) Corporate(1,747) (1,998) 
(876) 2,741  222  Total CCS earnings6,295  (15,268) 



1.    Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Third quarter 2021 included losses of $5,032 million mainly driven by Integrated Gas, refer to “Performance by Segment” (Q2 2021: $340 million losses; Q3 2020: $1,803 million income). This amount includes both the reversal of prior losses of $1,205 million (Q2 2021: $374 million losses; Q3 2020: $15 million losses) related to sales contracts and prior gains of $1,517 million (Q2 2021: $434 million gains; Q3 2020: $22 million gains) related to purchase contracts that were previously recognised and where physical settlement took place in the third quarter 2021.

                  
 
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS  
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
(447) 3,428  489  Income/(loss) attributable to Royal Dutch Shell plc shareholders8,640  (17,666) 
130  131  57  Income/(loss) attributable to non-controlling interest385  88  
(317) 3,559  546  Income/(loss) for the period9,025  (17,578) 
   Current cost of supplies adjustment:  
(666) (994) (395) Purchases(3,291) 2,947  
142  208  100  Taxation703  (719) 
(35) (33) (29) Share of profit/(loss) of joint ventures and associates(143) 82  
(559) (818) (324) Current cost of supplies adjustment(2,730) 2,310  
   of which:  
(541) (793) (312) Attributable to Royal Dutch Shell plc shareholders(2,648) 2,222
(18) (25) (12)Attributable to non-controlling interest(82) 88
(876) 2,741  222  CCS earnings6,295  (15,268) 
   of which:  
(988) 2,634  177  CCS earnings attributable to Royal Dutch Shell plc shareholders5,992  (15,443) 
112  106  45  CCS earnings attributable to non-controlling interest303  176  




 


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




3. Earnings per share

                  
 
EARNINGS PER SHARE
Quarters Nine months
Q3 2021Q2 2021Q3 2020 20212020
(447) 3,428  489  Income/(loss) attributable to Royal Dutch Shell plc shareholders ($ million)8,640  (17,666) 
      
   Weighted average number of shares used as the basis for determining:  
7,773.3  7,790.1  7,788.7  Basic earnings per share (million)7,781.8  7,799.4  
7,773.3  7,835.9  7,823.6  Diluted earnings per share (million)7,827.9  7,799.4  



 

4. Share capital

                  
 
ISSUED AND FULLY PAID ORDINARY SHARES OF €0.07 EACH1
 Number of sharesNominal value ($ million)
 ABABTotal
At January 1, 20214,101,239,499  3,706,183,836  345306651
Repurchases of shares—  (48,493,633) (4)(4)
At September 30, 20214,101,239,499  3,657,690,203  345302647
At January 1, 20204,151,787,517  3,729,407,107  349308657
Repurchases of shares(50,548,018) (23,223,271) (4)(2)(6)
At September 30, 20204,101,239,499  3,706,183,836  345306651



1.    Share capital at September 30, 2021 also included 50,000 issued and fully paid sterling deferred shares of £1 each.

At Royal Dutch Shell plc’s Annual General Meeting on May 18, 2021, the Board was authorised to allot ordinary shares in Royal Dutch Shell plc, and to grant rights to subscribe for, or to convert, any security into ordinary shares in Royal Dutch Shell plc, up to an aggregate nominal amount of €182.1 million (representing 2,602 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at the earlier of the close of business on August 18, 2022, and the end of the Annual General Meeting to be held in 2022, unless previously renewed, revoked or varied by Royal Dutch Shell plc in a general meeting.

 

5. Other reserves

                     
 
OTHER RESERVES
$ millionMerger reserveShare premium reserveCapital redemption reserveShare plan reserveAccumulated other comprehensive incomeTotal
At January 1, 202137,298  154  129  906  (25,735) 12,752  
Other comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders—  —  —  —  5,544  5,544  
Transfer from other comprehensive income—  —  —  —  (14) (14) 
Repurchases of shares—  —   —  —   
Share-based compensation—  —  —  (68) —  (68) 
At September 30, 202137,298  154  133  838  (20,206) 18,218  
At January 1, 202037,298  154  123  1,049  (24,173) 14,451  
Other comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders—  —  —  —  (5,102) (5,102) 
Transfer from other comprehensive income—  —  —  —  185  185  
Repurchases of shares—  —   —  —   
Share-based compensation—  —  —  (237) —  (237) 
At September 30, 202037,298  154  129  812  (29,091) 9,303  





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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent company of Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company, p.l.c., now The Shell Transport and Trading Company Limited, in 2005. The merger reserve increased in 2016 following the issuance of shares for the acquisition of BG Group plc. The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc. The share plan reserve is in respect of equity-settled share-based compensation plans.

 

6. Derivative financial instruments and debt excluding lease liabilities

As disclosed in the Consolidated Financial Statements for the year ended December 31, 2020, presented in the Annual Report and Accounts and Form 20-F for that year, Shell is exposed to the risks of changes in fair value of its financial assets and liabilities. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values at September 30, 2021, are consistent with those used in the year ended December 31, 2020, though the carrying amounts of derivative financial instruments measured using predominantly unobservable inputs have changed since that date.

The table below provides the comparison of the fair value with the carrying amount of debt excluding lease liabilities, disclosed in accordance with IFRS 7 Financial Instruments: Disclosures.

         
 
DEBT EXCLUDING LEASE LIABILITIES
$ millionSeptember 30, 2021December 31, 2020
Carrying amount67,422  79,594  
Fair value¹74,397  88,294  



1.    Mainly determined from the prices quoted for these securities.


 

 


 

7. Other notes to the unaudited Condensed Consolidated Interim Financial Statements

Consolidated Statement of Income

Interest and other income

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
497  134  234  Interest and other income3,087  458  
   of which:  
136  95  154  Interest income366  511  
 34   Dividend income (from investments in equity securities)44  19  
298  (55) 103  Net gains on sales and revaluation of non-current assets and businesses2,316  124  
(42)  (150) Net foreign exchange gains/(losses) on financing activities48  (355) 
96  56  123  Other313  159  




 

Depreciation, depletion and amortisation

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
6,358  8,223  7,689  Depreciation, depletion and amortisation20,477  42,871  



Depreciation, depletion and amortisation in Q3 2021 includes $352 million pre-tax (Q2 2021: $2,333 million; Q3 2020: $1,615 million; nine months 2021: $2,770 million; nine months 2020: $24,145) of impairments.


 

Condensed Consolidated Balance Sheet


 

Assets classified as held for sale



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

         
 
$ million  
 September 30, 2021December 31, 2020
Assets classified as held for sale7,922  1,258  
Liabilities directly associated with assets classified as held for sale1,758  196  




 

Assets classified as held for sale and associated liabilities at September 30, 2021 mainly relate to the Permian business in the USA and two refineries. The major classes of assets and liabilities classified as held for sale are Property, plant and equipment ($6,192 million; December 31, 2020: $1,146 million), Inventories ($787 million; December 31, 2020: zero), Decommissioning and other provisions ($692 million; December 31, 2020: $196 million) and Debt ($531 million; December 31, 2020: zero).

Retirement benefits

         
 
$ million  
 September 30, 2021December 31, 2020
Non-current assets  
Retirement benefits8,009  2,474  
Non-current liabilities  
Retirement benefits¹11,835  15,605  
Deficit3,826  13,131  



1.As from January 1, 2021 the 'Retirement benefits' liability has been classified under non-current liabilities (previously partly presented within current liabilities). Prior period comparatives have been revised by $437 million to conform with current year presentation.

The decrease in the net retirement benefit liability is mainly driven by an increase of the market yield on high-quality corporate bonds in the USA, the UK and Eurozone and positive returns on plan assets, partly offset by an increase in expected inflation in the UK and Eurozone. Amounts recognised in the balance sheet in relation to defined benefit plans include both plan assets and obligations that are presented on a net basis on a plan-by-plan basis.


 

Income taxes payable

         
 
$ million  
 September 30, 2021December 31, 2020
Income taxes payable2,809  3,111  




 

As from January 1, 2021 taxes payable not related to income tax are presented within 'Trade and other payables' (previously within 'Taxes payable') and 'Taxes payable' has been renamed into 'Income taxes payable'. Prior period comparatives have been revised by $2,895 million to conform with current year presentation.


 



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ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES

A.Adjusted Earnings and Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA)

The “Adjusted Earnings” measure aims to facilitate a comparative understanding of Shell’s financial performance from period to period by removing the effects of oil price changes on inventory carrying amounts and removing the effects of identified items. These items are in some cases driven by external factors and may, either individually or collectively, hinder the comparative understanding of Shell’s financial results from period to period. This measure excludes earnings attributable to non-controlling interest.

The “Adjusted EBITDA (CCS basis)” and “Adjusted EBITDA (FIFO basis)” measures are introduced with effect from January 1, 2021. Management uses both measures to evaluate Shell’s performance in the period and over time.

We define "Adjusted EBITDA (CCS basis)" as "Income/(loss) for the period" adjusted for current cost of supplies; identified items; tax charge/(credit); depreciation, amortisation and depletion; exploration well write-offs and net interest expense. All items include the non-controlling interest component.

We define “Adjusted EBITDA (FIFO basis)” as “Income/(loss) for the period adjusted for identified items; tax charge/(credit); depreciation, amortisation and depletion; exploration well write-offs and net interest expense. All items include the non-controlling interest component.


 

                  
 
ADJUSTED EARNINGS
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
(447) 3,428  489  Income/(loss) attributable to Royal Dutch Shell plc shareholders8,640  (17,666) 
(541) (793) (312) Add: Current cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders (Note 2)(2,648) 2,222  
(5,118) (2,899) (778) Less: Identified items attributable to Royal Dutch Shell plc shareholders(6,906) (19,897) 
4,130  5,534  955  Adjusted Earnings12,898  4,453  
   Of which:  
1,680  1,609  768  Integrated Gas4,705  3,274  
1,686  2,469  (884) Upstream5,118  (2,104) 
1,212  1,299  1,680  Oil Products3,389  5,454  
(3) 112  55  Refining and Trading 1,713  
1,215  1,187  1,626  Marketing3,384  3,742  
395  670  227  Chemicals1,795  581  
(732) (399) (792) Corporate(1,797) (2,576) 
(112) (115) (45) Less: Non-controlling interest(312) (176) 




 


 


 


 


 


 


 


 


 


 



         Page 19




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                  
 
ADJUSTED EBITDA
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
4,130  5,534  955  Adjusted Earnings12,898  4,453  
112  115  45  Add: Non-controlling interest312  176  
2,168  1,178  72  Add: Taxation charge/(credit) excluding tax impact of identified items4,896  1,520  
6,005  5,890  6,074  Add: Depreciation, depletion and amortisation excluding impairments17,707  18,726  
323  108  14  Add: Exploration well write-offs567  615  
859  893  992  Add: Interest expense excluding identified items2,643  3,180  
136  95  154  Less: Interest income366  511  
13,460  13,623  7,998  Adjusted EBITDA (CCS basis)138,656  28,159  
   Of which:  
3,768  3,364  2,349  Integrated Gas10,339  8,999  
6,766  6,714  2,911  Upstream18,866  9,421  
2,360  2,608  2,520  Oil Products7,080  9,134  
415  676  228  Refining and Trading1,558  3,425  
1,945  1,932  2,293  Marketing5,522  5,710  
715  1,036  466  Chemicals2,792  1,439  
(147) (101) (247) Corporate(421) (834) 
(559) (818) (324) Less: Current cost of supplies adjustment (Note 2)(2,730) 2,310  
142  208  100  Add: Current cost of supplies adjustment to taxation charge/(credit) (Note 2)703  (719) 
14,160  14,647  8,423  Adjusted EBITDA (FIFO basis)142,090  25,130  
   Of which:  
3,768  3,364  2,349  Integrated Gas10,339  8,999  
6,766  6,714  2,911  Upstream18,866  9,421  
2,965  3,553  2,863  Oil Products10,104  6,478  
892  1,370  578  Refining and Trading3,977  1,017  
2,073  2,182  2,286  Marketing6,126  5,463  
810  1,117  548  Chemicals3,201  1,066  
(147) (101) (247) Corporate(421) (834) 



1.With effect from Q3 2021, Adjusted EBITDA includes the non-controlling interest component of Adjusted Earnings. Prior period comparatives have been revised and had been previously reported as Q2 2021 Adjusted EBITDA (CCS basis): $13,507 million and Adjusted EBITDA (FIFO basis): $14,508 million.


 


 


 


 


 


 


 


 


 


 


 


 


 


 



         Page 20




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS





 


 

Identified items

Identified items comprise: divestment gains and losses, impairments, redundancy and restructuring, provisions for onerous contracts, fair value accounting of commodity derivatives and certain gas contracts and the impact of exchange rate movements on certain deferred tax balances, and other items.


 

                  
 
IDENTIFIED ITEMS
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
   Identified items before tax  
316  (55) 103  Divestment gains/(losses)2,334  154  
(352) (2,333) (1,636) Impairments(2,770) (24,718) 
321  68  25  Redundancy and restructuring(358) (511) 
(107) —  (133) Provisions for onerous contracts(107) (133) 
(6,110) (1,373) 721  Fair value accounting of commodity derivatives and certain gas contracts(7,095) (195) 
15  (29) (134) Other17  (561) 
(5,917) (3,722) (1,055) Total identified items before tax(7,978) (25,963) 
799  815  276  Total tax impact of identified items1,064  6,066  
   Identified items after tax  
301  (83) 46  Divestment gains/(losses)1,629  24  
(275) (1,787) (1,143) Impairments(2,155) (18,521) 
204  45   Redundancy and restructuring(237) (378) 
(82) —  (126) Provisions for onerous contracts(82) (126) 
(5,164) (1,181) 532  Fair value accounting of commodity derivatives and certain gas contracts(5,980) (171) 
(121) 121  13  Impact of exchange rate movements on tax balances(110) (397) 
19  (23) (104) Other21  (328) 
(5,118) (2,908) (778) Impact on CCS earnings(6,914) (19,897) 
   Of which:  
(4,927) (1,187) (920) Integrated Gas(5,002) (9,572) 
(412) (53) (226) Upstream(332) (6,590) 
150  (1,267) 411  Oil Products(1,344) (4,174) 
(38) (208) (96) Chemicals(286) (140) 
109  (193) 52  Corporate50  578  
(5,118) (2,899) (778) Impact on CCS earnings attributable to shareholders(6,906) (19,897) 
—  (8) —  Impact on CCS earnings attributable to non-controlling interest(8) —  




 

The identified items categories above may include after-tax impacts of identified items of joint ventures and associates which are fully reported within "Share of profit of joint ventures and associates" in the Consolidated Statement of Income, and fully reported as identified items before tax in the table above. Identified items related to subsidiaries are consolidated and reported across appropriate lines of the Consolidated Statement of Income. Only pre-tax identified items reported by subsidiaries are taken into account in the calculation of underlying operating expenses (Reference F).


 

Provisions for onerous contracts: Provisions for onerous contracts that relate to businesses that Shell has exited or to redundant assets or assets that cannot be used.

Fair value accounting of commodity derivatives and certain gas contracts: In the ordinary course of business, Shell enters into contracts to supply or purchase oil and gas products, as well as power and environmental products. Shell also enters into contracts for tolling, pipeline and storage capacity. Derivative contracts are entered into for mitigation of resulting economic exposures (generally price exposure) and these derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes, as well as contracts for tolling, pipeline and storage capacity, are, by contrast, recognised when the transaction occurs; furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.



         Page 21




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period, or (b) the inventory is measured on a different basis. In addition, certain contracts are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes. The accounting impacts are reported as identified items.

Impacts of exchange rate movements on tax balances represent the impact on tax balances of exchange rate movements arising on (a) the conversion to dollars of the local currency tax base of non-monetary assets and liabilities, as well as losses (this primarily impacts the Upstream and Integrated Gas segments) and (b) the conversion of dollar-denominated inter-segment loans to local currency, leading to taxable exchange rate gains or losses (this primarily impacts the Corporate segment).

Other identified items represent other credits or charges that based on Shell management's assessment hinder the comparative understanding of Shell's financial results from period to period.

B.    Adjusted Earnings per share

Adjusted Earnings per share is calculated as Adjusted Earnings (see Reference A), divided by the weighted average number of shares used as the basis for basic earnings per share (see Note 3).

C.    Cash capital expenditure

Cash capital expenditure represents cash spent on maintaining and developing assets as well as on investments in the period. Management regularly monitors this measure as a key lever to delivering sustainable cash flows. Cash capital expenditure is the sum of the following lines from the Consolidated Statement of Cash flows: Capital expenditure, Investments in joint ventures and associates and Investments in equity securities.

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
4,648  4,232  3,679  Capital expenditure12,764  11,379  
151  115  34  Investments in joint ventures and associates335  754  
41  36  23  Investments in equity securities98  190  
4,840  4,383  3,737  Cash capital expenditure13,197  12,324  
   Of which:  
1,272  880  1,020  Integrated Gas3,167  2,638  
1,502  1,696  1,245  Upstream4,732  5,642  
976  882  832  Oil Products2,527  2,019  
1,053  895  595  Chemicals2,678  1,810  
36  30  45  Corporate94  215  




 

D.    Return on average capital employed


 

Return on average capital employed ("ROACE") measures the efficiency of Shell’s utilisation of the capital that it employs. Shell uses two ROACE measures: ROACE on a Net income basis and ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis, both adjusted for after-tax interest expense.

Both measures refer to Capital employed which consists of total equity, current debt and non-current debt.

ROACE on a Net income basis


 

In this calculation, the sum of income for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period.



         Page 22




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

            
 
$ millionQuarters
 Q3 2021Q2 2021Q3 2020
Income - current and previous three quarters5,0695,933(16,489)
Interest expense after tax - current and previous three quarters2,6362,6682,933
Income before interest expense - current and previous three quarters7,7058,601(13,556)
Capital employed – opening269,397265,435281,505
Capital employed – closing262,074271,319269,397
Capital employed – average265,735268,377275,451
ROACE on a Net income basis2.9%3.2%(4.9)%




 

ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis


 

In this calculation, the sum of Adjusted Earnings (see Reference A) plus non-controlling interest (NCI) excluding identified items for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period. This measure was previously referred to as “ROACE on a CCS basis excluding identified items” and was renamed to improve clarity with effect from the second quarter 2021. There is no change to the calculation outcome as result of this nomenclature update.

            
 
$ millionQuarters
 Q3 2021Q2 2021Q3 2020
Adjusted Earnings - current and previous three quarters (Reference A)13,29010,1157,384
Add: Income/(loss) attributable to NCI - current and previous three quarters443371212
Add: Current cost of supplies adjustment attributable to NCI - current and previous three quarters(96)(90)89
Less: Identified items attributable to NCI (Reference A) - current and previous three quarters(18)(18)
Adjusted Earnings plus NCI excluding identified items - current and previous three quarters13,65610,4147,685
Add: Interest expense after tax - current and previous three quarters2,6362,6682,933
Adjusted Earnings plus NCI excluding identified items before interest expense - current and previous three quarters16,29213,08110,618
Capital employed - average265,735268,377275,451
ROACE on an Adjusted Earnings plus NCI basis6.1%4.9%3.9%



E.    Gearing

Gearing is a measure of Shell’s capital structure and is defined as net debt as a percentage of total capital. Net debt is defined as the sum of current and non-current debt, less cash and cash equivalents, adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt, and associated collateral balances. Management considers this adjustment useful because it reduces the volatility of net debt caused by fluctuations in foreign exchange and interest rates, and eliminates the potential impact of related collateral payments or receipts. Debt-related derivative financial instruments are a subset of the derivative financial instrument assets and liabilities presented on the balance sheet. Collateral balances are reported under “Trade and other receivables” or “Trade and other payables” as appropriate.



         Page 23




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

            
 
$ millionQuarters
 September 30, 2021June 30, 2021September 30, 2020
Current debt10,68613,04217,811
Non-current debt84,70587,03491,245
Total debt95,390100,076109,056
Of which lease liabilities27,96928,34028,930
Add: Debt-related derivative financial instruments: net liability/(asset)(231)(912)(564)
Add: Collateral on debt-related derivatives: net liability/(asset)407675686
Less: Cash and cash equivalents(38,073)(34,104)(35,714)
Net debt57,49265,73573,463
Add: Total equity166,683171,243160,341
Total capital224,175236,978233,804
Gearing25.6 %27.7 %31.4 %



F.    Operating expenses

Operating expenses is a measure of Shell’s cost management performance, comprising the following items from the Consolidated Statement of Income: production and manufacturing expenses; selling, distribution and administrative expenses; and research and development expenses.

Underlying operating expenses is a measure aimed at facilitating a comparative understanding of performance from period to period by removing the effects of identified items, which, either individually or collectively, can cause volatility, in some cases driven by external factors.

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
5,322  5,162  5,496  Production and manufacturing expenses17,292  17,299  
2,892  3,107  2,366  Selling, distribution and administrative expenses8,461  7,130  
145  201  233  Research and development511  708  
8,359  8,470  8,095  Operating expenses26,264  25,137  
   Of which identified items:  
322  68  25  Redundancy and restructuring (charges)/reversal(357) (501) 
15  (31) (267) (Provisions)/reversal(16) (678) 
—  (2) —  Other33  —  
337  35  (242)  (340) (1,179) 
8,696  8,505  7,854  Underlying operating expenses25,924  23,958  



G.    Free cash flow

Free cash flow is used to evaluate cash available for financing activities, including dividend payments and debt servicing, after investment in maintaining and growing the business. It is defined as the sum of “Cash flow from operating activities” and “Cash flow from investing activities”.

Cash flows from acquisition and divestment activities are removed from Free cash flow to arrive at the Organic free cash flow, a measure used by management to evaluate the generation of free cash flow without these activities.



         Page 24




   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




 

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
16,025  12,617  10,403  Cash flow from operating activities36,935  27,818  
(3,804) (2,946) (2,833) Cash flow from investing activities(7,339) (7,871) 
12,221  9,671  7,571  Free cash flow29,596  19,947  
1,297  1,274  869  Less: Divestment proceeds (Reference I)5,983  3,798  
—  24  —  Add: Tax paid on divestments (reported under "Other investing cash outflows")24  —  
181   12  Add: Cash outflows related to inorganic capital expenditure1272  614  
11,105  8,424  6,713  Organic free cash flow223,910  16,763  



1.Cash outflows related to inorganic capital expenditure includes portfolio actions which expand Shell's activities through acquisitions and restructuring activities as reported in capital expenditure lines in the Consolidated Statement of Cash Flows.

2.Free cash flow less divestment proceeds, adding back outflows related to inorganic expenditure.

H.    Cash flow from operating activities excluding working capital movements

Working capital movements are defined as the sum of the following items in the Consolidated Statement of Cash Flows:    (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current receivables, and (iii) increase/(decrease) in current payables.

Cash flow from operating activities excluding working capital movements is a measure used by Shell to analyse its operating cash generation over time excluding the timing effects of changes in inventories and operating receivables and payables from period to period.

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
16,025  12,617  10,403  Cash flow from operating activities36,935  27,818  
(538) (2,495) 405  (Increase)/decrease in inventories(6,459) 6,286  
(2,859) (4,080) (540) (Increase)/decrease in current receivables(13,768) 9,733  
1,950  5,016  1,583  Increase/(decrease) in current payables12,831  (11,073) 
(1,447) (1,559) 1,448  (Increase)/decrease in working capital(7,396) 4,947  
17,472  14,176  8,955  Cash flow from operating activities excluding working capital movements44,331  22,871  
   Of which:  
7,871  4,350  2,396  Integrated Gas15,874  8,619  
5,889  5,444  2,629  Upstream16,035  6,894  
3,262  3,365  3,476  Oil Products9,939  6,259  
684  1,225  488  Chemicals2,953  981  
(233) (208) (33) Corporate(471) 118  



I.    Divestment proceeds

Divestment proceeds represent cash received from divestment activities in the period. Management regularly monitors this measure as a key lever to deliver sustainable cash flow.

                  
 
Quarters$ millionNine months
Q3 2021Q2 2021Q3 2020 20212020
1,122  1,162571Proceeds from sale of property, plant and equipment and businesses5,3902,395
168  4159Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans¹4471,129
 108139Proceeds from sale of equity securities145274
1,297  1,274869Divestment proceeds5,9833,798



1.As from 2021 renamed from 'Proceeds from sale of joint ventures and associates'.


 



         Page 25



 


   
 
ROYAL DUTCH SHELL PLC
3RD QUARTER 2021 UNAUDITED RESULTS




CAUTIONARY STATEMENT

All amounts shown throughout this announcement are unaudited. All peak production figures in Portfolio Developments are quoted at 100% expected production. The numbers presented throughout this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures, due to rounding.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this announcement “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “goals”, “intend”, “may”, “milestones”, “objectives”, “outlook”, “plan”, “probably”, “project”, “risks”, “schedule”, “seek”, “should”, “target”, “will” and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell plc's Form 20-F for the year ended December 31, 2020 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, October 28, 2021. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

The content of websites referred to in this announcement does not form part of this announcement.

We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.

This announcement contains inside information.

October 28, 2021

   
The information in this announcement reflects the unaudited consolidated financial position and results of Royal Dutch Shell plc. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK.




 

Contacts:


 

- Linda M. Coulter, Company Secretary

- Media: International +44 (0) 207 934 5550; USA +1 832 337 4355


 

LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70

Classification: Inside Information


 



         Page 26


 


FAQ

What were Royal Dutch Shell's Q3 2021 results?

In Q3 2021, Royal Dutch Shell reported a loss of $0.4 billion attributable to shareholders, versus a gain of $3.4 billion in Q2 2021.

How much cash flow did Royal Dutch Shell generate in Q3 2021?

Royal Dutch Shell generated $16 billion in cash flow from operating activities in Q3 2021.

What impact did Hurricane Ida have on Shell's Q3 2021 earnings?

Hurricane Ida negatively impacted Shell's Q3 2021 earnings by approximately $0.4 billion.

What is Shell's plan for shareholder distributions in 2022?

Royal Dutch Shell plans to distribute $7 billion to shareholders in 2022 following a $9.5 billion asset sale in the Permian Basin.

What is Shell's current net debt and gearing ratio?

As of Q3 2021, Royal Dutch Shell's net debt is $57.5 billion, with a gearing ratio of 25.6%.

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