Shell PLC (SHEL) Q1 2023 Earnings Call Transcript

Shell PLC (NYSE:SHEL) Q1 2023 Earnings Conference Call May 4, 2023 9:30 AM ET

Company Participants

Sinead Gorman - CFO & Director

Wael Sawan - CEO & Director

Conference Call Participants

Oswald Clint - Sanford C. Bernstein & Co.

Michele Vigna - Goldman Sachs Group

Lydia Rainforth - Barclays Bank

Christyan Malek - JPMorgan Chase & Co.

Amy Wong - Crédit Suisse

Irene Himona - Societe Generale

Alastair Syme - Citigroup

Biraj Borkhataria - RBC Capital Markets

Paul Cheng - Scotiabank

Henri Patricot - UBS

Christopher Kuplent - Bank of America Merrill Lynch

Lucas Herrmann - BNP Paribas Exane

Henry Tarr - Berenberg

Kim Fustier - HSBC

Sinead Gorman

Welcome to Shell's 2023 First Quarter Results Presentation. Despite a less favorable macro environment than last quarter, we delivered another set of strong results.

Our performance was due to our well-positioned resilient portfolio and improved operational delivery. Our adjusted earnings were $9.6 billion, and our adjusted EBITDA was $21.4 billion, exceeding last quarter's adjusted EBITDA. And we delivered $14.2 billion of cash flow from operations.

Our Integrated Gas business performed very well, with improved utilization, robust performance in Australia, continued excellent operational performance at Pearl GTL and strong trading and optimization results. We also played an important role in securing gas supplies for Europe this past winter by storing 50% more gas than the previous year.

Moving to upstream, in our Deepwater business, our assets in the Gulf of Mexico improved controllable availability, equaling our best performance in a decade. And in Chemicals & Products, we also saw improved refinery utilization by safely delaying a turnaround for Norco, our Energy & Chemicals Park in Louisiana, we were able to maximize returns. Our total underlying operating expenses showed an improvement of $1.7 billion compared with Q4, which is typically higher than Q1.

Moving to our financial framework, we continued to make good progress. We are announcing a new round of share buybacks of some $4 billion for Q2, which would bring our expected shareholder distributions for the first half of the year to around $12 billion. This demonstrates our commitment to generating attractive shareholder returns. However, we also continue to make disciplined investments to high grade our portfolio.

A great example of this is Vito, our newest offshore platform in the Gulf of Mexico, which has started production. Vito has an estimated peak production of 100,000 barrels of oil equivalent a day. Changes to the original design created a reduction of approximately 80% in CO2 emissions over the lifetime of the facility. This rework also brought about a cost reduction of more than 70% from the original concept. Projects like Vito serve as a blueprint for other projects, allowing us to generate greater value from the Gulf of Mexico.