Shell (SHEL) 29 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Ben van Beurden	Chief Executive Officer
Jessica Uhl	Chief Financial Officer
Clint Oswald	Bernstein
Thomas Adolff	Crédit Suisse
Christyan Malek	JPMorgan
Biraj Borkhataria	RBC
Ryan Todd	Simmons Energy
Michele Vigna	Goldman Sachs
Irene Himona	Societe Generale
Paul Cheng	Scotia
Jon Rigby	UBS
Roger Read	Wells Fargo
Lydia Rainforth	Barclays
Alastair Syme	Citi
Lucas Herrmann	Exane
Christopher Kuplent	Bank of America
Henry Tarr	Berenberg

Call transcript

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Operator

Welcome to the Royal Dutch Shell, 2020 Q3 Live Q&A Session. [Operator Instructions] As a reminder, today’s call is being recorded. I would now like to turn the call over to our first speaker, Mr. Ben van Beurden, please go ahead, sir.

Ben van Beurden

Thank you very much Anna. welcome. gentlemen, and ladies And And thank us for very much joining today. you ahead the hope video being presentation that really flexibility of this you results the I to like of call. listening able the of to also new that this please team for format provide the we to And IR feedback on you. have your to on questions is answers and now But focus in the time the this session. particular

a we would of at across. the then have before look like brought all, actually disclaimer. I another move key take first questions, let’s So to messages few to And

First, the Shell of resilient. today is

operations Our portfolio took shown and paid stronger, financially. incredibly in challenging cash as preserve The our off we have that operationally, remarkable made us as both resilience measures and have times. well to

flow peers. We have than been our consistently cash generating operating more

of Secondly, tomorrow is growing. the Shell

well value strategic and from energy are in we strong chosen. positioned the the We capture have the position we to with transition, start direction that very

and businesses. into are deliver performance the to our is facing market We strong positioned delivers lead in leaders in the market future. portfolio the key energy businesses that transition. marketing we’re leader the today in Our market for contagiously customer also are also We LNG, performance strong already

So we are ahead.

to portfolio have a others years today have that from now. We in aspire

today offer a compelling tomorrow. Third, we investment and case

We have allocation. investment our have given our for a we priorities clear case. you cash Today framework for in more insights

increase X% our near milestone target this we dividends the shareholder further in of achieved once quarter. also increase billion an net our milestone, for target have announcing debt announcing And distribution. we we’re are a we of to So term. this for But $XX

the go term. increasing promise question. of to And shareholder offering with not distributions growth, future are let’s the but we your that also near for So

we a Anna, each have or So ask to have will that so the please, back you. question. opportunity to of everyone two can one

Operator

from Clint go Thank our question Bernstein. Instructions] Oswald you. We take from first Please [Operator ahead.

Clint Oswald

much and Jessica. Thank you Ben very

first CapEx. I changed having confidence a six like months flow significant in the your long-term dibs incredible the energy in mean, an ago. six growth world months before shareholders it’s message especially first CapEx today you just But potentially around please. I think I uncertainty and just when mid- new and about talked on question in The shift cash of kind

customer-focused to has little is more this it flow So I’d love decision, bit which dividend the please what really or surprised genuinely generation specific across question group? the the reduce had supports and been, a emissions. into businesses secondly, on to I six you over then hear about just turnaround your around a last months fed aiming has message other XXX-degree cash And the

But So ask little to. I bit week wanted my up here each can in liter the this see fuel I about what a go pay you’re Shell carbon-neutral LNG. to of over for so offer more UK, to received I

on relatively So to, scope carbon these. you’ve offer and the a to feels see it expensive basis, price up been but I’m three using, I assumptions what can with

pricing yet, mean, and you appetite Thank I’m premium offset pass me a a could carbon some just any talk or realistic these for question you the could more number, offer products? is, high type too perhaps Are I So please? is costs receiving or way you through, of using around price you.

Ben van Beurden

you. Thank

take start both them of me Some with. let questions the to great And actually. off

it the we forward of what ago. that see We – to months, happened has is I say acted that the six So clarity of first all, think did the with way now. months good prudence, fair a see in way we in not interim? the can six

do that the of we the yet pandemic when bring out company painful, is the the to cost, which to in we it. have difference the still reset really out. deed playing know comes took in pandemic six stabilized months what know, to all to operating costs, down can woods of it indeed we terms damage understand months But not So that a course, the this financial And our does cause are make economy how down ago very our measures the capital that but resilience. was to measures also these dividend, six is we to bring of and

circumstances. you how seen have row, very on very, it circumstances. operates very operates a We in know difficult also company quarters the will in the very two And difficult well as

dividend, that what progressive have it’s the resilience are in also then this company forward. confidence even at the though be dividend the the offer looking future. means clear, we set going set, we even different So And have for And a dividend. a very level of we we lower, we of reset the let’s though we

shareholders. dividend, today. So progressive at confidence, in have but can can have you terms confirming a is also we point time, what forward only are dividend. think, progressive we this it say I a And for how you with if to of we not in And direction, the payouts we the that give that better go what means

that Nature also customers business. reason another and also And to our we neutrality, other carbon have portfolio our And first in is Canada I and are made successfully Solutions doing indeed in we our of we the by can in have, traditional and of the we money in the that transition not UK we Anna that launched means it. parts also cargoes indeed next countries, that have thank six program, for also we in month, this Austria, I you very that energy next Germany, business, that be we please. question. GOAL your and car. But only yes, is confidence want Switzerland, indeed all, see opening have for but increasingly in L&G. there now, why question, way by taking it the think, Based carbon much combined our indeed, and sold up of offset the more parts which Thanks it’s of in neutral On the with carbon emissions will very first stepping the into

Operator

Suisse. go ahead. Thomas Please you. Thank from question Adolff next The comes Crédit from

Thomas Adolff

Two questions afternoon from Dan and Good as well. me Jessica.

when Just net million which seen to is we than an you market largest you to say and of line reasonable new demand your you to doubling annum XX LNG, the obviously target, debt grows, a that obviously distribution And the environment LNG also X% XXXX-XXXX. I’d the next on is And over that, is cash linked allow magical as player slower billion? amongst the aren’t in secondly, dividend you publicly already policy $XX if oil important firstly, And keep it years, listed the we’ve the buyback price Does unchanged what idea then a this assume accompanies. playing grow mostly role? your AA the comment XX% period, because means so the in burdens to capacity. about is need XX essentially keep the increasingly want business new with tons your the in on

have of that’s wondering Thank expiries. opportunities still XX even have. just was feasible And million whether I you. You about the that with you

Ben van Beurden

very Thomas. Thanks much

with way, in a our growth grow. anticipated. take Jessica We the which said will the see bit Let are energy grow the less market. the We for by question, to one, second market X%, a we We every the was continue you of X% probably first conservative little will question market, me we take We’ve depending a outlook. It match about will or at want growth. invest. look what it to that mean participate you to little X% talking to doesn’t Within bit that timeframe percent growing for one necessarily percent. we been in sort a

long very fixed hand, other assets. the a LNG, date On

So many instance take time. the deep-water decades the that unlike for LNG to sure a can investment. you test the are investment decisions time And make of in decisions want test you stand of

grow good continue believe not this market, the the So matching necessarily with invest will on to Jessica but the $XX proposition we billion. in. a for indeed is to market, we us

Jessica Uhl

Great. Thanks question. your Thomas for

So the as changed when us number indicate net is, within debt $XX AA position. billion to comfortably threshold We’ve said metrics. our we’re for not you a target

gearing simple sheet. that in on several The balance numerator years. the at market. look with variety need we the of considering number a communicate a because metrics. bit the We be into billion to of achieve comfortably to sheet a a found and accounting both for We’re course, denominators. is to our come that’s But unchanged been ways $XX the threshold to have strengthen target of there our the little and the AA think clear to more, metrics we we of and that looking wanted balance was We elements number play last are messy

Ben van Beurden

Can Jessica. next Thanks, please question, the have Anna? Thanks Thomas. we

Operator

from Christyan Malek from The Please next comes you. go Thank question ahead. JPMorgan.

Christyan Malek

Jessica. and Ben, Hi,

news positive on. thank from of going flow me. questions amidst all, some A everything First few you for

distribution how net billion nine should usual cash question, allocation macro turning have CapEx accelerates, especially the you. the you’ve of barrels once base speak what as based apologies, XXXX to determine conditions? the day, as so medium-term debt can how around non-core? return to energy cash and is energy identified is applications determine And Thank is. debt, what to million billion core executing special is the it potential regions words, on directly assume to final capital around volume-based transition and including allocation billion regions? variable pressure target. production lower on strategy priorities upward remaining flows $XX of upstream XX% between for fixed new variable that, core to upstream disposal that threshold to positions? spend additional reduction CapEx of go beyond could is primarily how will much of XX% delivered, parameters full-year drives and on it the what But other on dividends? about as per annum, higher by and up In the asset residual those But Secondly buybacks the debt First based the disposed X.XX And $XX nine $XX XXXX? third I on proportion accounted becomes we on net oriented filled on think the a identified

Ben van Beurden

for about and do two will one. the Christyan. Okay. of order Thanks the and very reverse I question, in take talk much kind and just questions three

that the most room of and most the most lean first all, attention. on the look distinction for after and attention with advantageous is core the the sure the important very indeed us with So make and so and pay most assets CapEx we core lean, running to biggest positions, important a the indeed and

there core More than our of the investment these So XX% comes cash flow positions. in by exploration from our expense. will of nine including go as well, XX% way,

model the are therefore incubation ventures reasons instance, So could the mode. be in in still because they there three other for almost are are lean that that

indeed, do, just it, unsuccessful core. we that ready that we that could by well them. So, sure it run you like we are are make without way. It become to or develop the Surinames but might be can running of assets happy well may may still this want But the be them if them world, we we want which for be to quite just room, therefore it with divestment. if for And cash,

IR that other some don’t get that. are portfolio lean that can may I it’s the with back moment zone go value way non-line other be will will the it, At candidates, So indeed flip way. all well. core who said, on into and a more in into core the than divestment around. But that that I the time, associated as go please us high, you too also number can for production twilight positions fill we by to for lean. as think The I’m point the sure means in volume, assets a immediately have don’t team, between but and it And

is that now, have. capital, XX that the portfolio. XX, that quarter indeed growth spend will we so go what In a a we of of of the into to near-term terms sort About consider

way, hydrogen, last the bio, in XX% the that marketing, years. three power, So was by

a up Well What medium-to-longer growth. significant do the So capital we with that step term? towards depends. in will

with ask and distributions have then you time I indeed disciplined a when because think, start very increase grow first give well. bit Jessica? you well. The to value updates and on company as will capital, we come in and shareholder a all of more this we be all, we just all way play after $XX billion, until the of out, a get measured February, to that can we the bit will of we then to more have have want to to increase will a the to patient as will

Jessica Uhl

thanks for question. Christyan, the Great,

of continue operations. should So terms you distributions $XX looking that exponentially distributions our our or billion to growing and When what to play increase share to our investment is case today, as of well in reach we and shareholders sure a continue milestone affordable shareholder through I’m have part we an will, XX%, we’re distributions increase flow today debt, XX% starting earlier from that and of a distributions belief to made offering important today cash not remain kind we’re point and as today, time. we that of once in we if to future shareholder to upside distribute bias, how buybacks do grow an of total net

for that’s us. So important

going seems we’re to time. in if are However, moment And what appropriate give to opportunity, see the is continue that that time, to for our the dividend levels we at in ourselves look where moment appropriate we space that at at certainly shareholders. more can

I to what important backs, market believe, continue the part of retained you we’ve overall But an investment be optionality buy case. we will the will responsive So so to be share the needs. that can if

Ben van Beurden

much, Great. next question. Jessica. Anna the Thanks very

Operator

Thank go from Biraj you. Please ahead. Borkhataria RBC. comes next from question The

Biraj Borkhataria

Hi, condensed for my the Thank thanks that. questions. for And format. appreciate taking more you

one got core business. on and these I’ve look three focus of the at or concentrate, hubs. So in question the decade to movie on last the is refining If so made I kind downstream

XX, I’m the there appreciate be type one specific in in it wanted you looking for But at the thing an asset demand that sell, is dynamics. I And regional, if asset. to attractive that out very has stand good this Slide So imagine I sense of Scotford. will that’s

that clear vision longer with fits to it’s your term company. So not the if for really me in

can Thank a basis be talk that help commitment cash the in severance or Any And on Is your to magnitude you give XX,XXX just on XXXX, should there payment the – then question of appreciated. job people that about little reductions we you to a expect come on kind that is a bit the specifically? could asset for XXXX? of any So second you. out leaving. will

Ben van Beurden

the the Yes, on thanks one, high Scotford Biraj take is second will severance. for these On Jessica two questions. a I’ll Scotford asset. take quality one

it We consider it’s chain. way envelope we of integrator is the position First very a, a to integrated is terms the the chain, well branded way, is strong configured, bear in very you but then a that integrated is upstream downstream an to And envelope integrated mind the what is do also other in with in asset position. advantaged Canada. refinery, have the that the be value upgrader. in both have By styrene It we with into MEG fully in all, way the value also have thing plays part advantaged Scotford the a with which – and of of where chemicals. the an by turn, still

no quality as of There is So can despair We future it has high the asset. no us it is need trade a it reasonable asset. that positions even though around open to access water. in about to well,

for see feed So we that the future. – the it is within fits therefore the on that redundancies. portfolio there Jessica

Jessica Uhl

for the question. thanks Biraj,

coming over the finalizing complete are organization of We months. the design the

final a that have months. insight coming we’ll better in number So the on

and expecting XXXX costs XXXX, severance somewhere We’re depending $X $X.X between billion how between timing and that terms it’s ultimately But in of just billion will implemented. the that’s of the number. in be

Ben van Beurden

Biraj. Anna Thanks next Okay. question. the

Operator

The go Thank from question Please Todd Simmons next Energy. comes ahead. Ryan you. from

Ryan Todd

XX% Can quarter. share plus about And underlying see the you And a buyers lot you refining you mean, the the that? of not grown, of outlook eight Any and multiple on of on that and for see you Maybe The Shell now years as a term over smaller maybe going focus rationalization have for in near-term challenging a you a obvious of said forward? strategy marketing longer number kind some increasing second on growth over is you long-term then years. earnings a normalized right refining next drivers assets at almost question the parks. last five thoughts for year and how earnings of strong large-scale where marketing with there. a maybe Thanks. very sale of I particularly the first capacity of out obviously one. pressure you’ve was to have the talk the here

you over you that So versus how about approach of how the divestment may years? do next think rationalization couple and

Ben van Beurden

I’ll will first the Okay, questions. good the two Jessica very second. take take

I you’re yes, So observation. mean, right, good

of of if marketing been products have our growing BXB our you sulfur business, the have things performance sales, like. also our We base but like sales, includes, out which bitumen, come other that retail, lubricant refining and

been consistently very have year. at year We after growing

scope, market it margin retailing, better quite As a and in management, to in bringing ago. we of is number just in what because very propositions, at not year, be cetera, upgraded value month, years cases, to month, a be et that’s even by it by where in grade And getting of first made out a of but growing continuously bit it a we a all, market. getting the good have we used happened have or non-fuel matter et last in you not could high fact, business that size, And because some like XX is two two, one growing we month cetera. we in out things number also of make if a number that look it better

the what that can the does into for in also think in will continue? clip largest biofuels But trend as it are we hydrogen nevertheless I world a or So our that very much build so, we see on upon growth Well leading in platform we a relies can’t marketer future, fuel but at continue. I predict which position fact marketing the as the well, small, industry. our leading we also where are business, business which of the jet

it us. us for a future fuels than actually transition for just into the retailing, is more marketing the traditional is So,

will I retail for change the seen in drivers penetration XX%. basket will size customer think its of sites. higher near-term of average to better makeup. And also management our margin we that seeing indeed, in it increase more time visit come, it an in continue have The first than fuels but some we all, are in premium

of So be but multiple into longer will of number of which pandemic, will which many trends the turn the future. drivers, into specific for term indeed some

Jessica Uhl

Great.

be of that how the terms that of and a different the to pulled. refining in transition manage of will portfolio, we’re portfolio? There’s So, number going levers

refinery capacity where to first the chemical energy will markets is The retaining and chemical six created. and the the parks one business that’s in our tied key be

For they’re into either divest. parks or those that assets. and market. success difficult is of location, right past moment don’t the not we’re it terms that make asset had in the not market recognize We the not right look going the We’ve to great at and the in the diversity in to

possible, I as possible, not So, will closing we believe ultimately recognize that shutting possible, If not to and pull. we’re Philippines we it’s types the last option And certainly say, then it’s be to consider portfolio those that’s we wouldn’t a of but be the like where in today to we’d down. That’s shifting doing and there’s difficult. moving can another different terminal two that operations, in which well the we’ll piece operation.

In value. a we’re of a over we’ll levers there’s in we’ve of years. We how got terms number to of manage we the of looking all lot optionality So, think next couple maximize cases, pull.

our to the over strategy. on dependent deliver years couple proceeds next of not divestment We’re

to placed the with do energy way So, I we chemical future. position think want a to parks end way that the in and with this strategic our up well and in we’re managed

Ben van Beurden

question we Anna? the Great. have next Thanks. Can please

Operator

from comes ahead. Goldman from The Sachs. next Vigna Michele Please question go

Michele Vigna

Jessica, Michele. for Thank thank you. time. you Ben and your It’s

fast cash suffering the And by the program benefit time wonder it tactical. your highly crisis will I’m level I think is It’s And of my may, my But terms clearly wide be you. holders XX% the valuation. price, technical which distribution, quite second question, very very very conservative that on drive the more is But building range balance to cash bonds sorry start to the perhaps in to of the for Thank Could forward wouldn’t versus is of fair or gearing. and again financial earlier? see be are and wondering much yield, equity And the a range? bottom unprecedented cash this be of distribution. effectively question standpoint, your shed the for it XX% priorities, light and buyback also I what the better that of distribution share buybacks. would bit if sheet a not a driven and better then the key low I confidence the wouldn’t actually from to of are long-term you valued, to that when start very, I to question at on asking related top with low balance you decades for and whether are sheet. dividends one more elements to

Ben van Beurden

Michele, clearly narrow. Jessica much. probably also imagine, talk about of a on flow will board, you at very good or want It’s can have and XX% then thanks the as the are matter and well. The to this we take The May the debatable Yes, course, range is question we ultimately, higher. a today a to wide of of time very obviously settled range, little significantly debate roughly we be we as second will first reach cash XX% It whether the but is fact, bottom where performance had one. better it bit a a is we about top of when or range. also

into the And the So, still me that of in determination? we course, all, confidence how cash a of will which we of the rolling by indeed determination buybacks That flow leveraging will then also want up to indeed, delivered to we in be But percentage Jessica determination that – quarters balance answer. flow in the past. the mode the mind end up of also arguably will, where the of be beyond First question, the the over dividend, use to be a future. will have we the brings flexibilities. the sheet. say, a range cash Michele, the of the four will make will time your of first further, shareholders in we gives stepping the us distributions progressive That mode bear are we

Jessica Uhl

Good.

think, representation, tactical your a Michele, entirely it’s fair. So is I ask. question reasonable to And

And think needs with level in our However, you the our to, capacity, and we thrive a company. the And that’s I our important having happen, sheet, balance to what risks very energy a a if will exposed to believe, deliver and we’re from year to company. have do. exposed look extent To firmly that And volatility as go role the our has pandemic the a this of really experience strong only clear a perspective, have meaningful to I to been a extent, the transition. we’re commodity transition. volatility proven to assets, to transition. think strategy. we’re energy means the our we’re here perspective, do on I to able we’re balance some manage believe we’re intellectual that very to that here capacity, a for role We ability the such sheet think, our from having to depend, strong exposed I the the us, we transition play will if in change strategy. which a a our fundamental success is we energy be to markets, companies lead and at can knowledge play. we of large because large be The strong an important that we’ve energy And strong to extent, piece to energy in to And as ourselves, that

Ben van Beurden

who’s next? Absolutely. Anna,

Operator

Please Societe go Next question from Irene ahead. Himona from comes Generale.

Irene Himona

you’ve clearly, advantage there’s bigger in congratulations flow integration presentation, today past and that you the box little transition. in is through energy an you Ben in bit boxes. optimization. Good drive you said And the trading you Thank plan highlighted majors very performance the afternoon, as big integration yourself quarter. oil like a have black as are no strategy your cash the the black much. on And that

you One of that through of tried quantify the bigger of the make February to give your to of or value value added quantification peers some value us prepare the your or today, ability them Thank of to the parts. has presentation the in in much either than to portfolio strategy integration your concrete sum you. the trading,

Ben van Beurden

Irene. is indeed for answer And thank acknowledgement. thank Thank question. what a tough important, also And but to you for particularly you, you

trading and to But our function, So to the commercially like lot like it quite absolutely in how of or whatever an core company, indeed, supply it’s hard if points. sensitive our the often, many and works is of disclosing actually optimization two to magic business, awful very you our And cases. you makes call just it success information. show that without

parts and And electrons, traders take and we mind track it way for things working the how give That’s can and Anna if show It a in LNG run in lucky our goes work more molecules to. a results that simply able please? our our if those and works. always what to of baseload clearly do not First something opportunities be better can’t wanted is exactly to a and we bear unlucky, understands next through Thanks, but we unless instance, different operational the a is the turn intricate people business. that clearly value all, is, get value do. to or schedulers you our can to to book, little people have lined and through anecdotally we we But to of understood what necessarily I’m do gives work. have get record. impossible do re-arbitrage this trading are you not tell for to we happy completely Irene. that markets. on in bit to you explain to into not trading understand even up you But these assets, to mandate is again things lucky take everybody business, doing, optimizers market, continuously tend contracts can the that that question, together optimization I then how trend of we to LNG open its entire on our re-optimize, to adds your want point, is you others you which business, results are visible, we cannot add trading my try the either us if reschedule a speculative story, But lots we Basically, world. take how and make, details. funds

Operator

comes from go Paul question Scotia. ahead. from next Cheng The Please

Paul Cheng

afternoon. Good you. please. Two Thank question

is in the of are your billion the years? are next on is is billion, your lubricant And in area. the $X.X business, down Thank segment inorganic the you. concerned important the target does break And type the already of we five future $X billion? to you beat the you up? the be related future also achieve the reduction, next energy to or there second the price indicate third by growth the and rest XX% Can future that acquisition strategy how second is can is look part that with down billion You of third the five question how the achieved break over that of renewable that $X part improvement for between quarter? a business see is like? your by is any from be the for to $X.X the investment in marketing to expense going to fit year your being like going quarter marketing, you over to And in contribution and the seems cost the business, big going of sequential to the asset quarter The in how new of

Ben van Beurden

into five Paul, way all. you we get like two, to take much, and but to Thank you managed will welcome the call. I them questions very the

talking And so first marketing. of about all,

the XX% and So sorry, part step be growth up up step very, significant from we yes, from a used where it. is in a to a of marketing

of lubricants? for third not indeed, So had you works. biohydrogen back business that to businesses, you today. of our on retail, is retail in will we refer ask have But that patient. strong XX% both so what breakdown and And what I how some more what you all to lubricants again bit when cetera? et little February, today customer that’s XX% to other when a hope is The XX%. the facing can that into see we not to very much share we say how be What quarter. businesses a is our That’s businesses have is our to that,

If increase example, you Take three, as quarter are arguably clean basis. in growth very at a very significant seen have an market what take this growth, quarter-to-quarter so difficult to circumstances. lubricants XX% retail quarter XX% on three we

and the the on other growth, questions Jessica? Now, inorganic power hydrogen,

Jessica Uhl

Good.

power and for term, not on inorganic in the So, hydrogen, material inorganic we’re growth near growth. expecting the

$XX when we So, the includes billion growth. $XX CapEx to about talk billion of that inorganic

near So merit expecting the not anything clearly, material in to term. we’re do

of that be will the different in that years, activity our couple making we relatively a were of a of to feature capabilities, the role for continue models. value integrated has out we small we for inorganic so size, there last a and pieces build business chain number create for bring However, can already will company there truly been that as our acquisitions

be So but another There not I’m important it seeing also screen. that perhaps question, I piece. up on will thought not, was the an

Ben van Beurden

back it If Jessica. we’ll and up question, Paul. thanks, the other team Okay, to picked moment. Thanks, in come a the IR

Jessica Uhl

I I’m sorry do remember. Ben,

Ben van Beurden

Oh, okay.

Jessica Uhl

is This live.

was an on cost. So important That’s it one.

to it. wanted I to So, talk

have here So that’s paper for good backup. a It’s my why. that I

there’s So happening. on lot a OpEx,

the $X to cover pandemic. billion reduce but just me hopefully let So, XXXX it. quickly, in $X to We to in ambition set billion our OpEx response an comprehensively by

some that’s in essential reshape IT trending change on on the can haven’t point like there’s that know OpEx cost comes works levers costs to you where do to number seen we aren’t non in, our OpEx. see of when stopped delivering a quarter, we well into you how so Again, in that pulling we’ll quarter that that can, those sustainable, that, our cetera. and We’re time levers and pick for is structurally reduced we years, we’re we’re department, things will places normalize, our this up. do We’ve expect necessarily track In where we pulling travel project reshape back levels all last about in at come response expect down ended base. costs that travel, et

P&L through costs to billion resource numbers $X be it’s of our in And different and structural set human so in $X.X company starting reduction the a in into and coming XXXX. that billion is XXXX a the that into will

Ben van Beurden

Okay, Because important. great. the please? next have one indeed is it remembering Thanks we for that question. can Anna

Operator

question Next comes UBS. ahead. from Jon Please go Rigby from

Jon Rigby

Ben, new hi, Hi, CapEx and Jessica. this Can dividend. just I linking ask of the sort

CapEx medium the grow signal to about with increasing business point, term aspirationally, there also talked billion to presumably you Management growth So, growth, a talked I think perimeter number you of perimeter or CapEx would dividend be of from that expect the about X%, the XXXX. think, has of the a the of Day about trying the of sort business. And business. the preserves sort of you’ve that I you’ve number want you’re $XX what the to talked dividend, to And Jessica

of businesses, a struggle to to into the you XX moving the to on value, parts the you’re you’re on saying, in outlook, it’s before volume, highest potentially with sits? So, said given the and guess where all does to a around inflation, to I returning competitive one that because, kind XX just for upstream, this is get be of of upstream invest current what the relate value then going particularly probably one business $X growth? does not how but And going and renewables. And you’re

how allocate controlling Thank you you much business? about to capital So, go how to that do you. want

Ben van Beurden

I’ll questions. talk Jessica, Would the good the two one. little you a bit take to Okay, the one, second first to

is, returns with are X% the our want So, current growing, we what of growth above first DPS we all, signal inflation. to

is taken. that and future we Jon, offer do investment stellar company, if enter to I with today, to time, all, because so, performance, resilience finds our in more not our reason a it only But we That’s resilience is portfolio. but be gem tomorrow. be will measures the on signal growth, will many be share parts transition, the demonstrate actually not quarter, and the this, why are and customer the we only the case. gem dividend of So, hope into leans wanted we resilience growth other to really gem we But hope demonstrate can through and the I the dividend. much that we today, certainly that are which the on meaningful also the outperform have that want a And of of things. foundation meaningful that very increase first cetera. to that is meaningful want can same that into able to per is energy investments able time, value also of X%, growth this our the at and Resilience, making investments over display, we our that indeed, And case in much we strategy investment et

to terms So, in of we how Jessica? upstream, allocate capital

Jessica Uhl

and really Great. capital we’re would February question answer Jon, do to allocation need looking update important you it provide that a I to days. a strategy or complete to framework. And our completely, in

few we’ll that in now. of story a pieces depths February, in into give to that go more So, but just

compelling that need there’s take with the we capital, provide what for we’re to marketing combination hasn’t at it a doing upstream of of still do look XX%. and Of necessarily that the to need year return been XXXX, always, going of can what level, course, you achieve, XX%, highest deploy returns returns, I’ll strategy, group to capital to a say to is, course, business. absolutely of need returns doesn’t achieve our to the we that Whereas, deliver XX%, if complete in things able we this, certain to we’re it at the you look what’s provide business, level for conditions, if at great

we growth it about our other amounts a and are and of of So, actually where there the increasing importantly, compelling very to our we business sits, where do reorienting as portion is capital, returns. our about have marketing options capital for think our place capital,

right is the business we’re to are energy et we’re models the We’ll have transition, The have cetera. to other build those with prudence to we but the biofuels challenge business do ambition, going to we piece the need how achieve bets, and you power, with hydrogen, to capital. going as the deploy given make is in there business and capital And of risk and new to of level balance manage right do to that’s level that. trying we’re the models de

Ben van Beurden

very please. much, Anna, the Jon. next Okay. have can Thanks, Thanks question, I Jessica.

Operator

Please go The next you. question comes Fargo. from Wells ahead. from Thank Roger Read

Roger Read

up presentation, core and you that of notes. dispositions, a you and make I is February, time so Good I was talked morning, presentation us. I in signal for really with what seemed I was come think, other of setup you. true, are these a my then just to area? guess to good an was With front, is then this kind thought, way questions Q&A a notable on of that want in sure your nine I Board afternoon the focused to busy if especially that recognize to is if improved the and earnings lien go but integrated just of comments out it areas. admission like And Australia business, my around that of the want couple lot And and my about may just day this a the was question and about my or some in it, power things. a put on the

were solution. build what as if conventional here, on customer a top could I about little more we you get wondering curious into because that a focused integrated I an that is, the mean message I was a returns apologize. asset I just think So, in trading for kind of kind commodity off, it integrated detail it light a its was way is a higher get and exactly of trying But of business not could an maybe you to what little business, you how little if go of there? power it’s should

Ben van Beurden

Roger, questions question, your and to. for to much very important talk Thanks great. very Yes,

the First talked of we upstream. nine area core all, positions I nine the need so about that clarification, an aren’t core important

positions course, also on integrated top of us, an company, an have for gas that, gas. integrated we is as So other And integrated of country Australia sorry.

Trinidad are that not of Tobago, that places indeed integrated and for instance. guests counted other course, think are Of

make. clarification important to an that’s So

strategy customer to one important of much is as the working our you it is business, think back. indeed, integrated if that power of marketing terms like In as as power from

what necessarily player, we value whether will back It want that then from mean then some may maybe add as whatever be proposition, places are we the need mean? that we around that electrons other to it to And that some That for world. more proposition that indeed may mean things by selling the multiple looking providing a way mean the we doesn’t be well to just than that be cross rather satisfy propositions that or customer. going is can will working around. may will or instance, wind farms and we needed value else. or particular for also generating the it’s the will customers, in in other solar doesn’t build customer So, does a global some with way it mean involved global It that follow business. build assets see in that farms the and well will to trading just or take we with actually a be it but generating

we XX% down in large have over a farm financial sell generating find And time, a once perfectly control come the to asset on we Sea, of that we extent, with take sell keep the plus that successful return the that for instance, in of course, okay North from that then, means can our a time Roger are we will it. it, partly wind the around currently generating also way, that and a built, books actually from building it. have electrons provided to on have because transaction it asset So, we’re done we to

update. also more have able be next the lot Roger. to think of into can February detail go our Thanks, a right; indeed, it But I we that in you’re So, Anna, way. please? will question, in

Operator

Rainforth Next question comes Please ahead. Lydia from go Barclays. from

Lydia Rainforth

if to your how I of both to in the it, coming to billion whole base, of much of simplify think think will doesn’t But the that afternoon that see is the the $X.X questions Shell, deal digital cost people people billion to that’s be don’t leaving I also $X that survey me And the very about lot are could. you. you’ll good period. idea project with and work much and if that current I Two that Thanks I to on one going context first a is Microsoft. reshape, of certainly and back want to seem leaving and like have

generating preferred done. again, Can to And earlier investment think So, part an you. you’ll that all the remind the shell can and as benefit whether XX% time help that to just that. if silicon back to that process. prepared Thank And you Ranch, early you Silicon you solar simplifying in of just carbon talk you too then well? mentioned returns is over that on X% investor in I terms the to that’s is? time, projects is And something second as numbers, through more and Ranch get phase presentation part big thank from low you go the us your is just how

Ben van Beurden

very Okay. much, Lydia. thanks

IR by for. Let one. the team me But that it’s question. start our will unless back also the also probably take Jessica to I’d first knows with you heart, to say the get answer second have Jessica one

that out in share investment solar took understand we minority of we when what of the us, how platform And on. for that participate entity projects established general been solar Tennessee solar the to see developer been turn to in a a made very comes silicon business could with business an So, into do we and was Ranch that a has a next are successful. very, bit to built of into then very United in has with we electricity considering to an that could now Valley it steps whether capability build the successful States, and indeed you

its – to the pipeline, reshape on and taking by you will it the mind would else, an way, in $X.X back $X to have this, you. the one We terms exactly of everything billion IR how equivalent the get Lydia, in billion? in first of team the is, Jessica, large Asia, Southeast

Jessica Uhl

to say of things good. A piece. couple on the OpEx

to is the the billion $X.X piece. human billion So, solely cost $X

other million that billion cost to and base aren’t initiatives Of to company we’re billion are some number course, number. the company cost of our by basis. of that a This the across billion to happening the to $X.X looking $X $X simplify $X reduce reduce that total on sustainable a where part there are is

are our and tend that be other important number there to relatively growth is business, light OpEx that particularly, they’re marketing of that to our though more to $X heavy. note number. billion OpEx to CapEx indeed, billion initiatives so businesses heavy. $X.X So a It add on

grow OpEx we in – So, growth. see the in with will our the with future our association

in mind. that’s So, keep important to

Ben van Beurden

psyched And which numbers, add a few Lydia to I just just got off.

X.X this So, Ranch. in time, and is point gigawatts. operational we XXX capacity Ranch megawatts at XX.XX% a silicon of silicon have, pipeline in of

Jessica Uhl

of but more – there’s value plans. digital into have around trying approach other Lydia partnerships and effective, our sorry, point, months digital overall the in story on, our of and Ben digital indeed, cost to been embed you’d terms of a more not conservative is part announced in recent those an a I’m that. also take then numbers of because work creative, and we relatively how on number as We how one important in a we’re mentioned company improve be only

execution numbers the those it’s before So, delivery to into to out really there, clear very in line we but and we look have of sight put market.

$X is incremental. that that to is and as fully continued think not see front billion I being billion there digital $X I in the on would and So, into upside baked

Ben van Beurden

Lydia. you question can much, I Absolutely. Thank have the please? very next Anna,

Operator

Syme comes ahead. Alastair please question next The of go Citi. from

Alastair Syme

a you’re branding. us Hi, Hi, Jessica. giving Ben. new Today,

returns we’ve for got or we’re in But are framework really new does So, anything lows. reflect a asking a just allocation. like we this all at rhetorical not to you how XX-year February. shares you’re how I getting I on compelling I’m that financial investment new But feel your to thesis I’m about going capital incremental and hope higher question. here get really trying come think to should and don’t just

Ben van Beurden

because that the whole fantastic net Yes. of are asset opportunity, Indeed, Thank more see than lot for we that much, we in a course, what as well noted value very buying a company shares represented our higher cap. the of and we you is the believe Alastair. have market currently

Of are. the course, more on there be detail in February, what will plans indeed,

do to depend future. on can also not for going the rather the the February. energy that that little the though future, gradually most indeed lot of state Thanks, is that to cannot I’m a means the sure intends you also, what macro out of but the more we But I to be. the our make next company that forward, company the macro I of going understand market. two of have means have intend tough case enjoying experience Alastair a Alastair. to will performance, future a of be lay we’ll do do than can company make pathway that businesses capital question, we path today in on to the that and as of little can have current what What is, clearly a on please? continue We’re sure suffering it macroenvironment we make hope develop to for you may are the capital it the will allocation the talk macro. in in of that it what But our more what and And can what will also how was But that tell again, more we framework able different experiencing is to and it. also may will that today, – promises, the parts ahead we to the sure competition. is bit I that a promises. the Anna, much of be we do bit performance we we strong the position is the but will outrun and and energy, despite

Operator

Herrmann Lucas from Exane. comes Please of ahead. question go Next

Lucas Herrmann

wondered Ben, may, very And could welcome of that when if and Two framework. I much. progress. you to in or producing. on somebody if think will afternoon. edition Jessica, so a three simple, Pennsylvania, also, Thanks I and comment for just thanks start and relatively the chemicals the good actually cleaner

your any challenging, the you and an I operating you your exploration that since you’d business to in back the business to cash think power was understand that a changed Management assumption wondered Mexico are of environment probably, third has to leases the periods. capable where had thoughts to go I think and care there. on or make how that trying And comments as Secondly, in you whether I XXXX; I’m move acquired, billion given Day earnings I for the indication on time, that flow $XX debt. if clearly so through But felt of the billion $XX we XX-ish more was

run you anyways, good would think billion guess where it And historically, my probably, But as resides? been eye to you to to cash time near this that you’re at business Ben Where shareholders has $XX it $XX a $XX where seen a it? lower, it’s returns flow. power degree, the depends number the it at of though your tell, the be the If establishing would $XX across billion. Well, your of return to the sense order today, today, operating back you’re been? in framework Where where have that you on of to is CapEx you’d do earnings some ties talking moment shareholders? indicating of looks range the billion or I billion

because the it’s priorities, of of a much is ago? or That’s is How so cetera? that? is was it sheets, convoluted? is what much that be world other is you thought not et shell just the to to it, much how year it was going So power what different degree, earnings How or balance a

Ben van Beurden

no. No,

our it’s think what what cash and and then on will deal if what the happen? clear, but macro other has maybe, question can flows, that off take happen two spring to on Pennsylvania. with the the also I perfectly Lucas, Mexico changed, Jessica And questions to would would I back, first wouldn’t

Jessica Uhl

good Lucas. really A question,

last quarters over you the and been since strong year, is trying of for during get the we’ve few with thank XXXX the So, and company and year that message particularly, fundamentals remained The across a half to that. a pandemic. last

the few of normalize, more time the getting the it of would What’s our in put demonstrating, terms for to macro I’d company. potential is the fundamentally cash considerable be and take way the that I company wanted a different the would term, that QX the in going some to to things and on our of years be the of earnings So, quality to both changed, capability to operational of flow the a where medium extent, it’s earnings obviously, on assets, sheet of we fundamentals continues in our to capability, in clock balance the hope and in there strength of be. near-term, does back say to terms terms

it’s years raise. So, to sheet capital take think terms ago, than which certainly we going bit one time you of of the in allocating balance a the points little of a is that to more anticipated couple I

the peace sure So, and But in sheet I fundamentals bit. macro of impact it’s balance are the story strategy strong our there’s pandemics the that getting more right. had a and our also a accelerating pretty about profound around effect balance terms the think on and making we’re strategy on

Ben van Beurden

Yes.

the On sides two that mentioned. you

our you And facilities, terms has, employees. in the and think I in But we in some as take needed the community. building simply something account Chemicals well. course, Pennsylvania quite we a the of cracker rapid succession in relatively have the you well to X,XXX pandemic. to being Also, mind, of because can’t I to this and of dozens, that safety, into small are health preserve we bear medical at can point by back site, had in over actually just impacted imagine, been remember So, as statistics. time, people before on pandemic, came

protocol it’s So, again, back testing we stringent back to for coming people site. and strict up a have very

a And indeed, of the areas no at Gulf not thousands site through few down way. about years. course, as – still that we talking in said of we we But up Mexico would are is the one mean deep think that that this. so part course, of the we on that employees the decade, massively beginning to about there again, like probably XXXX. in it; We’re it to then the on of be measured as maximum track. will it areas, if that it the upstream we imagine back of of can the we believe capacity of sort the in is in can construction itself. very taking program a areas well, much decline the you Lucas, areas; working next say enough, soon core I as that very in sort of the will site very going I going growth but one Mexico, of is these in will the doubt does, other count about project much prove we are still – starting promising Mexico for is have We of of is will have delayed; forward so, offset water, we have delivering the focused Mexican is some the on the on hope and have

Lucas. have results, we exactly to So, first afraid, have drilling patient more I’m will be our of in the a When we little process you that, bit wells. on are

can bring we the to question, on we can next move in? Anna. me Who Let

Operator

you. go question next Kuplent, comes from America. ahead. of Please The Bank Thank Christopher

Christopher Kuplent

not spend regret Jessica, And both just Lucas much that much how two restrictions in COVID thanks, looms that just and sacrifice large, slower? what think follow-ups, the similar you I years? being next of what figure and to other going you to because this Or few $XX and not able in on Thank still hopefully, Ben are to billion what just slowdowns. you willing words, is CapEx, mentioned for format. do

still on the to qX an updated in the are So, you in lockdowns just being you might last presented to you’ve year? that CapEx years number, the And an I suggests with around XXXX, feel for more us to asking going comment decided the lot quickly awful may, give February, coming do what or second guidance less to new if world. wanted with us or run a rate to without for you sacrifice compared plan

be that catch CapEx that great. would is might $XX other pretty as billion, XXXX the there much hand, be the just below on a end some commentary again, allow? qualitative to conditions if at you of one chance well sort in need XXXX but well So, up

Ben van Beurden

Thank fully clear. hopefully let And Chris. me them, you. on be brief me both of just let understood, but

right. absolutely You’re

the that that well $XX below at mentioned. is to a may range, the been bottom as of get in because they have not we be but we of because moment your to have at We just just the we projects. been if course, a doing stop not to end at mentioned where there’s running But had some Pennsylvania. able there’s XX. That cases. work. of So, not it’s also, ultra-disciplined. $XX down. we is even well. billion rate you bringing run simply are it disciplined others, that CapEx we been That have not continue our is billion way

of mini $XX we back regrets. indeed But clear; come bow stay part billion very So of to indeed, some course, $XX there are of billion will as spent. wave. it we’re a within the

we You XX. idea. we even $XX billion. next this billion idea But were range original a that up billion $XX talk and were the this $XX spend billion $XX we listen, original that year the and ramp year, going to about going was year to be in of not were the to to going to spend not

the indeed, with that’s it window, At To regrets. an make it are, time happen to have regrets not capital. we idea, be doesn’t And in we of growth where this parsimonious point our they’re category. give indeed, Now means that out much to in their have anymore. you more our

we instance, of like XX%, XX%. areas going spend now XX% used more does our for now it’s that spend CapEx, But of XX% to what we XX%. in close call that to to be where used be it to mean CapEx we our in where about So, growth to upstream,

have because Anna, of simply to please? regrets indeed, made affordability. I had choices the question, be had made, next been but So can

Operator

from Next Tarr go question Berenberg. Henry comes ahead. from Please

Henry Tarr

of the bidding more a customers small be billion current build show Hi, that the deeply see customer how part pursuing? the are the up on are guess net – of questions. hit and your was Two And strategy, system my taking type but thresholds, you on type this to about? So, in one I we environment you And a talking of is very aiming the for of there do debt what are was, focus thanks customers? I outlook? when the Thanks. to saw expect that business likely then broadband to might given activity? you’re $XX second UK to recently. really;

Ben van Beurden

be Thanks take first last very the much, by Jessica? well. will our talk that Henry. And the you as question customers I’ll why way don’t and to one,

Jessica Uhl

but capital. our of where volatility of a it, macro, of But by terms of what debt, is of When you performance little the question best around from of some of when quarter currently and are prices expectation I and see excluding marketing have on environment. that to you there’s and on the LNG years number down I’d very such as were company, a There $XX billion believe actual the think one relevant road, what the in give cycle. for is context and we is a are is company in In suite in low a flow working oil the low, of ourselves. the being that, whole businesses, the you the I moments a to we’re $X all is of low, impacted prices the net third cash course, If consider assumptions operations, our a the or give billion two try strong the trading. macro business, performance to how in or company. performing, way the number date

to flow the indication that’s cycle. So, a a the good the point I at of low capability question, earnings think back cash company earlier going fundamental an and of in

fluctuation And good capital the so kind being I capability indication. of is matters, working of the is that a margining expect good in of terms so that I should some qX think think quarter-on-quarter, state the we That a indication. matters, said, steady company,

Ben van Beurden

a very company. is our say aspect customer indeed, that for mainstay broadband as our as the differentiator the think of to Okay. bank I sort of a important thanks, consider that is really to let Jessica. news increasingly a growth going aspect growth from of plans the saw yes, And on very But well. customers, Don’t forward. across me get I working important clearly strategy. And be our

the decades. of been time, for a of many, customers. the company to customers much that some is customers society but But Also, customer bear the our in very of the have. mind, appeal that future point will have energy the energy appeal be We the will But think like. demands serving we have the focused transition how a many power going determine in made, know choices years, at the end, the of upstream that you the took customers to all trend, look will I in over

XX clearly, how of seen to not at a is to future for global is – we partnerships be little also wobble that going that companies energy serve of together a end are the meeting we served turn of be much the driver challenge. And companies, Paris that be other key decarbonisation we will customers. platform, indeed the we that journey consumers we of forecourts, that think session. if have shaped And very bit decades. therefore, we customer Microsoft, of to agreement our years, well. the me by we system energy a on the propositions come we into very that last well have increasingly being we are that to which which going be strong likes with system decarbonisation that build we to our shaped, argue, that believe energy brings retail as and will going in to part the have work But this a We value you which is will performing platform and could over can the Google, a their million other it, lost marketing So, will to reoriented very orientated never have ourselves way back because again, you in company have a

much very have our you but the questions hope our you framework. you And to IR Thank direction will that I joining strategic asked. bit outstanding, for But I you more there’s little few know team and we today. financial given our more you. on thank more of strategy, that for deliver. also much clarity a a you again, given all that So do the energy I very the get will have we you transition. strategy to be hunger has taste are bit know value because will ready we real to we there capture hope today that And and positioned because in the of a a is are, the about I how hope our it also a well give opportunities little that it call

the safe, So day a that’s on the more our of meantime, stay XX have next And come rest to great this on week and and strategy year. in everyone. of the please February

Operator

Ladies your Thank participation. and you gentlemen, for this concludes call. today’s conference

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