Shell has reported record annual profits after energy prices surged last year following Russia's invasion of Ukraine.

Profits hit $39.9bn (£32.2bn) in 2022, double last year's total and the highest in its 115-year history.

Shell plc Chief Executive Officer, Wael Sawan:
"Our results in Q4 and across the full year demonstrate the strength of Shell's differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.

We believe that Shell is well positioned to be the trusted partner through the energy transition. As we continue to put our Powering Progress strategy into action, we will build on our core strengths, further simplify the organisation and focus on performance. We intend to remain disciplined while delivering compelling shareholder returns, as demonstrated by the 15% dividend increase and the $4 billion share buyback programme announced today."

Highlights

• Strong performance in a continuing uncertain economic environment. Q4 2022 Adjusted Earnings of $9.8 billion, with Adjusted EBITDA of $20.6 billion, despite lower oil and gas prices compared with Q3 2022, with higher LNG trading and optimisation results.
• 15% dividend per share increase for the fourth quarter. $4 billion share buybacks announced, expected to be completed by Q1 2023 results announcement.
• 2022 full year shareholder distributions $26 billion. Total distributions in excess of 35% of CFFO for 2022.
• Strengthening the portfolio with the announced acquisition of Nature Energy (Denmark), a renewable natural gas producer, winning the wind tender for Hollandse Kust (west) VI as part of the Ecowende joint venture and further simplifying the portfolio with the merger of Shell Midstream Partners (USA).
• 2023 cash capex outlook: $23 - 27 billion. 
• CFFO of $22.4 billion for Q4 2022 benefited from a working capital inflow of $10.4 billion. The working capital inflow reflects the impact of lower oil and gas prices, active management of initial margin positions, decrease in accounts receivable and cash relating to joint ventures. Tax paid was higher at $4.4 billion in Q4 2022. As a result, net debt decreased by ~$3.5 billion (~7%) compared with last quarter, to $44.8 billion in Q4 2022.

Integrated Gas

• Lower liquefaction volumes mainly reflect longer-than-expected maintenance at Prelude and operational issues at QGC in Australia.
• Adjusted Earnings were higher than in Q3 2022 due to higher trading and optimisation results coupled with favourable movements in deferred tax positions.
• Trading and optimisation results driven by seasonality combined with capturing unique optimisation opportunities generated through the large scale and scope of our LNG trading portfolio.

Upstream

Q4 2022 production was higher than in Q3 2022, mainly driven by lower scheduled maintenance and lower unscheduled deferment.
Adjusted Earnings impacted by a decline in oil and gas prices. Q3 2022 earnings benefited from one-off non-cash provision releases and gains related to storage transfer effects in a joint venture.

Quarter Analysis
Segment earnings, compared with the third quarter 2022, were mainly driven by lower oil and gas prices (decrease of $1,849 million) and the comparative adverse impacts of the one-off non-cash provision release (decrease of $503 million) and storage transfer effects, included in the share of profit of joint ventures and associates (decrease of $609 million), in the third quarter.

Fourth quarter 2022 segment earnings also included charges of $1,385 million relating to the EU solidarity contribution and $441 million relating to the UK Energy Profits Levy, partly offset by gains of $304 million due to the fair value accounting of commodity derivatives. These gains and losses are part of identified items, and compare with the third quarter 2022 which included a gain of $312 million due to the impact of the discount rate change on provisions and charges of $361 million relating to the UK Energy Profits Levy and an impairment charge of $303 million.

Reserves Update
When final volumes are reported in the 2022 Annual Report and Accounts and 2022 Form 20-F, Shell expects that SEC proved oil and gas reserves additions before taking into account production will be approximately 1.3 billion boe, and that 2022 production will be approximately 1.1 billion boe. As a result, total proved reserves on an SEC basis are expected to be approximately 9.6 billion boe. Acquisitions and divestments of 2022 reserves are expected to account for a net increase of approximately 1.0 billion boe.

The proved Reserves Replacement Ratio on an SEC basis is expected to be 120% for the year and 58% for the 3-year average. Excluding the impact of acquisitions and divestments, the proved Reserves Replacement Ratio is expected to be 26% for the year and 39% for the 3-year average.

Renewables and Energy Solutions

• Q4 2022 Adjusted Earnings resulted from strong trading and optimisation margins for gas and power mainly driven by European and Australian markets as significant price volatility continued. This was partly offset by higher operating and development costs.
• Won bid with Eneco to jointly develop 760 MW installed capacity offshore wind power project in the Netherlands at Hollandse Kust (west) VI.
• Completed acquisition of Daystar Power Group, a provider of Solar-as-a-Service and Power-as-a-Service solutions to commercial and industrial customers in West Africa.
• Acquired 50% in Kondinin Energy Pty Ltd which holds land access for a wind, solar and battery energy storage development in Western Australia.
• Acquired Green Tie Capital’s platform with ten medium mature solar energy projects across Spain and potential for 2 GW of solar power generation capacity.

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