Shell Plc Q4 FY2024 earnings call

• Safety and Technology: Focus on safety, leveraging technologies like sensors, robotics, and AI for process safety improvement.
• Capital Markets Day 2023 Progress: Structural costs reduced by $3.1 billion by end-2024, ahead of target. CapEx was below guidance, free cash flow and free cash flow per share grew, with over $22.5B returned to shareholders.
• Emissions Reduction: Abated over 1M tonnes of CO2, Scope 1 and 2 emissions roughly flat despite increased asset utilization, methane below target, and net carbon intensity reduced.
• Portfolio Strengthening: Deepwater projects online, final investment decisions on Bonga North, acquisition of Pavilion, Ruwais LNG project, and Manatee project in Trinidad and Tobago; Renewals and Energy Solutions projects progressing.

Integrated Gas and Upstream: In 2024, Prelude and QGC achieved record availability with highest-ever production. Deepwater business saw Whale and Mero-3 come online, and Bonga North in Nigeria took final investment decision. Chemicals: Shell Polymers Monaca had all 3 units ramped up, but the segment faced a loss in Q4. Mobility: Completed divestment of Shell Pakistan, installed over 70,000 EV public charge points globally, and lubricants delivered its highest result. Renewals and Energy Solutions: Completed acquisition of a combined cycle power plant in Rhode Island and progressed with the Holland Hydrogen I project.

• Cash CapEx for 2025 expected to be lower than the 2024 range of $22 billion to $25 billion.
• Dividend increased by 4%, with a $3.5 billion share buyback program announced, expected to complete by May 2025.
• Capital Markets Day in New York on March 25, 2025, to outline next steps.

• Uncertainties in regulatory approvals for asset disposals (e.g., Nigeria, Singapore).
• Impact of legacy hedge contracts on earnings.
• Volatility in energy markets affecting earnings and cash flow.

Q: When I think about the G&A, there's obviously been a lot of progress that you've made from 2023. So can you just talk about what philosophy you want to take going forward to help realize some of the value in the shares that you talked about?

A: Lydia, thank you for those questions. I'll take the first one and maybe Sinead, if you want to pick up the second one. On your first question, so what's the philosophy? I think where we started in 2023, we said very clearly, we have an organization that has an amazing set of assets, a great portfolio, a great set of capabilities and that what we needed to do was to build a couple of key things. One, we needed to be able to make sure we consistently deliver results and do so through the cycle. So that point around consistency will hold not just for today, not for tomorrow, but I think throughout because we are still in a capital-intensive cyclical industry where value is created through the life cycle and what we want to try to do is make sure that we focus on the areas like performance, discipline, simplification and inculcate that into our culture because I think that's a critical part of what we do. And part of the consistency is not just the delivery, but also the distributions, which is what you see us doing, 13 quarters in a row of $3-plus billion, we need to create that. I think the second key piece we want to continue to do is to create a machine -- a Shell machine that also has resilience through the cycle, that we can generate cash to be able to take some of those countercyclical opportunities to have a healthy balance sheet to be able to do that. And that's what we are trying to establish. Now we have moved a long way. Capital Markets Day '23 to now you have seen us, in essence, do what we said we're going to do or a bit more. And of course, I'm playing out the structural cost reductions and the like. And so from here on, it's going to be -- we still have a lot more to do, and we have a bit more range now to look at other things, and you'll hear more about that, of course, in Capital Markets Day. Sinead?

Q: When I think about the G&A, there's obviously been a lot of progress that you've made from 2023. So can you just talk about what philosophy you want to take going forward to help realize some of the value in the shares that you talked about?

A: Lydia, thank you for those questions. I'll take the first one and maybe Sinead, if you want to pick up the second one. On your first question, so what's the philosophy? I think where we started in 2023, we said very clearly, we have an organization that has an amazing set of assets, a great portfolio, a great set of capabilities and that what we needed to do was to build a couple of key things. One, we needed to be able to make sure we consistently deliver results and do so through the cycle. So that point around consistency will hold not just for today, not for tomorrow, but I think throughout because we are still in a capital-intensive cyclical industry where value is created through the life cycle and what we want to try to do is make sure that we focus on the areas like performance, discipline, simplification and inculcate that into our culture because I think that's a critical part of what we do. And part of the consistency is not just the delivery, but also the distributions, which is what you see us doing, 13 quarters in a row of $3-plus billion, we need to create that. I think the second key piece we want to continue to do is to create a machine -- a Shell machine that also has resilience through the cycle, that we can generate cash to be able to take some of those countercyclical opportunities to have a healthy balance sheet to be able to do that. And that's what we are trying to establish. Now we have moved a long way. Capital Markets Day '23 to now you have seen us, in essence, do what we said we're going to do or a bit more. And of course, I'm playing out the structural cost reductions and the like. And so from here on, it's going to be -- we still have a lot more to do, and we have a bit more range now to look at other things, and you'll hear more about that, of course, in Capital Markets Day. Sinead?

Q: You mentioned about the Nigerian announcement that they have approval at the end of December, and obviously, Singapore is still pending, and I think you have the power sales or reduction in terms of your interests currently pending. Can you give us an idea of where things stand on the disposal visibility for 2025?

A: Let me touch on the first one without giving a specific number at this stage and then maybe if you want to talk about the second one, Sinead. Let me just maybe pause there, Doug, and just update you on where things are. I mean I think firstly, on Nigeria, indeed, as you said, consent came through. We're still reviewing the conditions of that consent and are engaging with the regulator to be able to close that. That sort of will hopefully play out through the course of this year. . Singapore, we're weeks away from hopefully getting to that completion. An important milestone for us and indeed another proof point of doing what we said we were going to do. And then from a power perspective, we have, of course, evolved our strategy into one that is much more focused on how we are able to offtake electrons, with investments in batteries, but essentially also looking at flex investments, all to take those offtake -- those electrons through into our trading organization, which continues to be a real differentiated capability. We're not putting numbers out there in terms of each of those, what we're realizing in terms of proceeds. But I think suffice it to say that where we are focused is very much maximizing value from those divestments and strategically moving that capital into areas that we see more productive opportunities for ourselves in. Sinead?