Shell Plc Q4 FY2025 earnings call

Safety and Process Safety

• Safety is a top priority; 4 colleagues lost lives in 2025, with focus on learning from incidents and improving process safety (30% fewer incidents in 2025 vs prior year).

Financial Targets

• Structural cost reductions: Achieved $5.1B of $5-7B target by end of 2025, ~60% from operational efficiencies.
• Cash CapEx: Within $20-22B range, ended 2025 in the middle.
• Normalized free cash flow per share: Aim to grow over 10% through 2030.
• Shareholder distributions: 40-50% of CFFO, delivered at top end in 2025.

Portfolio Actions

• Upstream: Divested SPDC in Nigeria, completed Adura joint venture, strengthened deepwater positions.
• Chemicals & Products: Divested loss-making asset in Singapore, repositioning portfolio.
• LNG: Aimed to grow sales 4-5% pa, achieved 11% in 2025 with record cargoes.

Emissions Progress

• Halved Scope 1/2 emissions under operational control by 2030 target ~70% achieved.
• Reduced net carbon intensity of products sold by 9% vs 2016.
• Reduced customer emissions from oil use by 18% in 2025, meeting 15-20% ambition.

In 2025, Shell's segments had varied performances. Upstream completed divestment of SPDC in Nigeria, finalized the Adura joint venture (UK North Sea's largest independent producer), and strengthened deepwater positions. Chemicals & Products divested a loss-making asset in Singapore and worked on repositioning the portfolio. Integrated Gas saw LNG sales grow 11% in 2025, supported by LNG Canada's start-up. Downstream and Renewables & Energy Solutions: Mobility and Lubricants achieved best-ever results with higher margins, while Chemicals faced challenges due to low margins and operational performance.

Cash CapEx

• Cash CapEx range remains $20-22B.

Dividends and Buybacks

• Announced 4% increase in dividend and $3.5B share buyback program, expected to complete by Q1 results in May.

LNG Growth

• Aim to grow LNG sales 4-5% per annum through 2030, achieved 11% in 2025 with LNG Canada start-up contributing.

• Safety incidents: Tragic loss of 4 colleagues in 2025, with ongoing focus on preventing recurrence.
• Market Volatility: Oil and gas price fluctuations can impact financial results.
• Chemicals Downturn: Prolonged low chemical margins pose challenges for the Chemicals & Products segment.
• Geopolitical Risks: Issues in regions like Kazakhstan and Venezuela can affect operations and investments.

Q: On reserves and portfolio refocus, Alastair Syme asked about reserve life falling 15% and portfolio issues.

A: Wael Sawan responded about closing the reserve gap with deepwater investments and Sinead Gorman added on conscious decisions to focus on value over R/P metrics.

Q: Josh Stone asked about buybacks, whether it was a close call.

A: Sinead Gorman said buybacks are value-led, within 40-50% CFFO distribution range, and balance sheet is strong.

Q: Irene Himona asked about Adura joint venture impacts and Chemicals restructuring.

A: Wael Sawan talked about Chemicals restructuring progress and Sinead Gorman discussed Adura's impact on metrics like dividends.

Q: Biraj Borkhataria asked about Renewables OpEx and M&A.

A: Wael Sawan spoke about M&A strategic patience and Sinead Gorman discussed Renewables OpEx cost reductions through portfolio mix changes.

Q: Paul Cheng asked about new opportunity sets in Iraq, Libya, Venezuela.

A: Wael Sawan said longer-term energy demand is constructive, and Shell is well-positioned in these regions.

Q: Michele Della Vigna asked about LNG oversupply and China demand.

A: Wael Sawan said LNG has constructive demand, Shell is well-positioned with diversified supply and demand, and China/India want LNG at right price.

Q: Kim Fustier asked about Chemicals capacity shutdown and Vaca Muerta sale.

A: Wael Sawan said Chemicals is looking at unit shutdowns and Sinead Gorman corrected on Vaca Muerta sale rumors.

Q: Martijn Rats asked about trading contribution to ROACE and Kazakhstan claims.

A: Sinead Gorman said trading contribution was in lower end of range and Wael Sawan commented on Kazakhstan legal proceedings impact.

Q: Lydia Rainforth asked about agentic AI and free cash flow.

A: Wael Sawan talked about agentic AI deployment and Sinead Gorman discussed free cash flow per share targets being variable but on track.

Q: Lucas Herrmann asked about resource resolution and LNG volumes.

A: Wael Sawan said resource focus is agnostic to basin, and Sinead Gorman discussed LNG volume growth and upcoming projects.

Q: Doug Leggate asked about legacy investment and free cash flow growth.

A: Wael Sawan talked about exploration reset and Sinead Gorman discussed confidence in free cash flow growth from performance and returns.

Q: Henry Tarr asked about exploration performance and future capital allocation.

A: Wael Sawan said exploration has mixed results, focusing on value accretive opportunities, and will pivot based on value creation.

Q: Christopher Kuplent asked about M&A market and LNG Canada.

A: Sinead Gorman said focus on capital reallocation and Wael Sawan talked about M&A strategic patience and LNG Canada's performance.

Q: Ryan Todd asked about Bonga South West and Nigeria resources.

A: Wael Sawan discussed Bonga South West progress with fiscal support and Nigeria's investment drive in offshore resources.