
During a Feb. 2 Q&A session to discuss the supermajor’s fourth quarter results with analysts, Shell CEO Wael Sawan said the company delivered its results in an ongoing volatile environment and that “volatility and uncertainty will continue to be watchwords in 2023.” (Source: Shutterstock.com)
Boosted by its integrated gas business, Shell reported fourth quarter 2022 adjusted earnings of $9.81 billion and adjusted EBITDA of $20.6 billion with plans to be “ruthless” in its capital allocation going forward.
In announcing its earnings on Feb. 2, Shell said fourth quarter adjusted earnings were higher than the third quarter’s $9.45 billion adjusted earnings due to higher trading and optimization results, coupled with favorable movements in deferred tax positions.
“We generated $22.4 billion of cash flow from operations, including a positive inflow of $10.4 billion of working capital,” CFO Sinead Gorman said in a presentation highlighting the results. “These strong quarterly results helped us to achieve our highest ever full year results with adjusted earnings of some $40 billion more than double those of last year.”
Shell delivered about $26 billion in shareholder distributions for the year and also announced on Feb. 2 a new $4 billion share buy-back program that the company expects to complete at the time of the results announcement for the first quarter of 2023, she said.
During a Feb. 2 Q&A session to discuss the supermajor’s fourth quarter results with analysts, Shell CEO Wael Sawan said the company delivered its results in an ongoing volatile environment and that “volatility and uncertainty will continue to be watchwords in 2023.”
In the face of those conditions, he said Shell would maintain capital discipline and focus on value.
“We've worked hard over the years to strengthen our portfolio. We have a clear strategy empowering progress. Our focus now is to further operationalize and profitably deliver this strategy. We will build from our strengths, where we will prioritize value over volume while reducing carbon emissions,” Sawan continued.
As it considers opportunities in the future, he said Shell will think about the short-term value for today’s shareholders but also longer term opportunities to create value for 2040 “when the energy system will be fundamentally different.”
“By the way, by 2040, I'm still convinced you're going to need oil and you're going to need gas and you're going to need a lot more renewables,” he added.
Looking to 2023, Shell placed its 2023 cash capex outlook at $23 billion to $27 billion, while in 2022 the company’s capex was $25 billion.
“When it comes to discipline, it's about making sure we continue to be ruthless in our allocation of capital towards the value enhancing opportunities we see,” Sawan said.
He said discipline is about the ability to make capital choices “in an objective way, an unemotional way” rather than leaving it to each business segment to pitch for their own capital.
The 2023 capex will not include the Gato do Mato project in Brazil.
Shell recycled that project “because the cost estimates that came in were higher than we were comfortable taking a final investment decision on,” Sawan said. “We said, ‘this is not the right time to do it,’ and therefore we punted it until there is a better environment.”
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