Shell Generates Record Cash Flow in 3Q

Shell Generates Record Cash Flow in 3Q
The figure was supported by 'outstanding' cash generation across the businesses and 'boosted' by commodity derivatives.

Royal Dutch Shell plc (NYSE: RDS.A) has recorded its highest ever cash flow from operations, excluding working capital, of $17.5 billion, the company’s latest quarterly results statement has revealed.

The figure was supported by “outstanding” cash generation across the businesses and “boosted” by commodity derivatives, Shell noted in the results statement. The company’s cash flow, excluding working capital, came in at $14.1 billion in the second quarter (2Q) and $8.9 billion during the third quarter (3Q) of last year.

Shell posted adjusted earnings of $4.13 billion in 3Q, compared to $955 million in 3Q 2020. The company’s integrated gas segment and upstream segment each saw adjusted earnings of $1.6 billion in 3Q and its oil products and chemicals segments saw adjusted earnings of $1.2 billion and $395 million, respectively, during the same period. Shell’s corporate segment saw an adjusted loss of $732 million during 3Q.

In 3Q 2020, Shell’s integrated gas segment saw adjusted earnings of $768 million and its upstream segment saw an adjusted loss of $884 million. Oil products saw adjusted earnings of $1.6 billion in 3Q 2020, chemicals saw adjusted earnings of $227 million and Shell’s corporate segment saw an adjusted loss of $792 million.

Shell’s net debt stood at $57.5 billion in 3Q this year, compared to $73.5 billion in 3Q 2020. Divestment proceeds in 3Q 2021 stood at $1.3 billion.

“In 3Q we saw a dynamic energy market resulting in higher oil and gas prices, improved refining margins and mixed chemicals margins,” Jessica Uhl, Shell’s chief financial officer, said in a company statement.

“Throughout this we again delivered solid financial results for the quarter. Our adjusted earnings were $4.1 billion, and our adjusted EBITDA was $13.5 billion, boosted by another outstanding quarterly performance in our marketing business which has delivered record 3Q year to date adjusted earnings,” Uhl added in the statement.

“In integrated gas, our trading and optimization results continued to be impacted by gas and LNG supply shortages while the assets benefited from higher prices. With most of our LNG sales linked to oil prices in long-term contracts, we saw limited benefit from higher spot gas prices in 3Q … In upstream, despite divestments and impacts from Hurricane Ida, we generated the highest cash flow from operations excluding working capital movements since 3Q 2018,” Uhl went on to say.

Uhl also highlighted that Shell announced the divestment of Permian shales assets in 3Q for $9.5 billion. The Shell CFO noted that the company will distribute $7 billion of the divestment proceeds to Shell’s shareholders, with the remaining going towards balance sheet strengthening.

To contact the author, email andreas.exarheas@rigzone.com



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