Royal Dutch Shell Plc: 3rd Quarter 2012 UNAUDITED Results
THE HAGUE, The Netherlands, November 1, 2012 /PRNewswire/ --
Royal Dutch Shell's (NYSE:RDS.A) (NYSE:RDS.B) third quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $6.1 billion compared with $7.2 billion in the same quarter a year ago.
Third quarter 2012 CCS earnings, excluding identified items (see page 6), were $6.6 billion compared with $7.0 billion in the third quarter 2011, a decrease of 6%. Basic CCS earnings per share excluding identified items decreased by 6% versus the same quarter a year ago.
Cash flow from operating activities for the third quarter 2012 was $9.5 billion. Cash flow from operating activities excluding movements in working capital was $11.7 billion in the third quarter 2012.
Net capital investment (see Note 1) for the third quarter 2012 was $8.0 billion. Capital investment for the third quarter 2012 was some $8.8 billion and proceeds from divestments were $0.8 billion.
Total dividends distributed in the quarter were $2.8 billion, of which some $0.8 billion were settled under the Scrip Dividend Programme. During the third quarter 4.3 million shares were bought back for cancellation for a consideration of some $0.1 billion.
Gearing at the end of the third quarter 2012 was 8.6%.
A third quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depository Share (ADS), an increase of 2.4% compared with the third quarter 2011.
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 %[1] 2012 2011 %
Income attributable to
7,139 4,063 6,976 +2 shareholders 19,921 24,418 -18
Current cost of supplies
(CCS) adjustment for
(1,012) 1,901 270 Downstream (171) (2,252)
6,127 5,964 7,246 -15 CCS earnings 19,750 22,166 -11
(432) 245 245 Less: Identified items[2] 193 2,325
CCS earnings excluding
6,559 5,719 7,001 -6 identified items 19,557 19,841 -1
Of which:
4,888 4,507 5,435 Upstream 15,648 15,493
1,731 1,296 1,818 Downstream 4,148 4,552
Corporate and
(60) (84) (252) Non-controlling interest (239) (204)
Cash flow from operating
9,483 13,305 11,645 -19 activities 36,227 30,306 +20
Basic CCS earnings per
0.98 0.95 1.16 -16 share ($) 3.16 3.57 -11
Basic CCS earnings per ADS
1.96 1.90 2.32 ($) 6.32 7.14
Basic CCS earnings per
share excl. identified
1.05 0.91 1.12 -6 items ($) 3.13 3.20 -2
Basic CCS earnings per ADS
2.10 1.82 2.24 excl. identified items ($) 6.26 6.40
0.43 0.43 0.42 +2 Dividend per share ($) 1.29 1.26 +2
0.86 0.86 0.84 Dividend per ADS ($) 2.58 2.52
[1] Q3 on Q3 change.
[2] See page 6.
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
"Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets. Our profits pay for substantial investments in new energy supplies, and they pay dividends for our shareholders.
"Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products.
"We've made progress with our Alaska exploration programme, commencing drilling operations in the Beaufort and Chukchi seas, as the industry continues to assess offshore potential there. This will be a multi-year exploration programme, demonstrating Shell's commitments to high standards on sustainable development and safety.
"We continue to refresh our portfolio, launching new oil and gas developments, making new exploration discoveries, purchasing new liquids-rich shale acreage and increasing our positions in oil and gas fields where we can add value with our innovation and scale. We are also continuing with our capital efficiency drive, selling down positions where others can add more value. We have announced around $6 billion of acquisitions and new acreage and also around $6 billion of asset sales in 2012, which will better position Shell for growth.
"I am pleased with our progress in a difficult industry environment. There is more to come from Shell."
THIRD QUARTER 2012 portfolio developments
Upstream
In Australia, Shell signed a agreement to consolidate the Crux gas and condensate field with Nexus Energy and Osaka Gas. Following the completion of the agreement, which is subject to regulatory approvals, Shell will assume operatorship and hold an 80% interest in the new joint venture.
Also in Australia, Shell agreed to exchange its 33.3% interest in Clio-Acme for Chevron's 16.7% interest in East Browse and Chevron's 20% interest in West Browse. In addition to the assets exchanged, a cash payment of some $0.5 billion from Shell to Chevron was agreed. Following the completion of this transaction, Shell's interest will be 35% in West Browse and 25% in East Browse. The transaction is subject to regulatory approvals.
In China, Shell and China National Petroleum Corporation signed an amendment of the production-sharing contract ("PSC") for the onshore Changbei block, covering some 1,692 square kilometres in the Ordos basin. The PSC amendment allows for development of additional tight gas sands as well as further development of the already producing main reservoir.
Shell and China National Offshore Oil Corporation ("CNOOC") agreed for CNOOC to acquire a 25% participating interest in offshore exploration blocks BC9 and BCD10 in Gabon. CNOOC will reimburse Shell for 25% of certain past exploration costs and carry part of the future exploration costs. Following completion of the transaction in October, Shell's interest is 75%.
In Norway, Shell agreed to acquire BP's 18.36% interest in the offshore Draugen field for a consideration of some $0.2 billion. Shell is already the operator of the field and this transaction will bring Shell's interest to 44.56%. The transaction, subject to regulatory approvals, is expected to be completed by the end of the year.
In the United States, Shell agreed to acquire 618 thousand net acres (equivalent to some 2,500 square kilometres) in the Permian basin in West Texas from Chesapeake Energy for a consideration of some $1.9 billion. The acreage is rich in oil and natural gas liquids and currently produces some 26 thousand barrels of oil equivalent per day ("boe/d") with growth potential. The transaction was completed in October.
Also in the United States, Shell agreed to divest its 50% interest in the mature Holstein field (Shell share of production of 5 thousand boe/d) in the Gulf of Mexico for a consideration of some $0.6 billion. The transaction is expected to be completed by the end of the year.
Shell announced three final investment decisions, including on the Quest carbon capture and storage project (Shell share 60%) in Canada. Quest is expected to capture and store deep underground more than one million tonnes per annum of CO2 produced in bitumen processing. Quest is expected to reduce direct emissions from the Scotford Upgrader by up to 35%. In Italy, the final investment decision was taken on the onshore Tempa Rossa field (Shell share 25%) in the Basilicata region. The project is expected to produce some 45 thousand boe/d at peak production. In October, Shell announced the final investment decision for the Fram oil and gas field (Shell share 32%) in the United Kingdom North Sea. The field will be developed using floating production, storage and offloading technology. The project is expected to produce 35 thousand boe/d at peak production.
In Nigeria, Shell completed the sale of its 30% interest in Oil Mining Lease 34 (Shell share of production of some 20 thousand boe/d) in the Niger Delta for a consideration of some $0.4 billion. In a separate transaction, Shell also completed the sale of its 30% interest in the non-producing Oil Mining Lease 40 for a consideration of some $0.1 billion. Including these transactions, Upstream divestment proceeds totalled some $0.6 billion in the third quarter 2012.
During the third quarter 2012, Shell participated in the Satyr-2 gas discovery (Shell share 25%) in the Carnarvon basin offshore Australia and the Tukau Timur Deep gas discovery (Shell share 50%) offshore Malaysia. Shell also drilled a successful appraisal well at Appomattox Southwest (Shell share 80%) in the Gulf of Mexico.
As part of its global exploration programme, Shell spent some $0.6 billion on new acreage positions during the third quarter of 2012, including positions in Benin deepwater, the Gulf of Mexico and onshore North America. New acreage positions were also added offshore Australia, China, Malaysia and Ukraine.
Downstream
In Norway, Shell acquired the remaining outstanding shares in Gasnor AS ("Gasnor") for some $0.1 billion. Shell previously owned 4.1% of the shares in the company. Gasnor is a market leader in Norway in small scale LNG, supplying LNG as a transport fuel to industrial and marine customers.
Key features of the Third quarter 2012
-
- Third quarter 2012 CCS earnings (see Note 1) were $6,127 million, 15% lower than in the same quarter a year ago.
- Third quarter 2012 CCS earnings, excluding identified items (see page 6), were $6,559 million compared with $7,001 million in the third quarter 2011, a decrease of 6%.
- Basic CCS earnings per share decreased by 16% versus the same quarter a year ago.
- Basic CCS earnings per share excluding identified items decreased by 6% versus the same quarter a year ago.
- Cash flow from operating activities for the third quarter 2012 was $9.5 billion, compared with $11.6 billion in the same quarter last year. Excluding movements in working capital, cash flow from operating activities in the third quarter 2012 was $11.7 billion, compared with $10.6 billion in the same quarter last year.
- Net capital investment (see Note 1) for the third quarter 2012 was $8.0 billion. Capital investment for the third quarter 2012 was some $8.8 billion and proceeds from divestments were $0.8 billion.
- Total dividends distributed in the third quarter 2012 were $2.8 billion, of which some $0.8 billion were settled by issuing some 22.3 million Class A shares under the Scrip Dividend Programme for the second quarter 2012. Under our share buyback programme some 4.3 million Class B shares were bought back for cancellation during the quarter for a consideration of some $0.1 billion.
- Return on average capital employed (see Note 6) on a reported income basis was 12.9% at the end of the third quarter 2012.
- Gearing was 8.6% at the end of the third quarter 2012 versus 10.8% at the end of the third quarter 2011.
- Oil and gas production for the third quarter 2012 was 2,982 thousand boe/d. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, third quarter 2012 production volumes were 1% higher compared with the same period last year.
- LNG sales volumes of 4.97 million tonnes in the third quarter 2012 were 4% higher than in the same quarter a year ago.
- Oil products sales volumes in the third quarter 2012 were 1% lower compared with the third quarter 2011.
- Chemicals product sales volumes in the third quarter 2012 decreased by 3% compared with the same quarter a year ago.
- Supplementary financial and operational disclosure for the third quarter 2012 is available at http://www.shell.com/investor.
Summary of identified items
Earnings in the third quarter 2012 reflected the following items, which in aggregate amounted to a net charge of $432 million (compared with a net gain of $245 million in the third quarter 2011), as summarised in the table below:
- Upstream earnings included a net charge of $298 million, reflecting impairments of $354 million mainly related to onshore gas properties in North America, a tax charge of $329 million related to the enactment of legislation in the United Kingdom restricting tax relief on decommissioning costs, an update to provisions related to decommissioning and restoration in the United States and the estimated fair value accounting of commodity derivatives. These items were partially offset by divestment gains of $554 million and the mark-to-market valuation of certain gas contracts. Upstream earnings for the third quarter 2011 included a net gain of $636 million.
- Downstream earnings included a net charge of $134 million, reflecting legal and environmental provisions. Downstream earnings for the third quarter 2011 included a net charge of $338 million.
- Corporate results and Non-controlling interest included a net charge of $53 million for the third quarter 2011.
SUMMARY OF IDENTIFIED ITEMS
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
Segment earnings impact of
identified items:
(298) 181 636 Upstream 336 2,397
(134) 64 (338) Downstream 128 (19)
Corporate and Non-controlling
- - (53) interest (271) (53)
(432) 245 245 Earnings impact 193 2,325
These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's CCS earnings and are shown to provide additional insight into segment earnings and income attributable to shareholders. Further comments on the business segments are provided in the section 'Earnings by Business Segment' on page 7 to 9.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 %[1] 2012 2011 %
Upstream earnings excluding
4,888 4,507 5,435 -10 identified items 15,648 15,493 +1
4,590 4,688 6,071 -24 Upstream earnings 15,984 17,890 -11
Upstream cash flow from
8,278 9,830 8,520 -3 operating activities 26,896 24,094 +12
Upstream net capital
6,932 5,293 5,944 +17 investment 15,997 11,720 +36
Liquids production
available for sale
1,599 1,612 1,676 -5 (thousand b/d) 1,631 1,674 -3
Natural gas production
available for sale (million
8,022 8,647 7,749 +4 scf/d) 9,167 8,769 +5
Total production available
2,982 3,103 3,012 -1 for sale (thousand boe/d) 3,211 3,186 +1
LNG sales volumes (million
4.97 4.57 4.76 +4 tonnes) 14.71 13.99 +5
[1] Q3 on Q3 change
Third quarter Upstream earnings excluding identified items were $4,888 million compared with $5,435 million a year ago. Identified items were a net charge of $298 million, compared with a net gain of $636 million in the third quarter 2011 (see page 6).
Compared with the third quarter 2011, Upstream earnings excluding identified items benefited from the increased contribution from Integrated Gas, which included an additional dividend from an LNG venture. Upstream Americas incurred a loss as a result of higher depreciation, increased operating expenses, lower gas realisations and the impact of hurricane Isaac on offshore operations in the Gulf of Mexico. Upstream earnings also reflected higher maintenance activities and increased exploration expenses.
Global liquids realisations were 5% lower and synthetic crude oil realisations in Canada were 8% lower than in the third quarter 2011. Global natural gas realisations were 3% lower than in the same quarter a year ago. Natural gas realisations in the Americas decreased by 38%, whereas natural gas realisations outside the Americas increased by 8%.
Third quarter 2012 production was 2,982 thousand boe/d compared with 3,012 thousand boe/d a year ago. Liquids production decreased by 5% and natural gas production increased by 4% compared with the third quarter 2011. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, third quarter 2012 production volumes were 1% higher compared with the same period last year.
New field start-ups and the continuing ramp-up of fields contributed some 163 thousand boe/d to production in the third quarter 2012, in particular from the ramp-up of Pearl GTL in Qatar and Pluto LNG in Australia, which more than offset the impact of field declines.
LNG sales volumes of 4.97 million tonnes were 4% higher than in the same quarter a year ago. LNG sales volumes mainly reflected the contribution from Pluto LNG.
DOWNSTREAM
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 %[1] 2012 2011 %
Downstream CCS earnings
1,731 1,296 1,818 -5 excluding identified items 4,148 4,552 -9
1,597 1,360 1,480 +8 Downstream CCS earnings 4,276 4,533 -6
Downstream cash flow from
335 3,265 2,069 -84 operating activities 6,808 4,597 +48
Downstream net capital
1,051 967 149 +605 investment 2,804 1,980 +42
Refinery processing intake
2,880 2,810 2,854 +1 (thousand b/d) 2,824 2,905 -3
Oil products sales volumes
6,290 6,321 6,374 -1 (thousand b/d) 6,191 6,210 -
Chemicals sales volumes
4,699 4,671 4,832 -3 (thousand tonnes) 14,049 14,391 -2
[1] Q3 on Q3 change
Third quarter Downstream earnings excluding identified items were $1,731 million compared with $1,818 million in the third quarter 2011. Identified items were a net charge of $134 million, compared with a net charge of $338 million in the third quarter 2011 (see page 6).
Compared with the third quarter 2011, Downstream earnings excluding identified items benefited from a recovery in industry refining margins and Shell's operating performance. Earnings were also supported by lower operating expenses, mainly as a result of favourable currency exchange rate effects. These items were more than offset by lower Chemicals earnings and reduced contributions from marketing and trading. Rising oil prices during the third quarter 2012 and the global economic slowdown impacted marketing contributions. Compared with the third quarter 2011, Chemicals earnings decreased due to rising feedstock prices in Europe, the impact of hurricane Isaac on operations in the Gulf of Mexico as well as the global economic slowdown.
Oil products sales volumes were 1% lower compared with the same period a year ago. Lower marketing volumes, as a result of weaker demand as well as portfolio divestments, were largely offset by higher trading volumes.
Chemicals sales volumes decreased by 3% compared with the same quarter last year, mainly due to reductions in European capacity and the impact of hurricane Isaac in the Gulf of Mexico. Chemicals manufacturing plant availability was 89% compared with 90% in the third quarter 2011. Improved global operating performance during the quarter largely offset the impact on availability of hurricane Isaac in the Gulf of Mexico.
Refinery intake volumes were 1% higher compared with the third quarter 2011. Excluding portfolio impacts, refinery intake volumes were 3% higher than in the same period a year ago as result of improved operating performance. Excluding the impact of hurricane Isaac in the Gulf of Mexico, availability was in line with the 94% availability in the third quarter 2011.
CORPORATE AND NON-CONTROLLING INTEREST
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
Corporate and Non-controlling
(60) (84) (252) interest excl. identified items (239) (204)
Of which:
15 (36) (201) Corporate (51) 39
(75) (48) (51) Non-controlling interest (188) (243)
Corporate and Non-controlling
(60) (84) (305) interest (510) (257)
Third quarter Corporate results and Non-controlling interest excluding identified items incurred a loss of $60 million compared with a loss of $252 million in the same period last year.
Corporate results excluding identified items compared with the third quarter 2011 mainly reflected favourable currency exchange rate effects and higher tax credits. These items were partly offset by increased net interest expense. In the third quarter 2012 favourable currency exchange rate effects were $77 million compared with adverse currency exchange rate effects of $270 million in the same period last year.
FORTHCOMING EVENTS
Fourth quarter 2012 results and fourth quarter 2012 dividend are scheduled to be announced on January 31, 2013. First quarter 2013 results and first quarter 2013 dividend are scheduled to be announced on May 2, 2013. Second quarter 2013 results and second quarter 2013 dividend are scheduled to be announced on August 1, 2013. Third quarter 2013 results and third quarter 2013 dividend are scheduled to be announced on October 31, 2013.
Unaudited Condensed Consolidated Interim Financial Statements
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 %[1] 2012 2011 %
112,118 117,068 123,412 Revenue 349,106 354,596
Share of profit of
equity-accounted
2,367 1,514 2,041 investments 6,821 6,504
944 1,304 504 Interest and other income 3,162 4,261
Total revenue and other
115,429 119,886 125,957 income 359,089 365,361
87,265 95,041 98,094 Purchases 276,375 278,179
Production and
6,513 6,379 6,761 manufacturing expenses 18,941 19,465
Selling, distribution and
3,709 3,459 3,516 administrative expenses 10,857 10,629
311 289 253 Research and development 895 721
713 862 661 Exploration 1,937 1,441
Depreciation, depletion
3,875 3,503 3,803 and amortisation 10,780 9,985
415 411 331 Interest expense 1,378 1,086
12,628 9,942 12,538 +1 Income before taxation 37,926 43,855 -14
5,389 5,874 5,505 Taxation 17,785 19,138
7,239 4,068 7,033 +3 Income for the period 20,141 24,717 -19
Income attributable to
100 5 57 non-controlling interest 220 299
Income attributable to
Royal Dutch Shell plc
7,139 4,063 6,976 +2 shareholders 19,921 24,418 -18
[1] Q3 on Q3 change.
EARNINGS PER SHARE
Quarters $ Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
1.14 0.65 1.12 Basic earnings per share 3.19 3.93
1.14 0.65 1.12 Diluted earnings per share 3.18 3.93
SHARES[2]
Quarters Million Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
Weighted average number of shares
as the basis for:
6,266.3 6,265.9 6,238.1 Basic earnings per share 6,253.9 6,206.2
6,273.9 6,273.2 6,247.1 Diluted earnings per share 6,261.2 6,216.2
Shares outstanding at the end of
6,284.8 6,266.2 6,236.5 the period 6,284.8 6,236.5
[2] Royal Dutch Shell plc ordinary shares of EUR0.07 each.
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
Consolidated Statement of Comprehensive Income
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
7,239 4,068 7,033 Income for the period 20,141 24,717
Other comprehensive income, net of
tax:
2,424 (2,805) (4,642) Currency translation differences 1,504 (2,018)
Unrealised gains/(losses) on
(97) 70 23 securities (132) 13
(187) 567 (130) Cash flow hedging gains/(losses) (70) (89)
Share of other comprehensive
income/(loss) of equity-accounted
27 39 29 investments (43) 99
Other comprehensive income/(loss)
2,167 (2,129) (4,720) for the period 1,259 (1,995)
9,406 1,939 2,313 Comprehensive income for the period 21,400 22,722
Comprehensive income/(loss)
attributable to non-controlling
132 (36) (46) interest 254 255
Comprehensive income attributable
to Royal Dutch Shell plc
9,274 1,975 2,359 shareholders 21,146 22,467
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch
Shell plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2012 536 (2,990) 8,984 162,987 169,517 1,486 171,003
Comprehensive
income for the
period - - 1,225 19,921 21,146 254 21,400
Capital
contributions
from and other
changes in
non-controlling
interest - - - 36 36 (76) (40)
Dividends paid - - - (8,194) (8,194) (266) (8,460)
Scrip
dividends[1] 6 - (6) 2,438 2,438 - 2,438
Repurchases of
shares[2] (2) - 2 (1,815) (1,815) - (1,815)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 782 - 114 896 - 896
Share-based
compensation - - 243 (482) (239) - (239)
At September
30, 2012 540 (2,208) 10,448 175,005 183,785 1,398 185,183
[1] During the first nine months of 2012 some 69.6 million Class A shares,
equivalent to $2.4 billion, were issued under the Scrip Dividend
Programme.
[2] Includes shares committed to repurchase at September 30, 2012.
Equity attributable to Royal Dutch
Shell plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2011 529 (2,789) 10,094 140,179 148,013 1,767 149,780
Comprehensive
income for the
period - - (1,951) 24,418 22,467 255 22,722
Capital
contributions
from and other
changes in
non-controlling
interest - - - 48 48 (46) 2
Dividends paid - - - (7,816) (7,816) (374) (8,190)
Scrip
dividends[1] 9 - (9) 2,627 2,627 - 2,627
Repurchases of
shares[2] (3) - 3 (1,501) (1,501) - (1,501)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 961 - 99 1,060 - 1,060
Share-based
compensation - - (230) (67) (297) - (297)
At September
30, 2011 535 (1,828) 7,907 157,987 164,601 1,602 166,203
[1] During the first nine months of 2011 some 77.3 million Class A shares,
equivalent to $2.6 billion, were issued under the Scrip Dividend
Programme.
[2] Includes shares committed to repurchase and repurchases subject to
settlement at September 30, 2011.
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED balance sheet
$ million
Sept 30, June 30, Sept 30,
2012 2012 2011
Assets
Non-current assets:
Intangible assets 4,478 4,425 4,500
Property, plant and equipment 162,401 155,526 147,027
Equity-accounted investments 39,033 38,424 38,321
Investments in securities 5,492 5,530 3,915
Deferred tax 4,246 4,141 5,512
Prepaid pension costs 12,461 11,542 11,132
Trade and other receivables 10,070 9,467 9,040
238,181 229,055 219,447
Current assets:
Inventories 32,358 28,295 30,250
Trade and other receivables 70,972 71,200 78,529
Cash and cash equivalents 18,839 17,282 19,256
122,169 116,777 128,035
Total assets 360,350 345,832 347,482
Liabilities
Non-current liabilities:
Debt 28,078 28,383 31,092
Trade and other payables 4,322 4,250 5,415
Deferred tax 16,107 15,626 15,814
Retirement benefit obligations 6,169 6,026 5,988
Decommissioning and other
provisions 16,262 15,805 15,442
70,938 70,090 73,751
Current liabilities:
Debt 8,280 4,597 8,268
Trade and other payables 77,550 75,361 80,357
Taxes payable 14,869 14,491 15,305
Retirement benefit obligations 399 403 374
Decommissioning and other
provisions 3,131 2,814 3,224
104,229 97,666 107,528
Total liabilities 175,167 167,756 181,279
Equity attributable to Royal Dutch
Shell plc shareholders 183,785 176,637 164,601
Non-controlling interest 1,398 1,439 1,602
Total equity 185,183 178,076 166,203
Total liabilities and equity 360,350 345,832 347,482
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Nine months
Q3 2012 Q2 2012 Q3 2011 2012 2011
Cash flow from operating
activities
7,239 4,068 7,033 Income for the period 20,141 24,717
Adjustment for:
5,385 5,892 5,746 - Current taxation 16,756 17,193
362 358 249 - Interest expense (net) 1,219 889
- Depreciation, depletion and
3,875 3,503 3,803 amortisation 10,780 9,985
(428) (1,193) (347) - Net gains on sale of assets (2,145) (3,335)
- Decrease/(increase) in net
(2,209) 3,836 1,011 working capital 2,397 (5,783)
- Share of profit of
(2,367) (1,514) (2,041) equity-accounted investments (6,821) (6,504)
- Dividends received from
equity-accounted
2,537 2,799 2,402 investments 7,918 6,485
- Deferred taxation and
decommissioning and other
(75) (70) (204) provisions 826 1,927
(205) 261 (540) - Other (352) (399)
Net cash from operating
14,114 17,940 17,112 activities (pre-tax) 50,719 45,175
(4,631) (4,635) (5,467) Taxation paid (14,492) (14,869)
Net cash from operating
9,483 13,305 11,645 activities 36,227 30,306
Cash flow from investing
activities
(8,413) (7,033) (7,261) Capital expenditure (21,902) (16,387)
Investments in equity-accounted
(789) (724) (199) investments (2,811) (1,571)
786 1,675 1,594 Proceeds from sales of assets 4,833 5,815
Proceeds from sales of
56 170 200 equity-accounted investments 283 425
Proceeds from sales/(purchases)
(26) 10 6 of securities (net) (56) 7
47 45 75 Interest received 140 185
Net cash used in investing
(8,339) (5,857) (5,585) activities (19,513) (11,526)
Cash flow from
financing activities
Net (decrease)/increase in debt
with maturity period
507 248 (365) within three months 302 (2,883)
2,551 134 477 Other debt: New borrowings 3,295 1,244
(182) (1,533) (2,529) Repayments (4,682) (4,064)
(352) (339) (173) Interest paid (1,145) (1,195)
Change in non-controlling
(10) (2) (3) interest (2) (3)
Cash dividends paid to:
- Royal Dutch Shell plc
(1,973) (2,112) (1,865) shareholders (5,756) (5,189)
(164) (78) (175) - Non-controlling interest (266) (374)
(149) (890) (817) Repurchases of shares (1,039) (817)
Shares held in trust: net
sales/(purchases) and dividends
(93) (103) 10 received 9 413
Net cash used in financing
135 (4,675) (5,440) activities (9,284) (12,868)
Currency translation
differences relating to cash
and
278 (515) (829) cash equivalents 117 (100)
Increase in cash and cash
1,557 2,258 (209) equivalents 7,547 5,812
Cash and cash equivalents at
17,282 15,024 19,465 beginning of period 11,292 13,444
Cash and cash equivalents at
18,839 17,282 19,256 end of period 18,839 19,256
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
Notes to the Condensed Consolidated Interim Financial Statements
1. Basis of preparation
These Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc and its subsidiaries (collectively "Shell") are prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union and on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report and Form 20-F for the year ended December 31, 2011 (pages 105 to 110) as filed with the US Securities and Exchange Commission.
The financial information presented in the Interim Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006. Statutory accounts for the year ended December 31, 2011 were published in Shell's Annual Report and a copy was delivered to the Registrar of Companies in England and Wales. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.
The Interim Statements are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period.
Segment information
Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings thus exclude the effect of changes in the oil price on inventory carrying amounts. Net capital investment information is presented as measured based on capital expenditure as reported in the Condensed Consolidated Statement of Cash Flows, adjusted for: proceeds from divestments; exploration expenses excluding exploration wells written off; investments in equity-accounted investments; and leases and other items.
CCS earnings and net capital investment information are the dominant measures used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance.
2. Information by Business Segment
Quarters $ million Nine months
Q3 2012 Q3 2011 2012 2011
Third-party revenue
10,028 10,888 Upstream 32,066 30,659
102,075 112,516 Downstream 317,000 323,907
15 8 Corporate 40 30
112,118 123,412 Total third-party revenue 349,106 354,596
Inter-segment revenue
12,338 12,929 Upstream 38,337 37,304
172 125 Downstream 555 545
- - Corporate - -
Segment earnings
4,590 6,071 Upstream 15,984 17,890
1,597 1,480 Downstream 4,276 4,533
15 (254) Corporate (285) (14)
6,202 7,297 Total segment earnings 19,975 22,409
Quarters $ million Nine months
Q3 2012 Q3 2011 2012 2011
6,202 7,297 Total segment earnings 19,975 22,409
Current cost of supplies adjustment:
1,130 (260) Purchases 160 2,787
(294) 75 Taxation (51) (794)
Share of profit of equity-accounted
201 (79) investments 57 315
7,239 7,033 Income for the period 20,141 24,717
3. Share capital
Issued and fully paid
Sterling
shares of EUR0.07 each deferred
shares of GBP1
Number of shares Class A Class B each
At January 1, 2012 3,668,550,437 2,661,403,172 50,000
Scrip dividends 69,588,598 - -
Repurchases of shares - (30,728,970) -
At September 30, 2012 3,738,139,035 2,630,674,202 50,000
Nominal value
$ million Class A Class B Total
At January 1, 2012 312 224 536
Scrip dividends 6 - 6
Repurchases of shares - (2) (2)
At September 30, 2012 318 222 540
The total nominal value of sterling deferred shares is less than $1
million.
At Royal Dutch Shell plc's Annual General Meeting on May 22, 2012, the Board was authorised to allot ordinary shares in Royal Dutch Shell plc and grant rights to subscribe for or to convert any security into ordinary shares in Royal Dutch Shell plc up to an aggregate nominal amount of €147 million (representing 2,100 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at the earlier of August 22, 2013, and the conclusion of the Annual General Meeting to be held in 2013, unless previously renewed, revoked or varied in a General Meeting of Shareholders.
4. Other reserves
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve[1] reserve[1] reserve[2] reserve income Total
At January 1,
2012 3,432 154 60 1,571 3,767 8,984
Other
comprehensive
income
attributable
to Royal
Dutch Shell
plc
shareholders - - - - 1,225 1,225
Scrip
dividends (6) - - - - (6)
Repurchases
of shares - - 2 - - 2
Share-based
compensation - - - 243 - 243
At September
30, 2012 3,426 154 62 1,814 4,992 10,448
At January 1,
2011 3,442 154 57 1,483 4,958 10,094
Other
comprehensive
loss
attributable
to Royal
Dutch Shell
plc
shareholders - - - - (1,951) (1,951)
Scrip
dividends (9) - - - - (9)
Repurchases
of shares - - 3 - - 3
Share-based
compensation - - - (230) - (230)
At September
30, 2011 3,433 154 60 1,253 3,007 7,907
[1] The merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent
company of Royal Dutch Petroleum Company and of The "Shell" Transport
and Trading Company plc, now The Shell Transport and Trading Company
Limited, in 2005.
[2] The capital redemption reserve was established in connection with
repurchases of shares of Royal Dutch Shell plc.
5. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply or purchase oil and gas products, and also enters into derivative contracts to mitigate resulting economic exposures (generally price exposure). Derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes are, by contrast, recognised when the transaction occurs (see also below); furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period; or (b) the inventory is measured on a different basis.
In addition, certain UK gas contracts held by Upstream are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes.
The accounting impacts of the aforementioned are reported as identified items in the quarterly results.
6. Return on average capital employed
Return on average capital employed measures the efficiency of Shell's utilisation of the capital that it employs and is a common measure of business performance. In this calculation, return on average capital employed is defined as the sum of income for the current and previous three quarters adjusted for after-tax interest expense as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. The tax rate is derived from calculations at the published segment level.
LIQUIDITY AND CAPITAL RESOURCES
Third quarter Net cash from operating activities in the third quarter 2012 was $9.5 billion compared with $11.6 billion for the same period last year.
Total current and non-current debt increased to $36.4 billion at September 30, 2012 from $33.0 billion at June 30, 2012 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $17.3 billion at June 30, 2012. During the third quarter 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.
Net capital investment in the third quarter 2012 was $8.0 billion, of which $6.9 billion was in Upstream and $1.1 billion in Downstream. Net capital investment in the same period of 2011 was $6.1 billion, of which $5.9 billion was in Upstream and $0.2 billion in Downstream.
Dividends of $0.43 per share are announced on November 1, 2012 in respect of the third quarter. These dividends are payable on December 20, 2012. In the case of the Class B shares, the dividends will be payable through the dividend access mechanism and are expected to be treated as UK-source rather than Dutch-source. See the Annual Report and Form 20-F for the year ended December 31, 2011 for additional information on the dividend access mechanism.
Shell provides shareholders with a choice to receive dividends in cash or in shares via a Scrip Dividend Programme. Under the Scrip Dividend Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends. Only new Class A shares will be issued under the Programme, including to shareholders who currently hold Class B shares.
Nine months Net cash from operating activities in the first nine months of 2012 was $36.2 billion compared with $30.3 billion for the same period last year.
Total current and non-current debt decreased to $36.4 billion at September 30, 2012 from $37.2 billion at December 31, 2011 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $11.3 billion at December 31, 2011. During the first nine months of 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.
Net capital investment in the first nine months of 2012 was $18.9 billion, of which $16.0 billion was in Upstream, $2.8 billion in Downstream and $0.1 billion in Corporate. Net capital investment in the same period of 2011 was $13.8 billion, of which $11.7 billion was in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this document refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this document, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This document contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell Group to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward-looking statements included in this document, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Shell's Annual Report and Form 20-F for the year ended December 31, 2011 (available at http://www.shell.com/investor and http://www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this document, November 1, 2012. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this document.
We may have used certain terms, such as resources, in this report that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
November 1, 2012
Contacts:
- Investor Relations: Europe: +31(0)70-377-4540; USA: +1-713-241-1042
- Media: Europe: +31(0)70-377-3600
SOURCE Royal Dutch Shell plc
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