Shell PLC Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Josh Stone - UBS Equities - Analyst : Two questions, please. While you talked in the past about being or wanting to be more countercyclical in how you allocate capital. And you've clearly demonstrated that in the good times by being quite prudent with your capital spending. It just strikes -- in a downturn or potential downturn, it requires a lot more resolve to start spending more money or maybe sustaining the buyback. So just talk about your latest views on that and commitments to being more countercyclical. And then same question on Integrated Gas. Trading looks to be a decent quarter this time around, particularly if I adjust for the hedging losses. So some of your peers have talked about it being more difficult to trade in gas because of the event risk and more jitteriness in the markets. So what's been your experience there? And what's your approach to putting on risk and putting risk on the books today?

Question: Peter Low - Redburn Atlantic - Analyst : Yes, the first was on the CapEx budget. You reiterated it this morning. But can you perhaps talk a bit about how much flexibility there could be that should the macro environment continue to deteriorate? And then the second one was just on the Singapore disposal. Can you help us at all in thinking about the potential quantum of the earnings improvement you will see now that that divestment has completed, particularly in chemicals?

Question: Lydia Rainforth - Barclays - Analyst : A couple of questions, if I could. The first one, just -- we talked about volatility and uncertainty. But given the size of Shell's own network, what are you seeing on real-time data in terms of demand, whether it's oil, oil products, LNG? And just to give us an indication of some of the fundamentals. And then secondly, on OpEx, progress, again, very, very good. What are you finding when you're taking these costs out? Are you finding it becomes easier and easier to simplify things as you're taking some of those layers out?

Question: Paul Cheng - Scotiabank GBM - Analyst : I just want to follow up on the media question. In the time that Shell had a big shift, and I think you guys have done a phenomenal job in turning in. But at this point, do you think the organization capability or the culture have turned sufficiently that if you decide a launch acquisition that is attractive for you that the organization could take on? Or that is going to take maybe that another one or two years to ensure that all the counter, all the changes is really fully thing in? That's the first question. The second question is then, in the event if oil plants stay really low for an extended period of time -- when I say really know, call it to the 40s. Between the buyback and capital -- the CapEx cut, which one will be the first to go?

Question: Biraj Borkhataria - RBC Capital Markets - Analyst : Firstly, thanks for the comment on the financial frame and that $50 scenario. That's really helpful. I wanted to ask a question -- or two questions. The first one is just on your -- the various deals you've done. You've done a number of small deals where some are closed, some are to come, and not all of the financial magnitude is disclosed. Could you just help us understand the cash impacts of these? It's still not clear to me what you paid for Pavilion, and then you've got a Singapore sale and a few others. And then the second question is just on -- in the Upstream, thinking about OpEx in [DD&A], now that we deconsolidate the Nigeria from the portfolio. Is the Q1 run rate sensible? Or how should we think about that going forward?

Question: Giacomo Romeo - Jefferies - Analyst : Yeah. The -- if I can go back to the Pavilion acquisition, I'm just trying to understand a bit better why you don't expect to see an impact on earnings this year. Was just Pavilion not generating any and what changes next year in terms of contracts? Just trying to understand what are the moving parts there that actually drives your ability to extract profit out of what you're getting as part of the Pavilion deal? And on the $50, Sinead, you represent better you had in the CMD slide as well. And you mentioned that you would see the potential for reducing CapEx a bit. You showed that in the track there. Which areas will you be seeing the reduction? Can you provide more clarity there, where you would prioritize CapEx? That would be helpful.

Question: Henry Tarr - Berenberg - Analyst : I wanted to ask about marketing. Both mobility and lubricants had a very strong quarter, which certainly suggests underlying demand. You haven't seen a slowdown so far, as you mentioned earlier. I just wonder whether there's anything else going on there from a self-help perspective as we think about modeling out for the rest of the year? And then maybe sectors in decarbonization to round it out. The environment remains pretty weak, and we're seeing a decline. Are there any signs of light at the end of the tunnel for this business?

Question: Matt Lofting - JPMorgan - Analyst : Two quick ones, please. Shell has a substantial business in the US across the value chain. I wonder if you could share any perspectives you currently have on the direct impact of the tariff framework, at least as it stands at the moment, and whether there's any specific assets where you see potential effects? And then secondly, if we combine the Upstream and Integrated Gas business, there's a track record over the last four to six quarters of beating consensus expectations. To what extent do you see that as fruition of the performance improvement agenda over the last couple of years? And how sustainable do you see that performance going forward?

Question: Martijn Rats - Morgan Stanley - Analyst : I also had two questions, if I may. I wanted to ask you about the market conditions that you see for disposals. I can imagine that with all the uncertainty that exists, it may have become more difficult to execute some of the disposals that you're still working on, but hard to know. I was wondering if -- how you see the, basically, disposal market? And then secondly, slightly more practical, perhaps. But I was wondering where we are now with LNG Canada. And -- because it looks like we're relatively close to the startup and how we can expect the quarterly earnings stream to be impacted by that project.

Question: Roger Read - Wells Fargo Securities, LLC - Analyst : Maybe coming back to the resiliency question on a slightly different tack. So at the Capital Markets Day, you laid out the cost savings goals. Presumably in a lower oil price environment, you would have a little more urgency to get that done. So I'm just curious how you're thinking about it that way. And then the second question or follow on with that is, with environment you're describing, obviously, the cash flows and buying back shares is important. But how would you think about allocating on acquisitions in addition to thinking about the overall resiliency and the dividend and so forth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, SHEL.L - Q1 2025 Shell PLC Earnings Call

Question: Christopher Kuplent - BofA Global Research - Analyst : Two questions from me as well, if I may. And while this is coming from not a cynical place, but you mentioned earlier that perhaps the problem in the past was Shell's culture was happy to accept mediocrity. Maybe I would put it differently and ask you, isn't some of the biggest weaknesses or has been in the past -- I'm always going to call it [cuprous], i.e., we can do this. No one else can. And I want to ask you about the Rotterdam decision that you've taken. Can you give us an update on that,. where you're stepping back from things that perhaps five years ago had been part of the overall Shell ambition? So open question. And as I said, it's not coming from a clinical place. And a second question, perhaps to you, Sinead. You presented just a few weeks ago a marketing capital budget of up to $3 billion. And in the first quarter, I see marketing spent $250 million. What did you do to these people? How much lower can it go in terms of explaining that very light capital allocation in just Q1? Are there any funnies in there? Just a quick follow-up, please.

Question: Lucas Herrmann - BNP Paribas Exane - Analyst : A couple, if I may. Just wanted to touch on chemicals. And you've mentioned certain assets are up strategic review. I just wondered whether -- how the market or the broader chemical market responded to those comments and where you were left. And in line with that, your guidance on utilization for this quarter was 74% to 82%. Especially, should I think of that as being unusually low? I know it's not dissimilar to the last quarter, but I guess I'm slightly surprised that perhaps the levels aren't increasing. And beyond that, a really simple one for you, Sinead, just on disclose. I suspect you're trying to simplify things, but a lot of the marketing sheets have disappeared. So I presume it's intentional. But one of the numbers or some of the numbers that have disappeared as well are the breakdown of net income by mobility, lubes, techs and decarb, which makes life monitoring return on capital, et cetera, exceptionally challenging. Intentional or just omission?

Question: Doug Leggate - Wolfe Research - Analyst : Wael, you and Sinead, I know you talked earlier about the importance of per share growth targets, the 10% you talked about earlier. But there is an underlying assumption in there, which is a flat real oil price at $70 and a buyback pace. So my question is, to what extent would you be prepared to lean on the balance sheet to maintain the current buyback pace? And if not, what would that mean then for your per share targets if the flat real oil price scenario did not play out? And I've got a quick follow-up, please.

Question: Doug Leggate - Wolfe Research - Analyst : Yeah. Very quick follow-up is -- hopefully, my second question. And it's on the $5 billion to $7 billion cost savings. I just wondered very quickly why or if you could tell us where you are on that range now that you've had the portfolio changes in Nigeria and Singapore, as Sinead just mentioned. I'm just trying to figure out how much of the 5% to 7% is portfolio related and where you would consider to be on the run rate of that today.