REG-Royal Dutch Shell: 4th Quarter and Full Year 2014 Unaudited Results <Origin Href="QuoteRef">RDSa.L</Origin> - Part 1
29/01/2015 07:12
ROYAL DUTCH SHELL PLC
4TH QUARTER AND FULL YEAR 2014 UNAUDITED RESULTS
* Royal Dutch Shell's fourth quarter 2014 earnings, on a current cost of
supplies (CCS) basis (see Note 2), were $4.2 billion compared with $2.2
billion for the same quarter a year ago. Full year 2014 CCS earnings were
$19.0 billion compared with $16.7 billion in 2013.
* Fourth quarter 2014 CCS earnings excluding identified items (see page 6)
were $3.3 billion compared with $2.9 billion for the fourth quarter 2013,
an increase of 12%. Full year 2014 CCS earnings excluding identified items
were $22.6 billion compared with $19.5 billion in 2013.
* Compared with the fourth quarter 2013, CCS earnings excluding identified
items benefited from improved Downstream results reflecting steps taken by
the company to improve financial performance and the industry environment.
In Upstream, earnings benefited from increased high-margin liquids
production volumes and improved operational performance, and lower well
write-offs. These items were more than offset by lower oil prices. Upstream
earnings excluding identified items were impacted by $330 million related
to an increase of a deferred tax liability as a result of the weakening
Australian dollar.
* Fourth quarter 2014 basic CCS earnings per share excluding identified items
increased by 13% versus the fourth quarter 2013. Full year 2014 basic CCS
earnings per share excluding identified items increased by 15% versus 2013.
* Total cash dividends paid to shareholders in the fourth quarter 2014 were
$3.0 billion. During the fourth quarter some 27.4 million shares were
bought back for cancellation for a consideration of $1.0 billion.
* Gearing at the end of 2014 was 12.2% compared with 16.1% at the end of
2013.
* A fourth quarter 2014 dividend has been announced of $0.47 per ordinary
share and $0.94 per American Depositary Share ("ADS"), an increase of 4%
compared with the fourth quarter 2013.
* Royal Dutch Shell is expected to announce a dividend of $0.47 per ordinary
share and $0.94 per American Depositary Share ("ADS") in respect of the
first quarter 2015.
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Full year
Q4 Q3 Q4
2014 2014 2013 %1 2014 2013 %
Income attributable to Royal
773 4,463 1,781 -57 Dutch Shell plc shareholders 15,052 16,371 -8
Current cost of supplies (CCS)
3,390 803 371 adjustment for Downstream 3,989 374
4,163 5,266 2,152 +93 CCS earnings 19,041 16,745 +14
901 (581) (763) Identified items2 (3,521) (2,747)
CCS earnings excluding identified
3,262 5,847 2,915 +12 items 22,562 19,492 +16
Of which:
1,730 4,343 2,477 Upstream 16,505 15,117
1,550 1,793 558 Downstream 6,265 4,466
Corporate and Non-controlling
(18) (289) (120) interest (208) (91)
Cash flow from operating
9,608 12,811 6,028 +59 activities 45,044 40,440 +11
0.66 0.83 0.34 +94 Basic CCS earnings per share ($) 3.02 2.66 +14
1.32 1.66 0.68 Basic CCS earnings per ADS ($) 6.04 5.32
Basic CCS earnings per share
0.52 0.92 0.46 +13 excl. identified items ($) 3.57 3.10 +15
Basic CCS earnings per ADS excl.
1.04 1.84 0.92 identified items ($) 7.14 6.20
0.47 0.47 0.45 +4 Dividend per share ($) 1.88 1.80 +4
0.94 0.94 0.90 Dividend per ADS ($) 3.76 3.60
1 Q4 on Q4 change
2 See page 6
Royal Dutch Shell Chief Executive Officer Ben van Beurden:
"Our strategy is delivering with good performance on our three themes of
financial performance, capital efficiency and project delivery. These will
remain Shell's priorities in 2015, as we continue to balance growth and
returns."
FOURTH QUARTER 2014 PORTFOLIO DEVELOPMENTS
Upstream
In Malaysia, Shell announced first production from the Shell-operated
Gumusut-Kakap deep-water development (Shell interest 29%). The production
system is expected to reach a peak oil production of around 135 thousand
barrels of oil equivalent per day ("boe/d"). With oil production now underway,
work on the gas injection facilities is continuing with an expected start-up
during 2015.
Shell announced the final investment decision ("FID") on the Bonga Main phase 3
project (Shell interest 55%) offshore Nigeria. The development is expected to
contribute some 40 thousand boe/d at peak production through the existing Bonga
FPSO export facility.
Shell announced the FID on the Coulomb phase 2 project (Shell interest 100%) in
the Gulf of Mexico. The development is a subsea tie-back into the Na Kika
semi-submersible storage platform and is expected to contribute some 20
thousand boe/d at peak production.
Shell commenced front end engineering and design ("FEED") on the Vito
deep-water development project (Shell interest 51%) in the Gulf of Mexico,
United States. The development, which is expected to deliver peak production of
100 thousand boe/d, will be a floating production system with flexibility for
up to four subsea tiebacks.
Shell announced a frontier exploration discovery offshore Gabon, West Africa
(Shell interest 75%). The Leopard-1 well encountered a substantial gas column
with around 200 metres net gas pay in a pre-salt reservoir. Shell and its
partners are planning to undertake an appraisal programme to further determine
the resource volumes.
During the quarter, in Shell's heartlands exploration programme, Shell made two
Shell-operated oil discoveries in deep-water Gulf of Mexico with the Gettysburg
W well (Shell interest 80%) in the Norphlet play, and the Power Nap well (Shell
interest 50%) just east of the Vito discovery.
Shell had continued success with near-field exploration discoveries in a number
of countries.
As part of its global exploration programme, Shell added new acreage positions
following successful bidding results in the United States Gulf of Mexico.
Upstream divestment proceeds totalled some $2.2 billion for the fourth quarter
2014 and included proceeds from the divestment of the Haynesville dry gas
position in the United States, Oil Mining Lease 24 and related facilities in
onshore Nigeria, and the BM-ES-23 concession in the Espirito Santos Basin
offshore Brazil.
In Upstream outside the Americas, a strategic review of Shell's resources plays
portfolio is underway. This review may potentially lead to future portfolio
activities, well write-offs and/or impairments.
Downstream
In Norway, Shell signed an agreement for the sale of its retail, commercial
fuels, and supply and distribution logistics businesses to ST1. In addition,
Shell's aviation business will become a 50-50 joint venture with ST1. The sale
is subject to regulatory approval and is expected to be completed in 2015.
In Singapore, Shell has taken full control of Ellba Eastern (Pte) Ltd, through
the acquisition of a 50% stake in the company previously held by its joint
venture partner. The joint venture, which is already operated by Shell,
produces styrene monomer and propylene oxide. The buy-out enables integration
with and optimisation of Shell's existing asset base at Shell Jurong Island,
allowing for future growth.
In South Africa, Shell announced that it is merging its Marketing and Refining
businesses to form Shell Downstream South Africa. As part of the merger, Shell
will sell 3% of its shareholding in the Durban refinery in South Africa to our
Broad-Based Black Economic Empowerment partner, Thebe.
Shell Midstream Partners, L.P., a master limited partnership formed by Shell,
announced the pricing of its initial public offering of 40,000,000 common units
representing limited partner interests at $23.00 per common unit raising $1.0
billion in proceeds for Shell. The underwriters exercised the full
over-allotment option to purchase an additional 6,000,000 common units from
Shell Midstream Partners. The common units began trading on the New York Stock
Exchange on October 29, 2014 under the ticker symbol "SHLX".
KEY FEATURES OF THE FOURTH QUARTER AND FULL YEAR 2014
* Fourth quarter 2014 CCS earnings (see Note 2) were $4,163 million, 93%
higher than for the same quarter a year ago. Full year 2014 CCS earnings
were $19,041 million, 14% higher than in 2013.
* Fourth quarter 2014 CCS earnings excluding identified items (see page 6)
were $3,262 million compared with $2,915 million for the fourth quarter
2013, an increase of 12%. Fourth quarter 2014 CCS earnings excluding
identified items benefited from improved Downstream results reflecting
steps taken by the company to improve financial performance and the
industry environment. In Upstream, earnings benefited from increased
high-margin liquids production volumes and improved operational
performance, and lower well write-offs. These items were more than offset
by lower oil prices. Upstream earnings excluding identified items were
impacted by $330 million related to an increase of a deferred tax liability
as a result of the weakening Australian dollar.
Full year 2014 CCS earnings excluding identified items were $22,562 million
compared with $19,492 million in 2013, an increase of 16%.
* Basic CCS earnings per share for the fourth quarter 2014 increased by 94%
versus the same quarter a year ago. Full year 2014 basic CCS earnings per
share increased by 14% versus 2013.
* Basic CCS earnings per share excluding identified items for the fourth
quarter 2014 increased by 13% versus the same quarter a year ago. Full year
2014 basic CCS earnings per share excluding identified items increased by
15% versus 2013.
* Cash flow from operating activities for the fourth quarter 2014 was $9.6
billion, compared with $6.0 billion for the same quarter last year.
Excluding working capital movements, cash flow from operating activities
for the fourth quarter 2014 was $3.8 billion, compared with $7.7 billion in
the same quarter last year.
Full year 2014 cash flow from operating activities was $45.0 billion, compared
with $40.4 billion in 2013. Excluding working capital movements, cash flow from
operating activities for the full year 2014 was $38.9 billion, compared with
$37.5 billion in 2013.
* Net capital investment (see Note 2) for the fourth quarter 2014 was $7.8
billion. Capital investment for the fourth quarter 2014 was $9.7 billion
and divestments were $2.5 billion.
Full year 2014 net capital investment was $23.9 billion. Capital investment for
the full year 2014 was $37.3 billion, including $2.0 billion for the
acquisition of the Repsol LNG portfolio. This successfully completes the 2014
capital program. Divestments were $14.0 billion, excluding proceeds from the
initial public offering of the US midstream master limited partnership.
* Total cash dividends paid to shareholders in the fourth quarter 2014 were
$3.0 billion. Total dividends distributed in the full year 2014 were $11.8
billion, of which $2.4 billion were settled by issuing some 64.6 million A
shares under the Scrip Dividend Programme.
* Under our share buyback programme some 27.4 million A shares were bought
back for cancellation during the fourth quarter 2014 for a consideration of
$1.0 billion. During the full year 2014 some 87.7 million shares were
bought back for cancellation for a consideration of $3.3 billion.
* Return on average capital employed on a reported income basis (see Note 4)
was 7.1% at the end of 2014 compared with 7.9% at the end of 2013.
* Gearing was 12.2% at the end of 2014 versus 16.1% at the end of 2013.
* Oil and gas production for the fourth quarter 2014 was 3,213 thousand boe/
d, a decrease of 1% compared with the fourth quarter 2013. Excluding the
impact of divestments, Abu Dhabi license expiry, PSC price effects, and
security impacts in Nigeria, fourth quarter 2014 production volumes were 7%
higher than for the same period last year.
Full year 2014 oil and gas production was 3,080 thousand boe/d, a decrease of
4% compared with 2013. Excluding the impact of divestments, Abu Dhabi license
expiry, PSC price effects, and security impacts in Nigeria, 2014 production
volumes increased by 2% compared with 2013.
* Equity sales of LNG of 6.20 million tonnes for the fourth quarter 2014 were
26% higher than for the same quarter a year ago.
Full year 2014 equity sales of LNG of 23.97 million tonnes were 22% higher than
in 2013.
* Oil products sales volumes for the fourth quarter 2014 were 6% higher than
for the fourth quarter 2013. Chemicals sales volumes for the fourth quarter
2014 decreased by 12% compared with the same quarter a year ago.
Full year 2014 oil products sales volumes were 3% higher than in 2013. Full
year 2014 chemicals sales volumes decreased by 2% compared with 2013.
* When final volumes are reported in the 2014 Annual Report and Form 20-F,
Shell expects that proved oil and gas reserves additions before taking into
account production on an SEC basis will be around 0.3 billion barrels of
oil equivalent ("boe").
With 2014 production of some 1.2 billion boe, our headline proved Reserves
Replacement Ratio for the year on an SEC basis is expected to be around 26%.
Our Organic Reserves Replacement Ratio, which excludes the impact of oil and
gas price movements in the year, acquisitions and divestments, is expected to
be around 47%.
At the end of 2014, total proved reserves on an SEC basis are expected to be
around 13.1 billion boe, after taking into account 2014 production.
The 3-year average headline proved Reserves Replacement Ratio on an SEC basis
is expected to be around 67%. Our 3-year average Organic Reserves Replacement
Ratio, which excludes the impact of oil and gas price movements in the year,
acquisitions and divestments, is expected to be around 85%.
Further information will be provided in our Annual Report and Form 20-F, which
is expected to be filed in March 2015.
* Supplementary financial and operational disclosure for the fourth quarter
and full year 2014 is available at www.Shell.com/investor.
SUMMARY OF IDENTIFIED ITEMS
Earnings for the fourth quarter 2014 reflected the following items, which in
aggregate amounted to a net gain of $901 million (compared with a net charge of
$763 million for the fourth quarter 2013), as summarised in the table below:
* Upstream earnings included a net gain of $915 million, mainly reflecting
net divestment gains of $756 million and the net impact of fair value
accounting of commodity derivatives and certain gas contracts of $436
million. These items were partly offset by asset impairments of $119
million, as well as redundancy and restructuring charges and other items.
These other items included a $369 million charge associated with an update
of an Australian deferred tax asset, partly offset by a gain of $295
million related to the recognition of the Dutch pension plan amendment.
Upstream earnings for the fourth quarter 2013 included a net charge of $631
million.
* Downstream earnings included a net cRecent news on Shell
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