Earnings call transcript: Shell Q2 2025 earnings miss EPS forecast, revenue beats

Shell PLC (SHEL) reported its second-quarter 2025 earnings, revealing a mixed performance with earnings per share (EPS) falling short of expectations, while revenue surpassed forecasts. The company announced an EPS of $0.72, significantly below the anticipated $1.32, marking a surprise decline of 45.45%. However, revenue reached $65.41 billion, exceeding the forecast of $62.03 billion by 5.45%. The stock saw a slight pre-market decline of 0.11%, trading at $71.64, following the earnings announcement. According to InvestingPro analysis, Shell maintains a GOOD financial health score of 2.75, with particularly strong ratings in profit and cash flow metrics. The stock currently appears undervalued based on InvestingPro’s Fair Value assessment.

Key Takeaways

• Shell’s Q2 EPS of $0.72 missed the forecast by 45.45%.
• Revenue for the quarter was $65.41 billion, beating expectations.
• The company announced a $3.5 billion share buyback.
• Operational cost reductions totaled $800 million for 2025.
• Shell’s stock experienced a minor pre-market decline.

Company Performance

Shell reported adjusted earnings of $4.3 billion for the second quarter of 2025, with cash flow from operations reaching $11.9 billion. The company maintained its shareholder distribution within the target range, allocating 46% of cash flow from operations. This quarter marked the 15th consecutive quarter of share buybacks exceeding $3 billion, highlighting Shell’s commitment to returning value to shareholders. InvestingPro data reveals Shell has maintained dividend payments for 21 consecutive years, with a current yield of 4%. The company’s aggressive share buyback program and strong dividend history demonstrate its robust shareholder return strategy.

Financial Highlights

• Revenue: $65.41 billion, up from the forecast of $62.03 billion.
• Earnings per share: $0.72, below the forecast of $1.32.
• Cash flow from operations: $11.9 billion.
• Shareholder distributions: 46% of cash flow from operations.

Earnings vs. Forecast

Shell’s actual EPS of $0.72 was a significant miss compared to the forecasted $1.32, representing a 45.45% negative surprise. This deviation from expectations is notable in contrast to previous quarters where Shell generally met or exceeded forecasts. However, the revenue outperformed predictions, suggesting strong sales performance.

Market Reaction

Following the earnings release, Shell’s stock experienced a slight pre-market decline of 0.11%, trading at $71.64. This movement reflects investor concerns over the EPS miss, despite the revenue beat. The stock remains within its 52-week range, indicating moderate investor confidence. InvestingPro analysis shows Shell generally trades with low price volatility, with a beta of just 0.3. Analysts maintain a bullish consensus on the stock, with price targets ranging from $40.60 to $88.00. Want deeper insights? Access the comprehensive Pro Research Report, available for Shell and 1,400+ other top stocks, offering expert analysis and actionable intelligence for smarter investing decisions.

Outlook & Guidance

Shell projects EPS growth for the upcoming quarters, with forecasts of $0.80 for Q3 2025 and $0.72 for Q4 2025. The company aims for a 10% free cash flow per share growth by 2030 and continues to focus on portfolio transformation and operational efficiency improvements.

Executive Commentary

Wael, a senior executive at Shell, stated, "We delivered a robust set of results in a challenging geopolitical and macroeconomic environment." Another executive, Sinead, emphasized the importance of shareholder distributions, saying, "The 40% to 50% [distribution] is sacrosanct."

Risks and Challenges

• Geopolitical tensions could impact global operations.
• Fluctuating oil prices may affect revenue stability.
• Regulatory changes in key markets might pose compliance challenges.
• Supply chain disruptions could hinder operational efficiency.
• Economic slowdowns in major markets may dampen demand.

Q&A

During the earnings call, analysts inquired about Shell’s trading performance across segments and its exploration strategy. Executives addressed potential improvements in the chemical market and provided updates on the LNG Canada project. The balance sheet and buyback strategy were also discussed, highlighting Shell’s financial priorities.

Full transcript - Shell PLC ADR (SHEL) Q2 2025:

Wael, Senior Executive (likely CEO), Shell: Welcome everyone and thank you for joining. Today, Sinead and I will present Shell’s second quarter results for 2025. Starting first with the broader external context, the macro continued to be challenging on multiple fronts. Against the backdrop of geopolitical and economic uncertainty, we saw knock on effects on both physical trade flows as well as commodity prices and margins more broadly. In spite of this, we delivered a robust set of results with strong operational performance while continuing to further our strategy and progress against the key targets outlined at our Capital Markets Day in March.

Let’s start with cost where we have demonstrated once again that we will deliver what we say. In the 2025, we achieved some $800,000,000 in structural cost reductions. This brings the total since 2022 to $3,900,000,000, putting us firmly on track for our target of 5 to $7,000,000,000 by the 2028. What I’m particularly encouraged by is the fact that the majority of these savings come from what we call nonportfolio reductions, essentially changing the way we work as opposed to costs that are taken out as part of divestments or other portfolio choices. We have delivered efficiencies throughout our operations, in maintenance activities, across our supply chains, and in the corporate center.

And all of this has resulted in cost takeout of almost 2 and a half billion dollars, which is more than 60% of the total structural cost reduction since 2022. Now let’s turn to our portfolio where we’ve also made considerable progress delivering on our strategy to strengthen our world class businesses. A major milestone for us was the startup of LNG Canada in which Shell has a 40% working interest. Its strategic location on the country’s West Coast brings feedstock advantages and greater marketing flexibility, including transit routes to Asia that are more than 50% shorter than those from The US Gulf Coast. At CMD twenty five, we said that we will grow LNG sales between four to 5%, and LNG Canada is expected to play a big part in that having shipped its first cargo in June.

To support future growth, we also took final investment decisions on projects in Egypt as well as Trinidad And Tobago. These will increase feed gas supply to our leading LNG portfolio over time. We also said that we would grow production while continuing to sustain liquids. And in the second quarter, we continue to do that, especially in our deepwater assets. In Brazil, we have some of our most competitive barrels in terms of operating cost and carbon footprint.

This quarter, we started up Mero four and agreed to increase our working interest in Gato Do Mato. And in Nigeria, we deepened our interest in the Bonga field where we have been delivering top quartile operational performance. At CMD twenty five, we also said that we would high grade our downstream renewables and energy solutions business, which we have continued to do this quarter. In chemicals, we completed the divestment of the energy and chemicals park in Singapore. And in mobility, with a value over volume lens, we announced divestments of our retail networks in both Indonesia and in Mexico.

So despite the more challenging macro conditions, we have been able to make important progress on our strategy. And with that, let me hand over to Sinead to provide some more details on our q two financial performance.

Sinead, Senior Executive (likely CFO), Shell: Thank you, Weil. In q two, we delivered a robust set of results in what was a more challenging macro environment than q one, as Wael alluded to. Our adjusted earnings for the quarter were some $4,300,000,000 and we delivered $11,900,000,000 of cash flow from operations. Integrated Gas and Upstream both delivered strong operational performance in a quarter with higher planned maintenance, weaker margins and fewer trading and optimization opportunities. Chemicals and Products faced another challenging quarter impacted by continued weak margins and unplanned downtime in chemicals and a lower contribution from trading and optimization, which saw oil markets experience a disconnect between market volatility and supply demand fundamentals.

Marketing on the other hand recorded its best Q2 results in nearly a decade. Both Mobility and Lubricants had another strong quarter, with Mobility entering the driving season benefiting from its portfolio high grading and an increase in premium fuels margin contribution. Now moving to our financial framework. Our cash CapEx outlook for the full year 2025 remains unchanged, and we continue to prioritize the highest return opportunities. Given our cash generation and balance sheet strength, we’re announcing another $3,500,000,000 share buyback program today, which we expect to complete in time for our Q3 results announcement in October.

This is the fifteenth consecutive quarter in which we have announced $3,000,000,000 or more in buybacks. And at the end of Q2, our four quarter rolling shareholder distributions were 46% of CFFO, in line with our target range of 40 to 50% of CFFO through the cycle.

Unidentified Transition Speaker, Shell: And with that, let me hand back to Weil.

Wael, Senior Executive (likely CEO), Shell: Thank you, Sinead. To summarize, we delivered a robust set of results in q two in a challenging geopolitical and macroeconomic environment. We remain focused on executing our strategy, transforming our portfolio, and delivering on our key targets. We’re confident that our strategy is the right one, and every day, I see the momentum building across our organization to drive performance, discipline, and simplification in order to deliver more value with less emissions. Thank you.

Unidentified Transition Speaker, Shell: Call.

Wael, Senior Executive (likely CEO), Shell: Thank you for joining us today. We hope that after watching this presentation, you’ve seen how we continue to make meaningful progress on the delivery of our targets while strengthening our world class portfolio. Today, Sinead and I will be answering your questions. And now please, could we have just one or two questions each so that everyone gets the opportunity? With that, could we have the first one, please, Luke?

Luke, Call Moderator, Shell: Our first caller is Matt Lofting from JPMorgan.

Matt Lofting, Analyst, JPMorgan: Hi. Thanks for taking the questions. A couple, if I could, please. I wanted to start with trading, but perhaps you could frame in the context of the more challenged environment that you referred to in the opening remarks during the second quarter, how you see the outlook 3Q and beyond on those trading optimization businesses? And if it’s possible, perhaps break down the pieces between liquids and products and then gas in IG?

And then secondly, I just wanted to ask about the upstream business, another consensus beat in the second quarter this morning, something of a trend around that over the last four to six quarters. I wonder if you could sort of just zoom in on the Upstream business, talk about what areas of that business stand out to you in terms of delivery and how sustainable you see that going forward? Thank you.

Wael, Senior Executive (likely CEO), Shell: Thanks, Matt. Let me start maybe with the second question first and then have Sinead, if you want to address the first one. Very proud of the way the team has been responding in the upstream space. Remember, this is a high graded portfolio. Over the years, what we have done is really focused on trying to increase our cash flow per barrel, really focused on the basins where we have an advantaged position.

Most recently, of course, there was the divestment of onshore Nigeria that added to that portfolio high grading that we have. So what’s the team doing? We’ve been very focused on going back to what we call the brilliant basics. And what we mean by that is just the blocking and the tackling that is required to be able to create value. It starts with reliability, availability, the operational improvements that we have, teams really getting into the rigor of all the operations we need.

And you’ve seen that come through not just in operations, but also in maintenance. Second quarter, of course, is one of the highest maintenance quarters typically for us. And the majority of our turnarounds or maintenance activities have ended either on plan, on budget or slightly better. So really good performance. I’ve also seen a lot of drive to be able to create that next level of competitiveness in Upstream.

I was just in The U. S. Last week and looking at The Gulf and our operations in the Gulf Of Americas. A real focus these days on cost, how we optimize the supply chain, how we enhance our planning so that we are able to leverage a much leaner supply chain, whether it’s shipping, trucks or the like, and all of it with much more of a value focused mindset while delivering safe outcomes. In every part of the Upstream organization, I’m seeing more and more of that.

And that to me is a great signal of the culture change that we’re seeing as we drive performance discipline and simplification in the company, Matt. Sinead?

Sinead, Senior Executive (likely CFO), Shell: Indeed. And thanks, Matt. So with respect to trading, it definitely had a decent contribution for us across this quarter. So pleased with the results. You can’t have sort of one homogenous conversation about trading because each of the segments contributed slightly differently.

So let’s take them one by one, which is what you requested. So in terms of our renewables segment, it’s pretty much the norm, you always see it at the sort of level for the seasonality that we see. With respect to talking about normal, really moving on to LNG. What we see with our IG segment is really this is more the new norm. So this is where we’re seeing volatility having changed coming out of the war.

So we saw a lot of volatility around the time of the Russia Ukraine conflict. And of course, this is more towards that norm. And of course, from our perspective, we have less volatility and a bit of a change in our portfolio mix as well. Moving over to our Products Chemicals and Products segment. With respect to products in particular, good results coming through, traders doing well, being able to take advantage of what they saw there.

On the crude side, it came through a little bit differently. So of course, we saw just a disconnect between what was market volatility and what we saw in the underlying fundamentals, and therefore had a basically a prudent approach and chose to risk off slightly, which meant that we didn’t have the same contribution we would expect to see coming through on crude as a quarter aspect. We would expect to see our traders been picking up as you run through the rest of this year. So that gives you a bit of a view across the whole of the trading segment, but looking forward to see what they can deliver for us as usual as we end out the year.

Wael, Senior Executive (likely CEO), Shell: Thanks, Sinead. Thanks, Matt, for the question. Luke, let’s go to the next question, please.

Luke, Call Moderator, Shell: Our next caller is Lydia Rainforth from Barclays.

Lydia Rainforth, Analyst, Barclays: Hello. Thank you and good afternoon. I have two questions again if I could. Firstly, on gearing. How much higher are you willing to take the gearing level?

If we’re at about 19.5%, at $70 that might feel okay, but it does feel like we’ve all got a little bit used to that $3,000,000,000 a quarter buyback for more than fifteen quarters. So at some point, you have to think about slowing that. And then secondly, on the chemical side, it was unplanned maintenance here. So when I go back to C and D expense side, fixing the underperforming capital employed was a big focus and a big gap to close to get to optimal performance. So what’s going on there?

And is it proving a little bit harder than you expected?

Wael, Senior Executive (likely CEO), Shell: Lydia, thank you for those two. I’ll again maybe start with the second question and then hand over to you, Sinead. On Chemicals, I think firstly, of course, the macro continues in what has been an incredibly prolonged trough and one that could potentially run for a lot longer as well. Of course, we’re seeing the supply coming out of China, more supply coming out, but other parts of the world as well. So it just does mean that we’re going to have to live with this reality for quite some time.

What have we done to respond to that? I think, firstly, what we’ve talked about is making sure that we continue to focus on high grading our portfolio. You’ve seen us move now this quarter. On April 1, we completed the sale of our Singapore chemicals and refining assets. And we look at also the opportunities to be able to high grade and selective closures in Europe.

We’ve also announced more broadly that we will be looking in The U. S. At what we can do, but that takes time. And we’ve talked there about the strategic and partnering opportunities. But that’s one bucket that we’ve been looking at on the portfolio side and executing what we have said we were going to do.

I think the second bucket for us is also looking at what we can do in terms of self help. We’ve been driving down the cost structure there. We’ve been looking at how we can optimize even further to unlock value, and that’s helped us some. But the reality is it’s just not enough. We are continuing to see sort of negative free cash flow there.

And so I have instructed the team to take the next level of measures that will potentially bridge that gap and move us closer towards free cash flow neutrality. There are multiple levers we’re putting, but I think we have to move now to the stage where we have to stop the bleeding, and that is what we’re going to be focused on. This will be something that the team is very focused on while we continue to drive the reliability improvements and the like. And at the heart of it all, of course, is making sure the assets keep running. Shell Polymers Monaca, of course, has had a couple of good quarters.

The last one was a bit more challenged. We need to make sure that we are running that asset at capacity. So more for us to do and more for us to deliver in the chemical space, even though the macro continues to be very challenged. Sinead?

Sinead, Senior Executive (likely CFO), Shell: Thanks, Lydia. And with respect to gearing and how high will we go, let me take it a little bit differently and say how I think about it. So the thought process is very much around a trade off between value and risk. And it’s that trade off between buying back our shares at a very attractive yield, whatever metric you want to use versus leaning on the balance sheet and any risk that comes with that. Now of course, when your balance sheet is sitting at a gearing, as you say, of 19.1%, there’s a lot of space there, as well.

And of course, you’re talking about that attractive yield we just discussed. Where we went to net debt, of course, this time, the gearing went up roughly just under 0.5%, which is about $1,700,000,000 equivalent. So what is it? What was in that? Probably worth unpacking that a little bit because what you saw was roughly speaking about 1,000,000,000 of inventory build and roughly speaking about £05,000,000,000 related to leases.

So in other words, Mirror four coming on. So you can see most of that net debt increase was actually about things that add cash and add value later on. So I’m very comfortable with where my balance sheet is, very comfortable with where the gearing is as well. So what does that mean for us? It means that I need to focus in on what have we told you.

We’ve told you that that 40% to 50% is related to basically our cash flow. That’s the promise that’s sacrosanct to us in terms of that return. So we focus in on that and make sure we continue with predictability going forward.

Unidentified Speaker: Thank you.

Wael, Senior Executive (likely CEO), Shell: Thanks, Jeanette. I like that sacrosanct. Right, Lydia, thank you for that question. Luke, let’s go to the next one.

Luke, Call Moderator, Shell: Our next caller is Martijn Rats from Morgan Stanley.

Martijn Rats, Analyst, Morgan Stanley: Hi, hello. Two questions for me as well. Given this was a rather strong result in marketing, I was wondering if you could say a few words about what you think the state of global oil demand is. Because, of course, as the year has progressed, many of us have been expecting quite soft oil demand, tariffs, GDP, below trend, mostly seeing downgrades to estimates for oil demand growth this year. But this was a strong result and refining margins are strong and you see more than we on that.

So I was hoping you could say a few words on that. And secondly, I wanted to sort of pick you up on the previous comment on the extended sort of trough market conditions in chemicals. There seems to be, at least from my esteemed colleagues here in our chemicals team, somewhat some enthusiasm about anti involution in China.

Christopher Kuplent, Analyst, Bank of America: To be honest, I didn’t realize that that was

Martijn Rats, Analyst, Morgan Stanley: a term before, but there seems to be some measures on the part of the Chinese government to start shrinking excess capacity in both chemicals as well as in refining. And that could perhaps remove some of that excess capacity. And therefore, I was wondering if you had any perspective of whether that can perhaps at some point bring a bit of solace to the chemicals earnings.

Wael, Senior Executive (likely CEO), Shell: Thanks for those two, Martijn. Let me pick them up, starting with your second one, very quickly. Indeed, I mean, we pick up the same. But at the end of the day, what we can control is our own reality. And what we find at the moment is there’s been a discussion on this for quite a few quarters now.

It hasn’t materialized. And this is why we needed to escalate our own interventions to the next level of levers that we have. Clearly, if there is a move in that space, it would impact the chemicals market and the chemicals margins, just given the scale of production coming out of China at the moment. So we will watch that with interest, but I’m not in a position to speculate, of course, on where it might go. I think on the broader marketing and to your point around global oil demand.

So year to date, we’ve seen roughly 1,000,000 barrels per day of oil products demand growth. That’s pretty robust. And it’s being and that is despite some of the headwinds that we have seen, of course. We’ll have to really understand what the impact of the tariffs might be in the second half of the year. Of course, we also have to keep a close eye on where OPEC plus goes as they continue to ease some of the production cuts that were in place.

The other big question is how The U. S. Responds, of course, to Russia in terms of potential sanctions that have been talked about. That is a lot that I can’t control, we can’t control as a company. So what we have tried to focus on is what we can control.

And really, the investment thesis that we are building, Martijn, is one that is trying as much as possible to be non price dependent. What do I mean by that? And maybe just a moment to unpack it a bit further. We have been in this sort of mode of wanting to transform the company for just over two years now. And we have made excellent progress, right?

I mean, you’ve seen today our structural cost reductions, of which the majority, our non portfolio, are nearing $4,000,000,000 A couple of years ago, we thought we would be at $2 to $3,000,000,000 by the 2025. We’re at close to $4,000,000,000 2020 That gives you a sense of the culture change happening in company. We are really looking at how we are more and more disciplined in our capital allocation. You’ve seen that. You’ve seen that both in terms of the quantum and in where our capital is going.

You’ve seen us continue to drive operational enhancements in our business. That is what we can control. Sinead has already alluded to the strength of the balance sheet, and that is another element that we can make sure we have strengthened as we go into choppy waters. But at the heart of it, what we have also promised is a 10% free cash flow per share growth between now and 2030 on a CAGR basis. The attraction of that is just over half of it is coming from buybacks, again, we can control.

And then the remainder is coming from the transformation of our Downstream Renewables business, some of the OpEx cuts that we have alluded to. So a lot of it is non price dependent. That is what we can control and what we’re trying to drive towards. And that in my mind is the heart of the investment thesis that we are trying to drive, all while we deploy capital to build that run rate for the 2030s and build that cash flow growth that we will expect into the next decade. Thank you for the questions, Martijn.

Luke, let’s go to the next question, please.

Luke, Call Moderator, Shell: Our next caller is Josh Stone from UBS.

Unidentified Speaker: Hi, thanks and good afternoon. Two questions, please. Firstly, on the cost savings, you had great success at bringing down costs. And if I look at the numbers division, it looks like the upstream has been a big component of that compared to some other parts of the business. Also mentioned some of your earlier comments on that.

But when you look at the opportunities from now, where do you see the most room for further improvement? Are you running out of steam in the upstream at all? Or is that still an area of focus? And then second question on acquisitions. Last time, you told us you want to be value hunters, and you’ve been connected with a couple of companies this quarter.

So I’m interested to see how you think the hunt is going and any comments around your appetite to do deals today? Thanks.

Wael, Senior Executive (likely CEO), Shell: Yes. Again, maybe let me touch on those, starting with the cost runway. As you said, Josh, I think we’ve made good progress. But as I said at Capital Markets Day, we started the journey with a top down target. Where we are today is with a bottom up reality.

We are seeing a lot more of the cost structural cost reduction ideas coming from the shop floor, from the assets. I was recently in Malaysia. The offshore assets there have a funnel of 150 opportunities to be able to go after. They’re going after each one of them. That to me is the change that I had been hoping to see and maybe was surprised to the upside as to how quickly that materialized in the organization.

Where will the reductions come from going forward? Everywhere. Yes, Upstream has done has delivered, but it’s important to recognize the Upstream is also the consolidation of some of the functional costs. The functions are on their own journey to simplify, to automate where we can to apply AI. There’s a significant push for us to be able to go after the next wave of opportunities in our supply chain.

And we spend over $40,000,000,000 a year, massive opportunities if we are able to standardize our requirements to be a lot more commercial in how we pursue that. And we continue to simplify the organization. We are trying to, in essence, deconstruct the complexity that we have placed on the organization and rebuild it bottoms up with real much more of a risk based approach in the way we look at how we do work. So I’m still excited by those opportunities. And I do see line of sight towards that 5,000,000,000 to $7,000,000,000 of cost reductions that we have already signaled we are going to be delivering by 2028.

I think on the acquisitions, I’d say not much has changed since the last time we all spoke. The bar continues to be high. As I’ve said in the past, we will make the appropriate moves at the right points in time when we see value. We’ve made three such moves in the recent past. We increased our operator our equity interest in IRSA, a platform in the Gulf Of Americas, which we operate.

We’ve increased our equity interest in Gato do Mato in Brazil, a project that we operate. We’ve increased our interest in Bonga in Deepwater Nigeria, an asset that we operate. And so we have selectively used some of the flex we have in our capital budget to be able to build off those positions in areas where we think we have competitive advantages. Do we look at what’s happening in the market and keep an eye on the opportunities? Of course, we do.

But as I said, the bar is high and that bar is, as a minimum, competing with our own buybacks, buying back at a very attractive yield our own shares in the market. And so our capital allocation thesis is one that is going to continue to be dynamic, that is looking at creating inherent shareholder value and not trying to be dogmatic about trying to get to a certain target or otherwise. And that is what we will continue to hold on to. Thank you for that those questions, Josh. Let’s go to the next ones, please, Luke.

Luke, Call Moderator, Shell: Our next caller is Michele Della Vigna from Goldman Sachs.

Michele Della Vigna, Analyst, Goldman Sachs: Thank you and congratulations on the strong results. Two questions, if I may. First, I was just wondering if you could comment a little bit more on the resilience of your current buyback program to temporary lower moves in the oil price. Some of your peers are starting to show that if oil went to $60 or below, probably the quantum would change. How would you feel about that?

And then secondly, wanted to come back to LNG. It was very helpful the comment that this rate of earnings in the Integrated Gas business is probably the new normal. But I was wondering if you could perhaps expand a bit more into some of the moving parts for the next one to two years, including the contract expiries, the growth in LNG Canada, the unwinding of some of the hedges taken on during the Russia Ukraine conflict and also what is probably going to be a more oversupplied LNG market? Thank you.

Wael, Senior Executive (likely CEO), Shell: Thank you for that, Michele. Do you want to touch on the first one there, Jeanine?

Sinead, Senior Executive (likely CFO), Shell: No, absolutely. So no, absolutely. Thank you. And I think we talked about it a little bit with Lydia’s question as well. So we can look at it in different ways.

So from a static point of view, where are we? You know as well as I do that we have a balance sheet which is very strong. We’re sitting at below 20% in terms of gearing. And of course, we can look at it from that perspective. And each quarter we do look at how are we going to take a decision quarter by quarter.

But we also need to look at it from a dynamic perspective as well. And we’ve got the reality is it’s not just static, it is dynamic and it’s not just impacted by the macro. Of course, what we have to do is and you’ve heard me say this a few times that we have to look through the quarter in terms of that cash flow volatility for that specific quarter. But beyond that, we have to look to the long term, well, medium term and long term fundamentals. So are they going to persist or not?

So where do we believe the macro is going to go? That means, of course, that whilst I consciously have been repositioning the balance sheet in terms of its strength, we also have the ability to look at different levers. And those levers are quite broad. You know we have OpEx levers and CapEx levers, and we’ve discussed those. But there are other factors to consider as well.

And those include things like the divestment proceeds from strategic moves that we’ve made as well. All of that allows us to have considerable predictability in terms of our results. So remember, we’re at the moment in terms of that 40% to 50% distribution level, we’re at 46%. In terms of gearing, we’re at 19%. So I’m very comfortable where we are.

Do you want me to take the LNG one?

Wael, Senior Executive (likely CEO), Shell: Sure, please go ahead.

Sinead, Senior Executive (likely CFO), Shell: Also sure, sorry. Apologies. In terms of the LNG side of things as well, we’ve a little bit got into it. Our thinking is that where LNG is at the moment, it feels much more like the new representative of the norm. And why is that?

There’s a number of things there. We talked about volatility earlier, the fact that the volatility has changed. If you were to look back to 2019 and then look back to just at the war, you could see a difference and we’re now back to pre war in terms of volatility. But beyond that, of course, there’s a number of things that come into play as well. There’s the product mix that we have as well, and that product mix changes.

So we have flat price coming through that of course has dropped. You also see, of course, where our volumes coming from some of those legacy contracts have rolled off, but also so too have some of the hedges that we have. So our portfolio mix is very key. And you’ll see that change as we see some of the molecules coming in and the change in those contracts. So it’s really about that portfolio mix.

Wael, Senior Executive (likely CEO), Shell: Excellent. Thank you very much, Innate. Michele, thank you for those questions. Luke, let’s go to the next one please.

Luke, Call Moderator, Shell: Our next caller is Biraj Borkhataria from RBC.

Sinead, Senior Executive (likely CFO), Shell0: Hi. Thanks for taking my question. The first one was on LNG Canada. There were some reports around issues some issues with the ramp up. Could you just unpack that a little bit and let us know whether there’s any implications for the timing and ramp up of either Train one or Train two?

And then the second question, just a very specific one on the cash flow this quarter. CFFO headline numbers were flattered by the one off sort of cash return from the Nam JV. Could you give a sense of what we should expect going forward, it’s sort of once a year and if there’s anything penciled in for 2026? Thank you.

Wael, Senior Executive (likely CEO), Shell: Thanks, Biraj. Let me take the first one and then ask Sinead to address the second one. LNG Canada, super proud of the team. I mean this is a massive project. We brought the first part of Train one on stream.

It’s been running steady and stable. It’s we’re essentially churning out the cargo at the moment every eight days. And as we progress the ramp up of Train one, that moves to one every four days and so on and so forth as you get into Train two. The ramp up profile is very much in line with what we had expected. So indeed, I’ve read the article.

I still scratch my head as to some elements of it. Suffice it to say, we are very pleased with the momentum that we’re seeing in LNG Canada and the work that the team is doing there and very much looking forward to, as we get sort of over the next month or two, to start to see Train two as well ramping up. So indeed excited by the opportunities that brings. Maybe a couple of points around LNG Canada since we’re on it. I think important to recognize the iconic nature of this project.

We’re talking about significantly shorter transit routes to get us to Asia. Of course, this is predominantly uncontracted volumes for us that allows us to be able to trade around that. And that’s particularly important back to Sinead’s point earlier, because we have gone back to the pre-twenty twenty two volatility and mentioned the fact that the earnings of this quarter are more sort of the new normal. It’s important to have some of that optionality so that when volatility comes into the market, we can use some of these cargoes to trade around. But I do think LNG Canada is a critical part of our overall portfolio going forward And does, of course, create a bit of an offset for some of those advantaged contracts, which have rolled off as you’re fully aware of.

Second point, please.

Sinead, Senior Executive (likely CFO), Shell: Absolutely. And Biraj, you’re correct in terms of the non dividend. Just to remind you that what in effect has occurred is a zero impact on cash. So in terms of free cash flow or net debt, zero impact. But you’re right, it did flow through two different parts, CFFO and CFFO ex working capital.

So it was a working capital move as well. But just to make sure there is no flattery on our free cash flow nor on our bottom line in terms of the net debt. And ultimately, what will occur in the next year or so will be up to NAM as a joint venture to decide on dividends each year. So whether they go ahead with that, I can’t comment.

Wael, Senior Executive (likely CEO), Shell: Thank you, Sinead. Biraj, thank you for that. Luke, can we go to the next question, please?

Luke, Call Moderator, Shell: Our next caller is Doug Leggate from Wolfe Research.

Sinead, Senior Executive (likely CFO), Shell1: Thanks. Morning or good afternoon, everybody. Thanks for taking my questions. Waila, I wonder if I could ask you about the commentary around LNG. I think if I heard Shanae correctly, she said this is the new normal.

But in your preview, you said trading and optimization will be significantly lower than Q1 twenty five. And obviously, there’s a lot of questions over what the spot market could look like over the next five years. So what level of confidence do you have that LNG trading can come back to, I guess, what you would call normalized levels? That’s my first question. My follow-up is on cash flow very quickly, and that is, Sinead, you talk often about cash flow from operations, but you’ve got $2 plus billion below the operating line on interest and lease costs.

Where does that factor into your comfort with the buyback program?

Wael, Senior Executive (likely CEO), Shell: Super. Thank you for that, Doug. Let me take the first one and then hand over to Sinead for the second one. I think so where is the LNG market, right? I’d start off with, of course, prices are now sort of steadying at around the $10 to $12 per million BTU.

Again, what we had seen in the pre-twenty twenty two timeframe. The volatility similarly is sitting in that space for different reasons, by the way. Today, we see, for example, strength in Europe. We see maybe weakness in China, in particular, on the industrial demand side. So the way that those trades around the world are playing up is changing.

But there is no question that the attractiveness of LNG as a versatile, resilient energy form continues to be something that’s key, and we continue to believe that there’s a very exciting runway for LNG growing by 60% between now and 02/1940. But then let’s get specifically then on what we mean by this is a normalized quarter. So given that we start to look more like the pre-twenty twenty two realities, at that level of volatility at these price points, what you see this quarter in terms of trading is indeed much more of what the new normal looks like. Q1 had some real exciting arbitrage opportunities that played out. Hopefully, we see more of those in future.

What I’m trying to say is, at the end of the day, we have to be able to plan on the basis of what we see and then, of course, take advantage of the opportunities as they come. As arbitrage opportunities come, we’ll try to take them. But in terms of the baseline planning for us, we think this is more of a reflective quarter and it allows us to be able to then continue to position the portfolio for strength as we go into the coming quarters. There is more supply coming into the portfolio through LNG Canada, through Pavilion and so on and so forth. But remember, we’ve also lost supply, some very advantaged supply contracts that we had in the past.

And that’s what we’re looking to be able to offset and over time be able to continue to improve on. Jeanine?

Sinead, Senior Executive (likely CFO), Shell: And on the second one, Doug, absolutely, of course, I consider all cash movements into free cash flow as well. So whether that is just a CFFO bit, but of course, the CapEx impact, which obviously comes off that as well. And of course, anything that flows through from an interest point of view or from leases. So all of that gets considered whenever we consider just what are we going to do in terms of those value versus risk decisions each and every quarter. And those lease payments that you refer to in there as well, I mentioned one earlier of Miro four being one, but of course, there are more leases that come into our portfolio.

It was only one that I mentioned earlier. So that is very much just a consideration that comes through. Of course, it’s all about value. And of course, those lease payments are ones that actually generate future cash as well. So we utilize those underlying assets.

So yes, part of the consideration doesn’t change where I stand in terms of 40% to 50% being sanked in terms of distributions, in terms of CFFO and being very comfortable with where my balance sheet is now.

Wael, Senior Executive (likely CEO), Shell: Thank you for that, Sinead. Luke, let’s go to the next question, please.

Luke, Call Moderator, Shell: Our next caller is Alastair Sim from Citi.

Sinead, Senior Executive (likely CFO), Shell2: Hi, Wael, Sinead. Monica, how far away are you for being profitable on this asset asset? And you alluded to potentially looking at JV structures as a strategy. Why does bringing in a partner help improve the performance of the business? And my second question is on biofuels.

I mean, a year ago, you hit the pause button on the Rotterdam project. I’m wondering if sort of one year on, you’ve got any reflections on what you want to do with that project, indeed, probably your biofuel strategy as a whole, given that politicians still seem intent on raising mandates.

Sinead, Senior Executive (likely CFO), Shell0: Thank you.

Wael, Senior Executive (likely CEO), Shell: Thanks for those two questions, Al. So let me touch on those. On Monaco, what we have said indeed is we will look at strategic and partnering opportunities for the whole of The U. S. What we have reflected on is we have a terrific asset out there, advantaged in many ways, right?

It’s uniquely located in a part of the world where we are able to reach a significant portion of the customers that need that product. We have fiscal advantages there from the state. We have access to an attractively priced resource as well. The issue is it’s our only one, our only major facility. And that’s why we’ve said we’re not the natural owner of that asset.

Ideally, you want to be able to leverage that with two, three other plants and create optimization opportunities as we do, for example, with our LNG facilities around the world, where we can meet our customer demands through different channels at different points in time, take advantage of opportunities when one plant is shut down to supply from the other one and so on and so forth, not to mention the obvious synergies on costs and the like. And so what we are looking at is, again, not dogmatically, but looking at how we can unlock more value having reached the conclusion that we are not the natural operator and owner of that asset. What I would say is, of course, the conditions in the market mean that it’s not easy to be able to transact on something like that immediately, but we continue to have discussions and we’ll update you, of course, in due course as appropriate. Little to say on our Rotterdam facility at this stage. We continue to review the options.

Of course, we are looking at the backdrop of the market. We see it’s a market at the moment that is, I’d say, challenged, challenged because of excess supply coming in from The U. S, from Asia. But also there’s been some backtracking on mandates here in Europe. And so I think to what you implied in your question, it is a weaker market.

Having said that, this is one of the first levers you would look at for decarbonization. And the desk that we have, the trading desk that is continuing to be able to source bioproducts and sell into some of our own shorts, which are in the mobility space, does very well in this market. And so we are being selective around where we deploy capital to make sure that we continue to unlock value in a value chain where we continue to believe we are advantaged. Let me pause on that one and go back to Luke, please. Thanks, Alastair.

Luke, Call Moderator, Shell: Our next caller is Paul Cheng from Scotiabank.

Sinead, Senior Executive (likely CFO), Shell3: Thank you. Good morning or good afternoon your time. Wei and Shen, just curious that you haven’t talked much about exploration, but in order for you to sustain the liquid production or maybe at some point that maybe that you can grow it, this is a depleting asset base. So do you think you have the right size of the exploration program? Or do you think that you need to step it up?

And if you do want to step it up, where is the focus going to be and how big is the increase may need to be in order for you to perhaps that be able to use it to replace more of your resource? Second question is on I want to go back into trading, but you know, different angle. In The US, we do have a president love to treat day and night on many topic. And unfortunately, that often time when he treat, they will impact the market condition. So from that standpoint, that’s not really tradeable.

And when you guys manage your trading business, how you take that into consideration? If that means that you will take maybe a risk down a that to previously and correspondingly, your future trading result, everything else equal will be lower than what it was in the past or that you think you will be able to handle and manage and doesn’t really impact your future results and you don’t have to change the way how you manage your trading operation? Thank you.

Wael, Senior Executive (likely CEO), Shell: Paul, let me start with the first question and then ask Sinead to address the second one. Exploration, I think our program, our exploration program is right sized at the moment. We went through a significant reset, I would say, of our exploration department capability, the funnel. Because the hard truth is while we have had some good progress in certain areas, it hasn’t delivered what we had wanted. So we have rightsized the spend.

We have refocused. We have challenged ourselves to raise the bar on how we can deliver better results for every dollar we’re spending in exploration. The areas where we continue to invest in are basins where we have established track records like the Gulf Of America, areas like Malaysia, like Oman, where we have also significant assets and more. We also selectively look at opportunities. Of course, you know we have Namibia.

There we are looking at what others are doing, continuing to learn and positioning ourselves in case something interesting comes up. And so our exploration portfolio, I think, is one now that is getting grounded into a better place. We have some exciting wells coming in the next, I’d say, to twelve months, which I’m looking forward to seeing what we come out of that. While always recognizing, of course, exploration, we play the long game. But the levels that we are investing in, and I’m I think are the right ones.

And I’m very confident in this reset that the team has now put into place. I’m very confident in the quality of leadership that we have and I’m excited by the opportunities that are coming through.

Sinead, Senior Executive (likely CFO), Shell: Sinead? Thank you, Paul. You’re really asking about sort of the impact on trading with geopolitical uncertainty and how we handle that, etcetera. So this is one of those moments where having a very high quality trading team matters, and we do. Our capability, do believe, is second to none.

And that team has the ability to be able to focus in on what matters. And they will make the calls quarter to quarter. They have fundamentally an excellent set of assets, which they can optimize around. And for them, it’s all about making sure that we have those assets up and running and being able to provide the molecules that they can then optimize and put into the right place to take advantage of that. And then secondly, of course, you have on the other side of it, their ability to make judgments depending on whether or not they’re going to trade around fundamentals or whether it’s something else that’s coming through.

And what we’ve seen is they will make a different call quarter by quarter. But overall, we’ve seen the Capital Markets Day guidance up to 2% to 4% ROACE uplift in the medium term being held and no earnings losses in any quarter that hasn’t changed. Of course, I talked about it earlier in terms of crude, they made a call to be more prudent this quarter and to be focused in on the fact that they wanted to trade around fundamentals rather than being able to understand what that volatility was, which didn’t seem to be based on fundamentals. And that was a judgment they took, and we support them. So we’re looking forward to seeing what they deliver for us in the next couple of quarters, but full support.

Wael, Senior Executive (likely CEO), Shell: Thank you, Sinead. Thank you, Paul, for those questions. Luke, let’s go to the next question, please.

Luke, Call Moderator, Shell: Our next caller is Lucas Herman from BNP Paribas.

Sinead, Senior Executive (likely CFO), Shell4: Yes. Thanks very much. Afternoon, Will and Sinead. A couple of relatively straightforward questions, well, maybe one’s a little abstract. But Sinead, for you, straightforward divestments this year.

Can you just remind me where we are in terms of well, let’s let’s start with, you know, where do you think you’ll be divestments for the full year, and where are we on things like Colonial and, you know, the sums you’re expecting to come in, you know, at the present time. And the slightly off the wall, Whale, is Zaba Zaba or o p l two four five. I only mentioned it because, you know, a number of projects that have been sitting in the portfolio for a long time are starting to come to life. And I wonder whether that’s something that one should be thinking about as well. That was it.

Thanks very much.

Wael, Senior Executive (likely CEO), Shell: Thank you, Lucas. Let me maybe start with the second one and then Sinead, if you want to address the divestments. Of course, we’re looking deep into our funnel of opportunities and it helps there, Lucas, that we have now really focused our portfolio. In particular, in a place like Nigeria, I think for everyone’s benefit, licenses and the blocks that you referred to are deepwater Nigeria blocks. We are looking at opportunities within the deepwater space to continue to expand.

Of course, you know we FID ed Bonga North. There is the potential for the next phase in Bonga, what we call Bonga Southwest, which would require its own FPSO. That’s something which is still work in progress. There are other tieback opportunities, but there’s also greenfield opportunities like Nuevo Douro and others which are in the area. OPL two forty five, of course, is one that ENI operates, and we will, of course, defer to them to come up with a plan for that opportunity to see whether it’s investable or not.

But I think to your broader question, Lucas, we are, in particular, as we see our well costs continue to be attractive vis a vis the competitors as we continue to look at how we have simplified the funnel of project opportunities on the back of something like a Vito, Whale, Sparta. We’re learning more and more how to be able to create more value with less resource. And I think we are looking at how we can apply that in different fields, including in Nigeria deepwater.

Sinead, Senior Executive (likely CFO), Shell: And on divestments, Lucas, so the thinking on divestments for this year was that not that it was going to be a core part or a needed part of the underlying sort of financial framework. You can see that with the perspective of where we are in gearing. So for us, it was more about actually that sort of capital reallocation across the portfolio and cleaning up different aspects of it in line with our strategy. So that’s very much what we’ve been focused on doing. And you’ve seen that on a couple of things.

So you see it in our renewables portfolio in particular. So we’ve of course, just announced a JV with in terms of Savion and D8 for us with respect to Savion. So you’ll see some proceeds come through on that later on. We also of course, announced divestment of Inspire, which was a B2B sorry, B2C in US that needs to come through as well. But these are not massive amounts of money in the sense of the greater scheme of things, but it’s more about aligning with our strategy.

Of course, Bookum is already done, as you know, and beyond that, of course, there’s some mobility portfolio upgrading that we’re doing, which is Mexico, Indonesia and of course, South Africa that still has to come through as well. But again, it’s less about the proceeds, it’s more about taking things that don’t fit our strategy off the books and actually being able to redeploy OpEx, CapEx, etcetera elsewhere. Colonial is the one that’s still to come. And that’s hoping to come, would imagine we’ll see what closes out, but probably in Q3, Q4. So we will see that come through before the end of the year and see those proceeds as well.

Wael, Senior Executive (likely CEO), Shell: Thank you, Sinead. Thank you for the questions, Lucas. Let’s go to the next question, please.

Luke, Call Moderator, Shell: Our next caller is Irene Himona from Bernstein.

Sinead, Senior Executive (likely CFO), Shell5: Thank you very much. I had two questions both on marketing. First of all, lubricants, I can see first half earnings are up substantially on flat volumes. So your unit EBITDA is up materially. I wonder if you can talk around what is driving that and is it sustainable?

And then in Mobility, again, your unit EBITDA margin is the highest in a very long time. I think you referred in your speech to better premium product margins, but mobility includes other things like convenience and e mobility, etcetera. You no longer disclose those margins by segment on a quarterly basis. Can you talk around the different moving parts, please? And whether you anticipate the margin improvement to be sustainable?

Thank you.

Sinead, Senior Executive (likely CFO), Shell: You’re welcome. Happy to. So in terms of lubricants, well, actually just our Marketing segment, full stop, did really well this quarter, really pleasing to see just the change that’s coming through. So specifically, Oleyn, on lubricants, you’re correct, margin doing well, which is that premium products growth. Very much the teams are pushing that and making sure we focus on where can we differentiate.

Of course, we’ve also had stable base oil pricing, so that’s helped a lot. OpEx is very much under control, and they are line by line making sure that they reduce OpEx there and focusing on where it actually adds value. In terms of mobility, which you asked about, again, it is the premium brands coming through. We did take away this sort of breakdowns because we weren’t seeing that as being particularly useful. But in terms of premium fuels, it’s up over 1% quarter on quarter.

We’re seeing Europe doing very well and Americas. The convenience retail is beginning to differentiate, but that depends on where you are. So it’s different across the different areas. What I think is probably most key about what the teams are doing in mobility is they’re not trying to play the same aspects in each area. They’re looking at how can they make the most money and extract the most value It’s country by country, and that’s what you’re seeing come through.

So slightly different week of strategy for each one of them, and it’s playing out in the overall numbers.

Wael, Senior Executive (likely CEO), Shell: And I’d maybe just add, I think there’s more to go. I’m excited by what the marketing team has been doing. Two, three years ago, when we came together in CMD twenty three, we laid out a vision for that business. We reset the expectations. And they have followed through on it and have pushed even beyond that.

And I think there’s more to do. But it’s a great example of how we’re going about trying to turn around some of our underperforming businesses. I mean we were clear in Capital Markets Day twenty five, dollars 45,000,000,000 of our capital employed is returning nothing at the moment or close to nothing. And so this is the opportunity for us. If we can truly unlock the full potential of those businesses, and if not, how we recycle capital, reallocate that capital to the higher returning businesses, therein lies an exciting opportunity that we have.

Irina, thank you very much for those questions. Luke, let’s go to the next question please.

Luke, Call Moderator, Shell: Our next caller is Christopher Kuplent from Bank of America.

Christopher Kuplent, Analyst, Bank of America: Yes, thank you for taking my questions. One quickly to mop up on the quarter, again, marketing. It’s also outperforming on much less CapEx than you told us about as their budget at the CMD in March. So wondered whether you can give us a steer on that considering the very light run rate for the first half. And then one for you, Sinead, and I can see your eye rolls already eyes roll already.

The question around buyback, balance sheet, payout, I think you’ve given us many ways to show you’re comfortable. But let me ask you a mean question. You’ve had for a number of years a 30% to 40% payout ratio and paid out above that. Can we therefore assume that if you stood above 50% that you’d still answer in the same way pointing to balance sheet strength in that hypothetical scenario, of course? Thank you.

Sinead, Senior Executive (likely CFO), Shell: Would you like me to say both?

Wael, Senior Executive (likely CEO), Shell: Yes, I

Sinead, Senior Executive (likely CFO), Shell: want to say both. I would never eye roll, Christopher, of course. So let me take them both slightly. The first one in terms of mobility CapEx. You’re right, it’s light on CapEx at the moment into the sort of middle of this year.

What we’ve asked the team to focus on is really extracting the maximum return they can. They’ve had a lot of CapEx in the past, And they now need to show that they can return against us. They also need to put the right opportunities to us to show the right returns and then we’re willing to release more. But 80% of the cash CapEx is into 10 key markets for mobility. So that focus is working and you’re seeing that.

So let’s encourage that to continue and be able to extract even more results from that. So your second part, which was around the buyback and the comfort level around it. So you’re right, mean, have moved from 20% to 30 to 40% to 40% to 50%. And I am saying the 40 to 50% is sacrosanct. Where are we standing at the moment?

We’re sitting at 46%, as you know, in terms of that on a rolling four quarter basis. You’re asking specifically the question of, will we move above 50%? That’s really what’s underlying there. To be able to do that, we need to believe it’s the best capital allocation decision for the quarter or for the company actually more importantly, and then in that specific quarter. And we’ve had that conversation a little bit, I’ve alluded to it earlier as well.

That is a conversation that we have at between Weil and myself at a board level, etcetera, just thinking through quarter to quarter, what is that value versus risk decision that we need to make. And of course, we look at the company performance, we look at the macro and I’ve said it before short term isn’t just the point, it has to be about what our belief is and whether that macro will continue to persist into the medium term and the long term. We’ll see what goes about that. So no eye roll, I promise. But I’m just saying to you, I do believe in the strength of the balance sheet.

I will lean on it and we will make the decision that is appropriate for the company on a value lens.

Wael, Senior Executive (likely CEO), Shell: Let me maybe help you out here because I think you’ve been asked the question What every which I would say is the following. The 40% to 50% that Sinead has described as sacrosanct is one that we have been very, very clear on. This is one that we’re going to be committed to through the cycle. We’re going to generate our free cash flow through all the improvements that we have talked about. And we have said very clearly that we will continue to preferentially allocate towards buybacks buybacks because we do believe that is the best capital allocation decision for us at this point in time.

So we’re absolutely committed to it. And you’ve seen us continue to deliver on that. I would also say that we still have a lot more to unlock from this company. There is a lot more to come, whether it is from the OpEx opportunities that we see, which are moving faster than planned. We still, as I mentioned a moment ago, have unproductive capital that we need to be able to do better on.

We still have businesses that we are looking to take to the next level of outstanding performance. Indeed, we I think, Chenay touched earlier on some potential strategic divestments that we have coming through, which will bring in proceeds. So we are in a position where we have the capital to be able to actually stand there and make some choices. And what we are looking at every time we take one of those choices is what is the best use of that capital to unlock intrinsic shareholder value. Again, not being dogmatic, but looking at that point in time, what is it?

And at some point, we will be looking at more buybacks. At other points, we are looking at acquisition as we’ve done with the last three that I’ve mentioned. Those are all the right steps at that point in time. But we don’t want to sort of give a blanket answer other than to say, please trust us to allocate in the best way that we think is there for our shareholders. Let’s go to the next question please, Luke.

Luke, Call Moderator, Shell: Our next caller is Ryan Todd from Piper Sandler.

Sinead, Senior Executive (likely CFO), Shell6: Thanks. Maybe one on in the Gulf Of Mexico or at least at Whale, the project, it looks like the ramp at that project went very well. Can you talk about this in the context of improving operational performance overall? But also maybe specifically in the basin of the Gulf Of Mexico, which seems to continue exceeding expectations. How does that improvement and maybe even the change in administration play into how you think about opportunities for sustaining volumes or growth going forward there?

And then maybe on on refining, distillate markets are really tight, which have been sustaining margins. Can you maybe talk about how you think about refining market dynamics looking into 2026 and whether your portfolio is now where you want it to be there?

Wael, Senior Executive (likely CEO), Shell: Ryan, thank you for those questions. Let me address them. Very pleased with Whale ramp up. You recall, we started with this template on Vito. We then carried it across to Whale, and we’re in the process of carrying it across to Sparta as well.

It’s achieved nameplate Whale has achieved nameplate capacity within five months of first oil delivery, which is outstanding. Right? The wells have delivered what we had hoped. The performance all the way through the project, whether it was the drilling of the wells, the construction was all very much as per plan. I I think to your point around the underlying operational performance, why is Whale different than maybe the old model of projects we had?

We have looked as much as possible to be able to simplify the setup to really get much more rigorous in the way we maintain our equipment and not allowing for redundancies and the like, but really making sure that we are focused on delivering with the equipment that we have. I do think it is symptomatic of the improvement that we have seen in the Gulf Of America across our asset base, by the way. We’re seeing it in everything from what we call well reservoir and facilities management, so producing more out of our existing wells and infrastructure. We’re seeing it in the stability of our planning sequence when it comes to turnarounds and the like. We’re seeing it in the cost structure.

We’re seeing it in the availability and reliability stats. So across the patch, this is starting to really become much more structural and intrinsic in the way we’re driving the business. A part of your question was also what all this means with the change of the administration. Clearly, with the big beautiful bill, there is also now a much steadier lease sale schedule that’s planned for the next fifteen years to a year, which of course is critical to be able to keep these facilities full. And that gives me a lot more comfort that we will see that opportunity to continue to tie back to many of our facilities.

And with new hubs like Whale and Sparta in some terrific ZIP codes, that does mean that we will have many of the key hubs that allow us to be able to continue to bring new volumes in. So a good story and I think a great example of how performance discipline and simplification are coming to life. Sinead? Sorry, I wanted to go to the refining, apologies. On refining 2026, look, the current reality is that, that market of course went through a challenging period for the first half of the year.

You’ll have seen the July numbers and what you’re seeing is strength with margins moving to double digits at the moment. In particular, it’s diesel that is in short supply. Inventories are relatively low at the moment. So you could have a more robust market for oil products for the second half of the year. But it will all depend on where geopolitics goes.

It all depends on where the tariffs impact will go. Where we sit, I mean, I think the portfolio we have is the portfolio that we think allows us to optimize as well as we can. We have the critical hubs in our portfolio, the Dutch hub, the German hub, we have Canada, we have The U. S. And those are the ones that we are optimizing around.

Our traders don’t just depend, by the way, on the refineries. They depend very much on the flow of third party products. They depend on our shipping length. They depend on our blending storage. It’s all these arteries that are allowing us to be able to create value out of that market, and I think we are well positioned to continue to do that.

Thank you for the questions there. Luke, let’s go to the next question please.

Luke, Call Moderator, Shell: Our final caller today is Peter Low from Rothschild and Co, Redburn.

Christopher Kuplent, Analyst, Bank of America: Hi, thanks for taking my questions. The first was just on C and P. This was the first quarter without Singapore. I think in the past, you suggested that was a heavily loss making asset. We didn’t maybe quite see the step up we might have expected in that division given that dropped out.

Was that simply a result of the issues at Monika? Or is there any reason to think that the benefit of that disposal might just take a little bit longer to come through? And then to say quickly on working capital, you had a build in the first half. In recent years, it looks like you typically have a bit of a seasonal release in the second half, particularly in 4Q.

Martijn Rats, Analyst, Morgan Stanley: Are you expecting something similar this year?

Sinead, Senior Executive (likely CFO), Shell: So Thanks. I’ll be very short on this one, if you don’t mind, Peter. In terms of the first one, in terms of CMP in Singapore, basically, it’s just that we only completed in Q sorry, on the first month of this quarter. And of course, that has to play out. Obviously, the settlement amounts that always happen in any transaction, those flow through in Q2 as well.

So you will see that, particularly on OpEx really flowing through and some of the losses that we would have had later in the year. So we’ll see some of that play out. In terms of working capital, we did have a small build, as you say. Will depend quarter to quarter, will depend on the opportunities. For us, what we use working capital for, it’s about opportunities.

It’s the same as any dollar, whether it’s deploying it for OpEx, CapEx, distributions, etcetera. We think through very carefully where we use this. And for our working capital, we’ll make a choice as to what we want to do on inventory and what opportunities we see, and that will very much depend on market conditions. So quite difficult one to predict. Of course, we have given a certain amount to our trading team for them to be able to deploy, but we will have those discussions with them depending on the market conditions.

So looking forward to seeing what they can come up with.

Wael, Senior Executive (likely CEO), Shell: Thank you, Sinead, and thank you, Peter. And thank you all for your questions and for joining the call. In conclusion, we delivered a robust set of results in a challenging geopolitical and macroeconomic environment. We continue to remain focused on executing our strategy, transforming the portfolio that we have and delivering on our key targets. And we’re confident that our strategy is the right one to deliver more value with less emissions.

Wishing all of you a very pleasant end of the week and hopefully a well deserved rest for many. Thank you very much.

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