Shell Midstream Partners, L.P.

Welcome to our first quarter 2022 results presentation. Before I look at our performance, I would like to thank Jessica Yule, who is leaving Shell after 17 years. Her distinguished Shell career culminated in five years as Chief Financial Officer, and she leaves an impressive legacy. She has been key in strengthening Shell's financial position whilst delivering some of the industry's best cash flows year after year. And I am honoured and excited to follow in her footsteps. Today, I will talk about our key developments, strategy delivery and our Q1 performance. As the war continues in Ukraine, Shell is working hard to ensure the safety of our staff and contractors there and to support relief efforts. We are doing our utmost to keep retail sites operating in the country and supplies moving. We are supporting our staff in Ukraine and taking care of our staff fleeing the war by offering assistance and means for relocation. We have announced our intention to withdraw from all Russian hydrocarbons in a phased manner. So we have stopped buying Russian crude oil and liquefied natural gas, or LNG, on the spot market, and we will not renew any long-term contracts. We have also stopped spot purchases of cargos of refined products directly exported from Russia. For the first quarter of 2022, we have taken post-tax charges of around $3.9 billion in relation to Russian oil and gas activities. As well as causing human tragedy, the war has led to deep uncertainty about supplies and rising prices. The disruption in global energy markets shows that secure, reliable and affordable energy must be managed through engagement with government, customers and suppliers. We are continuing to deliver a secure supply of energy across the world. And as the world's largest supplier of LNG, we continue shipping natural gas to where it is needed most. One example is the agreement we have just signed to ship LNG through the terminal that will be built in Germany. In Q1 2022, we have safely, on time and on budget, completed the largest turnaround in Shell's history at Pearl and Qatar. Additionally, we have successfully started up the PowerNap, Calibri and Miro One oil and gas projects. Prelude Floating LNG is also back online and supplying additional volumes since mid-April. At the same time, we are accelerating our transition to low-carbon energy. This includes our successful bids together with our partners to develop large-scale offshore wind farms in the USA and UK. Together, they represent 6.5 gigawatts of total generation capacity. And just last week, we announced the acquisition of Spring Energy Group, one of India's leading renewable power platforms. This deal positioned Shell as one of the first movers in building a truly integrated energy transition business in India. While we deliver a secure supply of energy, we are also meeting the climate targets that form part of our Powering Progress strategy to be a net zero emissions energy business by 2050. So by the end of 2021, we achieved our short-term target to reduce the net carbon intensity of the energy products we sell by 2.5% compared with 2016. As an energy user and producer, Shell has set a bold target to reduce net absolute emissions from its operations, including the energy it buys and uses, by 50% by 2030, compared with 2016 levels. We are making good progress towards this target, with an 18% reduction at the end of 2021 compared with 2016. The recently published Shell Energy Transition Progress Report outlines our strong progress against our strategy and will be put to an advisory vote at our annual general meeting this month. Turning to our Q1 2022 performance. This was a strong quarter for Shell amid volatile geopolitical and macro conditions. Our adjusted earnings were $9.1 billion and our adjusted EBITDA was $19 billion. We delivered $14.8 billion of cash flow from operations, which included $7.4 billion of working capital outflow due to rising commodity prices. These results reflect the benefits of the strong integration of trading and optimization activities across all of our businesses, including Renewables and Energy Solutions, or RES. In Res, which we are reporting as a separate segment for the first time, we delivered adjusted earnings of more than $300 million and adjusted EBITDA of some $500 million, primarily driven by the exceptional market environment as well as seasonality. Starting this quarter, we have enhanced our disclosures to offer more transparency about our growth pillar. You can find insights into the new group segmentation and additional disclosures in the informative video and in the quarterly data book, all available on shell.com. This quarter, we are increasing our dividend by some 4% as previously announced. Also, we've made substantial progress in buying back shares. We have now completed 4 billion of our planned total of $8.5 billion share buyback program for the first half of 2022. The remaining $4.5 billion is expected to be completed before the Q2 results announcement. This quarter, we have further strengthened our balance sheet by reducing net debt to $48.5 billion. We will stay disciplined with our investments and any incremental capex will be to provide energy security and accelerate the energy transition. Including our investment in Spring Energy, our cash capex will remain within the $23 to $27 billion range for 2022. Strong cash flows, a healthy balance sheet and continued disciplined delivery of our strategy gives us a solid foundation to invest in the energy transition whilst also safeguarding the company. With the current macroeconomic outlook, we expect to be distributing more than 30% of our CFFO in the second half of the year, subject to board approval. We will provide more details on our capital allocation framework at our Q2 results announcement. Our delivery this quarter demonstrates the leading role we intend to play in the world's energy security and transition to a low-carbon energy system.