Shell Midstream Partners, L.P.

Hello, Sinead and I welcome you to our second quarter results presentation. It was a turbulent quarter for the world and the global economy. The war in the Ukraine continued, destroying lives and disrupting supplies of food and energy and aggravating the life of so many more through high energy prices and the cost of living crisis. It all reinforces the importance of getting the balance right. We need a system that provides secure supply of energy that is reliable and low carbon and affordable. And governments play a crucial part in achieving this balance. Not least because their policies affect our long-term investment planning. And we need reliable policies that ensure a stable supply of energy products today and significant investments in the energy system of tomorrow. For example, by speeding up reviews for offshore wind projects and allowing the accelerated tax depreciation of renewable assets. But we know we also have a significant role to play. And Shell has been taking action in Q2 to deliver the energy the world needs today. In the North Sea, in the short term, we are adding vital gas production by completing the refit of a floating production, storage and offloading vessel to produce natural gas from the Pierce oil field. It's expected to start delivering gas as soon as this autumn. And we have taken the final investment decision for the Jackdaw field, which has the potential to supply more than 6% of the UK's gas production in the years ahead. And for the medium to longer term, we've also taken a final investment decision on the Crux field in Australia, which will provide gas for Prelude, our floating RNG facility. And we see significant value to come from our investment in the Northfield East expansion in Qatar. But at the same time, we're also taking action to accelerate as an energy transition company. So in the Netherlands, we are building an electrolyzer that makes hydrogen for wind power. Holland Hydrogen One will be one of Europe's largest renewable hydrogen plants once it's operational in 2025. In fact, Shell owns and operates around 10% of the global electrolyzer capacity. And we plan to add further capacity to a strong funnel of hydrogen projects. So our company is truly changing. It's transforming for the future. And we are setting ourselves up for that success in that transformation. Just look at the foundations that we have built over the past decade. We have become more disciplined, we've become more resilient, and we have become a more profitable business. The key similarity between today and how our operating environment looked in 2013 is the oil price. The average price of $108 a barrel for the first half of 2022 is almost what it was in the first half of 2013. But Shell has transformed since then, both financially and operationally. Over the first six months of this year, our adjusted earnings are up 65% compared with the first half of 2013. In the same period, comparatively, our organic free cash flow tripled. And we have doubled our shareholder distributions. In fact, this quarter, our cash distributions were the highest ever. And we have done all that safely and responsibly. Our teams achieved 83% fewer process safety incidents and 32% lower scope one and two carbon emissions. That's emissions from our operations and the energy that we use to run them. So what changed? Well, we have high graded our portfolio, divested around $80 billion worth of assets and doubled down on integrated value delivery. And as a result, in our integrated gas business, we now sell over two times more LNG, while our CFO per barrel increased more than fivefold over the same period. And our upstream portfolio is much more concentrated, leading to 21% lower production, while our upstream CFO per barrel increased by 74%. So yes, energy prices are very high today, but they have been so before. And the real difference is that today we are performing much better in a similar price environment. And we are confident about the future because we have a strong capital framework and an energy transition plan that our shareholders firmly supported at our annual general meeting in May. So we are increasing our shareholder distributions with a $6 billion share buyback program for the next quarter. Now Sinead can tell you more about our results and these distributions.

Our performance in the second quarter was strong amid volatile energy prices. Our adjusted earnings were $11.5 billion. We saw stronger performance in Upstream, Products and Renewables and Energy Solutions, or RES. Our adjusted EBITDA was more than $23 billion. And we delivered $18.7 billion of cash flow from operations. Our trading and optimisation results across our businesses were strong overall, especially in gas and power in our res business. That brings me to our financial framework. The $6 billion share buyback programme we announced today is expected to be completed by the time of our Q3 results announcement. And we expect our shareholder distributions to remain in excess of 30% of CFFO with the current energy sector outlook. Our net debt further decreased to $46.4 billion this quarter, and we will continue to strengthen our balance sheet given where we are in the cycle. We will be disciplined with the investment decisions we make and expect our cash capital expenditure to be in the $23 to $27 billion range for 2022.

So without doubt, our delivery this quarter reflects the macroeconomic environment. But even more so, it reflects the transformation of Shell into a more disciplined and a more resilient company. We are using our financial strength to benefit society through secure energy supplies and to benefit our shareholders to increase distributions and to position the company for the future of energy.