Shell plc (NYSE:SHEL) Q3 2025 Earnings Call Transcript

Shell plc (NYSE:SHEL) Q3 2025 Earnings Call Transcript October 30, 2025

Shell plc beats earnings expectations. Reported EPS is $1.86, expectations were $1.72.

Operator: Welcome to Shell’s Third Quarter 2025 Financial Results Announcement. Shell’s CFO, Sinead Gorman, will present the results, then host a Q&A session alongside Shell’s CEO, Wael Sawan. [Operator Instructions] We will now begin the presentation.

Sinead Gorman: Welcome to Shell’s Third Quarter 2025 Results Presentation. This quarter, we delivered another strong set of results. Our adjusted earnings were $5.4 billion, and we generated $12.2 billion in cash flow from operations. The quarter-on-quarter improvement was driven by strong performance across our businesses with all demonstrating positive momentum. This quarter clearly illustrates our focus on performance, discipline and simplification is laying the foundations of a winning performance culture across Shell. So let’s start with performance. In Integrated Gas, strong operational delivery drove higher liquefaction volumes, which in turn enabled a higher contribution from LNG trading and optimization this quarter.

The start-up of LNG Canada where 13 cargoes were delivered from Train 1 in Q3 contributed to these volumes, and there’s more to come with the expected startup of Train 2 later this quarter. Welcome to Shell’s Third Quarter 2025 Results Presentation. This quarter, we delivered another strong set of results. Our adjusted earnings were $5.4 billion, and we generated $12.2 billion in cash flow from operations. The quarter-on-quarter improvement was driven by strong performance across our businesses with all demonstrating positive momentum. This quarter clearly illustrates our focus on performance, discipline and simplification is laying the foundations of a winning performance culture across Shell. So let’s start with performance. In Integrated Gas, strong operational delivery drove higher liquefaction volumes, which in turn enabled a higher contribution from LNG trading and optimization this quarter.

The start-up of LNG Canada where 13 cargoes were delivered from Train 1 in Q3 contributed to these volumes, and there’s more to come with the expected startup of Train 2 later this quarter. In Upstream, our strong operational performance resulted in higher production. Together, Brazil and the Gulf of America made up more than half of our liquids production in Upstream. In Brazil, we achieved our highest ever quarterly production. And in the Gulf of America, we reached our highest quarterly production level since 2005. Both were supported by successful project ramp-ups such as the Whale project in the Gulf of America, which reached nameplate capacity with wells producing above the investment case expectations. This was achieved in less than half the expected time, showing the benefit of our design one, build many philosophy.

And we also saw numerous examples of operational excellence in other parts of the company. In marketing, the business delivered its second highest quarterly adjusted earnings in over a decade, as we continue to capture more value through growing margins of our premium products. Chemicals & Products results also improved quarter-on-quarter with stronger crude and products trading, whilst chemicals continues to face challenges with weak margins. Moving to our second focus area, simplification, where the organization is making real progress. At our QGC asset in Australia, for instance, production reached an all-time high in the third quarter. This was supported by a reduction of almost 90% in well site permits ensuring operations are not only safe and fit for purpose, but also allowing the team to free up time for even more value-added activities.

Q&A Session

We’re also simplifying our portfolio, just as we said we would at Capital Markets Day. We continue to maintain a relentless focus on value over volume, high-grading the portfolio, where we see the opportunities to do so. And you can see this in our mobility business. Year-to-date, we’ve divested or closed some 400 lower-performing retail sites. Beyond mobility, we have completed the divestment of the noncore interest in the Colonial Pipeline, which generated around $1 billion in proceeds. And we also completed the sell-down of five Savion solar projects as part of our power strategy, where we are allocating capital to part of the value chain that offer higher returns and where we have differentiated capabilities. Our third focus area is discipline.

We take our responsibility as custodians of shareholders’ capital extremely seriously. And that is why we made the difficult but value-driven decision to not restart the construction of our HEFA biofuels facility in Rotterdam. And we continue to apply that rigorous value-driven lens to all of our investments. Our disciplined approach to capital allocation allows us to remain resilient throughout the cycle while continuing to invest in growth within our $20 billion to $22 billion cash CapEx range such as the HI gas development project in Nigeria, where we took a final investment decision this month. Looking at our financial framework more broadly. In Q3, our net debt decreased as we continue to maintain a strong balance sheet. We also continue to deliver attractive shareholder distributions.

And at the end of Q3, our 4-quarter rolling shareholder distributions were 48% of CFFO, in line with our target range of 40% to 50% of CFFO through the cycle. And today, we announced another $3.5 billion share buyback program, which we expect to complete by the time of our Q4 results announcement. This marks the 16th consecutive quarter in which we have announced $3 billion or more in buybacks. Once this program is completed, we will have repurchased more than 1/4 of our shares over the last four years. So to summarize, in Q3, we delivered strong financial results, improving our performance quarter-on-quarter. This improvement was driven by strong operational performance across the company and we’ll keep delivering on what we say, focusing on performance, discipline and simplification.

So we can continue to deliver more value with less emissions. Thank you.

Operator: [Operator Instructions]

Wael Sawan: Thank you for joining us today. We hope that after watching the presentation, you’ve seen how we delivered a strong set of results in the third quarter and how our principles of performance, discipline and simplification are guiding us in our actions. Today, we also released updated guidelines on how to model Shell, which you can find in our slide pack. We hope you find them useful. And now Sinead and I will be answering your questions. So 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?

Operator: Our first caller is Matt Lofting from JPMorgan.

Matthew Lofting: Congratulations on the strength of performance in 3Q. Two questions related to operational performance, if I could, please. First, I thought the performance in the Upstream business across Brazil and the Gulf of America looked like it was a highlight of the third quarter. How sustainable do you see that performance going into 2026 and beyond. And then secondly, in the IG business, to what extent was the third quarter improvement in trading supported by operational outperformance versus greater market opportunity? In other words, is there any change to the new norm market conditions that we referenced in the summer?

Wael Sawan: Appreciate that, Matt. Thank you very much. I’ll take the first question and ask Sinead to address the second one. Very proud of the work in both Brazil and in the Gulf of America. I think it goes back to a journey we’ve been on now for a few years, really trying to go back to what we’ve called the brilliant basics, rigor in the way that we are executing the turnaround. So this quarter, we still had turnarounds in both Brazil and in the Gulf, and those have gone to plan below schedule — faster than scheduled plan as well as actually below budget. So really pleased with that. But also just the rigor in the way that the teams are following through on all the different operational metrics that we are focused on at the moment.

And so I think across the patch, I see that strength, not by the way, just in those two big bases, but also across our conventional oil and gas portfolio. In terms of how much is this sort of sustainable? I believe that the improvements we have are very much sustainable. Of course, we will continue to want to bring those facilities down for maintenance on the annual basis that we typically do. But we’ve also seen some of the tailwinds that come from new projects. In Brazil, you have Mero-3 and Mero-4 that started up this year. And in a place like the Gulf, we’ve had Whale startup, actually start up and do much faster ramp-up than maybe traditionally we have seen in many of our deepwater projects. And so across multiple measures, very pleased with that momentum and looking forward to sustaining and improving it because we know there’s more to do there.

Sinead?

Sinead Gorman: Thanks. And thanks, Matt. Indeed, last quarter, we talked about integrated gas, and we talked about it moving towards a new normal. And how fast it was it’s a new normal absent any opportunities to be able to trade around additional length or a variety of things that could occur in the market. So what did we see in Q3? In Q3, we saw very strong as well, put its operational performance, not just on upstream, but also on our integrated gas business as well. And that gives us length and therefore, the ability to trade around those. In addition, of course, there were some arbs opening up in terms of the different price lines between both Asia and Europe as well, which give the results that you see, which we’re really pleased with.

It’s not a given, and we’re so proud of the team for what they managed to deliver this quarter. When we then look at Q4 and beyond, what do we see in Q4? So already, we’re seeing some of those opportunities, but nowhere near the amounts that we had before, and we don’t see any one-off helps. Of course, as we look to 2026, what we’re seeing at the moment, the spreads aren’t there. We’ll see how it plays out as the year continues.

Wael Sawan: Luke, let’s have the second question, please.

Operator: Our next caller is Lydia Rainforth from Barclays.

Lydia Rainforth: I have two questions, please. The first one, artificial intelligence. We do seem to be seeing an acceleration in recent months of agents of the tech available. How are you thinking about AI deployment cross-sell? I know you’ve been doing it for a while, but how far through the journey are you? And when you think about what it means to the cost base, does it make a difference there in terms of where you are with the plan? And then secondly, can I do a big picture? I’m sorry about this, but what are you seeing demand-wise, because clearly, within the market that’s competing seriously between is there an [indiscernible] versus market starting to tighten next year versus inventories not showing up? How do you see that given all the demand base you have?

And how does the buyback fit into sort of that uncertainty? I have 2 questions, please. The first one, artificial intelligence. We do seem to be seeing an acceleration in recent months of agents of the tech available. How are you thinking about AI deployment cross-sell? I know you’ve been doing it for a while, but how far through the journey are you? And when you think about what it means to the cost base, does it make a difference there in terms of where you are with the plan? And then secondly, can I do a big picture? I’m sorry about this, but what are you seeing demand-wise, because clearly, within the market that’s competing seriously between is there an [indiscernible] versus market starting to tighten next year versus inventories not showing up?

How do you see that given all the demand base you have? And how does the buyback fit into sort of that uncertainty?

Wael Sawan: Lydia, thank you for those questions. Let me address them both, starting with the AI question. I think the reality is we are every single day learning the potential that AI brings to our business and continuing to grapple with that and what it means. It’s requiring us to relook at workflows, the way we do work in general and how we can improve. And so I think we’re at the cusp of some exciting things ahead, and we’re challenging ourselves as a team, as a company, to be able to embrace some of those opportunities. I spoke a moment ago to Matt’s question about some of the improvements in the Gulf of America, for example. The platforms like Olympus in the third quarter of this year, but also Ursa, you’ll recall, we deepened our interest in Ursa buying Conoco share.

Those two platforms had outstanding performance this past quarter. A large part of that is driven by our ability to detect issues before they materialize on the platform. And that is very much leveraging AI, leveraging our data capabilities and being able to bring those signals to the front line, so they can intervene before a trip happens on a facility. So it is already helping us today in the way we are driving business outcomes. We’re also using AI and trading more and more and looking at how we can leverage some of those split-second decisions to be able to make sure that we can create value and we optimize across the portfolio. The last thing I’d say about AI is, of course, beyond how we use it for ourselves. We are in constant communication with many of the hyperscalers.

You’ll have heard about our deal with Google here in the U.K., where we provide them the low carbon renewable energy that allows them to be able to run their data centers. So we are in service of many of these hyperscalers and looking at the opportunities to do the same in the U.S. through our Savion entity. So really exciting space that we’re getting our minds around and continuing to drive value out of. To your broader question around demand, what we see at the moment is indeed headwinds on the supply-demand fundamentals going into 2026 and a highly credible scenario that there is an oversupply in 2026. Of course, what we’ve seen in the last quarter or two is significant uptake in Chinese storage, and we have seen a lot more oil on water.

So that has, in a way, sort of pushed out some of the oversupply. And of course, there’s the macroeconomic or the geopolitical reality that we see as well, which puts a premium on prices. And so I think in the short to medium term, there are headwinds. Longer term, we continue to have strong conviction in crude prices going forward. In LNG, we see a balanced outlook for the next year or so as we continue to see that supply-demand balance in good shape. And then, of course, longer term, we continue to be very bullish as well on LNG, and we can talk about that a bit more. Finally, on your point around buybacks. I think in the context of the macro that we are going to be seeing what we have said, what we have already guided and continue to hold on to is our 40% to 50% distributions from CFFO is sacrosanct.

And we very much intend to be able to continue to be within that range. And of course, we have positioned the company to be able to do that and to weather any potential downturns that emerge over the coming months a year or so. Thanks, Lydia, for the question. Luke, can we go to the next question, please?

Operator: Our next call is Jason Gabelman from TD Cowen.

Jason Gabelman: Yes. I wanted to ask about the outlook for the LNG segment, particularly with LNG Canada ramping up and then Pavilion kicking in. And if I recall correctly, you had mentioned that Pavilion wouldn’t really contribute this year. So should we expect to see any uplift from those two items in 4Q and how should those impact results in 2026? And then my follow-up is just on kind of the resource hopper and at the Investor Day, you had talked about needing more long-cycle liquids in the 2030s, a couple of quarters since that Investor Day. How is the organic opportunity set shaping up to fill that resource hopper versus your outlook for inorganic?

Wael Sawan: I’ll take the second question and then ask Sinead to address the first one. Look, briefly, where are we? We have, of course — we continue to drive what is a strong organic funnel. We’ve talked in Capital Markets Day around 1 million barrels per day of oil equivalent between now and 2030 to bring online at breakeven prices of just sub $35. And so there is a lot of work to do to be able to bring that across and to be able to drive the outcomes we want from that. Beyond that, I spoke at the previous quarterly call around exploration, how we’ve continued to really sort of tighten the team, get much more focused on the basis where we think we have a competitive advantage, leverage some of the capabilities we have also digital and AI to be able to drive that forward.

And I’m pleased with what I’m seeing from that team, and I’ll have a bit more to be able to update, hopefully, as we get to Q4 on that. I think in the broader context, we’ve also done some inorganic moves. We’ve deepened in Brazil in Gato do Mato as you know. We’ve deepened in Nigeria, deepwater. Not too long ago, we deepened in Ursa. So we are already moving with some of these bolt-on opportunities to be able to create value, while, of course, continuing to look at other opportunities that are attractive. But like I’ve said in the past, our bar is high and we will continue to hold ourselves to that high bar to make sure that we are able to generate value for our shareholders from any capital dollars that are spent in that space. Sinead?

Sinead Gorman: Indeed. And thanks, Jason. You were asking about the LNG segment or integrated gas for us. We’ve talked a little bit about the new norm in the previous question as well that came through from Luke — sorry, from Matt. When we look at that segment, of course, we’re looking at both the operational capability and then the trading opportunities that come with it. On the operational side, the team is, of course, focusing very hard to make sure that we get all of our assets fully running. And you asked specifically about LNG Canada. And of course, we’re more than 13 cargoes, of course, now out on Phase 1 in terms of the first string. So what we’re looking at there is, of course, is when do we actually ramp up the next train as well.

And that will come between now and year-end. So teams focused on that. But of course, as you say, it takes — it’s not the first cargo or the second cargo that matters. It’s actually having those up and running fully and therefore, being able to rely on them and have the ability to trade around them. So you’re right, that will be more into and the second half of next year. Pavilion very similar. We talked about it last quarter, if you remember, I talked about the fact that we’re looking forward to getting those contracts in. We’ve got everything integrated into the portfolio at the moment, but actually how we manage them and utilize them, we need some of those to roll off and be able to have freedom on those volumes. And that will happen indeed towards the second half of 2026 as well.

So we expect to see that coming.

Wael Sawan: Thank you, Sinead. Thank you for the questions, Jason. Luke, let’s go to the next question, please.

Operator: Our next caller is Martijn Rats from Morgan Stanley.

Martijn Rats: Two questions, if I may. They’re — both a bit about sort of specific line items in the financial statement. I noticed that the line item, underlying OpEx was up sort of 10% year-on-year. And I was wondering what lies behind this. Of course, I know there’s inflation in the system, there’s inflation, almost everywhere, and it can be hard to fight. But 10% still struck me sort of as a reasonably noteworthy number. Maybe a year ago, this number was just luckily very low for some reason or another, but I was hoping you could say a bit about it. The other thing I also wanted to ask you is, could you elaborate a little bit on the sale of the stake in the Colonial pipeline. Because the context around the question is that the trading is clearly very important for Shell that has become more important for Shell as the years has gone by.

And I can totally see how an individual pipeline or a pipeline system might not be the highest returning asset. So you could say, okay, part of the disposal program. At the same time, assets like that, I would imagine, are precisely the type of assets that really help the trading business. So there’s probably some sort of trade-off there. And I was wondering how that type of consideration come into discussion about some of the disposals, particularly this one.

Wael Sawan: Sure. Thank you for that, Martijn. Do you want to take those two Sinead?

Sinead Gorman: Happy to. Thanks, Martijn. Two very different questions, but as you say, into the nitty-gritty of our numbers. On the underlying OpEx, just a couple of things are really flowing through there. What you’re seeing, of course, is a combination of, as you say, inflation, although we’re doing really well to eat inflation, there’s also new assets coming in as well. So a lot of that is about phasing. So what you’re seeing is the likes of LNG Canada coming in with the full OpEx coming in, of course, because it’s also just started up. So you have a lot of those ramp-up costs. You have the same, of course, when you’re — with respect to Chemicals and Monaca, all coming through whilst the platforms are still or the assets are still ramping up as well.

So that’s two things that come through. We’ve also been very, very focused — sorry, on that as they ramp up, of course, you see those big costs hitting, but of course, you don’t see the full operational performance yet. So that’s one thing. You also have the same in terms of the divestments, there’s also phasing around that. Of course, we’ve not seen the actual impact of all of the divestments coming through yet, so particularly the refinery and chemical plant in Singapore. We, of course, have cost as we handed those over and as we helped and the setup for the buyer the same with Nigeria. So those don’t flow through yet as well. So a little bit of that is phasing. And secondly, of course, is in terms of marketing, we’ve actually had a higher impact in terms of advertising or marketing, very, very focused knowing exactly where we want to make a difference, and that’s what you’re seeing in terms of some of the marketing performance come through actually very well where we’ve been able to push some of those premium products, and it’s coming out in our actual numbers.

But costs are if you do it year-on-year, they’re actually the 9-month costs are 4% dying at the end of the day. So doing really well and continually driving the team towards that $5 billion to $7 billion target that we gave, which we have no doubt we will be into that range. It’s just how fast and how hard we can go. That’s the first one on OpEx. And it’s Colonial Pipeline that you asked. It’s a great question, Martijn. We’ve had this discussion quite a few times about what do we need for our trading business. And from our trading side of things, you’ve got a bunch of traders who are very focused on the maximizing return and maximizing the use of capital, as you can imagine, which is rather helpful. From their perspective, they look at where are their touch points, where are their control points where they can maximize value.

And for us, Colonial was not one of those. So it was just one that was in a long list of assets where they looked at it and said, I can put my capital elsewhere, that was really the rationale behind that, and you’ll see small numbers of those come through where you can see us reallocating capital and that’s everything about our story at the moment, as you know, is reallocating capital to that best return that we can get. They brought the opportunity to us. We managed to execute it this quarter.

Wael Sawan: And that’s a good point. Indeed, it was the traders who brought that opportunity to us. Thank you, Sinead, and thanks for the question, Martijn. Luke, let’s go to the next one, please.

Operator: Our next caller is Kim Fustier from HSBC.

Kim Fustier: I have two, please. Firstly, on LNG Canada. I wondered if you could give any color on how you’re managing the feed gas from Western Canada. So maybe just a rough split between your equity tight gas production versus grid supplies and your ability to shift from one to the other depending on prices? And the second question is on Chemicals. I wondered if you could give an update on the restructuring of your chemicals business. I also understand that Monaca will have a turnaround in the fourth quarter. So what remains to be done in terms of works at Monaca?

Wael Sawan: Kim, I’ll address both. I think on the first one, of course, we have had in the third quarter a number of days where AECO pricing went negative. And so to step back and remind you of the model, we actually use the Shell trading organization to source feedstock for our equity interest in LNG Canada. And we use on the other side, Shell’s trading capability to be able to place those LNG cargo or equity LNG cargoes. And so what our traders are doing are — is looking at what is the best option to be able to create value for the enterprise. And so recently, we got up to roughly 100,000 barrels of oil equivalent per day capacity in Groundbirch, our Canadian feed gas. And we turned down quite a bit of it. We were running at around 70,000 to 75,000 barrels of oil equivalent per day because we could drive quite a bit of the flow coming out of third parties, and it was more — it was better economics for us to do so.

And so I was out in Calgary just a few weeks ago and just sitting in that control room and seeing how those decisions to be able to shut off a well and to be able to source third-party supply are being made on the spot with the traders sitting by the side of the operator to maximize value. Exactly the model I would have liked to see and really looking at how we can create value through that integrated interface between asset and traders in the business. So we’ll hopefully continue to see that. And of course, that will ramp up with Train 2, which as Sinead has already said, actually is days away at the moment, and we look forward to the first LNG cargo from that. To your second point around chemicals and chemicals update, indeed, I think you touched on Monaca’s planned maintenance in the fourth quarter.

More work to do to really get ourselves to the point where we are running at full capacity in that asset. But if — if I maybe take that question, if you don’t mind, Kim, and just step back for a moment. We said in Capital Markets Day 2025 that we have $45 billion of capital employed that is underperforming for us. $25 billion of that is sitting in chemicals and $20 billion is sitting in res. On the chemical side, of course, the deep trough we find ourselves in means that what we have done in terms of the cost take at over the last few years is still not enough to get us into free cash flow neutrality. And I said at the last call that I instructed the team to take the next set of cash preservation measures, which they have now outlined, there’s a clear plan to go after them.

And we have a trajectory to take out a few hundred million dollars more over the coming months from both the OpEx and CapEx. I don’t expect that to sort of feature in Q4 already. And you’ll remember, of course, Q4 in both chemicals and products is traditionally a weaker quarter for us. So I don’t expect that to flow through. But I do hope to see it coming through in 2026. On the other side of it, on the res side, in particular, power where we have the bulk of the capital, we have been doing a lot of work to be able to reshape the nature of the capital employed in that portfolio away from renewable generation capital-intensive assets towards more trading backed assets. You heard yesterday in the news, we will have announced the withdrawal from Atlantic Shores, the offshore wind project in the U.S. We’ve sold some of our B2C platforms in the U.S., including Inspire, and we have also sold out of Cleantech in India, 49% equity interest not to mention the Savion a joint ventures that Sinead mentioned in the video.

So lots of good progress to start to reallocate that capital and put it into the much more productive share that allows us to get back towards that 10% across our segments that we are aiming to get to. So hopefully, Kim, that gives you just chemicals, but a bit more broadly how we’re thinking about that unproductive capital that we have. Thank you for that question. Let me now turn Luke to you for the next question, please.

Operator: Our next caller is Biraj Borkhataria from RBC.

Biraj Borkhataria: Two, please. Just going back to LNG Canada. Have there been any further discussions on Phase 2 of the project? And I just wanted to update where we are there. I saw us put on the top of the list for Carney’s major project review. So any color that would be helpful. And then just on the cancellation of the biofuels project. I’m trying to get a sense of how much of this was project specific? And how much of this was sort of related to your view on the end market and policy risk because obviously, there is elevated policy risk in a bunch of ways right now. The alternative for you is to just keep deploying more capital to the buyback which, obviously, the value proposition is fairly obvious. So just trying to understand how the investment committee is thinking about political risk across the various FIDs you have in the hopper?

Wael Sawan: Yes. Thanks for that, Biraj. I’ll take the first one and then Sinead, if you want to address the second one. LNG Canada Phase 2, look, I think the biggest things we’re keeping an eye on at the moment is the joint venture is working with the various contractors to be able to at least frame a quality decision for us at some point next year and see what that looks like. What are some other important factors that we will have to sort of consider when we get to that decision point. Clearly, the support of both the federal and the provincial governments in Canada will be important. And I think as you rightly inferred there, we do see very strong support at the moment, both at the provincial and the federal side. So that’s good news.

We’re very appreciative of that support, and that is enabling for a future investment. But we’re also looking carefully at the broader dynamics. You know our views that we are strong believers in the future of LNG demand through to 2040 and beyond. And we’re also conscious of the significant investment that is taking place, the number of FIDs this year, in particular in the U.S. is unprecedented. You’re talking of the 70 million tonnes per annum of capacity that’s been FID-ed. 60 million is sitting in the U.S. Now if we then think about future investment opportunities in liquefaction, it is about making sure that we are delivering to the demand destination from the right supply sources. Where Canada features is, of course, they have a transportation advantage vis-a-vis the U.S. it takes 10 days to ship from Canada to Asia versus 25% from the Gulf.

So there’s an advantage there. And that’s why we’re trying to understand what that overall balance of new supplies coming in, at least in the medium term and how that features in our broader calculus because not all supply is equal, and we want to make sure that we get access to the best supply for our customers and also cost advantage supply to make sure that they can create value for themselves as well from that. So lots to consider over the next several months there, Biraj. Sinead?

Sinead Gorman: Thanks, Biraj. Two parts in the way to your question. So first and foremost, about the half a plant and the decision to stop. As you know, when we paused, we paused because we wanted to look at the ability, both internally to execute and ensure that we got something that was — what we thought was the appropriate return. And then, of course, how we play out broader into the market. We took our time. It’s a big decision to make and looked at it in every possible way and decided not at the moment to stop, right decision to be made. We continue to be very bullish about trading in biofuels in the prompt. But yes, the supply and demand fundamentals should play out further. We need to see how they play. And of course, we do need stable policy.

And that’s the second part of your comment in a way was about how are we looking at political risk or just policy risk, you could go beyond that. You mentioned the investment committee that we have, that we sit on and that we discuss — we’re discussing all of our projects, not only as a stand-alone opportunity as a capital allocation decision, but looking at them in the aggregate. So how much concentration risk do we have to different aspects. And it’s exactly as you say, we’re not just looking at country. We’re looking at themes whether that might be around changing regulatory decisions, et cetera, and making sure that we understand what could go on and how bad could it get or how good could it get? So exactly that, cutting the data in every way we can to inform the best quality capital allocation decision.

Wael Sawan: Thanks for the question, Biraj. Luke, next question please.

Operator: Our next caller is Doug Leggate from Wolfe Research.

Douglas George Blyth Leggate: While I wonder what’s the path back to profitability for the Chemicals business? And I’m wondering, is the Chemicals business — should we consider it core for Shell going forward? That’s my first question. And my quick follow-up. I don’t know if you’re able to talk to this. But obviously, one of your large peers had a different outcome with Venture Global, is there any recourse for Shell to revisit the arbitration that you had? What’s the path forward for that as well?

Wael Sawan: Thanks for that, Doug. Let me take both of those, starting with the Venture Global one. I think first, just to say deeply disappointed in the outcome of the arbitration tribunal, and we have a lot to reflect on and to learn, if I’m honest, in terms of how we can do — to do better, because we deeply believe in our case, and we need to be able to continue to explore all pathways to protect our rights. And that is something, of course, we’re looking at. So let me just leave it there out for now. On the path back to profitability for Chems, I would firstly just acknowledge once again the depth of the trough that we find ourselves in. And that’s been just very challenging to navigate. We have already been working on a reduction of OpEx over a number of years, but it is just not enough.

We were hoping that this is a typical cycle, and therefore, we would see the upside sooner than we are seeing it at the moment. We just don’t see a line of sight to when that up cycle is going to come. And therefore, we have decided to really go after that cash preservation that I mentioned. The path towards free cash flow neutrality is squeezing more out of the OpEx juice and more out of CapEx. And that’s where my previous reference to hundreds of millions more that we would look to be able to take out in the coming months to be able to at least get back to — to stopping the bleeding from that unit. And I know my team is very, very focused on doing that, the plan has been established and now we’re going into execution mode to be able to affect that.

Thanks for the questions, Doug. Luke, next questions, please.

Operator: Our next call is Christopher Kuplent from Bank of America.

Christopher Kuplent: In the same vein, perhaps. Can you comment on renewables and where you see the role here, considering where the M&A market is, the PPA market, where do you see capital allocation and opportunities perhaps. Just quoting one example is not just a gigawatts, but it’s also your JV in Brazil that’s crying out for fresh equity injections. So how do you feel about adding more commitments into that overall, I suppose, low carbon area. And as a second brief mop-up question, could you give us an update on the Venezuela and Trinidad situation and how you so far have been dealing with that?

Wael Sawan: Let me take the second one and then ask Sinead to address the first one. On the second one, clearly, worrying. Our first focus is our staff and the well-being of our staff in case the situation escalates, which we hope it doesn’t. Clearly, the Dragon license, which was granted by OFAC to the Trinidad and Tobago government, through which, of course, Shell would be implementing that license. We still have to figure out exactly what’s happening there. So we’re assessing the situation closely, working with the government in Trinidad and Tobago and making sure that we are able to then determine how to move forward. But I’d say, very early days to be able to judge exactly how this will play out, and we are on a wait and see mode at the moment to see what happens. Sinead?

Sinead Gorman: Indeed. And thank you, Christopher. In terms of renewables, as you remember, when we talked about renewables in Capital Markets Day, we talked about our role in it and how we would play. And there’s two aspects to your question because you brought in both biofuels and, of course, the gigawatts, the electrons side of it. So looking at both in unison there. In terms of the biofuels side, I talked a little bit about half of our view on let’s see where supply and demand goes to into the future and about where we see the sort of trading in the prompt you alluded to, of course, a joint venture or a company that we are invested in, in Brazil as well. Of course, it’s a listed company, so I always look to the company to speak for itself.

But just priority is there for them to look at really all of the different options that they have in terms of the turnaround and to ensure it’s value accretive, and we see their management team doing a superb job on that as well. So making sure it’s aligned with all of our goals as well. Moving back on to the electron side for a moment, and you talked about the gigawatts aspect there. What you can see us doing, of course, and what we talked about was moving from being 80% in producing assets or solar wind, different aspects like that, and 20% in trading and shifting that focus between now and sort of 2030 much more towards 20% into the producing assets and 80% into the trading side. That continues to move forward. While talk to a number of those different actual capital reallocation that’s occurred, whether that was around Cleantech that he mentioned, and Savion, of course, the opportunity where we actually diluted our stake in some of the producing fields of the solar fields and actually kept the electrons.

And that’s about really where is our strategy going to. It’s making sure that from a strategy point of view, we’re very much focused on considering how can trading maximize the value from the flow, and that’s what you see us doing. We continue to look for opportunities in things like gas-fired combined cycle power plants as well. You saw us do one of those last year. And of course, we continue with some of the battery investments we’re doing as well. So that process continues and really good progress, I would say, well.

Wael Sawan: Yes. Thanks, Sinead. Christopher, thank you for those questions. Luke, next question, please. .

Operator: Our next caller is Michele Della Vigna from Goldman Sachs.

Michele Della Vigna: Congratulations on all of the rejuvenation of your E&P portfolio through all of the FIDs and stake increases in the last year. I wanted to say really on that topic. And I wanted to ask you, what do you think is the scale of inorganic investment that you’ll need to continue this 1% hydrocarbon production growth well into the next decade? And if there’s any area in your portfolio and particularly that you would like to deepen in scale?

Wael Sawan: Yes. Thank you, Michele, for that question. I think — thank you for the recognition on what already has been, I think, a successful strategy of bolt-ons, focusing on areas where we do have competitive advantage. And actually, in all of them, where we ourselves operate and so it is deepening of our existing interests. I mentioned earlier, some of the potential headwinds that we see coming into 2026 on oil prices, for example. And of course, we have been positioning the company over the last few years through cost reductions, performance enhancements, portfolio high grading. For the specific moment to be able to actually be resilient through a potential downturn. And what we have been doing, of course, is preferentially allocating distribution capital to our buybacks.

And so in a world where there might be softness in the future, I think it creates real opportunities for us, both on the buyback side, but also to look at other inorganic opportunities, which, by the way, over the last several months, we have seen more of those come through our desk, albeit none of them at an attractive enough level to be able to cross that high bar. But I really hope we get to see some good opportunities come through in 2026. I’m not going to give a particular scale of opportunity because at the end of the day, what we have said and what I’ve said in the past that we’ve maintained is we want to be value driven. We want to look at the right opportunities and make sure that we are creating shareholder value using free cash flow per share accretion as an important north star for us.

And so we will be pragmatic in the approach we take as we look at these opportunities. We know that between now and 2030, the requirement to be able to sort of maintain liquids flat we’ve, by and large, we’re almost there. So this is not about 2030 where we have high confidence. It’s about building that funnel for the 2035-plus where we indicated in the Capital Markets Day chart that there was a gap of somewhere in the range of 350,000 barrels a day and which we hope to be able to fill organically and where it makes sense inorganically. And so we will continue to position ourselves for that and continue to make sure that we create — or that we make the best choices from a capital allocation perspective on behalf of our shareholders.

Sinead Gorman: Indeed. And I think that’s the opportunity that we have well because actually, we’re in the best place to do it in the sense of a very healthy balance sheet at the moment. So gearing is healthy, as you know. I mean, we’ve talked about it before, it’s below 19% as of today. And of course, it came down this quarter. It does oscillate up and down. And that’s what we talked about. We’re very comfortable with that ability to take it up or down. And you’ve seen us leaning on the balance sheet from time to time. You’ve seen us leaning on the balance sheet sometimes for distributions. This quarter, we didn’t have to, but we have done so in previous quarters. We’re very comfortable with that And if you look at where our gearing has actually been, it’s actually range between sort of 10% and 30% over time.

So comfortable where it is today. Those moments when we have to lean in it, we can lean on it for a variety of things, whether it’s distribution, as you said or inorganic. And of course, we will see debt as a result move. And actually, I would expect, of course, our gearing to our debt, net debt to go up next quarter, largely because what do I see? I see that sort of Q4 being one of those quarters where we always have some unusuals coming through. So we’ve had really strong performance from our Upstream and Integrated Gas business. The performance is superb this quarter, and that’s actually helped us to be able to deliver on just bringing that net debt down. But of course, for Q4, I think everyone’s getting boring of — bored of me talking about this, but we have those unusuals that come through.

So those unusuals are quite a broad range, but they add up to several billion, whether it’s the German and U.S. biofuels and certificates, the emission certificates payments that come through the German mineral oil tax, et cetera, but it adds up to a couple of billion, of course, next quarter. And of course, beyond that, what we also see is the ability to have some of those opportunities, which help push up our CapEx levels a little bit into that quarter. And of course, at the same time, we see downstream typically being a little bit weaker in Q4. The data book says it all. You can go back and look at the last couple of years and see Q4 coming through as well on that, and it’s really twofold. It’s two different stories. One is chemicals and products, which is normally trading-related where it’s a bit weaker into the quarter.

And of course, we have a few turnarounds which were mentioned earlier by one of your colleagues will also hit in Q4 as well. But then, of course, on our marketing. Marketing has been doing superbly well. But of course, Q2 and Q3 are driving season. So it is seasonality coming into Q4, where you would see it be a little bit weaker. So I look forward to in Q4 making sure that our performance is good, understanding that those items will drive down some of the cash flow and looking forward to seeing whether what opportunities we have as well, including potentially working capital build, depending on where the macro is, but that links back exactly to where you were going to, which is we have the balance sheet available to actually lean on for whether it’s distribution or whether it’s to lean on for inorganic opportunities as well.

So yes.

Wael Sawan: Thank you very much, Sinead. And thank you for the question, Michele. Let’s go to the next question, please, Luke.

Operator: Our next caller is Josh Stone from UBS.

Joshua Stone: A couple of questions. One, just following up to date on the fourth quarter. Thanks for taking us through all those building blocks, particularly on the Integrated Gas because in an earlier question, at this time, you’re sounding quite conservative. And yet I look liquefaction volumes should be up. Why would the ramp-up of those volumes not help you optimize margins in the fourth quarter? Are there other things in integrated gas we should be aware of? And can you just remind us where we are on the hedging impact there and the potential headwind there that was inside these numbers this quarter? And then second question on Namibia, there were some headlines earlier in the summer that you’re expecting to resume exploration drilling next year in the midyear.

So — can you talk a little bit about what areas you’re thinking about targeting? And maybe just more generally, your willingness to add more capital to this country, given what you know so far about the basin.

Wael Sawan: Josh, I’ll take the second one and ask Sinead to address the first one. On Namibia, indeed, we — like we said in the past, we had — we like the volumes we found. We were challenged by the high gas oil ratios and of course, just the movability of the fluid. And so — what we have also been doing is just spending time to really understand what our appraisal program has resulted with the subsurface data points we have, not just ours, but also leaning on what others have been doing in the basin to be able to maximize our knowledge set. We continue to have appetite, of course, to invest in Namibia, but it’s going to have to be at a level where it meets our high hurdles for investment opportunities. And so we are very willing to invest in an appraisal well for a new horizon if we have an investable case for it, and that’s what the team is assessing at the moment.

And we should be in a position to be able to decide that in the coming weeks. More broadly, I would say, we continue to look at those options for basins where we think we can be differentiated in the way that we are able to play in that basin. For example, in deepwater, where we can leverage our knowledge of the North Atlantic to be able to potentially create opportunities like the well we’re drilling at the moment in Sao Tome and like other wells we’re drilling as well in the Gulf of America. So looking forward to continuing to see what comes out of that. Sinead?

Sinead Gorman: Indeed. And thank you, Josh. So back to Integrated Gas. No, you’re absolutely right in the sense that when we talk about the normal, we’re always talking about whether we can deliver higher operational performance and then what opportunities we can find in the market as well beyond that. So when I look at Q4, indeed, we’re looking at strong operational performance. So we’re looking at the team doing what they’ve said they’re going to do and making sure they continue on the ramp-up of LNG Canada and other assets. But then we’re looking at what do we see in terms of the availability of those lengths, so hopefully, we will have some. But in terms of the arbs and what are the opportunities to be able to trade around those.

What I was mentioning earlier on was that we’re seeing some of it at the moment, but less in Q4 than we did in Q3. So there is that sort of notice board. Those are closing at the moment, and you can talk about Brent versus Henry Hub and also it’s a fun item there, but it is closing a little bit. You also mentioned then the impact in terms of the runoff by the way, in terms of the losses of the legacy positions. So I think I’ve positioned probably back almost a year ago, but I said we’d run through 2025. We’re still seeing those legacy positions expire over this year. That impact is less pronounced than it was at the start of the year. That’s just some really good work from the trading team in terms of effective risk management, but you will see that in Q4 as well.

So looking to see what can we actually capture upside in the portfolio in terms of both net length and what’s in the market as well? But of course, there is weakness versus downstream versus where integrated gas is. So as I outlined earlier, we’re expecting to see downstream being weaker than it was in Q3 versus integrated gas, where we would not see it be able to capture some of the opportunities that we have seen this quarter, but we’re looking at strong operational performance as well. So it’s a tale of two halves there.

Wael Sawan: Thanks, Sinead. Thanks for the questions, as well there, Josh. Luke, let’s go to the next question, please.

Operator: Our next caller is Alastair Syme from Citi.

Alastair Syme: While coming back on the portfolio because it seems you get a lot of questions on this now. Look, I’ve made the observation that the industry as a whole looks like it’s delevered in the cycle. So I get your point about looking for opportunities in a down cycle. But I’m wondering if you think this down cycle needs to be quite deep for those opportunities to really emerge that you need? And then the sort of the second part of this is do you think these new positions — or do you think there’ll be new positions in geographies? Or do you think that ultimately Shell can add more value by deepening in existing positions?

Wael Sawan: Alastair, thank you for those questions. Look, I think who knows exactly how things play out. But what is clear is if I compare where we have been over the last few months to say, one or two years ago. We are getting a lot more proposals that are interesting, though, like I said earlier, not yet meeting that high bar that we hold ourselves to. That tells you that expectations of breakeven points around some of these transactions have come down from what maybe we had seen a year, 1.5 years ago. How far they come down? Question mark. We are, of course, looking at long-term strategic imperatives. We see ourselves as we look into the 2030s, we continue to see an important role for crude, and we continue to see ourselves one thing to have a portfolio that’s able to serve our customers as we do as well for LNG.

And so what we will continue to do is look at those opportunities that create long-term value, and they need to be at a price point that is interesting enough for us. Now exactly where we play typically, I’d say we want to look at where we can create incremental value beyond what the current owners can do, in particular, if you want to have to pay a premium for it. And so — and that’s why I talk about the high bar partly it’s because of the price point and partly because it is not easy to be able to justify M&A, in particular, when it has to compare where it has to compete against the alternative of buybacks. And so what we’re trying to do is to keep that tension in. And if it is affiliated with one of our existing positions, then there’s much more likelihood we can create incremental value out of it, in particular now that we have really addressed some of the performance issues in the strength of our portfolio, like in deepwater, like an integrated gas, like in marketing.

Those areas where we believe we have a comparative advantage are firing on not all cylinders yet but on many cylinders. And while we know we have a lot more to do, we think we can now create more value out of some of those assets that others hold than maybe what they hold. The question is whether we can get to a price point that’s attractive enough to transact. Let me ask you, Luke, then for the next question please.

Operator: Our next caller is Peter Low from Rothschild & Co Redburn.

Peter Low: And maybe just one more on Upstream. You took FID on the HI gas project in Nigeria in the quarter. It’s the sort of project we don’t necessarily have great visibility on from the outside. I was wondering if you could give some examples of any other projects you’re maturing at the moment that could potentially reach FID in the next 12 months or so?

Wael Sawan: Thank you for that question. I’ll say a few words and please pitch in Sinead as well if you want to. So HI is one of those projects which will feed into Nigeria LNG our equity interest, and there’s 1 or 2 of those behind as well that we are looking to mature to be able to grow the potential feedstock into Nigeria LNG. That, of course, builds on the Bonga North opportunity. And just even staying within that space, there is the potential one day for Bonga Southwest, which would be a new FPSO in Nigeria and therefore creating an exciting opportunity for us to grow there. In places like Brazil, what we’re seeing at the moment is the opportunity to be able to develop a new hub like Gato do Mato, which we FID-ed recently, but also given the massive license that sits in the 2P field, as an example, there are opportunities there to be able to look beyond and that’s what the team is looking at in Mero, in 2P, what can we do to be able to maximize production out of those.

And those could be very interesting opportunities to tie back. There are opportunities as well that we continue to mature in the Gulf of America, tiebacks to existing facilities. One specific facility we’re looking at how we can beef up is Appomattox. We have ullage there. We have capacity, which we are in the process of developing some opportunities to be able to go after. Ursa and Mars are other opportunities we look at. And then you can go to places like Oman, where we continue to look to bring some FIDs through — they’re more localized FIDs. We’re talking sub 20,000 barrels per day each one. But as you add them up, they are part of that funnel that I referred to earlier, which when you add it all up, it gets you to the 1 million barrels plus per — of oil equivalent per day at those sub-$35 breakevens.

And so Peter, there are many of those opportunities that we continue to be able to bring into the portfolio. And to be honest, that create the most value for our shareholders at the end of the day. Anything you want to add, Sinead?

Sinead Gorman: I think that was well.

Wael Sawan: Thank you. Luke, let’s go to the next question, please.

Operator: Our next caller is Ryan Todd from Piper Sandler.

Ryan Todd: Maybe first, your operational execution, particularly in the Upstream and Integrated Gas business continue to be really impressive. If we think about it in context of the outlook that you’ve provided to the end of the decade and even beyond, you’ve laid out a plan that allows you to largely hold volumes flat to 2030, if you think about how well your assets seem to be performing and the success that you’ve had in getting more out of your existing asset base, particularly in places like the goal from Brazil, how does this inform your confidence in the ability to meet or maybe even exceed the plan that you’ve laid out? And then maybe one on LNG. If you think about global gas and LNG demand in the coming years, you’ve been optimistic, at least over the longer term and the demand will respond at least at a price to growing capacity additions.

LNG demand this year out of some of the big Asian players has been a bit disappointing. How are you thinking about global demand, particularly in Asian markets? And what are some of the moving pieces that you’re watching there?

Wael Sawan: Thanks for that, Ryan. I’ll try to address both pretty quickly. LNG, what I would say is, of course, you’re going to go through the cycles. You saw strength in Europe this year. You’re seeing weakness in Asia after quite some stock building and weather patterns. What are we looking at? We’re looking at new supply projects and what that means for the overall complex in the latter part of the decade. We continue to see positive signals on transportation in particular, big marine shipowners are looking more and more for LNG as a solution and, of course, trucking. And we’re looking at what happens in the broader geopolitical space. Russia, how that plays vis-a-vis China and others. And so we are well positioned given the breadth of our portfolio of supply points and our multiple customer touch points to be able to navigate that space and, of course, to weather any storms while looking at the long term to build the portfolio that we think we can continue to lead in as the premier LNG player in our sector.

On the Upstream, look, we continue to make progress in our portfolio. As I said, I’m proud of the team, but I wouldn’t, at this stage, yet say that we are at the full potential of this company. We still leave money on the table, and we are relentlessly going after that, whether it is in the — in our turnarounds, whether it is in the reliability of our assets, whether it is in areas like water injection, we have more to do. And the more we can derisk that, of course, the less we need new molecules to be able to address the 2030 ambition. I will not, at this stage, sort of make a prediction as to where we get to by 2030. But what I will say is I’m very pleased with the progress we’re making across the patch to be able to deliver on that objective, and to start to position ourselves for the latter — for the next decade as well.

Thank you for those questions. We can go to the next question, please, Luke.

Operator: Our final caller today is Mark Wilson from Jefferies.

Mark Wilson: A lot of emphasis on allocating capital to the best return. So I’d like to ask you about the U.K. North Sea business combination and your forward plans with that? Is — do you consider that an investment area? And obviously, combined with that expectations for fiscal changes in the U.K. and how strategic you see that U.K. North Sea portfolio?

Wael Sawan: Yes. I’d say on the U.K., firstly, excited by the Adura JV and hope that kicks off before end of the year. So good progress there. Look, at the end of the day, we have been very clear. When we invest in the upstream. We’re looking for predictable and progressive tax systems that allow us to be able to make sure that the investment we are making is one that we can see the returns on. And the reliability of that fiscal setup is key to us. Now what Adura will do is, I think it takes the best of both. It takes the best of Equinor the best of Shell, puts it together has a nice development runway with the projects that are already sanctioned, but also has a great asset base to be able to go for follow-up opportunities if the conditions are right.

But the conditions need to be right to attract that marginal dollar of capital. And so without speculating on where the budget goes in November, we continue to be hopeful that the fiscal situation is improved. And at the end of the day, that predictability and reliability come to play so that we can make the investments that allow for indigenous production to be able to serve the needs of the U.K. longer term.

Sinead Gorman: And just to add on that a while because the second part of that about capital allocation as well. So I think as we’ve discussed previously, the whole idea of capital allocation, you emphasized very clearly earlier, we have decisions on where we put the capital, whether it’s organic opportunities, inorganic opportunities, whether we look to share buybacks, et cetera. And that decision criteria is key to us, the framework we use, which is really where Mark was going to at the end of this question as well. So we do look at both the performance of the company in the quarter, but we also look at the macro and where it’s going to as well. And of course, that’s sort of the decision criteria when we look at the buyback versus actually putting capital to some of our assets as well.

We keep coming back to the fact that on a distribution policy perspective, 40% to 50%, as you said, is sacrosanct. And we want to remain within that range and that’s what we will do. And of course, then we look at how do we fund it, whether it’s the free cash flow or whether we are looking to lean on the balance sheet, as we’ve said. So we have a large range of different capital allocation decisions as we go through, but always focused on what we’ve said consistently, 40% to 50% of distribution is sacrosanct, and we look forward to growing the business as we can.

Wael Sawan: Thanks, Sinead. And thank you, Mark, for that question as well. I think we’re at the end. So thank you all for your questions and for making time to join the call. In conclusion, we delivered a strong set of results despite the continued volatility we see. Our strong delivery this quarter has enabled us to enhance another $3.5 billion of buybacks. And as we close out this year, we will continue to focus on performance, discipline and simplification. Wishing everyone a pleasant end of the week. Thank you all again for joining us today.