Note 20 - Debt

Net debt is the sum of current and non-current debt, less cash and cash equivalents, adjusted for the fair value of derivative financial instruments used to hedge the volatility caused by fluctuations in foreign exchange and interest rates relating to debt, and associated collateral balances. Net debt is a non-GAAP measure, providing additional information to help demonstrate the economic impacts of debt, associated hedges, and cash and cash equivalents.

Shell has access to international debt capital markets via two commercial paper (CP) programmes, a Euro medium-term note (EMTN) programme and a US universal shelf (US shelf) registration. Issuances under the CP programmes are supported by a committed credit facility and cash.

Under the CP programmes, Shell can issue debt of up to $10,000 million with maximum maturities ranging between 183 days and 364 days depending on the form of the notes issued; and $10,000 million with maturities not exceeding 397 days.

The EMTN programme is updated each year, most recently in November 2023. During 2023, no debt was issued under this programme (2022: no debt issued).

The US shelf registration provides Shell with the flexibility to issue debt securities, ordinary shares, preferred shares and warrants. The registration is updated once every three years and was last updated in December 2023. During 2023, no debt was issued under the US shelf registration (2022: no debt issued).

On December 13, 2019, Shell refinanced its revolving credit facilities (RCF), which are linked to the Secured Overnight Financing Rate (SOFR), at pre-agreed margins. In December 2023, Shell extended the short-dated tranche of the facility of $1,920 million until December 2024. The facility retains a further one-year bank extension option, taking final maturity to 2025. The additional RCF tranche is $8,000 million expiring in 2026 (2022: $320 million expiring in 2025 and $7,680 million expiring in 2026). The terms and availability are not conditional on Shell’s financial ratios nor its financial credit ratings. The interest and fees related to these facilities are linked to Shell’s progress towards reaching its short-term Net Carbon Intensity target.

The following tables compare contractual cash flows for debt, excluding lease liabilities at December 31, with the carrying amount in the Consolidated Balance Sheet. Contractual amounts reflect the effects of changes in foreign exchange rates; differences from carrying amounts reflect the effects of discounting, premiums and, where fair value hedge accounting is applied, fair value adjustments. Interest is estimated assuming that interest rates applicable to variable-rate debt remain constant and there is no change in aggregate principal amounts of debt other than repayment at scheduled maturity, as reflected in the table.

Interest rate swaps have been entered into against certain fixed rate debt affecting the effective interest rate on these balances (see Note 25). The fair value of debt excluding lease liabilities at December 31, 2023, was $50,866 million (2022: $51,959 million), mainly determined from the prices quoted for those securities. The difference between the fair value of debt and the carrying amount is predominantly related to fixed rate debt.