EARNINGS / Shell Canada reports 12 month Results
Shell Canada Limited announced today record earnings from continuing
operations for 1997 of $523 million or $1.69 per class "A" Common Share
compared to earnings of $326 million for 1996 - an improvement of 61 per
cent. Total reported earnings in 1996 were $595 million or $1.77 per share
which included the Chemicals business sold at the end of the year. Oil
Products achieved record earnings due to improved margins and higher sales
volumes. Resources reported slightly lower earnings due to reduced volumes.
Shell Canada's 1997 earnings also included a $67-million improvement from the
refund of income tax and related interest.
Fourth quarter earnings were $93 million or $0.33 per share compared to $342
million or $1.02 per share for the same period in 1996. Fourth quarter 1996
results were $103 million when restated to exclude proceeds from the sale of
the Chemicals business and after an asset write-down in Oil Products taken at
the end of 1996.
Cash flow from continuing operations in 1997, before movements in working
capital, was $940 million compared to $750 million for the same period in
1996. Capital and exploration expenditures were $520 million against $442
million in 1996.
The planned 1998 capital and exploration expenditures program is $891
million. This includes $288 million for Shell's share of the recently
approved Sable Offshore Energy Project and $74 million for further
development work in the Athabasca Oil Sands. The capital program also
includes $207 million for Resources development projects, $71 million for
exploration and $180 million for Products. All 1998 expenditures will be met
through current cash balances and expected cashflow from operations.
"I am delighted to report record operating earnings for the company in 1997.
These results, which are based on strong performances from both our Products
and Resources businesses, reflect the contributions from all Shell Canada
employees over the past year," said C.W.Wilson, President and Chief Executive
Officer, Shell Canada Limited.
For further information, contact:
Investor Inquiries: Media Inquiries:
Mr. John Armstrong Ms. Jan Rowley
Manager, Investor Relations Manager, Public Affairs
(403) 691-2175 (403) 691-3899
Web Site: www.shell.ca
SEGMENTED INFORMATION
Resources
Resources earnings for 1997 were $264 million compared to $292 million in
1996. The main reasons for the earnings decline were reduced volumes due to
asset sales and plant turnarounds. Other contributing factors were lower
prices for natural gas, gas liquids and crude oil towards the end of the
year. Earnings in the fourth quarter were $57 million compared to $110
million for the same period in 1996 due primarily to lower prices and
decreased oil volumes. Further declines in commodity prices at the end of the
quarter and into early 1998 will continue to put downward pressure on 1998
earnings.
Oil Products
Oil Products earnings for the full year were a record $252 million compared
to $75 million for the same period in 1996. Improved margins, a continued
focus on costs and higher sales volumes due both to a stronger Canadian
economy and the performance of the refining and marketing businesses all
contributed to this result. Fourth quarter earnings were $45 million compared
to $52 million, before a $50-million write-down of marketing assets, in the
same quarter of 1996.
Corporate
Corporate earnings for 1997 were $7 million compared to expenses of $41
million in 1996. These results reflect the interest on the federal income tax
refund recorded in the last half of the year.
Earnings* Cash Flow* Capital Expenditures*
($ millions) ($ millions) ($ millions)
Q4 = 103 (1996) Q4 = 237 (1996) Q4 = 153 (1996)
Q1 = 152 (1997) Q1 = 222 (1997) Q1 = 114 (1997)
Q2 = 111 " Q2 = 209 " Q2 = 124 "
Q3 = 167 " Q3 = 282 " Q3 = 129 "
Q4 = 93 " Q4 = 227 " Q4 = 153 "
* From continuing operations - all quarters restated to exclude Chemicals.
Fourth quarter 1996 earnings include a $50-million after-tax write-down to
integrate Shell's wholly-owned private-brand marketing businesses into the
branded operations.
SHELL CANADA LIMITED
Financial Highlights
($ millions, except as noted)
(unaudited)
Fourth Quarter Total Year
1997 1996 1997 1996
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Revenues 1 370 1 504 5 445 5 223
Cash flow from operations 227 237 940 750
Continuing operations 1:
Earnings 93 103 523 326
Earnings per Class A
Common Share (dollars) 0.33 0.31 1.69 0.96
Earnings 93 342 523 595
Earnings per Class A
Common Share (dollars) 0.33 1.02 1.69 1.77
Cash flow per Class A
Common Share (dollars) 0.78 0.70 3.03 2.22
Dividends paid per
Class A Common Share
(dollars) 0.18 0.15 0.66 0.60
Return on continuing
operations 1:
Shareholders' equity
(per cent) - - 14.8 8.9
Average capital employed
(per cent) 2 - - 13.5 8.8
Results by Segment
Revenues
Resources 240 343 969 1 053
Oil Products 1 178 1 232 4 610 4 451
Corporate 13 10 126 32
Inter-segment sales ( 61) ( 81) ( 260) ( 313)
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Total 1 370 1 504 5 445 5 223
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Cash flow from operations
Resources 110 195 513 579
Oil Products 109 45 399 182
Corporate 8 ( 3) 28 ( 11)
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Total 227 237 940 750
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Earnings
Resources 57 110 264 292
Oil Products 45 2 252 75
Corporate ( 9) ( 9) 7 ( 41)
Earnings from discontinued
operations - 239 - 269
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Total 93 342 523 595
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Capital and exploration expenditures
Resources 91 85 352 278
Oil Sands 6 - 15 -
Oil Products 55 67 150 160
Corporate 1 1 3 4
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Total 153 153 520 442
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Return on net investment from continuing operations (per cent):
1997 - 10.9 (1996 - 7.1)
Return on net investment (per cent): 1997 - 10.9 (1996 - 11.9)
Return on net investment is earnings plus after-tax interest expense on
long-term debt divided by opening and closing net investment.
Net investment is total assets less current liabilities.
1. Continuing operations exclude the Chemicals business.
2. Effective for the fourth quarter, Shell is reporting Return on Average
Capital Employed (ROACE). Capital employed is a total of equity and long-term
debt including the current portion of long-term debt. ROACE is earnings plus
after-tax interest expense on long-term debt divided by the average of
opening and closing capital employed.
Certain amounts previously reported have been reclassified to conform with
the current year's presentation.
SHELL CANADA LIMITED
Operating Highlights
(unaudited)
Fourth Quarter Total Year
1997 1996 1997 1996
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Production
Natural gas - gross (mmcf/d) 690 686 667 697
Crude oil and bitumen -
gross (bbls/d) 22 200 29 100 26 500 29 700
Natural gas liquids -
gross (bbls/d) 57 100 57 400 55 900 57 500
Sulphur - gross (tons/d) 6 877 6 197 6 643 6 386
Crude oil processed by
Shell refineries (m3/d) 42 700 42 300 41 200 40 400
Oil and Gas Sales
Natural gas sales from
own production - gross
(mmcf/d) 673 674 647 689
Sulphur sales from own
production - gross (tons/d) 7 833 7 184 6 886 5 607
Oil Products Sales
Gasolines (m3/d) 20 500 19 600 19 900 19 400
Middle distillates (m3/d) 17 500 18 100 16 800 16 700
Other products (m3/d) 9 000 8 100 7 700 7 400
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47 000 45 800 44 400 43 500
Prices
Crude oil average field
gate price ($/bbl) 25.77 29.15 25.80 26.14
Natural gas liquids ($/bbl) 17.86 20.80 17.85 16.79
Natural gas average plant
gate netback price ($/mcf) 1.81 2.03 1.86 1.69
SHELL CANADA LIMITED
Consolidated Statement of Earnings
($ millions, except as noted)
(unaudited)
Fourth Quarter Total Year
1997 1996 1997 1996
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Revenues
Sales and other operating
revenues 1 350 1 488 5 295 5 176
Dividends, interest and
other income (Note 1) 20 16 150 47
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1 370 1 504 5 445 5 223
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Expenses
Purchased crude oil,
petroleum products and
other merchandise 815 868 3 066 3 066
Operating, selling and
general 274 284 1 060 1 075
Exploration 29 16 62 84
Depreciation, depletion,
amortization and retirements 86 161 308 393
Interest on long-term debt 23 19 85 80
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1 227 1 348 4 581 4 698
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Earnings
Earnings before income taxes 143 156 864 525
Income taxes 50 53 341 199
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Earnings from continuing
operations 93 103 523 326
Earnings from discontinued
operations (Note 4) - 239 - 269
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Earnings 93 342 523 595
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Earnings per Class A
Common Share (dollars)
(Note 3) 0.33 1.02 1.69 1.77
Common Shares outstanding
(Note 3) 290 337 310 337
(millions - monthly weighted average)
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Certain amounts previously reported have been reclassified to conform with
the current year's presentation.
Approved by the Board,
___________________________ ___________________________
Charles W. Wilson, Director Peter J.G. Bentley, Director
SHELL CANADA LIMITED
Consolidated Statement of Cash Flows
($ millions)
(unaudited)
Total Year
1997 1996
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Cash from Operating Activities
Cash flow from operations 1 940 750
Movement in working capital and other
related to operating activities 43 ( 52)
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Cash flow from operating activities from
continuing operations 983 698
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Cash flow from discontinued operations
- 61
Movement in working capital from
discontinued operations - 25
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983 784
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Cash Invested
Capital and exploration expenditures ( 520) (442)
Proceeds on disposal of properties,
plant and equipment 169 72
Investments, long-term receivables and other ( 15) 35
Discontinued operations - 520
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( 366) 185
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Cash from Financing Activities
Dividends paid ( 206) ( 202)
Proceeds from exercise of Common Share
stock options 8 10
Common Shares buy-back (976) --
Long-term debt repayments and other ( 14) ( 31)
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(1 188) ( 223)
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Decrease in Cash ( 571) 746
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Cash at beginning of year 1 190 444
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Cash at December 31 (2) 619 1 190
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1. Cash flow from operations, net of discontinued operations, comprises
earnings before exploration expenses adjusted for deferred income taxes,
depreciation, depletion, amortization, retirements and other items not
affecting cash.
2. Cash comprises cash and highly liquid short-term investments less
short-term borrowings.
Certain amounts previously reported have been reclassified to conform with
the current year's presentation.
SHELL CANADA LIMITED
Consolidated Statement of Financial Position
($ millions)
(unaudited)
Dec. 31, 1997 Dec. 31, 1996
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Assets
Current assets
Cash and short-term investments 619 1 190
Accounts receivable 717 767
Inventories 589 443
Prepaid expenses 114 99
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2 039 2 499
Investments, long-term receivables
and other 214 193
Properties, plant and equipment 3 713 3 718
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5 966 6 410
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Liabilities
Current liabilities
Accounts payable and accrued
liabilities 705 717
Income and other taxes payable 304 120
Current portion of site restoration
and other long-term obligations 28 --
Current portion of long-term debt 1 6
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1 038 843
Site restoration and other long-term
obligations 189 238
Long-term debt 740 716
Deferred income taxes 799 762
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2 766 2 559
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Shareholders' Investment
Capital stock
100 4% Preference Shares 1 1
290 127 940 Class A Common Shares
(1996 - 337 531 497) 469 538
Contributed surplus -- 291
Retained earnings 2 730 3 021
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Shareholders' Investment 3 200 3 851
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5 966 6 410
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Certain amounts previously reported have been reclassified to conform with
the current year's presentation.
SHELL CANADA LIMITED
Notes to Consolidated Financial Statements
(unaudited)
1. Tax Refund
In the third quarter, Shell Canada Limited received a tax refund and related
interest of $200 million towards final settlement. The settlement is
associated
with a number of tax issues from the years 1971 to 1991 and includes $149
million in taxable interest. The largest portion of the settlement results
from
the 1992 decision by the Federal Court of Appeal in The Queen v. Gulf Canada
Limited. In anticipation of a favorable settlement, a portion of the refund
was
recognized in earnings in prior years, with $67 million after tax included in
1997 earnings.
2. Share Buy-Back
On June 2, 1997, Shell Canada Limited purchased 15,999,784 of its Class
A Common Shares (14 per cent of the total) at a price of $61.00 a share for
a total cost of $976 million. The purchase included 12,533,907 shares under
the
proportionate tender option which allowed shareholders to retain the same
percentage ownership interest in the company as they had previously held. The
remaining 3,465,877 shares were purchased under the auction tender
option which established the purchase price.
3. Stock Split
On June 30, 1997, Shell Canada Limited subdivided the Class "A" Common
Shares of the company on a three-for-one basis.
4. Discontinued Operations
The results of the chemicals operations have been accounted for as
discontinued operations, and previously reported financial statements have
been restated.
Fourth Quarter Total Year
($ millions) 1997 1996 1997 1996
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Gain on disposals before
income taxes - 324 - 324
Earnings from discontinued
operations before taxes - 18 - 66
Income Taxes - 103 - 121
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Earnings from discontinued
operations - 239 - 269
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