Notes From The Road

Research evidence excerpt

Notes From The Road

sands growth that underpins

its views on condensate. SHEL will be able to optimize drilling toward condensate that brings

with it gas rather than drilling dry gas. It will preferentially move gas from British Columbia

to LNG Canada while it will move gas from Alberta into higher value markets. The Attache

development was problematic for ARX, and SHEL did not factor in growth beyond the current

phase into its valuation. It will likely maintain the ARX growth profile at the 3% CAGR ARX had

guided to.

LNGC2 FID Outlook and Selldown of LNGC1 Liquefaction

SHEL reiterated it will make a decision on sanctioning LNGC2 by YE26. Recent issuance of

limited notice to proceed to Fluor/JGC is an encouraging sign while body language suggested

a high-likelihood the project is sanctioned. It has been fielding more interest in its Canadian lng

footprint given the Middle East conflict. The company separately reiterated a desire to sell-down

part of its ownership in the LNGC1 liquefaction facility given other parties may value the asset

more highly. The sell down of LNGC1 and sanction of LNGC2 are not dependent on one another,

though we suspect asset sale proceeds will be put toward construction. Growth beyond phase 2

would require additional permitting. Separately, it discussed looking to exit Northwest Shelf Lng

as there is a misalignment in owners after it did not participate in Browse.

We estimate SHEL's 40% stake in LNG liquefaction could be worth $5.4B, as discussed in a note

from February, while the total cash SHEL receives on a sale could be dependent on if the buyer

is also participating in Phase 2.

Impact from Middle East Conflict

SHEL will have one of its two trains at Pearl GtL down until March 2027. It will restart the other