Media webcast presentation Royal Dutch Shell second quarter 2012 results
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Media webcast presentation Royal Dutch Shell second quarter 2012 results

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Peter Voser, Chief Executive Officer of Royal Dutch Shell plc hosted a webcast of the second quarter 2012 results on Thursday July 26, 2012.

Peter Voser, Chief Executive Officer of Royal Dutch Shell plc hosted a webcast of the second quarter 2012 results on Thursday July 26, 2012.

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Media webcast presentation Royal Dutch Shell second quarter 2012 results Media webcast presentation Royal Dutch Shell second quarter 2012 results Presentation Transcript

  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSLONDONJULY 26 2012Copyright of Royal Dutch Shell plc 26 July 2012 1
  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSPETER VOSERCHIEF EXECUTIVE OFFICERCopyright of Royal Dutch Shell plc 26 July 2012 2
  • DEFINITIONS AND CAUTIONARY NOTEResources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC provenmining reserves. Resources are consistent with the Society of Petroleum engineers 2P and 2C definitions.The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “RoyalDutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us”and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served byidentifying the particular company or companies. „„Subsidiaries‟‟, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in whichRoyal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companiesin which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control arereferred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term“Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownershipinterest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements otherthan statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that arebased on management‟s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning thepotential exposure of Royal Dutch Shell to market risks and statements expressing management‟s expectations, beliefs, estimates, forecasts, projections andassumptions. These forward-looking statements are identified by their use of terms and phrases such as „„anticipate‟‟, „„believe‟‟, „„could‟‟, „„estimate‟‟, „„expect‟‟,„„intend‟‟, „„may‟‟, „„plan‟‟, „„objectives‟‟, „„outlook‟‟, „„probably‟‟, „„project‟‟, „„will‟‟, „„seek‟‟, „„target‟‟, „„risks‟‟, „„goals‟‟, „„should‟‟ and similar terms and phrases. Thereare a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in theforward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand forShell‟s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmentaland physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of suchtransactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developmentsincluding potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l)political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval ofprojects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation areexpressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-lookingstatements. Additional factors that may affect future results are contained in Royal Dutch Shell‟s 20-F for the year ended 31 December, 2011 (available atwww.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of thispresentation, 26 July 2012. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statementas a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from theforward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation inthe future, or that they will be made at all.We use certain terms in this presentation, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us fromincluding in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC websitewww.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.Copyright of Royal Dutch Shell plc 26 July 2012 3
  • OVERVIEW Performance focus  Q2 „12 earnings $5.7 bln; EPS -13%  H1 „12 earnings $13 bln; EPS unchanged  H1 ‟12 asset sales $4 bln CONTINUOUS IMPROVEMENT GROWTH DELIVERY Growth delivery  Underlying production growth 4% MATURE NEW OPTIONS  >20 projects under construction PERFORMANCE FOCUS New growth options  Expanding our opportunity funnel  Frontier exploration build  New integrated gas optionsEarnings CCS basis, earnings and EPS excluding identified itemsCopyright of Royal Dutch Shell plc 26 July 2012 4
  • CONTINUOUS IMPROVEMENTDOWNSTREAMMINIMIZING UNPLANNED DOWNTIME% $ per barrel $ per tonne10 8 800 5 6 600 0 4 400 2006 2007 2008 2009 2010 2011 1H2012 Oil Products Chemicals 2 200 CHALLENGING INDUSTRY CONDITIONS 0 0 2008 2009 2010 2011 2012 FOCUS ON IMPROVING UPTIME + RETURNS Weighted average refining margin $/bbl Weighted average chemicals cracker industry margin (RHS)Copyright of Royal Dutch Shell plc 26 July 2012 5
  • GROWTH DELIVERYRAMPING UP NEW PROJECTSATHABASCA OIL SANDS, QATARGAS 4, PEARL GTL PEARL GTL PRODUCT SLATE BUILD-UP$ billion per quarter thousand boe/day 400 100% LPG NAPHTHA NAPHTHA NAPHTHA NAPHTHA GASOLINE GAS OIL NAPHTHA 200 GAS OIL 50% GAS OIL GAS OIL KEROSENE GAS OIL 0.0 0 BASE OIL BASE OIL BASE OIL KEROSENE PARAFFIN PARAFFIN BASE OIL 0% Typical PEARL RAMP UP complex-1.0 refinery-2.0 2009 2010 2011 2012 FOCUS SHIFTS FROM Capex DEVELOPMENT TO Production (RHS) COMMERCIAL PERFORMANCEShell shareCopyright of Royal Dutch Shell plc 26 July 2012 6
  • MAINTAINING GROWTH MOMENTUM UPSTREAM KEY PROJECTS UNDER CONSTRUCTION UPSTREAM INVESTMENT 2012 % Schiehallion AOSP Debottlenecking Redevelopment Clair Ph2 Corrib Kashagan Ph1North America tight gas Eagle Ford Majnoon FCP UAE  Caesar Tonga Mars B Cardamom Forcados Yokri Southern Swamp  Harweel Amal Steam Sabah Gas Gumusut-Kakap Kebabangan Europe Asia Pacific Bonga NW Prelude FLNG Wheatstone LNG Americas Other BC-10 Phase 2  Pluto LNG T1 (Woodside) North Rankin 2 Gorgon LNG T1-3 Greater Western Flank Ph 1  On stream H1 2012 Under construction 2012 H1 FID ROBUST PROJECT FLOW + GROWTH OUTLOOK 8 BILLION BOE UNDER CONSTRUCTION 4 MILLION BOED 2017-18 Copyright of Royal Dutch Shell plc 26 July 2012 7
  • NEW PROJECTS UNDER CONSTRUCTION Mars-B Construction, South Korea Harweel, Oman Gumusut Kakap, Malaysia Prelude FLNG, AustraliaCopyright of Royal Dutch Shell plc 26 July 2012 8
  • RECYCLING CAPITAL INTO NEW GROWTHDIVESTMENTS 2011-2012 YTD H1 2012 DELIVERY  Portfolio rationalisation:  $4 billion disposals 1H „12  Exit non-core positions ~$12 billion  Strategic partnering; Prelude, Groundbirch  Refinery-to-terminal conversions  Continued portfolio buildACQUISITIONS 2011-2012 YTD  Liquids-rich shales  Frontier exploration plays  LNG optionality ~$6 billion RIGOROUS FOCUS ON CAPITAL EFFICIENCY Upstream Downstream 2012 DIVESTMENTS >$4 BLNCopyright of Royal Dutch Shell plc 26 July 2012 9
  • MATURING NEW OPTIONS:EXPLORATION & BUSINESS DEVELOPMENT Miss. Lime BUILDING NEW ACREAGE Bakken Eagle Ford Wolfcamp Fox Creek „000 km2 cumulative gross acreage cumulative spend $ billion LRS Neuquen Exshaw 400 15 Niobrara Colombia Tight / Shale Canol Utica Turkey Montney/Gundy Entry cost Jin Qiu 10 Gas Fushun Queensland Ukraine Marcellus 200 Yinggehai Greenland Fr Guyana Turkey Albania 5 Acreage Nova Scotia Frontier Iraq Abadi Tanzania Kalmykia New Zealand South Africa DW Conventional Timan Pechora Qatar (block D) GOM Brunei DW 0 0 UK 2009 2010 2011 1H 2012 Heartlands GOM Australia Canning Malaysia KEY WELLS IN H2 2012 Nile Delta Philippines  ALASKA  GOM 2010 2011 2012 1H  FRENCH GUIANA  AUSTRALIA NWS Building new acreageCopyright of Royal Dutch Shell plc 26 July 2012 10
  • ALASKA EXPLORATION2012 PROGRAMME  Large prospects in Chukchi and Beaufort Seas  Drilling plans 2012  2 exploration wells  <50 meters water depths  2 rigs + 19 support vessels mobilized  HSE priority  Additional shear ram to blowout preventers  Subsea capping capability  Arctic containment system Kulluk rig departing Seattle, June 2012Copyright of Royal Dutch Shell plc 26 July 2012 11
  • MATURING NEW OPTIONSNEW NORTH AMERICA INTEGRATED GAS POTENTIALLNG Canada Green corridor gas-to-transport Studying 12 mtpa at Kitimat  0.3 mtpa at Jumping Pound  Shell‟s integrated gas capabilities Shell 40% + strategic partners  Equity + industry resources base  Natural hedge; oil/gas differential MOVABLE MODULAR LIQUEFACTION SYSTEM (MMLS)Western Canada gas resources Groundbirch resource potential increased from 6 tcfe to >12 tcfe (Shell 80%) Gas-to Chemicals Gas-to- transport GTL+ LNG Options Assess Select Define FID Execute Start- up Operate NORTH AMERICA GAS MONETIZATION Feasibility Concept Project Construction Ramp-up to OPTIONS Study Selection Specifications full capacityCopyright of Royal Dutch Shell plc 26 July 2012 12
  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSSIMON HENRYCHIEF FINANCIAL OFFICERCopyright of Royal Dutch Shell plc 26 July 2012 13
  • PRICES & MARGINSSHELL OIL & GAS REALISATIONS INDUSTRY REFINING MARGINS INDUSTRY CHEMICALS MARGINS$/barrel $/mscf $/barrel $/tonne 8 1000 10110 800 8 7 600 6100 400 4 6 200 2 90 0 0 80 5 -2 -200 Q211 Q311 Q411 Q112 Q212 Q211 Q311 Q411 Q112 Q212 Q211 Q311 Q411 Q112 Q212 Oil US West Coast US ethane Gas (RHS) US Gulf Coast coking Western Europe naphtha Rotterdam complex NE/SE Asia naphtha SingaporeCopyright of Royal Dutch Shell plc 26 July 2012 14
  • Q2 2012 FINANCIAL HIGHLIGHTSQ2 2011 TO Q2 2012$ billion Q2 2011 Q2 2012 UPSTREAM 5.4 4.5 8 DOWNSTREAM (CCS) 1.1 1.3 BUSINESS SEGMENTS TOTAL 6.5 5.8 EPS Q2-Q2 CORPORATE & MINORITIES 0.1 -0.1 6 -13% CCS NET EARNINGS 6.6 5.7 CCS EARNINGS, $ PER SHARE 1.05 0.91 4 CASH FROM OPERATIONS 10.0 13.3 2 SHARE BUY BACKS - 0.9 DIVIDENDS 2.6 2.8 DIVIDEND, $ PER SHARE 0.42 0.43 0Earnings CCS basis, earnings and EPS excluding identified itemsCopyright of Royal Dutch Shell plc 26 July 2012 15
  • UPSTREAM PERFORMANCEEARNINGS OIL & GAS PRODUCTION$ billion million boe/day 3.6 6 +4% 3.4 +2% Q2-Q2 3.2 CONTROLLABLE -17% 3.0 4 VOLUMES production in million boe/day million tonnes 2 4 6 4 2 2 0 0 0 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Other Upstream Oil LNG Sales (RHS) Integrated Gas GasEarnings excluding identified itemsCopyright of Royal Dutch Shell plc 26 July 2012 16
  • DOWNSTREAM PERFORMANCEEARNINGS VOLUMES & AVAILABILITY$ billion % availability volume 2 100 7 Q2-Q2 +20% 95 1 90 5 85 0 80-1 75 3 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Oil Products Refinery availability Chemicals Chemicals availability Oil Product sales (mln bbl/d) Chemicals sales (mln tonnes)Earnings excluding identified itemsCopyright of Royal Dutch Shell plc 26 July 2012 17
  • FINANCIAL FRAMEWORKNET DEBT AND GEARING CAPITAL INVESTMENT $ billion $ billion30% 3020% 2010 2011 H1 2012 20 Organic Investment 24 26 1410% 10 Acquisitions 7 5 1 0% 0 Disposals (7) (7) (4) 2005 2006 2007 2008 2009 2010 2011 2012 Gearing (LHS) YTD Net Capital Investment 24 24 11 Net Debt (RHS)RDS VERSUS FTSE 100Total dividend growth rate versus 2006 ~$32 BLN ORGANIC CAPEX 30% 2012 20% 10% MAINTAINING PRUDENT 0% BALANCE SHEET 2006 2007 2008 2009 2010 2011 2012 -10% YTD SELECTIVE PORTFOLIO BUILD -20% RDS dividend growth FTSE100 dividend growthCopyright of Royal Dutch Shell plc 26 July 2012 18
  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSPETER VOSERCHIEF EXECUTIVE OFFICERCopyright of Royal Dutch Shell plc 26 July 2012 19
  • SUMMARY Performance focus  Q2 „12 earnings $5.7 bln; EPS -13%  H1 „12 earnings $13 bln; EPS unchanged  H1 ‟12 asset sales $4 bln CONTINUOUS IMPROVEMENT GROWTH DELIVERY Growth delivery  Underlying production growth 4% MATURE NEW OPTIONS  >20 projects under construction PERFORMANCE FOCUS New growth options  Expanding our opportunity funnel  Frontier exploration build  New integrated gas optionsEarnings CCS basis, earnings and EPS excluding identified itemsCopyright of Royal Dutch Shell plc 26 July 2012 20
  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSQUESTIONS & ANSWERSCopyright of Royal Dutch Shell plc 26 July 2012 21
  • ROYAL DUTCH SHELL PLCSECOND QUARTER 2012 RESULTSLONDONJULY 26 2012Copyright of Royal Dutch Shell plc 26 July 2012 22