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Webcast presentation Royal Dutch Shell plc fourth quarter and full year 2013 results

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Ben van Beurden, CEO of Royal Dutch Shell plc, presented the Royal Dutch Shell plc fourth quarter and full year 2013 results on January 30, 2014.

Ben van Beurden, CEO of Royal Dutch Shell plc, presented the Royal Dutch Shell plc fourth quarter and full year 2013 results on January 30, 2014.


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  • 1. Copyright of Royal Dutch Shell plc 30 January, 2014 1 FOURTH QUARTER 2013 RESULTS 30 JANUARY 2014 ROYAL DUTCH SHELL PLC
  • 2. Copyright of Royal Dutch Shell plc 30 January, 2014 2 The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch 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 by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal 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 companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred 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.) ownership interest 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 other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. 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. There are 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 the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including 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 of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2012 (available at www.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 this presentation, 30 January, 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as 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 the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including 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 website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330. DEFINITIONS AND CAUTIONARY NOTE
  • 3. Copyright of Royal Dutch Shell plc 30 January, 2014 3 BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
  • 4. Copyright of Royal Dutch Shell plc 30 January, 2014 4 ‘GOAL ZERO’ ON SAFETY injuries – TRCF/million working hours million working hours TRCF Working hours UNRELENTING FOCUS ON HSSE PERFORMANCE + TRANSPARENCY
  • 5. Copyright of Royal Dutch Shell plc 30 January, 2014 5 SHELL STRATEGY Prelude, November 2013  Unrelenting focus on HSE  Technology, integration and scale  Disciplined capital investment by strategic theme  Growth in cash flow through-cycle  Executing a consistent, long term strategy  Competitive shareholder returns
  • 6. Copyright of Royal Dutch Shell plc 30 January, 2014 6 EARNINGS $ billion CASH FLOW $ billion Cash flow from operations Asset sales Capex Acquisitions 2011-2013 DELIVERY Upstream Downstream Corporate Identified items Dividend Buy-backs PRIORITY TO IMPROVE FINANCIAL PERFORMANCE 2012 20132011
  • 7. Copyright of Royal Dutch Shell plc 30 January, 2014 7 Shell full year 2013, peer group 2013 12-month rolling to 2013Q3 ROACE: reported earnings local GAAP, 3 year rolling average. Shell 2011-2013, peer group as 2011-2013Q3 12 months rolling basis CASH FLOW FROM OPERATIONS $ billion Shell peer group ROACE % COMPETITIVE CASH FLOW + RETURNS peer group Shell  DISCIPLINED THROUGH CYCLE INVESTMENT DRIVES FINANCIAL GROWTH  COMPETITIVE CFFO BUILDUP + FURTHER POTENTIAL
  • 8. Copyright of Royal Dutch Shell plc 30 January, 2014 8 Deliver new projects  Returns and cash flow  Competitive returns for shareholders  Hard choices on new projects  Increase divestment of non-core assets  Reduce pace of growth investment  Major deep water start-ups in 2014  Integrate 2013 acquisitions  Operational performance and project delivery Improve our financial performance Enhance our capital efficiency 2014 PRIORITIES  CHANGING EMPHASIS IN 2014
  • 9. Copyright of Royal Dutch Shell plc 30 January, 2014 9 RESOURCES PLAYS RESTRUCTURING OIL PRODUCTS RESTRUCTURING  50% reduction in operating theatres  Gas focussed on to integrated plays  Growth liquids IMPROVE OUR FINANCIAL PERFORMANCE: RESPONDING TO MARKET DYNAMICS IN OIL PRODUCTS + NORTH AMERICA ONSHORE  Reorganising value chain accountability  Exit from non-core portfolio  Growth chemicals  PORTFOLIO RESTRUCTURING + POTENTIAL WRITE-DOWNS  COST REDUCTION  MORE SELECTIVE ON GROWTH OPPORTUNITIES Regional refinery hubs Operating theatres Elba LNG Gas-to-Chemicals LNG Canada Announced divestment Integration options     Portfolio reduction    Northeast BC Deep Basin/Foxcreek Foothills US Rockies Appalachia Mississippi Lime Haynesville Permian Eagle Ford
  • 10. Copyright of Royal Dutch Shell plc 30 January, 2014 10 Prelude dilution  Wheatstone Browse LNG onshore    IMPROVE OUR CAPITAL EFFICIENCY: SHARPENING OUR FOCUS Option re-framing Downstream ASSET SALES $ billion Eagle Ford Harburg refinery Czech refinery Nigeria SPDC leases Arrow LNG FID postponed Exit Niobrara Sandwash Basin Mississippi Lime Mongstad/Pernis swap  Italy downstream reduction Fram Linnorm  HARD PORTFOLIO CHOICES  $15 BILLION ASSET SALES 2014-15 Norway downstream reduction Downstream Upstream Upstream 2013+ divestments} Ohio Utica  Completed Gulf Coast GTL 
  • 11. Copyright of Royal Dutch Shell plc 30 January, 2014 11 Engines  Free cash flow plays  Asset integrity + selective growth Growth Priority  Global leadership  Strong project flow Longer Term  Major potential with surface challenges  Slower pace + capital allocation IMPROVE CAPITAL EFFICIENCY: 2014 INVESTMENT PRIORITIES  CREDIBLE, COMPETITIVE, AFFORDABLE  INVESTMENT CHOICES DRIVEN ON A GLOBAL THEMATIC BASIS  REDUCED PACE OF GROWTH INVESTMENT 1 Iraq, Nigeria, Kazakhstan, heavy oil, Arctic FUTURE OPPORTUNITIES RESOURCES PLAYS DEEP-WATERINTEGRATED GAS UPSTREAM DOWNSTREAM 1
  • 12. Copyright of Royal Dutch Shell plc 30 January, 2014 12 DELIVER NEW PROJECTS: TOP 4 START-UPS 2014 Mars-B  Preparing for start-up Gumusut-Kakap  Subsea systems tie-in completed. H2 ‘14 start-up Cardamom  Auger facility upgrades ongoing. H2 ’14 start-up Repsol LNG  Transaction completed Jan’14, integration ongoing Gumusut-Kakap FPS, 135 kboe/d, Shell 33%Cardamom, 50 kboe/d, Shell 100% Mars-B, 100 kboe/d, Shell 72%
  • 13. Copyright of Royal Dutch Shell plc 30 January, 2014 13 Indexed 2000=100, dividends paid in year Excludes $1.7 billion payout to former shareholders of Royal Dutch as part of the 2005 unification. RDS dividend per share in USD Inflation (US CPI, Annual Average)  Q1 2014 DIVIDEND $0.47/SHARE, > +4%  SHARE BUY BACK LEADING DIVIDEND TRACK RECORD
  • 14. Copyright of Royal Dutch Shell plc 30 January, 2014 14 SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC
  • 15. Copyright of Royal Dutch Shell plc 30 January, 2014 15 2013 PERFORMANCE Majnoon, July 2013 2013 delivery  CCS earnings $19 bln; CFFO $40 bln  7 new start-ups  Iraq oil & gas, BC-10 ph 2, North Rankin gas, others Acquisitions to enhance portfolio  Repsol LNG, Libra, ‘engines’ bolt-ons Decisive on portfolio  Non-core asset sales:  Oil Products  Nigeria onshore  North America LRS  US GTL cancelled Earnings excluding identified items
  • 16. Copyright of Royal Dutch Shell plc 30 January, 2014 16 Earnings CCS basis, Earnings excluding identified items EARNINGS 2012 TO 2013 2012 2013 $ billion UPSTREAM 20.1 15.1 DOWNSTREAM (CCS) 5.3 4.5 CORPORATE & MINORITIES (0.2) (0.1) CCS NET EARNINGS 25.3 19.5 CCS EARNINGS, $ PER SHARE 4.03 3.10 CASH FROM OPERATIONS 46.1 40.4 SHARE BUY BACKS 1.5 5.0 DIVIDENDS 11.0 11.3 DIVIDEND, $ PER SHARE 1.72 1.80 2013 FINANCIAL HIGHLIGHTS EARNINGS 2012 TO 2013 $ billion
  • 17. Copyright of Royal Dutch Shell plc 30 January, 2014 17 EARNINGS 2012 TO 2013 $ billion Earnings CCS basis, Earnings excluding identified items EARNINGS Q4 2012 TO Q4 2013 $ billion 2013 FINANCIAL HIGHLIGHTS Environment Choice Environment Choice 0.0
  • 18. Copyright of Royal Dutch Shell plc 30 January, 2014 18 UPSTREAM million boe/day million tonnes Oil Gas LNG Sales (RHS) DOWNSTREAM % availability volume Refinery availability Chemicals availability Oil products sales (million b/d) Chemicals sales (million tonnes) UPSTREAM  Q4-Q4 underlying decline 3%1  Growth from NA LRS, Iraq, Malaysia  40 kboe/d Nigeria sabotage Q4-Q4  95 kboe/d maintenance Q4-Q4 DOWNSTREAM  Q4-Q4 underlying OP volumes lower, Chemicals volumes similar Q1 – Q1 OUTLOOK  Nigeria operating challenges  Production impact:  ADCO licence expiry 155 kboe/d  NAM curtailment 60 kboe/d  Maintenance 50 kboe/d  Increased exploration charges  Increased Upstream DD&A  Reduced refinery availability OPERATIONAL PERFORMANCE + OUTLOOK 1 Excludes Nigeria security , PSC price effect + asset sales
  • 19. Copyright of Royal Dutch Shell plc 30 January, 2014 19 CFFO Asset sales GROUP 12 MONTHS CASH PERFORMANCE $ billion Capex Dividend Buy-backs CASH PERFORMANCE + PAYOUT Sources Uses GEARING AND PAY OUT $ billion % Free cash flow (FCF) Gearing (RHS) Dividend Buyback BUSINESS 12 MONTH CASH PERFORMANCE $ billion Acquisitions Upstream Downstream Sources Uses Sources Uses 30 15 0  2013 ACQUISITION IMPACTS  2014 FCF EXPANSION POTENTIAL
  • 20. Copyright of Royal Dutch Shell plc 30 January, 2014 20 $ billion cumulative Previous outlook set in 2012 for 2012-15: CFFO $175-$200 billion; net capital investment $120-$130 billion @ $80-$100 oil prices Cash flow from operations Net capital investment FINANCIAL PERFORMANCE 2012-2013  CFFO impacted by macro, portfolio + choices + performance  Net capital investment lifted by acquisitions Dividends distributed + buy-backs Previous target framework 2012-15
  • 21. Copyright of Royal Dutch Shell plc 30 January, 2014 21 FINANCIAL FRAMEWORK AND PRIORITIES CASH PERFORMANCE CFFO drives investment + payout INVESTMENT Affordability, profitability, portfolio PAY-OUT Dividend linked to business results BALANCE SHEET 0 – 30% gearing through cycle Priorities for cash 1. Debt service 2. Dividends: growth policy 3. Capital investment: disciplined through cycle growth 4. Return surplus cash: buy-backs CONSERVATIVE BALANCE SHEET UNDERPINS FINANCIAL FRAMEWORK
  • 22. Copyright of Royal Dutch Shell plc 30 January, 2014 22 PORTFOLIO DEVELOPMENT 2013 Acquisition / entry Exit Discovery Final Investment Decision Start-up  Nigeria on-shore asset sales  G/U Phase 2  TNP loop-line  Carmon Creek  AOSP debottlenecking  Basrah Gas Company  Majnoon  Kashagan  North America asset sales  Coulomb North  BC-10 pre-emption  Libra entry  Vicksburg discovery  Zabazaba-4 appraisal  Erha North Ph2  Stones  BC-10 Massa Ph3  BC-10 Phase 2  Repsol LNG  Elba LNG JV  Abadi LNG  Prelude dilution  Browse onshore  Gulf Coast GTL  Wheatstone LNG  Kentish Knock gas discovery  North Rankin Redevelopment  Beryl & Schiehallion  Bab Sour gas  Albania Shpiraq-2  Amal Steam  Poland: retail  Geelong  Italy  Harburg refinery  Pernis/Mongstad swap  Singapore Chemicals  Gulf Coast GTT  Great Lakes GTT Group delivery $8 billion $2 billion 4 discoveries 9 FIDs 7 start-ups UPSTREAM ENGINE INTEGRATED GAS RESOURCES PLAYS DEEP-WATER FUTURE OPPORTUNITIES DOWNSTREAM ENGINE (completed)    
  • 23. Copyright of Royal Dutch Shell plc 30 January, 2014 23 INCREASING SHELL’S MANAGED SALES + TRADING OPTIONS SHELL PORTFOLIO SHELL LNG LEADERSHIP Year end equity liquefaction capacity in mtpa REPSOL LNG ACQUISITION QG-4 Altamira Cove Point Elba Baja Hazira Spain NWSPluto Sakhalin Oman Malaysia + Brunei Nigeria Peru LNG Atlantic LNG Gorgon Repsol portfolio LNG supply Prelude Re-gasification Under construction Shell: Trading flows 2014 Shell directly managed Joint venture marketed total LNG volumes in mtpa 2013 2017 Repsol acquisition (2014+) 2013 >25 mtpa >30 mtpa
  • 24. Copyright of Royal Dutch Shell plc 30 January, 2014 24 $ billion INVESTING FOR LONG TERM GROWTH FUTURE OPPORTUNITIES RESOURCES PLAYS DEEP-WATER INTEGRATED GAS UPSTREAM DOWNSTREAM LONGER TERM GROWTH PRIORITY ENGINES 1 Announced acquisitions (Repsol, Basrah Gas capital injection)  2013 -14 INVESTMENT LIFTED BY ACQUISITIONS  ORGANIC SPENDING REDUCTION 2014 TOTAL CAPITAL INVESTMENT FY 2012 FY 2013 FY 2014E $ billion ORGANIC CAPEX 32 38 ~35 ACQUISITIONS 5 8 2 1 TOTAL CAPITAL INVESTMENT 37 46 37
  • 25. Copyright of Royal Dutch Shell plc 30 January, 2014 25 BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
  • 26. Copyright of Royal Dutch Shell plc 30 January, 2014 26 Deliver new projects  Returns and cash flow  Competitive returns for shareholders  Hard choices on new projects  Increase divestment of non-core assets  Reduce pace of growth investment  Major deep water start-ups in 2014  Integrate 2013 acquisitions  Operational performance and project delivery Improve our financial performance Enhance our capital efficiency 2014 PRIORITIES  CHANGING EMPHASIS IN 2014
  • 27. Copyright of Royal Dutch Shell plc 30 January, 2014 27 QUESTIONS & ANSWERS FOURTH QUARTER 2013 RESULTS
  • 28. Copyright of Royal Dutch Shell plc 30 January, 2014 28 FOURTH QUARTER 2013 RESULTS 30 JANUARY 2014 ROYAL DUTCH SHELL PLC