Simon Henry - Credit Suisse European Oil & Gas Conference - June 9, 2011
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Simon Henry - Credit Suisse European Oil & Gas Conference - June 9, 2011

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Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, presented the Shell strategy and highlighted progress so far in 2011.

Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, presented the Shell strategy and highlighted progress so far in 2011.

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  • 1. ROYAL DUTCH SHELL PLC CREDIT SUISSE EUROPEAN OIL & GAS CONFERENCE LONDON JUNE 9, 20111 Copyright of Royal Dutch Shell plc 9/06/2011
  • 2. ROYAL DUTCH SHELL PLC SIMON HENRY CHIEF FINANCIAL OFFICER2 Copyright of Royal Dutch Shell plc 9/06/2011
  • 3. DEFINITIONS AND CAUTIONARY NOTEReserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves for all 2009 and 2010 data, and includes both SEC proved oil and gas reserves and SEC provenmining reserves for 2008 data.Resources: 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 proven mining reserves. Resources areconsistent with the Society of Petroleum Engineers 2P and 2C definitions.Organic: Our use of the term Organic includes SEC proved oil and gas reserves and SEC proven mining reserves (for 2008) excluding changes resulting from acquisitions, divestments and year-average pricing impact.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 forconvenience 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 thosewho 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 “Shellcompanies” 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 acontrolling 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 controlare 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 forconvenience to indicate the direct and/or indirect (for example, through our 24% 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 historicalfact 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 andassumptions 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 offactors 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 thispresentation, 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 andtargets, 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 andregulatory 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 thereimbursement 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 cautionarystatements 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 RoyalDutch Shell’s 20-F for the year ended 31 December, 2010 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-lookingstatement speaks only as of the date of this presentation, 9 June 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-lookingstatement 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-lookingstatements 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 may use certain terms in this presentation, such as resources and oil in place, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including infilings 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 these forms fromthe SEC by calling 1-800-SEC-0330. 3 Copyright of Royal Dutch Shell plc 9/06/2011
  • 4. ROYAL DUTCH SHELL STRATEGY UPDATE4 Copyright of Royal Dutch Shell plc 9/06/2011
  • 5. SHELL ‘GOAL ZERO’ ON SAFETY Injuries – TRCF per million working hours Customer and Profitability & partner focus performance Sustainability & Value added growth technology Focus on personal and process safety Industry leader in Sustainable Development EMPLOYEES AND CONTRACTORS PER MILLION WORKING HOURS; SHELL OPERATED FACILITIES5 Copyright of Royal Dutch Shell plc 9/06/2011
  • 6. NATURAL GAS OUTLOOKNATURAL GAS DEMAND SHELL GAS CAPABILITIESBCMSOURCE: IEA Inaugural cargo QatarGas 4 arriving at Hazira terminalNATURAL GAS ADVANTAGE: EXAMPLE CCGT ATTRACTIVE ECONOMICS FOR ELECTRICITY PRODUCERS $/MW hour GALLINA LNG SHIP - SINGAPORE Abundant, Affordable, Acceptable Global gas resources ~250 years reserves at current production CCGT: gas-fired power compared to coal: • 40% more energy efficient • 50-70% less CO2 • Better complements with wind power CAPITAL COST LONG-RUN MARGINAL COSTCCGT: COMBINED CYCLE GAS TURBINE SOURCE: SHELL ANALYSIS BASED ON EU DATA6 Copyright of Royal Dutch Shell plc 9/06/2011
  • 7. STRATEGY FRAMEWORK MATURING NEXT GENERATION PROJECT OPTIONS NEW WAVE OF PRODUCTION GROWTH PERFORMANCE FOCUS7 Copyright of Royal Dutch Shell plc 9/06/2011
  • 8. ROYAL DUTCH SHELL PERFORMANCE FOCUS8 Copyright of Royal Dutch Shell plc 9/06/2011
  • 9. CONTINUOUS IMPROVEMENTCONTRACTING & PROCUREMENT DOWNSTREAM PORTFOLIO OFFSHORINGProcurement from emerging markets # of Retail sites ‘000 # of staff in shared service centres$Mln # of Suppliers BEING QUALIFIED DIRECT SITES INDIRECT SITES SPEND SUPPLIERS QUALIFIED COSTS (RHS) Sourcing from China, India, Low cost indirect operating model Shifting support functions to low Russia and Mexico Margin retention + enhancement cost shared service centres Up to 20 % savings versus • Brand + customer focus + Reducing headcount in higher market alternatives differentiated products cost locations High end specifications $1 billion cost savings target 2011-129 Copyright of Royal Dutch Shell plc 9/06/2011
  • 10. ASSET SALES + CAPITAL EFFICIENCYASSET SALES PROGRESS 2010 & 2011 YTD >$30 BILLION DIVESTMENTS – 5 YEARS $ Bln - cumulative $5 billion 2011E Finland & Sweden Statfjord Heide & Harburg refineries StanlowWilcat Hills US retail LPG business worldwide CORPORATE/Woodenhouse U.S. Car Care UPSTREAM South Texas Greece Syria Pakistan DOWNSTREAM GOM Assets El Salvador Panama & Costa Rica 14 countries Cano Sur Nigeria Africa Clyde Chile 10 % Woodside New ZealandDivestment /Exit announced or proposedUpstream Deal CompleteDownstream Allocating capital to high impact growth Exit from late-life + non-core positions10 Copyright of Royal Dutch Shell plc 9/06/2011
  • 11. REFOCUSING DOWNSTREAMREFOCUSING REFINERY PORTFOLIO MARKETING REFOCUSShell refining capacity – Mln bbl/d % DIRECT EXITS INDIRECT/PART EXIT 4.7 -30% 3.3 Retail Lubricants Aviation Fuels Bulk Fuels sites markets markets markets EUROPE & AFRICA AMERICAS ASIA PACIFIC11 Copyright of Royal Dutch Shell plc 9/06/2011
  • 12. ROYAL DUTCH SHELL GROWTH DELIVERY12 Copyright of Royal Dutch Shell plc 9/06/2011
  • 13. GROWTH DELIVERYCONVERTING RESOURCES TO PRODUCTIONBln Boe resources Longer-term upside NA tight gas Australia Cardamom Deep Appomattox Prelude Prelude Vito Malikai Pearls (CMOC) AOSP debottleneck NA tight gas Schiehallion Gorgon Mars-B Clair NA tight gas BC-10 Phase2 Pearl GTL AOSP-Exp 1 QG-4 Sakhalin Gjoa Oman EOR BC-10 Perdido Schoonebeek Gbaran Ubie Others NA tight gas ON-STREAM UNDER CONSTRUCTION STUDY PRODUCTION ~10 billion barrels on stream ~11 billion barrels under construction ~10 billion barrels new options13 Copyright of Royal Dutch Shell plc 9/06/2011
  • 14. GROWTH DELIVERYDELIVERING ON NEW PROJECTSKEY POST-FID PROJECTS RESOURCES 2010 - Bln boe Gjoa Study AOSP-1 Schoonebeek NA Port Arthur ~11 billion BoeTight gas Iraq FCP/IPT resources Perdido Qatargas 4 Pearl GtL Singapore Under 20 Upstream Chemicals Construction start-ups 2011-14 Mars B Qarn Alam Gumusut-Kakap Gbaran Ubie Ph 1 planned Bonga Onstream NW Amal Steam North Rankin B BC-10 Ph 2 Gorgon Pluto OIL & GAS PRODUCTION GROWTH T1-3 (Woodside) Kboe/d OIL & GAS START-UP DATE INTEGRATED GAS 2010-11 REFINING & CHEMICALS 2012-13 2014+ ONSTREAM 11 billion boe resources under construction : > 800 kboe/d potential 2014 OIL & GAS 2010 ASSET SALES ENTITLEMENT AT $80/BBL; OUTLOOK ASSUMES LICENSE EXTENSIONS + 2010 ANNOUNCED ASSET DISPOSALS14 Copyright of Royal Dutch Shell plc 9/06/2011
  • 15. GROWTH DELIVERY2011 KEY START-UPSQATARGAS 4 (QATAR) AOSP-1 (CANADA) PEARL GTL (QATAR)Inaugural Qatargas 4 cargo arriving at Shell AOSP Jackpine mine Pearl GtL plant under constructionHazira Regasification Terminal AOSP-1 mine expansion 2010 - Commissioning underway; ~12 7.8 mtpa LNG + 70 kboe/d adds ~100 kboe/d months start-up condensates Upgrader expansion H1-2011 1.6 bcf/d wet gas: First gas into plant – Jan 2011 255 kboe/d capacity built in • 120 kboe/d NGL/ethane First LNG export – Feb 2011 ~10 years • 140 kboe/d GTL Shell 30% Next focus: optimization + 100% Shell in partnership with QP debottlenecking Shell 60% (operator) Part of ~600 kboe/d 2011-12 production growth for Shell15 Copyright of Royal Dutch Shell plc 9/06/2011
  • 16. ROYAL DUTCH SHELL MATURING NEXT GENERATION PROJECT OPTIONS16 Copyright of Royal Dutch Shell plc 9/06/2011
  • 17. MATURING NEXT GENERATION OF PROJECT OPTIONSMATURING NEW PROJECTSOIL & GAS RESOURCES2010 Resources in Bln boe TIGHT GAS – N. AMERICA PRELUDE - AUSTRALIA Longer-term upside >10 billion boe ARROW - AUSTRALIA APPOMATTOX - USA resources > 30 new projects > 1 mln boe/d STUDY potential 2018-20... ... and maturing Long-term growth and investment UNDER further options Options to flex annual spending with macro CONSTRUCTION Capex and growth outcomes Investment decisions driven by ON Portfolio fit STREAM Affordability Profitability Portfolio can support profitable growth to ~202017 Copyright of Royal Dutch Shell plc 9/06/2011
  • 18. MATURING NEXT GENERATION OF PROJECT OPTIONSNORTH AMERICA TIGHT GASPRODUCTION GROWTHKboe/d Mmscf/d 2011 investment: ~$3 billion; >400 wells Canada USASHELL ASSET BREAK EVEN PRICE Groundbirch 40 Tcfe resources potential$/mcfe – End 2010 Deep Basin Foothills Pinedale Marcellus Eagle Ford Haynesville JV BREAKEVEN PRICE ENTRY COST Growth potential: ~ 300 kboe/d 2012; >400 kboe/d potential 201518 Copyright of Royal Dutch Shell plc 9/06/2011
  • 19. MATURING NEXT GENERATION OF PROJECT OPTIONSRECENT PROJECT FINAL INVESTMENT DECISIONSUSA – MARS-B AUSTRALIA – PRELUDE FLNG TLP capacity ~100 kboe/d First FID ever on Floating LNG New resources at Mars field Largest floating operating facility in the world West Boreas + South Deimos 110 kboe/d production; 3.6 mtpa LNG capacity Water depth 950 meters Fast development from Prelude discovery (2007) to Shell 72% (operator) FID Shell 100% (operator)19 Copyright of Royal Dutch Shell plc 9/06/2011
  • 20. PRELUDE FLOATING LNGFIRST FID ON FLNG IN THE INDUSTRY20 Copyright of Royal Dutch Shell plc 9/06/2011
  • 21. ROYAL DUTCH SHELL PLC FINANCIAL FRAMEWORK21 Copyright of Royal Dutch Shell plc 9/06/2011
  • 22. CONVERTING INVESTMENT TO CASHFLOW: 2009-12INVESTING FOR NEW GROWTH$ Bln $ Bln OTHER CANADA 2011 START-UPS QATAR 2010 CAPITAL UNDER CAPITAL UNDER CONSTRUCTION EXPLORATION & EVALUATION CONSTRUCTION AOSP debottle ph-1 Pearl GtL Gumusut-Kakap Caesar Tonga Malakai AOSP Expansion I Port Arthur Mars-B Prelude FID / DEALS Qatargas 4 Duvernay East Resources Clair Schiehallion Singapore Chemicals Gorgon LNG BC-10 Phase 2 NA tight gas QatarGas 4 2012-13 Nigeria T6 NWS T5 Sakhalin Perdido Pearl GtL Corrib BC-10 Ph 2 Ormen Lange Afam Gas BC-10 AOSP mine AOSP upgrader Gumusut-Kakap 1.8 BAB/SAS START-UPS Changbei Ursa Princess Singapore Gbaran Ubie Schoonebeek Port Arthur Kashagan Ph 1 Waterflood Chemicals Ph 1 Oman EOR Majnoon FCP North Rankin 2ITALIC: PLANNED22 Copyright of Royal Dutch Shell plc 9/06/2011
  • 23. CAPITAL SPENDING + OUTLOOKUPSTREAM NET CAPITAL INVESTMENT% Capital investment $ Bln EXPLORATION OTHERS HEAVY OIL & EOR TIGHT GAS EUROPE SOUR ASIA PACIFIC DEEPWATER AMERICAS INTEGRATED GAS TRADITIONAL NET CAPITAL INVESTMENTDOWNSTREAM 2012-14 INVESTMENT CHOICES & FLEXIBILITY% Capital investment Divestments up to $3 bn/year; capital efficiency MARKETING FID pace + industry costs drive capex range REFINING Tight gas + exploration spend flexibility CHEMICALS 2012-14 CAPITAL INVESTMENT EXCLUDES IRAQ FULL FIELD DEVELOPMENTS23 Copyright of Royal Dutch Shell plc 9/06/2011
  • 24. ROYAL DUTCH SHELL PLC SIMON HENRY CHIEF FINANCIAL OFFICER24 Copyright of Royal Dutch Shell plc 9/06/2011
  • 25. OUTLOOKPRIORITIES 2011-12 OUTLOOK $1 billion Downstream cost savings PERFORMANCE FOCUS Continuous improvement embedded in Shell Up to $8 bln asset sales; capital efficiency >20 projects under construction NEW WAVE OF PRODUCTION +6% production 2010-12 GROWTH On track for 2012 cashflow targets Studying > 30 new projects; 10 FIDs planned 2011-12 MATURING NEXT GENERATION OF PROJECT OPTIONS Upstream growth potential to ~2020 Selective Downstream growth Competitive performance – Profitable growth – Sharper delivery25 Copyright of Royal Dutch Shell plc 9/06/2011
  • 26. ROYAL DUTCH SHELL CREDIT SUISSE EUROPEAN OIL & GAS CONFERENCE Q&A26 Copyright of Royal Dutch Shell plc 9/06/2011