Simon Henry- Deutsche Bank 11th Annual Global Oil & Gas Conference

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Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, presented an update of Shell’s Strategy & Portfolio at the Deutsche Bank 11th Annual Global Oil & Gas Conference in London.

Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, presented an update of Shell’s Strategy & Portfolio at the Deutsche Bank 11th Annual Global Oil & Gas Conference in London.

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  • 1. ROYAL DUTCH SHELL PLC DEUTSCHE BANK GLOBAL OIL & GAS CONFERENCE LONDON SEPTEMBER 22, 20111 Copyright of Royal Dutch Shell plc 22 September 2011
  • 2. ROYAL DUTCH SHELL PLC SIMON HENRY CHIEF FINANCIAL OFFICER2 Copyright of Royal Dutch Shell plc 22 September 2011
  • 3. 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 proven miningreserves. 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 “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 usedto 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 orcompanies. „„Subsidiaries‟‟, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectlyhas 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 controlare 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/orindirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of allthird-party interest.This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other thanstatements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based onmanagement‟s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differmaterially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of RoyalDutch Shell to market risks and statements expressing management‟s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statementsare identified by their use of terms and phrases such as „„anticipate‟‟, „„believe‟‟, „„could‟‟, “scheduled”, „„estimate‟‟, „„expect‟‟, „„goals‟‟, „„intend‟‟, „„may‟‟, „„objectives‟‟,„„outlook‟‟, „„plan‟‟, „„probably‟‟, „„project‟‟, „„risks‟‟, „„seek‟‟, „„should‟‟, „„target‟‟, „„will‟‟ and similar terms and phrases. There are a number of factors that could affect the futureoperations 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 potentialacquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject tointernational sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial marketconditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays oradvancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained inthis presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance onforward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell‟s Annual Presentation / Form 20-F for the year ended December31, 2010 (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 ofthe date of this presentation, 22 September 2011. 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 inferredfrom the forward-looking statements contained in this presentation.We may have used certain terms in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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 these formsfrom the SEC by calling 1-800-SEC-0330. 3 Copyright of Royal Dutch Shell plc 22 September 2011
  • 4. SHELL ‘GOAL ZERO’ ON SAFETY Injuries – TRCF per million working hours Million working hours Customer and Profitability & partner focus performance WORKING HOURS (RHS) TRCF 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 FACILITIES4 Copyright of Royal Dutch Shell plc 22 September 2011
  • 5. STRATEGY AND PRIORITIESEARNINGS PRIORITIES$ Bln PERFORMANCE FOCUS UPSTREAM NEW WAVE OF PRODUCTION GROWTH DOWNSTREAM MATURING NEXT GENERATION OF PROJECT OPTIONS UPSTREAM CORPORATE DOWNSTREAM DIVESTMENTS/OTHER Growth Investment – Through Cycle ReturnsCURRENT COST OF SUPPLY EARNINGS5 Copyright of Royal Dutch Shell plc 22 September 2011
  • 6. ROYAL DUTCH SHELL PERFORMANCE FOCUS6 Copyright of Royal Dutch Shell plc 22 September 2011
  • 7. PERFORMANCE FOCUSPERFORMANCE FOCUS NEW WAVE OF PRODUCTION GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSCONTINUOUS IMPROVEMENT EXAMPLE: CAPITAL EFFICIENCY Asset sales - $ Bln (cumulative) CORPORATE UPSTREAM DOWNSTREAM Cost focus Continuous Operational Simplification improvement excellence EXAMPLE: WELLS MANUFACTURING JV WITH CNPC Capital efficiency7 Copyright of Royal Dutch Shell plc 22 September 2011
  • 8. DOWNSTREAM VALUE CHAINS Retail Business-to- Refining Business Supply & Distribution Chemicals Lubricants Chemicals Trading 3 keys to winning Operational excellence – Concentrating the portfolio – Selective growth8 Copyright of Royal Dutch Shell plc 22 September 2011
  • 9. PERFORMANCE FOCUSOIL PRODUCTS PERFORMANCE FOCUS NEW WAVE OF PRODUCTION GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSMARKETING REFOCUS 100%  Refocused portfolio + business model 50%  Selective growth • Brazil, Asia Pacific, others 0% 09 12 09 12 09 12 09 12  Brand strength + product innovation Retail Lubricants Aviation Bulk Fuels sites markets markets markets DIRECT INDIRECT/PART EXIT EXITSREFINING PORTFOLIO REDUCTIONRefinery capacity Mln bbl/d (100%) 4.7 -30%54 3.3  Focus on larger integrated sites32  30% net reduction by 201210  Improve operating performance 2002 2009 2012 EUROPE & AFRICA AMERICAS ASIA PACIFIC9 Copyright of Royal Dutch Shell plc 22 September 2011
  • 10. PERFORMANCE FOCUS CHEMICALS PORTFOLIO + PERFORMANCE NEW WAVE OF PRODUCTION GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONS EARNINGS CCS Earnings - $ Bln  Base chemicals and derivatives portfolio  Plant integration with refineries  Growth potential through advantaged feedstock  Product innovation INTEGRATED CHEMICALS USGC BASE CHEMICALS SHIFT TO GAS FEEDS Evolution of USGC industry cash margins + feedstock slate Scotford Mossmoran US Moerdijk/ SADAF Nanhai Pernis Total US Gulf feedslate Qatar China Coast Singapore Key siteAL JUBAIL PLANT – SAUDI ARABIA Options CCS EARNINGS EXCLUDING IDENTIFIED ITEMS 10 Copyright of Royal Dutch Shell plc 22 September 2011
  • 11. GROWTH DELIVERYBIOFUELS GROWTH: BRAZILGLOBAL BIOFUELS GROWTH POTENTIAL RAìZEN JOINT VENTURE 2011Kboe/d production3,000 SOYBEAN RAPESEED PALM OIL OTHER Marketing JV CORN SUGARCANE2,000  ~19% market share in Brazil  Rebranding and enhanced customer1,000 offering  Synergies + growth potential 0 2005 2010 2015 2020RAìZEN: LARGEST IOC BIOFUELS PRODUCER Biofuels JV Brazilian sugarcane ethanol  Leading Brazil and Top 5 global ethanol player lowest CO2  World-wide trading opportunities most sustainable of today‟s biofuels  Potential to double volumes in ~5 years most cost competitive 2nd generation technology portfolio11 Copyright of Royal Dutch Shell plc 22 September 2011
  • 12. ROYAL DUTCH SHELL GROWTH DELIVERY12 Copyright of Royal Dutch Shell plc 22 September 2011
  • 13. LEADER IN A GLOBAL GROWING GAS MARKETGAS DEMAND GROWTH SHELLMln Boe/d30 Traditional LNG +23% +189% gas2520 +29%15 +89% 203510 2008 +86% 5 Gas-to-liquids Tight gas 0 North Europe Asia Middle Other America Pacific EastSOURCE: INTERNATIONAL ENERGY AGENCY; WORLD ENERGY OUTLOOK 2011 GOLDEN AGE OF GAS13 Copyright of Royal Dutch Shell plc 22 September 2011
  • 14. PERFORMANCE FOCUSGROWTH DELIVERY NEW WAVE OF PRODUCTIONCONVERTING RESOURCES TO PRODUCTION GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSBln Boe resources Longer-term upside NA tight gas Australia Cardamom Deep Appomattox Prelude  Prelude Vito AOSP debottleneck  Pearls (CMOC) Schiehallion  Malikai NA tight gas  Gorgon Mars-B Clair Ph2 NA tight gas BC-10 Phase2 AOSP-Exp 1 Pearl GTL  Sakhalin Gjoa QG-4  BC-10 Perdido Schoonebeek  Gbaran Ubie Oman EOR NA tight gas Others ON-STREAM UNDER CONSTRUCTION STUDY PRODUCTION  2011 PROGRESS Maintaining Upstream momentum14 Copyright of Royal Dutch Shell plc 22 September 2011
  • 15. PERFORMANCE FOCUSGROWTH DELIVERY NEW WAVE OF PRODUCTION2011 START-UPS GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSINNOVATIVE TECHNOLOGY, FULL VALUE CHAIN, LONG-LIFE RETURNS Canada - Scotford upgrader Qatar - Pearl Qatar – Qatargas 4 LNG shipment ~ $30 bln capital investment >400,000 boe/d* for Shell Underpins target for 3.1 - 3.5 mln boe/d 2009-12* PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO15 Copyright of Royal Dutch Shell plc 22 September 2011
  • 16. PERFORMANCE FOCUSGROWTH DELIVERY NEW WAVE OF PRODUCTIONLAUNCHING NEW UPSTREAM PROJECTS GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONS2010 + 2011 YEAR-TO-DATE INVESTMENT DECISIONS Cardamom – USA Sabah Gas Kebabangan (KBB) - Malaysia 50 kboe/d; 100% Shell 130 kboe/d; 30% Shell; PSC AOSP Debottlenecking Schiehallion 1st FID NA tight gas (various) Cardamom Mars-B Mars-B – USA Sabah Gas KBB Prelude FLNG – Australia 100 kboe/d; 72% Shell 110 kboe/d; 100% Shell BC-10 Phase 2 Prelude FLNG 14 FIDs taken ~400,000 boe/d* potential Driving 3.7 mln boe/d target 2014 and longer term growth* PEAK PRODUCTION; SHELL SHAREENTITLEMENT AT $80/BBL; 2014 OUTLOOK ASSUMES LICENCE EXTENSIONS + 2010 ANNOUNCED ASSET SALES16 Copyright of Royal Dutch Shell plc 22 September 2011
  • 17. ROYAL DUTCH SHELL MATURING NEXT GENERATION PROJECT OPTIONS17 Copyright of Royal Dutch Shell plc 22 September 2011
  • 18. PERFORMANCE FOCUSMATURING NEXT GENERATION OF PROJECT OPTIONS NEW WAVE OF PRODUCTIONADDING NEW RESOURCES GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSEXPLORATION & BUSINESS DEVELOPMENT 2008 Canada - Duvernay Kazahkstan - Auezov Long-term growth and investment 2009 Australia – Iago 2 Nigeria - Offshore GoM – Cardamom Australia – Libra 1  Options to flex annual spending with macro GoM - Vito GoM – West Boreas Brunei – ML-J206T1  Capex and growth outcomes Norway – Fram US - HaynesvilleCanada – Groundbirch Australia - Concerto ACQUISITION Investment decisions driven byAustralia - Arrow DISCOVERY  Portfolio fit US - East Resources EXPLORATION  Affordability PROSPECTGoM – South Deimos  Profitability US - Eagle Ford Brazil – Massa GoM – Appomattox Australia - NWS French Guyana Brazil – Gato do Matto China – Tight gas Brunei 2010 Brunei - Geronggong USA - GoM Alaska 2011/12 Brazil - DW Portfolio can support profitable growth to ~202018 Copyright of Royal Dutch Shell plc 22 September 2011
  • 19. DRILLING TECHNOLOGY UNLOCKS NEW GROWTHNORTH AMERICA CHINA + AUSTRALIA JVs WITH PETROCHINA Groundbirch Changbei tight gas Deep Basin Foothills North Shilou CBM Pinedale Marcellus Daning CBM Jinqiu tight gas Eagle Ford Haynesville JV Fushun tight gasACREAGE TIGHT GAS COAL BED METHANE Arrow Energy LNG China: Changbei drilling rig19 Copyright of Royal Dutch Shell plc 22 September 2011
  • 20. PERFORMANCE FOCUSMATURING NEXT GENERATION OF PROJECT OPTIONS NEW WAVE OF PRODUCTIONMATURING NEW PROJECTS GROWTH MATURING NEXT GENERATION OF PROJECT OPTIONSINVESTMENT OPTIONS Appomattox - USA Arrow - Australia Long-term growth and investment  Options to flex annual spending with macro  Capex and growth outcomes Tight Gas – N. America Qatar Chemicals Investment decisions driven by  Portfolio fit  Affordability  Profitability Vito - USA Gbaran Ubie Ph2 - Nigeria Portfolio can support profitable growth to ~202020 Copyright of Royal Dutch Shell plc 22 September 2011
  • 21. ROYAL DUTCH SHELL PLC FINANCIAL FRAMEWORK21 Copyright of Royal Dutch Shell plc 22 September 2011
  • 22. INVESTMENT PROGRAMMEUPSTREAM DOWNSTREAM% Capital investment % Capital investment EXPLORATION HEAVY OIL & EOR TIGHT GAS SOUR DEEPWATER INTEGRATED GAS TRADITIONAL OTHERS AMERICAS CHEMICALS MARKETING REFINING EUROPE ASIA PACIFIC Sustained growth investment $25 - $27 bln net capex 2011-2014 Capital discipline2012-14 CAPITAL INVESTMENT EXCLUDES IRAQ FULL FIELD DEVELOPMENTS22 Copyright of Royal Dutch Shell plc 22 September 2011
  • 23. CONVERTING INVESTMENT TO CASHFLOWINVESTING FOR NEW GROWTH DELIVERING CASHFLOW GROWTH$ Bln $/bbl BRENT $80/bbl $96/bbl $60/bbl $62/bbl 2009 H1‟11 2012 (12 months rolling) target CAPITAL UNDER CONSTRUCTION EXPLORATION & EVALUATION CASH FLOW FROM OPERATIONS EXCL. NET CAPITAL NET MOVEMENTS IN WORKING CAPITAL INVESTMENT (2009-12 average) Rebalancing financial framework into surplus cash flow Maintaining growth investment and competitive payout CASH FLOW TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009- 201223 Copyright of Royal Dutch Shell plc 22 September 2011
  • 24. CASH FLOW AND BALANCE SHEETCASH PERFORMANCE 12 MONTHS TO H1 2011 GEARING$ Bln % SOURCES USES Gearing range CASH FLOW FROM OPERATIONS EXCL. NET MOVEMENTS IN WORKING CAPITAL ASSET SALES ACQUISITIONS CAPEX + EQUITY ACC. INVESTMENTS PAY-OUT24 Copyright of Royal Dutch Shell plc 22 September 2011
  • 25. COMPETITIVE PAYOUTMAJORS DIVIDEND PAYOUT RATIOS SHELL PAYOUT% $ Bln COMPETITORS DIVIDENDS DECLARED, of which: SCRIP CLEAN EPS, 4 QUARTERS ROLLING TO H1 2011 BUYBACKS25 Copyright of Royal Dutch Shell plc 22 September 2011
  • 26. FINANCIAL FRAMEWORK CASH PERFORMANCE  ~50-80% CFFO increase 2009-12 ($60-$80 oil price scenarios)  Surplus cash flow 2012 at $60/bbl INVESTMENT PAY-OUT  $25-27 bln net capex /year  Dividend linked to results  Up to $3 bln asset sales/year  Scrip dividend option 2012+  ~$10 billion expected 2011  Affordability, profitability, portfolio BALANCE SHEET  0 – 30% gearing through cycle  Balance sheet underpins investment  Capital employed grows steadily Competitive returns – cash generation – growth investmentCFFO TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009-201226 Copyright of Royal Dutch Shell plc 22 September 2011
  • 27. OUTLOOKPRIORITIES 2011-12 OUTLOOK  Continuous improvement embedded in Shell PERFORMANCE FOCUS  Up to $8 billion asset sales; capital efficiency  2011 start-ups: >400kboe/d*; $30bn investment NEW WAVE OF PRODUCTION GROWTH  Selective Downstream growth  On track for 2012 cashflow and production targets MATURING NEXT GENERATION OF  >400kboe/d* new projects launched 2010-11 PROJECT OPTIONS  Upstream growth potential to ~2020 Competitive performance – Profitable growth – Sharper delivery* PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO27 Copyright of Royal Dutch Shell plc 22 September 2011
  • 28. ROYAL DUTCH SHELL DEUTSCHE BANK GLOBAL OIL & GAS CONFERENCE Q&A28 Copyright of Royal Dutch Shell plc 22 September 2011