Simon Henry - Société Générale in Paris - 3 December 2010


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Simon Henry, Chief Financial Officer at Royal Dutch Shell, presented an overview of the Shell group strategy at the Premium Conference of Société Générale in Paris on 3 December 2010.

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Simon Henry - Société Générale in Paris - 3 December 2010

  2. 2. DEFINITIONS AND CAUTIONARY NOTEReserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves for all 2009 data, and includes both SEC proved oil and gas reserves and SEC proven miningreserves for 2007 and 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 2007 and 2008) excluding changes resulting from acquisitions, divestments andyear-end pricing impact.To facilitate a better understanding of underlying business performance, the financial results are also presented on an estimated current cost of supplies (CCS) basis as applied for the Oil Products andChemicals segment earnings. Earnings on an estimated current cost of supplies basis provides useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell’s resultsof operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS.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 the Shell’s products; (c) currency fluctuations; (d) drilling and productionresults; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisitionproperties 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 countriesand 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 delaysin 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 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, 2009 (available at and ). These factors also should be considered by the reader. Each forward-lookingstatement speaks only as of the date of this presentation, 3 December 2010. 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-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.The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actualproduction or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation that SECs guidelinesstrictly 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 can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2 Copyright of Royal Dutch Shell plc 3/12/2010
  4. 4. HSSE & SUSTAINABLE DEVELOPMENT PRIORITYSTRENGTHENING DELIVERY & ACCOUNTABILITY FOCUS ON SAFETY: GOAL ZERO Injuries - TRCF per million working hours Project profitability 1 Environment Technology Safety 99 00 01 02 03 04 05 06 07 08 09 Employees and contractors per million working hours; Shell operated facilities OPERATIONAL SPILLS Operational Spills – thousand tonnes 10 Social 8 6 4PARTNERSHIPS 2 0 00 01 02 03 04 05 06 07 08 09 Data 100% basis for companies and joint ventures where we are the operator4 Copyright of Royal Dutch Shell plc 3/12/2010
  6. 6. GROWTH INVESTMENTPRUDENT BALANCE SHEETGearing % 2009-12 cashflow from operations30% Gearing range +50% at $60 bbl scenario +80% at $80 bbl scenario20% Reduced costs + growth Surplus cashflow 2012 > $60 bbl10% after dividends0% Q205 Q206 Q207 Q208 Q209 Q310 2012 ASSUMES NORMALIZED DOWNSTREAM AND NATURAL GAS ENVIRONMENT6 Copyright of Royal Dutch Shell plc 3/12/2010
  7. 7. ROYAL DUTCH SHELL PLC PERFORMANCE FOCUS7 Copyright of Royal Dutch Shell plc 3/12/2010
  8. 8. CONTINUOUS IMPROVEMENTSTANDARDIZATION CAPITAL EFFICIENCYEXAMPLE: OFFSHORING TO LOW COST SHARED SERVICE CENTERS DIVESTMENT PROCEEDS‘000s STAFF $ BLN $7-8 BILLION 10 40 DIVESTMENTS 2010-11 CORPORATE UPSTREAM 8 30 DOWNSTREAM 6 20 4 10 2 0 0 2008 2009 2010E 05 06 07 08 09 10-11E CUMULATIVE Simpler structures & standardization Capital Efficiency Commercial mind-set8 Copyright of Royal Dutch Shell plc 3/12/2010
  9. 9. ACQUISITIONS AND DIVESTMENTS2010 PROGRESS Finland & Sweden Statfjord East Resources LPG business Shell Haven worldwide Heide Refinery US retail Eagle Ford Greece Syria GoM leases El Salvador Nigeria Cosan 21 countries Arrow Africa Chile Woodside New Zealand Acquisition Deal Complete NORTHA AMERICA TIGHT GAS Divestment DRILLING RIG9 Copyright of Royal Dutch Shell plc 3/12/2010
  10. 10. DOWNSTREAM PORTFOLIO MANAGEMENTONGOING REFINING PORTFOLIO REDUCTION RETAIL: SIMPLIFICATION & MAINTAINING EARNINGSShell refining capacity – Kbbl/d Example: Retail 2002-09 -18% 100%5,000 2009-12 -15%4,000 75%3,000 50%2,0001,000 25% 0 2002 2006 2009 2012 0% % Markets % Earnings EUROPE & AFRICA AMERICAS ASIA PACIFIC DIRECT & INDIRECT MARKETS EXITS Reducing refining capacity Investing in scale and higher refinery complexity Value driven disposals strategy10 Copyright of Royal Dutch Shell plc 3/12/2010
  11. 11. ROYAL DUTCH SHELL PLC GROWTH DELIVERY11 Copyright of Royal Dutch Shell plc 3/12/2010
  12. 12. NEW WAVE OF PRODUCTION GROWTHRESOURCE BASE KEY POST-FID PROJECTS Longer-term upside Gjoa 30 AOSP-1 Corrib Sakhalin II Kashagan Ph 1 CONCEPT NA Port Schoonebeek SELECTION Tight gas Arthur Iraq SAS Caesar Qatargas 4 Pearl GTL DESIGN Perdido Tonga Singapore Chemicals 20 Gbaran Harweel Gumusut Ubie Ph 1 Bonga Qarn Alam NW Amal Steam North Rankin B • ~11 billion Boe resources BC-10 Gorgon UNDER Pluto T1-3 CONSTRUCTION • 12 Upstream start-ups (Woodside) 10 2010-11 • 5 already on stream ON ON START-UP DATE DOWNSTREAM STREAM STREAM OIL & GAS 2009 0 2010-11 INTEGRATED GAS 2012+ ON STREAM12 Copyright of Royal Dutch Shell plc 3/12/2010
  13. 13. START-UP OF OIL SANDS EXPANSION PRODUCTION AND PROFITABILITY AOSP PHASE 1 EXPANSION AOSP net cash flows - $ Bln (Shell) Kbbl/d Expansion 1 JACKPINE MINE ON STREAM H2 2010 2.5 start up UPGRADER EXPANSION 20110.3 Base project 2 start up 200 1 1000.0 0 0 -1 -2-0.3 -2.5 2000 2000 2002 2004 2006 2008 2010 2012 2014 2002 2004 2006 2008 2010 2012 2014 CASH FROM OPERATIONS CAPITAL INVESTMENT PRODUCTION (RHS) FORECAST AT $ 70/BBL OIL PRICE AOSP-1 mine expansion on stream Upgrader expansion start-up 2011 ~250,000 b/d capacity built in ~10 years Next focus: Optimization + debottlenecking 13 Copyright of Royal Dutch Shell plc 3/12/2010
  14. 14. QATAR: NEW HEARTLAND FOR SHELLSHELL POSITIONS IN QATAR PROJECTS UNDER CONSTRUCTION • Pearl GTL + Qatargas 4 LNG • ~3 bcf/d offshore gas development • Significant onshore infrastructure QatarGas 3/4 • GTL • LNG Pearl GTL • NGLs/Ethane RAS LAFFAN PRODUCTION & PROFITABILITY Shell Qatar cash flow (Pearl + Qatargas 4) - $ Bln Production – Kboe/d 6 PEARL 600 400 3 200 0 0 -200 -3 CASH FLOW -400 -6 PRODUCTION (RHS) -600 2005 2010 2015 2020 2025 2030 LNG LIQUEFACTION GTL $ 70/bbl oil price14 Copyright of Royal Dutch Shell plc 3/12/2010
  15. 15. PROFITABLE GROWTHOIL & GAS PRODUCTION GROWTHKboe/d 4,000 3,000 2,000 1,000 2009 2010 2012 2014 ENTITLEMENT: OIL & GASADDING TO UPSTREAM UNIT CASH FLOWS ADD A SECOND COLOUR: 2010+ START-UPS,$/Boe WHI CH IS DEFINED AS THE 2010-11 +40 $60/BBL 2012-13 + 2014+ BARS FROM SLIDE 24 $80/BBL MARCH20 Courtesy of Qatargas 0 2009 2012 2009+ start ups: 2012 impactENTITLEMENT SHOWN AT $70/BBL15 Copyright of Royal Dutch Shell plc 3/12/2010
  16. 16. ROYAL DUTCH SHELL PLC MATURING NEXT GENERATION PROJECT OPTIONS16 Copyright of Royal Dutch Shell plc 3/12/2010
  17. 17. MATURING NEW PROJECTSOIL & GAS RESOURCES DEVELOPMENTS PLANS 2010-11Billion Boe Longer-term upside Clair Ph. 2 North CMOC America Tempa Rossa 30 Tight Gas Majnoon Full Field Development Mars-B Cardamon Appomatox Gbaran Amin Waterflood > 8 billion Boe Deep Stones Ubie Ph. 2 Champion resources Vito Rabab/ Harweel Waterflood CONCEPT Bonga Sabah Gas KBB Malikai SELECTION BC-10 Ph. 2 20 > 35 new projects North Browse Sunrise BS-4 DESIGN Prelude Arrow UNDER CBM to CONSTRUCTION LNG FID TARGET 10 FEED TARGET ON STREAM 0Resources end 200917 Copyright of Royal Dutch Shell plc 3/12/2010
  18. 18. MARS-B + WEST BOREAS & SOUTH DEIMOS TIE BACKSUB-SEA TIE BACKS….. ….. TO MARS-B TLP DEVELOPMENT Mars A ~2 Km Mars B Boreas exploration well ~5 Km South Deimos Exploration well West Boreas Drill Centre Subsea Production System Olympus TLP 6 wells 15kpsi subsea tie-back to Mars B host 24 Slot TLP with West Boreas /South Deimos; Discovery wells both reused for production ~100 kboe/d; Shell 72% Flexibility to connect future subsea Capability to drill to >9,100 meters managed developments depth Future provision for Water Injection/Gas Lift18 Copyright of Royal Dutch Shell plc 3/12/2010
  19. 19. AUSTRALIA UNDERPINS NEXT TRANCHE OFSHELL LNG GROWTHSHELL GLOBAL LNG CAPACITY GROWTH Curtis Island Greater Sunrise Prelude Browse Pluto (Woodside) North West Shelf Gorgon SHELL FLOATING LNG NEW HUB EXISTING PRODUCTION HUB 2009 Shell world-wide capacity: 18.5 mtpa 2015 capacity ~25 mtpa (40% growth)19 Copyright of Royal Dutch Shell plc 3/12/2010
  20. 20. TIGHT GAS: COMPETITIVE POSITIONNORTH AMERICA TIGHT GAS POSITIONS ~40 Tcfe of potential resource Groundbirch Deep Basin Acreage growth (+ 1.3 million net acres in Foothills 2010) Pinedale Resource growth: East Resources Inc. + Marcellus Eagle Ford acquisition 2010 Eagle Ford Haynesville JV High value positions: exploration running South Texas room, low break-even pricesPRODUCTION GROWTH POTENTIAL COMPETITIVE LIFTING COSTSKboe/d Bcf/d Lifting costs $/mcfe600 Mature Emerging Other Direct Operating Cost 2500 3.0400 2.0300 1200 1.0100 0 0 0.0 Petrohawk Ultra Shell EnCana EOG XTO Chesapeake Talisman 2005 2006 2007 2008 2009 2010 H1 2015+ Other costs: non-income taxes, transportation and handlings costs and general & administrative expenses SOURCE: 2009 PUBLIC REGULATORY PUBLICATIONS20 Copyright of Royal Dutch Shell plc 3/12/2010
  21. 21. UPSTREAM: INVESTING FOR GROWTH +PROFITABILITY Longer-term upside Investment decisions driven by Portfolio fit30 Affordability CONCEPT > 8 billion Boe Profitability SELECTION ~ 35 new projects DESIGN Growth potential to 202020 Prelude - Australia ~11 billion Boe UNDER CONSTRUCTION 2009-12 production +11% 2009-15 LNG capacity +40%10 ~9 billion Boe ON 3.1 mboe/d STREAM 18.5 mtpa LNG capacity ~25 countries 0 200921 Copyright of Royal Dutch Shell plc 3/12/2010
  22. 22. SUMMARY • Upstream growth potential to ~2020 MATURING NEXT GENERATION • 8 billion Boe resources; 35 new projects OF PROJECT OPTIONS • Financial growth in focus • 2009-12: NEW WAVE OF PRODUCTION • Oil & gas growth +11%; GROWTH • Cashflow growth: +50-80% • Continuous improvement + capital efficiency PERFORMANCE FOCUS • $7-8 billion asset sales 2010-11 • Downstream restructuring Competitive performance – Profitable growth – Sharper delivery22 Copyright of Royal Dutch Shell plc 3/12/2010
  23. 23. ROYAL DUTCH SHELL PLC Q&A23 Copyright of Royal Dutch Shell plc 3/12/2010