Q4 2008 Presentations

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Q4 2008 Presentations

  1. 1. ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS FOURTH QUARTER & FULL YEAR 2008 RESULTS 29TH JANUARY 2009
  2. 2. ROYAL DUTCH SHELL PLC FOURTH QUARTER & FULL YEAR 2008 RESULTS JEROEN VAN DER VEER CHIEF EXECUTIVE
  3. 3. DEFINITIONS AND CAUTIONARY NOTE Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves and SEC proven mining reserves. 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 are consistent 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 excluding changes resulting from acquisitions, divestments and year-end pricing impact. Identified Items: This presentation refers to Identified Items which have been excluded from CCS earnings and EPS calculations. Please see page 4 of the Quarterly Results Announcement for a listing of those items. In this presentation, excluding in the financial statements, we have aggregated our equity position in projects for both direct and indirect interest (for example, we have aggregated our indirect interest in North West Shelf LNG via our 34% shareholding in Woodside Energy Ltd). 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. Also included as a forward looking statement is our disclosure of reserves, proved oil and gas reserves, proven mining reserves, organic reserves, net reserves and resources. 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 the Group’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market 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 effects arising from recategorisation of reserves; (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 December 31, 2007 (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 January 29, 2009. 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. 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 actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may use certain terms in this announcement that the SEC's guidelines strictly prohibit us from including in filings with the SEC. US Investors are urged to consider closely the disclosure in our Form 20-F, File No 001-32575 and disclosure in our Forms 6-K, File No 001-32575, available on the SEC’s website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2
  4. 4. 2008 HIGHLIGHTS 2008 PERFORMANCE SATISFACTORY • 2008 CCS EARNINGS $ 31.4 BLN, CCS EPS +16% • CAPITAL DISCIPLINE: $ 32 BLN NET CAPEX, $13 BLN RETURNED TO SHAREHOLDERS • GOOD OPERATING PERFORMANCE 2008 PORTFOLIO PROGRESS • NEW PROJECT START UPS • $ 7 BLN DISPOSALS, $ 9 BLN ACQUISITIONS • NEW UPSTREAM RESOURCES; REBALANCING DOWNSTREAM PRUDENT APPROACH TO ECONOMIC DOWNTURN • MAINTAINING STRATEGY TO BUILD NEW HEARTLANDS • MANAGING COSTS AND AFFORDABILITY • 2009 NET CAPEX $31- 32 BLN; Q1 2009 DIVIDEND $0.42/SHARE (+5%) 3
  5. 5. RESPONDING TO THE CHANGING LANDSCAPE OIL PRICE & INDUSTRY REFINING MARGIN $ Oil Price Refining Margin $ 120 12 80 8 • MANAGING COST & PRICE CYCLES • PROJECTS BASED ON LONG-RUN PRICE SCENARIOS 40 4 • MAJOR COSTS LOCKED IN AT FID 0 0 • FEWER PROJECTS LAUNCHED ACROSS CYCLE PEAK 2003 2004 2005 2006 2007 2008 2009 UPSTREAM COST INFLATION 250 Afam Gbaran Ubie Sakhalin North Rankin 2 • MANAGING AFFORDABILITY Gjoa Salym • CONTINUED FOCUS ON COMPETITIVE COSTS Bonga NW Perdido 200 Ormen Lange Angel BC-10 Ursa • POSTPONING DISCRETIONARY INVESTMENT Kashagan QG4 Gumusut • MAINTAINING BALANCE SHEET FLEXIBILITY Changbei 150 Pluto Corrib AOSP Exp 1 Shell Key Pearl Project FID 100 2003 2004 2005 2006 2007 2008 2009 IHS-CERA Upstream Capital Cost Index (2000=100) 4
  6. 6. KEY PROJECTS 2008 PROGRESS GJOA HALFDAN PHASE IV AOSP CORRIB N AMERICA TIGHT GAS KASHAGAN SAKHALIN II PORT ARTHUR URSA/PRINCESS QATARGAS 4 PEARL GTL PERDIDO WATERFLOOD GUMUSUT NIGERIA OMAN AFAM SINGAPORE CHEMICALS NORTH RANKIN B NWS T5 / ANGEL BC-10 PLUTO 2008 ON STREAM UNDER CONSTRUCTION 5 OIL & GAS REFINING & CHEMICALS INTEGRATED UPSTREAM/DOWNSTREAM
  7. 7. SAKHALIN II START UP START PA-B PLATFORM LNG SITE YEAR ROUND OIL EXPORT LNG TRAIN 1 YEAR-ROUND OIL COMPLETE 1ST LNG CARGO 400 GAS ARRIVED AT LNG PLANT LNG TRAIN 2 200 COMPLETE KBOE/D EXPECTED RAMP-UP PROFILE PIPELINE ROUTE REINSTATEMENT: VAVARKA VALLEY 0 2008 2009 2010 6 SALES VOLUMES: OIL GAS
  8. 8. RETURNS TO SHAREHOLDERS PAY OUT TRACK RECORD (CUMULATIVE) DIVIDEND PERFORMANCE $ BILLION 80 400% 70 350% 60 300% 50 250% 40 200% 30 150% 20 100% 10 50% 0 0% 2004 2005 2006 2007 2008 1983 1988 1993 1998 2003 2008 DIVIDEND BUYBACK SHELL DIVIDEND GROWTH* INFLATION UK INFLATION US INFLATION NL 7 * RD € DIVIDEND PRE UNIFICATION, RDS € UNTIL 2007, RDS US$ FROM 2007
  9. 9. ROYAL DUTCH SHELL PLC FOURTH QUARTER & FULL YEAR 2008 RESULTS PETER VOSER CHIEF FINANCIAL OFFICER
  10. 10. PRICES AND MARGINS OIL & GAS PRICES INDUSTRY REFINING MARGINS INDUSTRY CHEMICALS MARGINS* $/BBL $/MMBtu $/BBL $/T 140 14 16 1500 14 1300 120 12 12 1100 900 100 10 10 8 700 80 8 6 500 4 300 60 6 2 100 40 4 0 -100 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 BRENT JCC* US WEST COAST ROTTERDAM US ETHANE WTI HENRY HUB ($/MMBtu) US GULF COAST SINGAPORE WESTERN EUROPE NAPHTHA NORTH EAST ASIA NAPHTHA 9 * Q4 2008 indicative: based on available prices/margins at the end of the quarter.
  11. 11. Q4 2008 FINANCIAL HIGHLIGHTS $ BLN EARNINGS ($ BLN) Q4 08 Q4 07 Q4 2008 VERSUS Q4 2007 ($ BLN) - EXPL. & PRODUCTION 2.4 4.2 - GAS & POWER 1.0 0.6 6 - OIL SANDS 0.0 0.0 - OIL PRODUCTS 0.8 0.7 5 - CHEMICALS 0.0 0.4 BUSINESS SEGMENTS TOTAL 4.2 5.9 4 NET EARNINGS 3.9 5.7 3 EARNINGS PER SHARE ($) 0.64 0.92 DIVIDEND PER SHARE ($) 0.40 0.36 2 Q4 08 Q4 07 1 CASH FROM OPERATIONS 10.3 5.3 SHARE BUY BACKS 0.3 1.5 DIVIDENDS 2.4 2.3 0 NET CAPITAL SPENDING 8 6.8 6.3 AM IN AM 7 40 40 M Q RE RE Q .& ST ST RP N UP W CO 10 Earnings CCS basis, Earnings and EPS excl. Identified Items DO
  12. 12. UPSTREAM PERFORMANCE EARNINGS OIL & GAS PRODUCTION $ BILLION MLN BOE/D MLN TONNES 7 4 4 6 3 3 5 4 2 2 3 2 1 1 1 0 0 0 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 EXPLORATION & PRODUCTION OIL SANDS OIL LNG SALES (MLN TONNES) GAS & POWER GAS 11 Excluding Identified Items
  13. 13. DOWNSTREAM PERFORMANCE CCS EARNINGS AVAILABILITY AND SALES VOLUMES $ BILLION % AVAILABILITY VOLUME 2.5 100 7 2.0 95 6 1.5 90 5 1.0 85 4 0.5 0.0 80 3 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 OIL PRODUCTS CHEMICALS REFINERY AVAILABILITY OIL PRODUCT SALES (MLN BBLS/D) CHEMICALS CHEMICALS SALES (MLN TONNES) AVAILABILITY 12 Excluding Identified Items
  14. 14. DISPOSALS UPDATE 2008 CUMULATIVE DIVESTMENT PROCEEDS 2008 DISPOSALS $ BILLION 35 RAINBOW EUROPE UPSTREAM PIPELINE 30 NOGAT PIPELINE BEB 25 20 FRENCH BOOMVANG REFINERIES 15 BIG FOOT DOMINICAN REFINERY NIGERIA AFRICA 10 OFFSHORE DOWNSTREAM TRANSREDES BLOCKS NWS OIL ASSETS 5 0 2004 2005 2006 2007 2008 UPSTREAM DOWNSTREAM OTHER ANNOUNCED COMPLETED UPSTREAM DOWNSTREAM 13
  15. 15. CASH PERFORMANCE 12M BUSINESS GROUP $ BILLION $ BILLION 45 UPSTREAM DOWNSTREAM 60 SOURCES USES SOURCES 40 50 WORKING 35 USES ACQUISITIONS CAPITAL 30 40 ASSET SALES DOWNSTREAM PAYOUT 25 30 20 UPSTREAM 15 SOURCES 20 ORGANIC CAPITAL 10 SPENDING USES 10 5 0 0 EXPLORATION & PRODUCTION OIL PRODUCTS ASSET SALES GAS & POWER CHEMICALS ACQUISITIONS OIL SANDS WORKING CAPITAL ORGANIC CAPITAL SPENDING 14
  16. 16. INVESTMENT AND CHOICES CAPITAL SPENDING ($ BLN) CAPITAL UNDER CONSTRUCTION / ROACE 2006 2007 2008 2008 2009 E $ BLN RETURN % TARGET ACTUAL 35 35% ORGANIC 20 26 30-31 30 31-32 ACQUISITIONS 3 8 10 9 30 30% DISPOSALS (2) (10) (5) (7) NET CAPEX 21 24 35-36 32 ~31-32 25 25% 20 20% • STABILISING ORGANIC SPENDING LEVELS 15 15% • FINANCIAL FLEXIBILITY TO DELIVER 10 10% POST-FID PROJECTS 5 5% • PROGRESSIVE RE-GEARING OF BALANCE SHEET 0 0% 2004 2005 2006 2007 2008 ROACE RETURN ON CAPITAL IN SERVICE UPSTREAM CAPITAL UNDER CONSTRUCTION ($ BLN) 15 DOWNSTREAM CAPITAL UNDER CONSTRUCTION ($ BLN)
  17. 17. 2008 HIGHLIGHTS 2008 PERFORMANCE SATISFACTORY • 2008 CCS EARNINGS $ 31.4 BLN, CCS EPS +16% • CAPITAL DISCIPLINE: $ 32 BLN NET CAPEX, $13 BLN RETURNED TO SHAREHOLDERS • GOOD OPERATING PERFORMANCE 2008 PORTFOLIO PROGRESS • NEW PROJECT START UPS • $ 7 BLN DISPOSALS, $ 9 BLN ACQUISITIONS • NEW UPSTREAM RESOURCES; REBALANCING DOWNSTREAM PRUDENT APPROACH TO ECONOMIC DOWNTURN • MAINTAINING STRATEGY TO BUILD NEW HEARTLANDS • MANAGING COSTS AND AFFORDABILITY • 2009 NET CAPEX $31- 32 BLN; Q1 2009 DIVIDEND $0.42/SHARE (+5%) 16
  18. 18. ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS FOURTH QUARTER & FULL YEAR 2008 RESULTS Q&A
  19. 19. ROYAL DUTCH SHELL PLC BUILDING NEW HEARTLANDS FOURTH QUARTER & FULL YEAR 2008 RESULTS 29TH JANUARY 2009
  20. 20. APPENDIX: KEY PROJECTS START UP PROJECT COUNTRY SHELL PEAK LNG 100% PRODUCTS CATEGORY SHELL SHARE PRODUCTION CAPACITY OPERATED % kboe/d mtpa 2008- 2009 AFAM GAS SUPPLY NIGERIA 30 46 BC 10 BRAZIL 50 100 NW SHELF LNG T5 /ANGEL AUSTRALIA 22.3 145 4.4 PERDIDO USA 35.4 130 SAKHALIN II /LNG T1-2 RUSSIA 27.5 395 9.6 URSA PRINCESS WATERFLOOD USA 45.4 30 2010-2011 AOSP EXP 1 CANADA 60 100 BONGA NW NIGERIA 55 24 CORRIB IRELAND 45 58 FORCADOS YOKRI IP NIGERIA 30 54 GBARAN UBIE PH 1 NIGERIA 30 160 GJOA NORWAY 12 107 HALFDAN PH4 DENMARK 46 23 HARWEEL OMAN 34 44 PEARL QATAR 100 320 140 kbbls/d GTL+ PLUTO LNG AUSTRALIA 31 124 4.3 QARN ALAM EOR OMAN 34 44 QATARGAS 4 LNG QATAR 30 280 7.8 SHELL EASTERN PETROCHEMICALS SINGAPORE 100 800 kta ethylene+ DS PORT ARTHUR REFINERY EXPANS. USA 50 325 DS 2012+ GUMUSUT-KAKAP MALAYSIA 33 135 KASHAGAN PHASE 1 KAZAKHSTAN 16.8 300 NORTH RANKIN B AUSTRALIA 22.3 465 CHOICES AMAL STEAM OMAN NIGERIA LNG T7 NIGERIA AOSP CANADA OLOKOLA LNG NIGERIA BONGA SW NIGERIA PEACE RIVER / CARMON CREEK CANADA BISENI SAMABRI FOD NIGERIA TEMPA ROSSA ITALY CAESAR/TONGA USA VAL D’AGRI ITALY GBARAN UBIE PH 2 NIGERIA GORGON LNG AUSTRALIA KASHAGAN PH 2&3 KAZAKHSTAN TRADITIONAL TIGHT/SOUR LNG GTL PSC volumes shown on a gross basis DEEPWATER HEAVY OIL & EOR 19

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