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Barclays CEO Energy-Power conference
Royal Dutch Shell plc
Ben van Beurden
Chief Executive Officer
September 7, 2016
Ben van Beurden
Chief Executive Officer
Royal Dutch Shell plc
Royal Dutch Shell September 7, 2016
Definitions & cautionary note
Reserves: Our use of the term “reserves” in this present...
Royal Dutch Shell September 7, 2016 4
Strategy
“Let’s make the future”
Leader: value +
influence
Reducing our
carbon inten...
Royal Dutch Shell September 7, 2016
Industry context
Substantial + long lasting shifts in energy landscape
2005 2010 Q1 20...
Royal Dutch Shell September 7, 2016
Re-shape Shell
Driving strategy in multiple time horizons
Relentless portfolio high-gr...
Royal Dutch Shell September 7, 2016 7
Stronger results from smaller portfolio
Earnings on CCS basis, excluding identified ...
Royal Dutch Shell September 7, 2016
0
25
50
2011 2013 2015
8
Cash engines
Example: Integrated Gas
 IOC leadership positio...
Royal Dutch Shell September 7, 2016 9
Growth priorities
Example: deep water
Shell + BG deep water growth
Brazil
Gulf of Me...
Royal Dutch Shell September 7, 2016
Production excludes divested assets (2013-14) and BG Haynesville addition (2016H1)
Fut...
Royal Dutch Shell September 7, 2016
Manage down-cycle
Financial performance
$ billion
Earnings + ROACE
$ billion
Dividend,...
Royal Dutch Shell September 7, 2016 12
* $60 oil price scenario 2018 (2016 RT Brent)
Manage down-cycle
Pulling levers to m...
Royal Dutch Shell September 7, 2016 13
Manage down-cycle
Divestments
Integrated gas split out from Upstream from 2011 onwa...
Royal Dutch Shell September 7, 2016
0
20
40
60
2013 2014 15Q2
4Q rolling
2015 16Q2
4Q rolling
2016E 2017 - 20 avg
0
20
40
...
Royal Dutch Shell September 7, 2016 15
Manage down-cycle
Reduce operating cost
Excluding identified items
$ billion
Operat...
Royal Dutch Shell September 7, 2016
* BG organic growth from 1.1.2016 | LNG volume includes offtake
 Significant oil & ga...
Royal Dutch Shell September 7, 2016
Competitive financial data as published. Free cash flow: cash flow from operations les...
Royal Dutch Shell September 7, 2016 18
Transformation
CREATE A
WORLD CLASS
INVESTMENT CASE
Improved capital
efficiency: re...
Questions & Answers
Barclays CEO Energy-Power conference
Royal Dutch Shell plc
Ben van Beurden
Chief Executive Officer
September 7, 2016
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Ben van Beurden - Barclays CEO Energy-Power Conference 2016

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Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc presented at the Barclays CEO Energy-Power Conference in New York.

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Ben van Beurden - Barclays CEO Energy-Power Conference 2016

  1. 1. Barclays CEO Energy-Power conference Royal Dutch Shell plc Ben van Beurden Chief Executive Officer September 7, 2016
  2. 2. Ben van Beurden Chief Executive Officer Royal Dutch Shell plc
  3. 3. Royal Dutch Shell September 7, 2016 Definitions & cautionary note Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas 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. Resources are consistent with the Society of Petroleum Engineers (SPE) 2P + 2C definitions. Resources and potential: Our use of the term “resources and potential” are consistent with SPE 2P + 2C + 2U definitions. Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact. Shales: Our use of the term ‘shales’ refers to tight, shale and coal bed methane oil and gas acreage. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this release “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 release refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations” respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This release 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’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ 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 release, 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 regulatory measures addressing climate change; (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. There can be no assurance that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this release 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 risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2015 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expressly qualify all forward looking statements contained in this release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, September 7, 2016. Neither Royal Dutch Shell plc 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 release. With respect to operating costs synergies indicated, such savings and efficiencies in procurement spend include economies of scale, specification standardisation and operating efficiencies across operating, capital and raw material cost areas. We may have used certain terms, such as resources, in this release 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.
  4. 4. Royal Dutch Shell September 7, 2016 4 Strategy “Let’s make the future” Leader: value + influence Reducing our carbon intensity Shared value with society World-class investment case STRATEGIC  Focus portfolio on resilient positions  Invest in advantaged projects  Value chain integration  FCF/share + ROCE growth  Conservative financial management OPERATIONAL  Reset cost and capital spending  First class execution projects + operations  Unrelenting focus on HSSE and licence to operate
  5. 5. Royal Dutch Shell September 7, 2016 Industry context Substantial + long lasting shifts in energy landscape 2005 2010 Q1 2016 2000 2050 $ From 7 to 9 billion by 2050 75% will live in cities Global energy demand to double between 2000 & 2050 World needs more energy; less CO2 New sources New energy carriers New business models OPEC, shales, shorter price cycles Requires new value creation models Global population Growth in oil & gas demand Energy system in transition Customer choice Continued oil price volatility Changing resources access 5
  6. 6. Royal Dutch Shell September 7, 2016 Re-shape Shell Driving strategy in multiple time horizons Relentless portfolio high-grading Strong free cash flow and returns Cash engines: today Growth priorities: 2016+ Future opportunities: 2020+ Competitive + resilient Funds dividends + balance sheet FCF + ROACE pathway Affordable growth in advantaged positions Material value + upside Managed exposure Path to profitability Cash engines 2020+ CONVENTIONAL OIL + GAS CHEMICALS OIL PRODUCTS DEEP WATERINTEGRATED GAS OIL SANDS MINING SHALES NEW ENERGIES 6
  7. 7. Royal Dutch Shell September 7, 2016 7 Stronger results from smaller portfolio Earnings on CCS basis, excluding identified items Cash engines Example: Oil Products  Advantaged feedstock + supply  Asset sales  Products + brand 2007 2015 Global weighted average refining margin (RHS) Oil products earnings Million barrels/day $ billion $ per barrel -20% -30% +25%
  8. 8. Royal Dutch Shell September 7, 2016 0 25 50 2011 2013 2015 8 Cash engines Example: Integrated Gas  IOC leadership position  Global footprint  Value from optionality Million tonnes per annum LNG volumes Capacity at year-end in million tonnes per annum Liquefaction capacity 2015 Shell LNG liquefaction volumes Shell LNG sales volumes LNG Peru QG-4 Atlantic LNG Oman Sakhalin Malaysia Sabine Pass Equatorial Guinea Pluto NWS Brunei QCLNG Gorgon Nigeria Shell + BG 16H1 extrapolated Equity capacity Long-term offtake agreement Spot offtake in 2015 Deliveries in 2015
  9. 9. Royal Dutch Shell September 7, 2016 9 Growth priorities Example: deep water Shell + BG deep water growth Brazil Gulf of Mexico Other Lowering capital intensity $ per boe break-even cost (examples) Reducing drilling costs # drilling days 2014 baseline Current -30% -40% Current 2013/14 baseline Variable spread rate + drilling materials cost $ thousand  Delivering world class development funnel  Reducing break-even: new projects ~$45/bbl 2009 BC-10 2014 Mars B Gumusut-Kakap 2010 Perdido 2005 Bonga 2001 Brutus 1999 Ursa 1997 Ram Powell 1996 Mars 1994 Auger Brazil Pre-salt CoulombAppo VitoKaikias Current estimate - under construction Previous estimateCurrent estimate - pre-FID Example Gulf of Mexico Under construction Malikai Coulomb Appomattox Brazil pre-salt Thousand boe per day 2016 Stones
  10. 10. Royal Dutch Shell September 7, 2016 Production excludes divested assets (2013-14) and BG Haynesville addition (2016H1) Future opportunities Example: shales $ million per well 0 4 8 12 2013 2014 2015 2016H1 Average drill and complete costs – LRS wells $ billion 0 2 4 2013 2014 2015 2016E Capital investment ~12 billion boe Resources Thousand boe per day 0 125 250 2013 2014 2015 2016H1 Production  Material resource + potential ~12 billion boe  25% liquids, 75% gas  Reducing costs + improving capital efficiency Western Canada Gas Western Canada LRS Appalachia Permian Argentina Haynesville -60% +35% Liquids Gas Reserves Contingent resources - other Contingent resources - development pending Prospective resources -50%
  11. 11. Royal Dutch Shell September 7, 2016 Manage down-cycle Financial performance $ billion Earnings + ROACE $ billion Dividend, buyback + gearing $ billion Cash flow  Priorities for cash:  Debt reduction  Dividends  Buybacks + capital investment % -5 0 5 10 15 -10 0 10 20 30 2012 2013 2014 2015 16Q2 4Q rolling -15 0 15 30 45 -15 0 15 30 45 2012 2013 2014 2015 16Q2 4Q rolling 0 10 20 30 0 10 20 2012 2013 2014 2015 16Q2 4Q rolling CFFO Cash investment Free cash flow (RHS) Dividend declared Buyback End period gearing (RHS) Upstream Integrated gas Downstream ROACE (RHS)Corporate/Other % %
  12. 12. Royal Dutch Shell September 7, 2016 12 * $60 oil price scenario 2018 (2016 RT Brent) Manage down-cycle Pulling levers to manage financial framework 2016-18 levers Divestments Reduce capital investment Reduce operating costs Deliver new projects  Reducing our cash break-even  Further options available  +/- $10 Brent = ~5 billion CFFO $ billion 2015 baseline: Shell + BG 2016 2017-2018 potential Operating costs 46 Trend to 40 (underlying) Multi-billion p.a. Capital investment 36 ~29 25-30 Divestments 6 + 5 6-8 in progress 30 over 2016-18 Projects start-up post-2014 (CFFO) n/a ~$2 billion ~10 billion by 2018*
  13. 13. Royal Dutch Shell September 7, 2016 13 Manage down-cycle Divestments Integrated gas split out from Upstream from 2011 onwards $ billion Divestment program  $30 billion 2016-18  Progressing $6-8 billion 2016  5-10 countries; ~10% of production 0 10 20 30 2007-09 2010-12 2013-15 2016-18 Downstream/Corporate High grading ‘tail’ Infrastructure + mature positions Refocus portfolio Upstream Integrated Gas 2016-2018 completed + announced $ billion Completed – MLP 0.8 – Denmark marketing 0.3 – N.Z.: Maui pipeline 0.2 – MGL IPO 0.1 – Others 0.1 Total completed 1.5 Announced – Showa Shell ~1.4 – Brutus/Glider 0.4 – Malaysia refining ~0.2– Anasuria cluster – Maclure Total announced ~2.0 TOTAL ~3.5 In progress – Motiva JV end – N.Z.: upstream strategic review – Thailand strategic review – Selective North Sea strategic review – Argentina Downstream strategic review Divestments Reduce capital investment Reduce operating costs Deliver new projects
  14. 14. Royal Dutch Shell September 7, 2016 0 20 40 60 2013 2014 15Q2 4Q rolling 2015 16Q2 4Q rolling 2016E 2017 - 20 avg 0 20 40 60 2013 2014 15Q2 4Q rolling 2015 16Q2 4Q rolling Shell + BG 2016E 2017 - 20 avg $25-30 billion 14 2016 excludes BG purchase price $ billion Capital investment Manage down-cycle Lower & more predictable capital investment  Planning for $25-$30 billion range  $30 billion/year ceiling  Trending low in range today  Options to further reduce below $25 billion if warranted Shell BG -25% Divestments Reduce capital investment Reduce operating costs Deliver new projects Shell + BG C.I. on a cash basis 58 47 41 36 53 43 37 33 31 ~2929 ~26
  15. 15. Royal Dutch Shell September 7, 2016 15 Manage down-cycle Reduce operating cost Excluding identified items $ billion Operating cost 0 10 20 30 40 50 2014 15Q2 4Q rolling 2015 16Q2 4Q rolling Shell + BG end-2016 run-rate Shell BG Divestments Reduce capital investment Reduce operating costs Deliver new projects  Substantial reductions delivered  “Lower for ever” mindset + BG synergies  Staff, supply chain + contractors  Divestments, growth, FX impacts -$4 billion ~40 49 46 44 42
  16. 16. Royal Dutch Shell September 7, 2016 * BG organic growth from 1.1.2016 | LNG volume includes offtake  Significant oil & gas + Downstream production under construction  Capex to free cash flow  High margin / price upside barrels Manage down-cycle Deliver new projects  Cash operating cost <$15/boe  Tax rate ~35% 16 Thousand boe per day* 2016-17 start-ups 2014-15 start-ups LNG volume (RHS) 2018+ start-ups Million tonnes per annum Divestments Reduce capital investment Reduce operating costs Deliver new projects
  17. 17. Royal Dutch Shell September 7, 2016 Competitive financial data as published. Free cash flow: cash flow from operations less cash used in investing activities. $/ADR for European companies. ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items. Capital employed on gross debt basis. Financial dashboard % Gearing % ROACE $/share Free cash flow per share % Total shareholder return 0 10 20 30 Q211 Q212 Q213 Q214 Q215 Q216 -30 -15 0 -10 0 10 20 30 Q211 Q212 Q213 Q214 Q215 Q216 -10 -5 0 5 10 Q211 Q212 Q213 Q214 Q215 Q216 0 10 20 3 years to Q2 2016 12 months to Q2 2016 Shell Peer group
  18. 18. Royal Dutch Shell September 7, 2016 18 Transformation CREATE A WORLD CLASS INVESTMENT CASE Improved capital efficiency: reduced investment/FCF ratio Energy transition: CO2 footprint & new energies strategy Simpler company: Exit ~10% production; 5-10 countries Less cost + fewer people with BG than Shell stand-alone: 12,500 fewer staff Capital efficiency: 2013 spending halved & $45 billion mitigated Improving our metrics: FCF/share; ROCE; net debt $30bn divestments: Innovative deals like Motiva, Showa and MLP Portfolio growth: 1 mboe/d adds $10 bln cash flow 2019-2021 average 2013-2015 average Brent ROACE ~$60 ~10% ~$90 8% Organic free cash flow $20-25 billion p.a.$5 billion p.a. $60 oil price scenario (2016 RT Brent
  19. 19. Questions & Answers
  20. 20. Barclays CEO Energy-Power conference Royal Dutch Shell plc Ben van Beurden Chief Executive Officer September 7, 2016

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