This document provides an overview of a presentation given by Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, at a conference in Paris on November 30, 2011. The presentation covers Shell's strategy and financial performance, with a focus on delivering profitable growth through investments in upstream oil and gas projects, downstream refining and marketing assets, and gas-to-liquids technologies. Specific examples of recent and ongoing projects that will underpin targeted production growth through 2014 are highlighted.
The CMO Survey - Highlights and Insights Report - Spring 2024
Shell CFO Discusses Financial Strategy and Outlook
1. ROYAL DUTCH SHELL PLC
PREMIUM CONFERENCE
SOCIETE GENERALE
PARIS
30 NOVEMBER 2011
1 Copyright of Royal Dutch Shell plc 30 November 2011
2. ROYAL DUTCH SHELL PLC
SIMON HENRY
CHIEF FINANCIAL OFFICER
2 Copyright of Royal Dutch Shell plc 30 November 2011
3. DEFINITIONS AND CAUTIONARY NOTE
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.
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 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 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 a controlling 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 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/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 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‟‟, “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 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 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. 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 Annual Presentation / Form 20-F for the year ended December
31, 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 of
the date of this presentation, 30 November 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 inferred
from 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 forms
from the SEC by calling 1-800-SEC-0330.
3 Copyright of Royal Dutch Shell plc 30 November 2011
4. ENERGY OUTLOOK
GLOBAL ENERGY MIX
Mln Boe/d
Industry outlook
400
Hydrocarbons dominate outlook
300
Growth required in all sectors of energy mix
Energy policy + sustained investment
200
Shell
100 Crude oil & oil products
Natural gas & LNG
0 Biofuels, wind, carbon capture + storage
1980 1990 2000 2010 2020 2030 2050
Petrochemicals
OIL BIOMASS COAL
GAS WIND NUCLEAR
SOLAR
SHELL ACTIVITIES
OTHER RENEWABLES
SHELL ESTIMATES
4 Copyright of Royal Dutch Shell plc 30 November 2011
5. SHELL
‘GOAL ZERO’ ON SAFETY
Injuries – TRCF per million working hours Million working hours
5 900
4 800
3 700
2 600
1 500
Customer and Profitability & 0 400
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 H1
partner focus performance WORKING HOURS (RHS) TRCF 11
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 FACILITIES
5 Copyright of Royal Dutch Shell plc 30 November 2011
6. STRATEGY & CAPITAL ALLOCATION
STRATEGY CAPITAL INVESTMENT
$ Bln
Upstream
150
Profitable growth; price upside
>80% of total capital spending
Sustained exploration investment
100
Downstream UPSTREAM
Stable capital employed
Fewer refineries; upgrade chemicals assets 50
More concentrated marketing positions
DOWNSTREAM
Financial outlook 0
2007-10 2011-14
Generating surplus cash flow through cycle
Investing for growth; competitive payout
Substantial cash flow growth
Growth Investment – Through Cycle Returns
6 Copyright of Royal Dutch Shell plc 30 November 2011
7. FINANCIAL PERFORMANCE AND PRIORITIES
EARNINGS PRIORITIES
$ Bln
35
30
PERFORMANCE FOCUS
25
20
15 NEW WAVE OF PRODUCTION
GROWTH
10
5
0
MATURING NEXT GENERATION OF
PROJECT OPTIONS
-5
2007 2008 2009 2010 Q1-Q3 '11
UPSTREAM CORPORATE
DOWNSTREAM DIVESTMENTS/OTHER
CURRENT COST OF SUPPLY EARNINGS
7 Copyright of Royal Dutch Shell plc 30 November 2011
8. ROYAL DUTCH SHELL
PERFORMANCE FOCUS
8 Copyright of Royal Dutch Shell plc 30 November 2011
9. PERFORMANCE FOCUS
CONTINUOUS IMPROVEMENT EXAMPLE: CAPITAL EFFICIENCY
Asset sales - $ Bln (cumulative)
40 CORPORATE
UPSTREAM
30 DOWNSTREAM
Cost focus
20
10
0
07 08 09 10 Q1-Q3 2011
Continuous Operational
Simplification
improvement excellence
EXAMPLE: WELLS MANUFACTURING JV WITH CNPC
Capital
efficiency
9 Copyright of Royal Dutch Shell plc 30 November 2011
10. DOWNSTREAM VALUE CHAINS
Retail
Business-to-
Refining Business
Supply &
Distribution
Chemicals Lubricants
Chemicals
Trading
3 keys to winning
Operational excellence – Concentrating the portfolio – Selective growth
10 Copyright of Royal Dutch Shell plc 30 November 2011
12. GROWTH DELIVERY
BIOFUELS GROWTH: BRAZIL
GLOBAL BIOFUELS GROWTH POTENTIAL RAìZEN JOINT VENTURE
Kboe/d production
Marketing JV
3,000 SOYBEAN RAPESEED
PALM OIL OTHER ~4,500 retail sites; ~10% of Shell world-
2,000
CORN SUGARCANE wide portfolio
~19% market share in Brazil
1,000
Rebranding and enhanced customer
offering
0
2005 2010 2015 2020 Synergies + growth potential
RAìZEN: LARGEST IOC BIOFUELS PRODUCER
Biofuels JV
Brazilian sugarcane ethanol Leading Brazil and Top 5 global ethanol
player
lowest CO2
• > 30 kbd ethanol production capacity
most sustainable of today‟s biofuels • > 80 kbd potential ~ 5 years
most cost competitive Shell world-wide trading opportunities
2nd generation technology portfolio
12 Copyright of Royal Dutch Shell plc 30 November 2011
13. ROYAL DUTCH SHELL
GROWTH DELIVERY
13 Copyright of Royal Dutch Shell plc 30 November 2011
14. GROWTH DELIVERY
CONVERTING RESOURCES TO PRODUCTION
Bln Boe resources
Longer-term upside
35 NA tight gas
Australia
Cardamom Deep
Appomattox Prelude
Prelude Vito AOSP debottleneck
25 10
8 Pearls (CMOC) 8 Schiehallion
Cardamom
NA tight gas
Gorgon Mars-B
Clair Ph2
NA tight gas BC-10 Phase2
15
10 11 11
AOSP-Exp 1 Pearl GTL
Sakhalin Gjoa QG-4
BC-10 Perdido Schoonebeek
5 9 9 Gbaran Ubie 10 Oman EOR
NA tight gas Others
-5
2008 2009 2010
ON-STREAM UNDER CONSTRUCTION STUDY PRODUCTION
2011 PROGRESS
Maintaining Upstream momentum
14 Copyright of Royal Dutch Shell plc 30 November 2011
15. GROWTH DELIVERY
2011 START-UPS
INNOVATIVE 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 SCENARIO
15 Copyright of Royal Dutch Shell plc 30 November 2011
16. GROWTH DELIVERY
LAUNCHING NEW UPSTREAM PROJECTS
2010 + 2011 YEAR-TO-DATE INVESTMENT DECISIONS
Cardamom – USA Sabah Gas Kebabangan (KBB) - Malaysia
50 kboe/d; 100% Shell 130 kboe/d; 30% Shell; PSC
Clair Ph2
AOSP Debottlenecking Schiehallion
1st FID
NA tight gas (various)
Cardamom Mars-B
Mars-B – USA Prelude FLNG – Australia
100 kboe/d; 72% Shell Sabah Gas KBB 110 kboe/d; 100% Shell
Prelude FLNG
BC-10 Phase 2 Wheatstone
2010-11 FIDs: >400,000 boe/d* potential
* PEAK PRODUCTION; SHELL SHARE
ENTITLEMENT AT $80/BBL; 2014 OUTLOOK ASSUMES LICENCE EXTENSIONS + 2010 ANNOUNCED ASSET SALES
16 Copyright of Royal Dutch Shell plc 30 November 2011
17. GROWTH DELIVERY
DEEPWATER UNDER CONSTRUCTION
MARS-B (GULF OF MEXICO) BC-10 PHASE 2 (CAMPOS, BRAZIL) CARDAMOM (GULF OF MEXICO)
Development concept Phase 1 FPSO Surface System and Subsea View
TLP capacity ~100 kboe/d Peak production ~30 kboe/d Peak production ~50 kboe/d
West Boreas + South Deimos Argonauta O-North field Tie back to Auger platform
Water depth 950 meters Water depth 1,600 meters Water depth 830 meters
Shell 72% (operator) Shell 50% (operator) Shell 100% (operator)
Part of >250 kboe/d deepwater production under construction
17 Copyright of Royal Dutch Shell plc 30 November 2011
18. GROWTH DELIVERY
AUSTRALIA LNG UNDER CONSTRUCTION
PRELUDE FLOATING LNG GORGON LNG
First FID ever on Floating LNG Greenfield LNG on Barrow Island
110 kboe/d peak production 3 x 5 MTPA LNG trains and domestic gas plant
3.6 mtpa LNG capacity + condensate/LPG Carbon capture and storage 4 mtpa
2007 discovery; 2011 FID Shell 25%
Shell 100% (operator)
Part of 9 mtpa under construction
18 Copyright of Royal Dutch Shell plc 30 November 2011
19. ROYAL DUTCH SHELL
MATURING NEXT GENERATION
PROJECT OPTIONS
19 Copyright of Royal Dutch Shell plc 30 November 2011
20. MATURING NEXT GENERATION OF PROJECT OPTIONS
ADDING NEW RESOURCES
EXPLORATION & BUSINESS DEVELOPMENT ADDING NEW RESOURCES AT LOW COST
Bln boe
2008
Canada - Duvernay Kazahkstan - Auezov
2009 Australia – Iago 2 Nigeria - Offshore 6
GoM – Cardamom Australia – Libra 1 <$2/boe entry cost
GoM - Vito GoM – West Boreas Brunei – ML-J206T1
Norway – Fram US - Haynesville 4
Canada – Groundbirch
Australia - Concerto ACQUISITION
2
Australia - Arrow
DISCOVERY
EXPLORATION
US - East Resources PROSPECT
0
GoM – South Deimos
US - Eagle Ford Brazil – Massa
GoM – Appomattox Australia - NWS F. Guyana - Zaedyus -2
Brazil – Gato do Matto China – Tight gas Brunei '08 '09 '10
2010 Brunei - Geronggong USA - GoM Alaska
2011/12 Brazil - DW EXPLORATION ACQUISITION/NEGOTIATED ENTRY
DISPOSALS PRODUCTION
20 Copyright of Royal Dutch Shell plc 30 November 2011
21. DRILLING TECHNOLOGY UNLOCKS NEW GROWTH
NORTH 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 gas
ACREAGE
TIGHT GAS
COAL BED METHANE
Arrow Energy
LNG
China: Changbei drilling rig
21 Copyright of Royal Dutch Shell plc 30 November 2011
22. MATURING NEXT GENERATION OF PROJECT OPTIONS
MATURING NEW PROJECTS
INVESTMENT 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 ~2020
22 Copyright of Royal Dutch Shell plc 30 November 2011
23. ROYAL DUTCH SHELL PLC
FINANCIAL FRAMEWORK
23 Copyright of Royal Dutch Shell plc 30 November 2011
24. INVESTMENT PROGRAMME
UPSTREAM DOWNSTREAM
% Capital investment % Capital investment
100% 100% 100%
EXPLORATION
80% HEAVY OIL & EOR
75% 75%
TIGHT GAS
SOUR
60%
DEEPWATER
50% 50%
40%
INTEGRATED GAS
25% 25%
20%
TRADITIONAL
0% 0% 0%
2007-10 2011-14 2007-10 2011-14 2007-10 2011-14
OTHERS AMERICAS
CHEMICALS MARKETING REFINING
EUROPE ASIA PACIFIC
Sustained growth investment
Capital discipline
2012-14 CAPITAL INVESTMENT EXCLUDES IRAQ FULL FIELD DEVELOPMENTS
24 Copyright of Royal Dutch Shell plc 30 November 2011
25. CONVERTING INVESTMENT TO CASHFLOW
INVESTING FOR NEW GROWTH DELIVERING CASHFLOW GROWTH
$ Bln
50 $/bbl BRENT
$105/bbl
60 $80/bbl
40
$60/bbl
50
30
40
$62/bbl
30
20
20
10
10
0 0
2007 2008 2009 2010 2011E 2012E 2009 Q1-Q3 2011 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 cashflow
Maintaining growth investment and competitive payout
CASH FLOW TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009-
2012
25 Copyright of Royal Dutch Shell plc 30 November 2011
26. OUTLOOK
PRIORITIES 2011-12 OUTLOOK
Continuous improvement embedded in Shell
PERFORMANCE FOCUS
Asset sales; capital efficiency
2011 start-ups: >400kboe/d*; $30bn
NEW WAVE OF PRODUCTION investment
GROWTH Selective Downstream growth
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 SCENARIO
26 Copyright of Royal Dutch Shell plc 30 November 2011
27. ROYAL DUTCH SHELL
PREMIUM CONFERENCE
SOCIETE GENERALE
Q&A
27 Copyright of Royal Dutch Shell plc 30 November 2011