Slide 1: Third quarter 2018 results
Third quarter 2018 results Delivering a world-class investment case Royal Dutch Shell plc November 1, 2018 #makethefuture Royal Dutch Shell November 1, 2018
Slide 2: Jessica Uhl, Chief Financial Officer
Jessica Uhl Chief Financial Officer Royal Dutch Shell Royal Dutch Shell November 1, 2018
Slide 3: Definitions & cautionary note
Definitions & Operating costs are defined as underlying operating expenses, which are operating expenses less identified items. Organic free cash flow is defined as free cash flow excluding inorganic capital investment and divestment proceeds. ROACE (Return on Average Capital Employed) is defined as
Slide 4: Summary
Summary Key messages Thrive in Cash flow delivery the energy Cash flow from operations excluding working capital of $14.7 billion transition Free cash flow of $8 billion Financial framework $25 billion share buyback programme ongoing World-class 1st tranche completed, 2nd tranche of up to $2.5 b
Slide 5: LNG Canada
Portfolio & projects Consistent with strategy and disciplined approach Emerging LNG supply-demand gap LNG Canada to capital investment Million tonnes per annum (DES) 600 500 LNG demand growth driven by Asia, supply gap 400 300 expected in early 2020s 200 100 Capital investment included within
Slide 6: Thriving in the Energy Transition
Portfolio & projects LNG Canada – competitive low carbon footprint Beijing – gas as a cleaner alternative to coal Thriving in BCM μg/m3 the Energy Low upstream emissions 20 120 Transition British Canada Alberta in the Montney 18 Columbia 100 16 14 80 LNG plant clean 12 power import 10 60 8 40 6 Low
Slide 7: Portfolio highlights Q3 2018
Q3 2018 Portfolio & projects Nigeria Epu near field discovery – 823 net feet of new hydrocarbon Portfolio Other portfolio Exploration bearing pay developments highlights Brazil bid round – awarded Saturno pre-salt block as operator, increasing Brazilian offshore acreage to 2.7 million acres Ma
Slide 8: Financial highlights: summary
Q3 2018 Financial Cash Cash flow from operations highlights: generation excl. working $14.7 billion Highest since Q2 2008 when Brent averaged >$120/bbl for the quarter summary capital Of which $7.5 billion organic free cash flow Free cash flow $8.0 billion More than covers dividend, interest a
Slide 9: Financial highlights: earnings
Q3 2018 $ billion Q3 2017 Q3 2018 Earnings Q3 2017 to Q3 2018 Financial Integrated Gas 1.3 2.3 $ billion highlights: 8 Upstream 0.6 1.9 earnings 0.3 2.5 Downstream (CCS) 2.7 2.0 6 (0.1) (0.8) Corporate & (0.2) (0.1) (0.4) (0.6) non-controlling interest 4 CCS earnings 4.1 5.6 CCS earnings, $ per shar
Slide 10: Financial highlights: cash flow
Q3 2018 $ billion Q2 2018 Q3 2018 CFFO excl. working capital Q2 2018 to Q3 2018 Financial Integrated Gas 3.0 3.3 $ billion highlights: Upstream 5.5 6.7 16 0.6 cash flow Downstream 1.0 1.0 0.8 0.5 0.6 0.6 Corporate 0.0 1.1 12 Cash flow from operations 9.5 12.1 8 Cash flow from operations 14.7 excl. w
Slide 11: Financial highlights: trend
Q3 2018 Earnings & ROACE (4Q rolling) Cash flow (4Q rolling) Gearing Financial $ billion % $ billion $ billion % 45 80 30 highlights: 25 25 75 trend 15 15 30 70 25 65 15 60 20 5 5 55 0 50 15 -5 -5 2014 2015 2016 2017 18Q3 2014 2015 2016 2017 18Q3 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q
Slide 12: Four powerful levers
Outlook Operating expenses Capital investment Four powerful 4-quarters rolling underlying operating $25-30 billion per annum until 2020 levers expenses of $38.7 billion Disciplined & efficient capital allocation Drive simplification, standardisation Material savings post-FID and digitalisa
Slide 13: Projects delivery
Outlook Cash contribution from new projects Selected key projects Start-up Projects $ billion Deep- Brazil (8 FPSOs) delivery 20 water Gulf of Mexico (Cardamom, Mars, Stones, Kaikias) Malikai Gumusut Kakap Ph1 Brazil - Lula North (P-67) Q4 2018 Appomattox Q3 2019 Integrated QCLNG Gas Gorgo
Slide 14: Normalisation
Outlook Organic free cash flow Q3 2018 to 2020 Outlook Organic free $ billion On track to deliver 2020 outlook of $25-30 cash flow 35 billion organic free cash flow >7 25-30 30 25 ~24 Normalised organic free cash flow excludes ~21 effects of margining and working capital 20 (3) movements 15 10
Slide 15: Cash allocation
Financial framework Cash allocation Buybacks Intention to purchase $25 billion by the end of 2020 Surplus Subject to further progress with debt reduction and oil price CFFO conditions Capital investment $25-30 billion p.a., organic & inorganic ~$25 billion in 2018 and within the range in 201
Slide 16: Summary
Summary Key messages Thrive in Cash flow delivery the energy Cash flow from operations excluding working capital of $14.7 billion transition Free cash flow of $8 billion Financial framework $25 billion share buyback programme ongoing World-class 1st tranche completed, 2nd tranche of up to $2.5 b
Slide 17: Questions & Answers
Questions & Answers Jessica Uhl Chief Financial Officer Royal Dutch Shell November 1, 2018 17
Slide 18: Royal Dutch Shell November 1, 2018
Royal Dutch Shell November 1, 2018
Slide 19: RDS working capital movements
RDS working Working capital movements Q2 2018 to Q3 2018 Working capital movements Q3 2017 to Q3 2018 capital $ billion 8 $ billion 8 movements 1.3 0.6 6 6 5.6 4 4 7.5 0.9 2 1.1 2 ~300 million boe in 2.6 Downstream inventory at 0.5 end Q3 2018 – materially 0 0 unchanged from Q3 2017 Inventories - In
Slide 20: Q4 2018 Outlook
Outlook Q4 – Q4 OUTLOOK: Year-ago baseline reflects Shell’s earnings seasonality Q4 2018 Integrated gas Outlook Production volumes: 0-40 thousand boe/d lower, mainly due to divestments Liquefaction volumes: up to 0.3 million tonnes higher, mainly due to increased feed gas availability and lowe
Slide 21: Prices & margins
Q3 2018 Shell oil & gas realisations Industry refining margins Industry chemicals margins Prices & margins $/barrel $/mscf $/barrel $/tonne 80 6 18 1000 5 15 800 60 4 12 600 40 3 9 400 2 6 20 200 1 3 0 0 0 0 17Q3 17Q4 18Q1 18Q2 18Q3 17Q3 17Q4 18Q1 18Q2 18Q3 17Q3 17Q4 18Q1 18Q2 18Q3 Oil US West Coast
Slide 22: Integrated Gas results
Q3 2018 Earnings Q3 2017 to Q3 2018 Integrated Gas $ billion results 3 Environment Choice 1.2 0.1 (0.2) (0.1) ~(0) 2 2.3 1 1.3 0 Earnings on CCS basis, excluding identified items Royal Dutch Shell November 1, 2018 22
Slide 23: Upstream results
Q3 2018 Earnings Q3 2017 to Q3 2018 Upstream $ billion results 3 Environment Choice 0.1 0.1 0.1 0.1 1.8 2 (0.8) (0.1) 1 1.9 0.6 0 Earnings on CCS basis, excluding identified items Royal Dutch Shell November 1, 2018 23
Slide 24: Downstream results
Q3 2018 Earnings Q3 2017 to Q3 2018 Earnings mix Downstream $ billion $ billion results 3 10 (0.3) (0.1) (0.1) 2 (0.1) ~(0) 5 2.7 2.0 1 0 0 2015 2016 2017 18Q3 4Q rolling Marketing Refining & Trading Chemicals Earnings on CCS basis, excluding identified items Royal Dutch Shell November 1, 2018 24
Slide 25: Projects under construction
Projects Start-up Project Country Shell share % Peak production 100% kboe/d LNG 100% capacity mtpa Products Legend Theme Shell operated under 2018-19 Appomattox Atapu South (P-70)* United States Brazil 79 25 175 150 Deep water Deep water P construction Berbigão and Sururu SW (P-68)* Brazil 25 15
Slide 26: Pre-FID options
Pre-FID Phase Project Country Shell share % Peak production 100% kboe/d LNG 100% capacity mtpa Products Legend Theme Shell operated options Define Arrow Surat Assa North Australia Nigeria 50 30 TBD 60 Integrated Gas Conventional oil + gas P Bonga South West Nigeria 43 175 Deep water P Gbaran P