Slide 1: Fourth quarter 2017 results
Fourth quarter 2017 results Delivering a world-class investment case Royal Dutch Shell plc February 1, 2018 #makethefuture Royal Dutch Shell February 1, 2018
Slide 2: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell Royal Dutch Shell February 1, 2018
Slide 3: 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 Definitions & classified as SEC proved oil and gas reserves. Resources are consistent with t
Slide 4: Summary
Summary 2017 Thrive in Year of transformation the energy transition Strong financial delivery + strengthened financial framework Growth momentum World-class investment case Q4 2017 Strong delivery + strong earnings Timing effects on cash flow Strong Dividend: $0.47 per share – no scrip l
Slide 5: Financial summary
2017 Financial summary 15.8 Earnings ($ billion); EPS +109% versus 2016 FY 35.7 Cash flow from operations ($ billion) 27.6 Free cash flow ($ billion) 5.6 ROACE (%) 24.8 Gearing (%) Earnings and ROACE on CCS basis, excluding identified items Royal Dutch Shell February 1, 2018 5
Slide 6: Portfolio highlights
Q4 2017 Divestment completions in Q4 2017 Portfolio UK North Sea up to $3.8 billion highlights Woodside ~$2.7 billion Gabon ~$900 million Comgas ~$380 million Hong Kong LPG ~$150 million Brazil – Libra FPSO “Pioneiro de Libra” Whale discovery – Gulf of Mexico Divestments: headline, cash pr
Slide 7: Major Gulf of Mexico discovery
Exploration One of Shell’s largest Better map available? Major Gulf of discoveries in U.S. Gulf of Mexico discovery Mexico in the last decade Close to existing infrastructure Appraisal drilling underway Shell-operated (60%) Targeting production in early 2020s Royal Dutch Shell February 1, 20
Slide 8: Brazil deep water
Deep water Production + current development Post 2020 - Libra Post 2025 – new leases Brazil Thousand boe per day 400 New block +140% Alto de Cabo Frio Oeste (Shell operator) Gato do Mato New block Sul do Gato do Mato (Shell operator) 200 Libra Iara Iracema Sagitário Lula 0 Lapa Sapinhoá New block En
Slide 9: Capital discipline & operating cost supporting growth
Capital discipline Capital investment Capital investment Underlying operating expenses & operating cost $ billion (p.a.) 2018 – 2020 $ billion $ billion 40 45 -$6 billion supporting Oil products 4-5 -$12 billion growth Conventional oil + gas 4-5 30 Integrated gas 4-5 25 30 Deep water 5-6 20 Chemical
Slide 10: Strong cash momentum continues
Strong cash Cash flow from operations excluding working capital movements momentum $ billion 99 52 44 54 40 continues +60%; +$14.5 billion 30 20 10 2017 CFFO excl. 0 working capital $39 2014 2015 2016 2017 movements Cash flow from operations excluding working capital movements (billion) # Average Br
Slide 11: Strategic themes delivery: on track
Strategic themes 2017 ~$54 2019-21** ~$60 delivery: on track Strategic Capital employed Free cash flow ROACE Capital employed Free cash flow* ROACE themes ($ bln end 2017) ($ bln p.a) (%) ($ bln) ($ bln p.a) (%) Cash engines ~59% ~14 ~9 ~70% 25-30 >10 Growth ~27% ~2 ~4 ~20% 1-2 ~5 priorities Emergin
Slide 12: Jessica Uhl, Chief Financial Officer
Jessica Uhl Chief Financial Officer Royal Dutch Shell Royal Dutch Shell February 1, 2018
Slide 13: Financial highlights
Q4 2017 Earnings Q4 2016 to Q4 2017 CFFO excl. working capital Q4 2016 to Q4 2017 Financial $ billion $ billion highlights 5 10 0.1 0.7 ~0.1 0.5 (1.1) 4 (0.1) (0.7) 1.6 3 5 9.8 4.3 8.4 2 1 1.8 0 0 Strong earnings Cash flow timing effects Dividend: $0.47 per share – no scrip Earnings on CCS bas
Slide 14: SEC proved reserves position
Preliminary results 2017 Reserves performance Reserves performance SEC proved 2017 RRR 27% Billion boe reserves position 2017 RRR (excl. A&D) 127% 14 (1.4) 1.8 3-yr avg RRR 78% 12 (1.4) Reserves/Production at end 2017 ~8.9 years 10 (billion boe) 2015 2016 2017 8 Production 1.1 1.4 1.4 SEC pr
Slide 15: Financial performance
2017 Upstream Integrated Gas Downstream Financial $ billion $ billion $ billion performance 20 20 20 15 15 15 10 10 10 5 5 5 0 0 0 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Earnings -5 CFFO excl. working capital movements 2017 Earnings $3.1 billion Earnings $5.3 billion Earni
Slide 16: Operational performance
2017 Upstream + Integrated Gas – oil & gas production Operational Million boe per day performance 4,25 4.25 0.29 0.09 (0.08) 4,00 4.00 (0.20) 3,75 3.75 (0.25) 4.00 3.91 3,50 3.50 3.76 3,25 3.25 Q4 2016 Growth Decline Performance Maintenance Q4 2017 Acquisitions & Q4 2017 / Other excl. A&D Divestment
Slide 17: Improving capital efficiency
2015 – 2017 actions Capital efficiency potential Improving Supply chain Delivered $6 billion capital efficiency savings in 2014-2017 capital efficiency Competitive scoping Portfolio unit development costs reduced by 35% since 2014 Efficient execution Affordable technology Deep water – unit devel
Slide 18: Sustaining capital efficiency
2018+ Ways of working Competitive scoping Supply chain transformation Sustaining capital efficiency Efficient planning, execution, Design, equipment and scope Partnership and collaboration resources and utilisation specifications Outcome-based contract strategy Revamped risk-based approach Fit
Slide 19: Foundation of the world-class investment case
Financial framework Foundation of the world-class Thrive in Key features investment case the energy transition Maximising value for shareholders through cycle Multi-year timescales World-class Surplus free cash flow in up-cycle and dividends fully covered investment case in down-cycle Conser
Slide 20: Financial framework
Financial Divestments 2016 + 2017 Net debt and gearing framework $ billion $ billion 75 % 30 30 20 50 20 10 25 10 0 0 0 Completed Announced In progress Total 2014 2015 2016 2017 / signed Net debt Gearing (RHS) Free cash flow Shareholder distributions $ billion $ billion 30 15 2017 27.6 Free cash flo
Slide 21: Free cash flow performance and payout
Free cash flow Distributions from free cash flow performance and $ billion payout 40 $99/bbl $54/bbl $60/bbl* 30 20 Financial transformation 10 2014-2017 2019-2021 average: FCF $30-35 billion 0 At least $25 billion** 2014 2017 2019-2021 average buyback over Divestment proceeds less acquisition
Slide 22: Cash flow priorities
World-class investment case Cash flow priorities 1 2 3 Priorities Buybacks Debt reduction Dividends & capital for cash investment Continue to reduce Cancel scrip dividend Buy back shares gearing to 20% Progress towards a world-class investment case Increase shareholder distributions Royal Dutc
Slide 23: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell Royal Dutch Shell February 1, 2018
Slide 24: Summary
Summary 2017 Thrive in Year of transformation the energy transition Strong financial delivery + strengthened financial framework Growth momentum World-class investment case Q4 2017 Strong delivery + strong earnings Timing effects on cash flow Strong Dividend: $0.47 per share – no scrip l
Slide 25: Questions & Answers
Questions & Answers Ben van Beurden Jessica Uhl Chief Executive Officer Chief Financial Officer Royal Dutch Shell February 1, 2018 25
Slide 26: Q1 2018 Outlook
Q1 2018 Q1 – Q1 OUTLOOK: Year-ago baseline reflects Shell’s earnings seasonality Outlook Integrated gas Production volumes: positive impact of ~210 thousand boe/d, mainly associated with Pearl, Gorgon and portfolio impacts Upstream Divestment impact: reduction of ~270 thousand boe/d Mainte
Slide 27: Prices & margins
Q4 2017 Shell oil & gas realisations Industry refining margins Industry chemicals margins Prices & margins $/barrel $/mscf $/barrel $/tonne 60 5 18 1000 15 4 800 40 12 3 600 9 2 400 20 6 1 200 3 0 0 0 0 Q416 Q117 Q217 Q317 Q417 Q416 Q117 Q217 Q317 Q417 Q416 Q117 Q217 Q317 Q417 Oil US West Coast US e
Slide 28: Financial highlights Q4 2017
Q4 2017 $ billion Q4 2016 Q4 2017 Earnings Q4 2016 to Q4 2017 Financial Upstream 0.1 1.7 $ billion highlights Integrated Gas 0.9 1.6 5 0.1 0.7 ~0.1 Downstream (CCS) 1.3 1.4 4 Corporate & (0.5) (0.4) non-controlling interest 1.6 CCS net earnings 1.8 4.3 3 CCS earnings, $ per share 0.22 0.52 4.3 2 Cas
Slide 29: Financial highlights 2017
2017 $ billion 2016 2017 Earnings 2016 to 2017 Financial Upstream (2.7) 3.1 $ billion highlights Integrated Gas 3.7 5.3 18 1.8 1.6 (0.6) Downstream (CCS) 7.2 9.1 Corporate & 5.8 (1.1) (1.7) non-controlling interest 12 CCS net earnings 7.2 15.8 CCS earnings, $ per share 0.91 1.90 15.8 6 Cash flow fro
Slide 30: Integrated Gas results
Q4 2017 Earnings Q4 2016 to Q4 2017 Integrated Gas $ billion results 2 Environment Choice 0.2 0.1 (0.1) 0.1 0.1 0 0.3 1 1.6 0.9 0 Earnings on CCS basis, excluding identified items Royal Dutch Shell February 1, 2018 30
Slide 31: Upstream results
Q4 2017 Earnings Q4 2016 to Q4 2017 Upstream results $ billion Environment Choice 2 0.1 1.0 1 0.9 0.5 1.7 ~0 (0.3) (0.6) ~0.1 0 Earnings on CCS basis, excluding identified items Royal Dutch Shell February 1, 2018 31
Slide 32: Downstream results
Q4 2017 Earnings Q4 2016 to Q4 2017 Earnings mix Downstream $ billion $ billion results 2 10 0.1 0.1 0.1 (0.3) 1 5 1.3 1.4 0 0 2014 2015 2016 2017 Marketing Refining & Trading Chemicals Earnings on CCS basis, excluding identified items Royal Dutch Shell February 1, 2018 32
Slide 33: Projects under construction
Projects under construction 2018-19 Shell share >700 kboe/d 2.4 mtpa LNG 1.2 mtpa NGLs 50 kbpd refined products 0.6 mtpa ethylene 0.4 mtpa AO 2020+ Shell share * Permian and Fox Creek production represents Shell entitlement share of production growth 2017 through 2020. >200 kboe/d ** T
Slide 34: Pre-FID options
Pre-FID options Shell share potential ~700 kboe/d >15 mtpa LNG Royal Dutch Shell February 1, 2018 34
Slide 35: Royal Dutch Shell February 1, 2018
Royal Dutch Shell February 1, 2018