Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Q4 2012 Earnings Presentation
52 slides from Shell's earnings presentation, Jan 31, 2013
Slide 1: Fourth Quarter 2012 Results & Strategy Update
ROYAL DUTCH SHELL PLC FOURTH QUARTER 2012 RESULTS & STRATEGY UPDATE DELIVERING COMPETITIVE & INNOVATIVE PERFORMANCE LONDON, JANUARY 31 2013 Copyright of Royal Dutch Shell plc 31 January 2013 1
Slide 2: Fourth Quarter 2012 Results and Strategy Update - Peter Voser
ROYAL DUTCH SHELL PLC FOURTH QUARTER 2012 RESULTS AND STRATEGY UPDATE PETER VOSER CHIEF EXECUTIVE OFFICER Copyright of Royal Dutch Shell plc 31 January 2013 2
Slide 3: Definitions and Cautionary Note
DEFINITIONS AND 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
Slide 4: Reconfirming Our Growth Agenda
RECONFIRMING OUR GROWTH AGENDA ON TRACK FOR 2012-15 TARGETS Maintaining our long term focus; managing short-term headwinds 2012 reported CCS earnings $27 billion, total CFFO $46 billion; delivering growth Expected Q1 2013 dividend increase 4.7%, $0.45 per share, reflecting growth momentum GROW
Slide 5: Focus on Safety and Asset Integrity
FOCUS ON SAFETY AND ASSET INTEGRITY 2012 UPDATE ‘GOAL ZERO’ ON SAFETY SPILLS - OPERATIONAL injuries – TRCF/million working hours million working hours Volume in thousand tonnes Working hours TRCF ENERGY INTENSITY - REFINERIES Energy Intensity Index (EEITM) HSSE PRIORITY PERFORMANCE + TRANSPARENC
Slide 6: Energy Market
ENERGY MARKET ROBUST LONGER-TERM FUNDAMENTALS MANAGING SHORT-TERM VOLATILITY ENERGY DEMAND OUTLOOK $/bbl $ per unit of measurement million boe/d Oil Coal Brent (LHS) Gas Nuclear WTI (LHS) Shell activities Biomass Other Renewables Western Canada Select (LHS) Wind Solar Henry Hub $/mmbtu (RHS) Weighte
Slide 7: Strategy and Capital Allocation
STRATEGY AND CAPITAL ALLOCATION TOTAL CAPITAL INVESTMENT $ billion UPSTREAM Growth strategy; price upside Priority: deep-water, integrated gas, resources plays DOWNSTREAM Optimize re-shaped portfolio Selective growth CLIMATE CHANGE Grow gas and biofuels CCS and energy efficiency FINANCIA
Slide 8: Reconfirming Our Outlook
RECONFIRMING OUR OUTLOOK 2012 OUTLOOK Cash flow from operations $46 billion 2012-15: $175-200 billion ($43 billion ex W/C) Net capex $30 billion 2012-15: $120-130 billion Dividends distributed $10.8 billion 2013 >$11 billion Oil and gas production outcome 3.3 million boe/d 2017/18: ~4.0 million boe/
Slide 9: Improving Our Performance
IMPROVING OUR PERFORMANCE EARNINGS TOTAL SHAREHOLDER RETURN $ billion CCS +45% Shell Other majors CASH FLOW FROM OPERATIONS VOLUMES $ billion million boe per day million tonnes per annum + ~70% 2010 2011 2012 Upstream Corporate Oil + Gas production volumes LNG sales volumes Downstream Divestments/ot
Slide 10: Operational Excellence
OPERATIONAL EXCELLENCE UNPLANNED DOWNTIME: DOWNSTREAM LNG RELIABILITY % % Oil Products Chemicals UPSTREAM FACILITIES COMPONENT COST (IPA) BENCHMARK QUARTILE 1Q 2Q IMPROVING ASSET UPTIME 3Q MANAGING COSTS 4Q Copyright of Royal Dutch Shell plc 31 January 2013 10
Slide 11: 2010-12 Track Record
2010-12 TRACK RECORD START-UPS 2010-12 FINANCIAL PERFORMANCE: ~20 START-UPS 2010-12 2010 $ billion million boe per day USA: Perdido Singapore: Chemicals North America: tight gas Nigeria: Gbaran Ubie Ph1 Norway: Gjoa Canada: AOSP-1 Raízen Qatar + AOSP-1 CFFO impact 2011 Iraq:West Qurna Netherlands: S
Slide 12: Q4 + 2012 Results - Simon Henry
ROYAL DUTCH SHELL PLC Q4 + 2012 RESULTS SIMON HENRY CHIEF FINANCIAL OFFICER Copyright of Royal Dutch Shell plc 31 January 2013 12
Slide 13: Q4 and 2012 Financial Highlights
Q4 AND 2012 FINANCIAL HIGHLIGHTS EARNINGS 2011-12 $ billion FY 2011 FY 2012 UPSTREAM 20.6 20.0 DOWNSTREAM (CCS) 4.3 5.3 BUSINESS SEGMENTS TOTAL 24.9 25.3 CORPORATE & MINORITIES (0.2) (0.2) CCS NET EARNINGS 24.7 25.1 BASIC CCS EARNINGS, $ PER SHARE 3.97 4.02 EARNINGS Q4 2011 TO Q4 2012 CASH FROM OPER
Slide 14: Upstream & Downstream Performance
UPSTREAM & DOWNSTREAM PERFORMANCE UPSTREAM EARNINGS DOWNSTREAM EARNINGS $ billion $ billion Other Upstream Oil Products Integrated gas Chemicals SHELL OIL & GAS REALISATIONS INDUSTRY REFINING + CRACKER MARGINS $/barrel $/mscf $/barrel $/tonne Oil Weighted average refining margin Gas (RHS) US ethane
Slide 15: Cash Flow and Payout
CASH FLOW AND PAYOUT CASH GENERATION DIVIDEND TRACK RECORD $ billion $ billion $ billion $ billion 2010-12 2012 DOWN STREAM DOWN STREAM UP UP STREAM STREAM Sources Uses Sources Uses Cash flow from operations Dividend and buyback Dividends declared Asset sales Capex + equity acc. investments FTSE 100
Slide 16: Working Our Portfolio for Growth & Capital Efficiency
WORKING OUR PORTFOLIO FOR GROWTH & CAPITAL EFFICIENCY DIVESTMENTS 2010-2012 ACQUISITIONS 2010-2012 Onshore assets, Nigeria Permian, USA Upstream Upstream Downstream Holstein, Gulf of Mexico Downstream Beryl, UK REFOCUSED DOWNSTREAM: GROWTH OIL + GAS: Europe; Africa; Latin-America Resources plays
Slide 17: SEC Proved Reserves Position
SEC PROVED RESERVES POSITION 2010-12 RESERVES ADDITIONS 2012 RESERVES PERFORMANCE 2012 RRR 44% 2010-12 RRR 84% Reserves life at end 2012 ~ 11 years 2010-12 RESERVES AVG. PERFORMANCE Organic2 additions ~ 4.2 billion boe Production ~ 3.7 billion boe Organic reserves replacement 115% Major
Slide 18: Hydrocarbon Maturation + Returns
HYDROCARBON MATURATION + RETURNS CONVERTING RESOURCES TO PRODUCTION… …AND RETURNS billion boe $ billion % Longer-term upside Abadi FLNG Phase 1 Tukau Timur Zaedyus Gbaran Ubie Ph2 Zabazaba Rab Harweel Erha North ph3 Tempa Rossa ML South Fram BC-10 ph3 Malikai Eagle Ford Forcados Yokri Permian Southe
Slide 19: Competitive Performance
COMPETITIVE PERFORMANCE EARNINGS PER SHARE GROWTH CASHFLOW PER SHARE GROWTH % growth 2010-2012 % growth 2010-2012 CAPITAL INVESTMENT COMPETITIVE PAYOUT $ billion % growth 2009-2012 Dividend $ billion % 2009 2010 2011 2012/ 2013E 2012 payout ratio (RHS) target SECTOR-LEADING EARNINGS AND CASHFLOW G
Slide 20: Refreshing Our Growth Outlook - Peter Voser
ROYAL DUTCH SHELL PLC REFRESHING OUR GROWTH OUTLOOK PETER VOSER CHIEF EXECUTIVE OFFICER Copyright of Royal Dutch Shell plc 31 January 2013 20
Slide 21: Investment Priorities
INVESTMENT PRIORITIES ORGANIC CAPEX 2013 $ billion Reserves-rich plays with long-term drivers LONGER TERM Iraq, Nigeria, Kazakhstan, Heavy Oil & Arctic FUTURE OPPORTUNITIES Slower pace + capital allocation RESOURCES PLAYS Integrated infrastructure + global capabilities GROWTH Standardized
Slide 22: Downstream Engine
DOWNSTREAM ENGINE Long-term engine Gasnor acquisition Lubes Russia Cost + portfolio steps to Rhineland Connect enhance profitability LNG to US gas-to- transport chemicals China Retail + Lubes Qatar chemicals China refining Selective growth in chemicals, SADAF expansion and chemicals biofuels,
Slide 23: Upstream Growth Portfolio Under Construction
UPSTREAM GROWTH PORTFOLIO UNDER CONSTRUCTION AOSP Kashagan Forcados debottlenecking Phase1 Yokri Bonga FUTURE North OPPORTUNITIES West Majnoon Southern Swamp AG FCP North American North American tight gas tight gas RESOURCES Eagle North American liquids rich shales PLAYS Ford BC-10
Slide 24: 2013-14 Start-ups 0.5 mboe per day
2013-14 START-UPS 0.5 MBOE PER DAY 2013 EXAMPLES Kashagan Phase 1, Kazakhstan Majnoon FCP, Iraq North Rankin, Australia MarsB Olympus hull arrives in Texas, USA Copyright of Royal Dutch Shell plc 31 January 2013 24
Slide 25: Maturing >30 New Options 2013+
MATURING >30 NEW OPTIONS 2013+ >1MBOED POTENTIAL; 13 BILLION BOE RESOURCES AOSP Pearls - Khazar Debottlenecking FUTURE Nigeria NLNG Train 7 Gbaran Ubie Ph 2 OPPORTUNITIES Majnoon FFD /West Qurna FFD Carmon Creek Expansion Ph 1 & 2 North American Liquids Rich Shales STRONG BUILD IN RESOUR
Slide 26: Maximizing Value in Our Upstream Engines
MAXIMIZING VALUE IN OUR UPSTREAM ENGINES EXAMPLE: EUROPE UPSTREAM CAPEX PRODUCTION Beryl + Draugen $ billion million boe per day Schiehallion stakes increased Increased stake Clair from 36% to 55% Redevelopment Fram underway Corrib On stream Under construction Tempa Rossa 2012 progress 2012 FI
Slide 27: Industry-Leading Integrated Gas Portfolio
INDUSTRY-LEADING INTEGRATED GAS PORTFOLIO Leveraging Shell’s scale + market North America: developing growth new gas value chain options Green Corridor GTT Pearl GTL Technology and project delivery Ramp up 2012 capabilities Hazira Potential doubling of capacity On Under stream construction Liq
Slide 28: North America & Australia Integrated Gas Close-up
NORTH AMERICA & AUSTRALIA INTEGRATED GAS CLOSE-UP NORTH AMERICA AUSTRALIA/INDONESIA Sunrise FLNG Abadi FLNG Browse BCT Prelude FLNG LNG Canada LNG Green Corridor GTT Pluto LNG 1(Woodside) North West Shelf North Rankin 2 Great Lakes GTT NWS GWF Ph1 Pennsylvania Gorgon LNG Gas-to-Chemicals Wheatstone
Slide 29: Global Deep-water
GLOBAL DEEP-WATER LEADING IOC DEEP-WATER PORTFOLIO Established production leadership Standardized developments + production technology Mars-B Cardamom Malaysia / Gulf of Mexico Brunei Nigeria Frontier exploration potential On stream Bonga North West Under construction Brazil Gumusut-Ka
Slide 30: Deep-water Gulf of Mexico
DEEP-WATER GULF OF MEXICO 0.2 MBOE/D 2012; GROWTH POTENTIAL Mars B Appomattox ~100 kboe/d ~150 kboe/d hub potential Shell 71.5 % (operator) 500 million boe resources Shell 80% (operator) 2013 appraisal of Vicksburg (Shell 75%) Vito ~100 kboe/d potential Nakika >300 million boe resource
Slide 31: Future Opportunities: Major Positions in Longer Term Plays
FUTURE OPPORTUNITIES MAJOR POSITIONS IN LONGER TERM PLAYS Arctic KAZAKHSTAN SPDC PHOTO OF NEW PROJECT PLEASE. DISCO = AOSP debottlenecking Shell operatorship RUST BUCKET + CCS post start-up 2013 IRAQ Heavy Oil Majnoon FCP 2013 Basrah Gas Company JV 2013 On stream NIGERIA Under construction 2
Slide 32: 2012 Alaska Performance
2012 ALASKA PERFORMANCE 2 top holes drilled >20 vessels and 2,000 employees/contractors, ~12,000 employee rotations Positive support from regulators + community 300 km Kulluk rig incident MULTIPLE DRILLING BARRIERS DRILLING FLUID BLOW OUT PREVENTER 1 2 3 4 2 CAPPING STACK ARCTIC CONTAINMENT
Slide 33: Reloading Our Conventional Portfolio
RELOADING OUR CONVENTIONAL PORTFOLIO BUILDING CONVENTIONAL ACREAGE Yinggehai ‘000 km2 cumulative cumulative spend French Guiana gross acreage $ billion Gabon Greenland GOM Tanzania Guyana Iraq Turkey Frontier Abadi Albania Benin Entry cost Colombia Newfoundland Kalmykia New Zealand Nova Scotia Acrea
Slide 34: 2012 Conventional Exploration and Appraisal
2012 CONVENTIONAL EXPLORATION AND APPRAISAL KEY RESOURCES ADDITIONS - DRILLING E&A RESOURCES ADDED 2012 billion boe Middle East, Africa, CIS Gulf of Mexico appraisal Appomattox 500 mmboe (Shell 80%) Malaysia: FID ~ 2015 Tukau Timur deep gas Nigeria Deep-water Americas Discovery (Shell 50%) Zabazaba
Slide 35: Building Up Global Leadership in Resources Plays
BUILDING UP GLOBAL LEADERSHIP IN RESOURCES PLAYS TIGHT/SHALE OIL AND GAS BUILDING NEW TIGHT/SHALE ACREAGE ‘000 km2 cumulative cumulative spend gross acreage $ billion Entry cost Tight gas Germany Liquids rich shale Ukraine Acreage Changbei Turkey Sichuan Egypt Oman Gas Liquids Rich Colombia On
Slide 36: North America Resources Plays Progress
NORTH AMERICA RESOURCES PLAYS PROGRESS TIGHT/SHALE OIL AND GAS ~30,000 km2 portfolio, 60% liquids-rich Canol Eagle Ford LRS development underway Montney Groundbirch Deep Basin Foothills Duvernay Drilling focus shifted to LRS Exshaw from dry gas ~10,000 km2 new acreage 2012 Pinedale Nio
Slide 37: Production Outlook
PRODUCTION OUTLOOK GROUP PRODUCTION OUTLOOK Prelude cutting first steel in South Korea Region Theme Future Opportunities Middle East, Africa, Deep-water CIS Resources Plays Mars B TLP on its way to Gulf of Mexico Integrated Gas Americas Asia Pacific Upstream Engine CONVERTING RESOURCES TO Europe CAS
Slide 38: Turning New Investment into Cash Flow
TURNING NEW INVESTMENT INTO CASH FLOW 2013 CAPEX & OUTCOME IMPACT OF KEY UPSTREAM START-UPS $ billion $ billion Exploration & Appraisal 2017+ 2013+ Key Projects Start-up CFFO 2015-16 2010-12 2013-14 2010-12 2013+ Upstream Base, Downstream + Corporate ORGANIC CAPEX Longer 2012-15 CFFO Term SPENDING P
Slide 39: Financial Framework - Simon Henry
ROYAL DUTCH SHELL PLC FINANCIAL FRAMEWORK SIMON HENRY CHIEF FINANCIAL OFFICER Copyright of Royal Dutch Shell plc 31 January 2013 39
Slide 40: Priority on Financial Performance
PRIORITY ON FINANCIAL PERFORMANCE ON TRACK FOR AMBITIOUS CFFO GROWTH + INVESTMENT PLAN ($100 scenario) $ billion $100/bbl macro Portfolio/ Free Growth outlook: Choice1 $112/bbl cashflow New projects $91/bbl Enhanced unit cash flow Macro uplift 2012 trend Investment for sustained growth 2012-15
Slide 41: Production & Potential
PRODUCTION & POTENTIAL OIL & GAS PRODUCTION + OUTCOMES UPSTREAM CAPEX + CFFO SCENARIO million boe/day Production + potential 2012+ asset sales 2012 PERFORMANCE $ billion million boe/day 2012 2012 Capex: CFFO: 2013 2015 potential PRODUCTION IS AN OUTCOME OF INVESTMENT DECISIONS Controllable CASHFLOW
Slide 42: Exploration and Appraisal 2013-14
EXPLORATION AND APPRAISAL 2013-14 KEY WELLS CONVENTIONAL $ billion Browse North Sea Alaska Russia Abadi Iraq Germany Ukraine Kazakhstan North America LRS Albania Turkey US GoM China Egypt Qatar Oman Yinggehai Colombia Benin Nigeria Malaysia Brunei Exploration & Appraisal French Guiana Gabon Acreage/
Slide 43: Capital Investment + Outlook
CAPITAL INVESTMENT + OUTLOOK TOTAL CAPITAL INVESTMENT ORGANIC CAPITAL INVESTMENT $ billion $ billion $ billion UPSTREAM DOWNSTREAM Upstream engine Resources plays Exploration Growth Downstream engine Deep-water Key projects Base Integrated gas Future opportunities Base 2010 2011 2012 2012 2013 $ bil
Slide 44: Maintaining Our Financial Framework
MAINTAINING OUR FINANCIAL FRAMEWORK CASH PERFORMANCE $175-$200 billion CFFO 2012-15 Grow free cash flow CFFO drives investment + payout PAY-OUT INVESTMENT Dividend linked to business results $120-$130 billion net capex 2012-15 Scrip dividend with buy back offset ~$33 billion net capex
Slide 45: Fourth Quarter 2012 Results and Strategy Update - Peter Voser
ROYAL DUTCH SHELL PLC FOURTH QUARTER 2012 RESULTS AND STRATEGY UPDATE PETER VOSER CHIEF EXECUTIVE OFFICER Copyright of Royal Dutch Shell plc 31 January 2013 45
Slide 46: Shell
SHELL FUTURE LONGER TERM OPPORTUNITIES RESOURCES PLAYS GROWTH ON TRACK FOR 2012-15 TARGETS DEEP-WATER PRIORITY GROWTH DELIVERY INTEGRATED GAS CAPITAL DISCIPLINE + TRACK RECORD UPSTREAM ENGINES DOWNSTREAM Copyright of Royal Dutch Shell plc 31 January 2013 46
Slide 47: Q&A
ROYAL DUTCH SHELL PLC Q&A Copyright of Royal Dutch Shell plc 31 January 2013 47
Slide 48: Back Up
ROYAL DUTCH SHELL PLC BACK UP Copyright of Royal Dutch Shell plc 31 January 2013 48
Slide 49: Key Projects Under Construction
KEY PROJECTS UNDER CONSTRUCTION Upstream Engine Deep-water Resources plays Integrated Gas Longer term Copyright of Royal Dutch Shell plc 31 January 2013 49
Slide 50: Strong Portfolio of Pre-FID Upstream Options
STRONG PORTFOLIO OF PRE-FID UPSTREAM OPTIONS POTENTIAL 2014-2020 START-UPS Upstream Engine Integrated Gas Deep-water Longer term Resources plays Copyright of Royal Dutch Shell plc 31 January 2013 50
Slide 51: Project Management + Performance
PROJECT MANAGEMENT + PERFORMANCE PROJECT STATUS Construction time elapsed % BAB THAMAMA G & BAB… KASHAGAN PHASE 1 SAS NORTH RANKIN 2 AOSP DEBOTTLENECKING BONGA NW MAJNOON FCP CORRIB GUMUSUT-KAKAP BC-10 PHASE 2 MARS B, W. BOREAS & S.… PETAI GORGON LNG T1-3 CARDAMOM SABAH GAS KEBABANGAN (KBB) SCHIEHAL
Slide 52: 2010-2012 Reserves Summary
2010-2012 RESERVES SUMMARY RESERVES IN MILLION BOE3 Movements 2010 2011 2012 Organic1 reserves additions 1,653 1,545 1,047 Year average price effect -198 -235 -431 Production -1,242 -1,212 -1,234 Acquisition & divestment -85 -105 -74 Total subsidiaries and affiliates movements 1,370 1,205 542 Year e