Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Bernstein Strategic Decisions Conference 2015
27 slides from Shell's conference presentation, Sep 30, 2015
Slide 1: Company Update: Bernstein Strategic Decisions Conference
COMPANY UPDATE BERNSTEIN STRATEGIC DECISIONS CONFERENCE ROYAL DUTCH SHELL 30 SEPTEMBER 2015 Copyright of Royal Dutch Shell plc 30 September, 2015 1
Slide 2: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 30 September, 2015 2
Slide 3: Definitions & Cautionary Note
DEFINITIONS & CAUTIONARY NOTE NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISIDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. The information set out in this presentation is not intended to form
Slide 4: Summary
SUMMARY Integrated business + performance drive supporting results: 12 months CCS earnings $16.2 billion; CFFO $35.6 billion; dividend + buy-back $14 billion Dividend + buy-back commitment $1.88/share 2015; at least $1.88/share 2016 At least $25 billion buy-back expected 2017-2020 Pullin
Slide 5: Oil Price + Outlook
OIL PRICE + OUTLOOK Oil prices OPEC policy change and non-OPEC growth Brent in $ per barrel Medium-term supply/demand fundamentals remain positive Responding with urgency + determination Resilience in today’s oil prices OPEC Global Addressing Shell’s cost structure financial policy crisis ch
Slide 6: H1 2015 Delivery
H1 2015 DELIVERY Earnings + ROACE Cash flow $ billion % $ billion $ billion Upstream Corporate/Other CFFO CFFI Free cash flow (RHS) Downstream ROACE (RHS) Dividend, buyback + gearing Gearing % $ billion range Integrated business + results Performance drive Balance sheet strength Dividend annou
Slide 7: Shell Integrated Gas Performance
SHELL INTEGRATED GAS PERFORMANCE 2014 Shell LNG* sales + pricing linkage Integrated gas earnings Million tonnes per annum $ billion $ per unit Short-term ‘spot’ 10-15% Gas hubs (e.g. NBP, 20-25% HH) Oil linked: 65% Term contracts 3-6 (2-20 years) months lag Earnings Brent $/bbl (RHS) LNG JKM $/mmbtu
Slide 8: Financial Framework and Priorities
FINANCIAL FRAMEWORK AND PRIORITIES Priorities for cash Financial framework 1. Debt reduction Cash performance 2. Dividends 3. Buy-backs + capital investment Pay-out Investment Grow cash flow from operations + free cash flow Credit rating a priority: debt pay-down Balance sheet Dividend policy
Slide 9: Pulling Levers to Manage Shell in the Downturn
PULLING LEVERS TO MANAGE SHELL IN THE DOWNTURN Cash performance Pulling our financial levers $ billion Balance sheet 4Q rolling CFFO Pay-out Investment Reduce operating costs $ billion $ billion Reduce capital investment 4Q rolling 4Q rolling Cash dividend Buyback CFFI Portfolio restructurin
Slide 10: Balance Sheet
BALANCE SHEET Cash flow surplus Competitive gearing position $ billion, 4Q rolling Q2 2015 % Cash flow from operations Capex + equity acc. invest. + acq Shell Peer group Asset sales Dividend and buy back Implementing a competitive balance sheet strategy Copyright of Royal Dutch Shell plc 30 Septem
Slide 11: Reduce Operating Costs
REDUCE OPERATING COSTS Operating costs + outlook Continuous improvement drive $ billion -10% Supply chain re-set Targeted programmes: Oil Products, North- America onshore, North Sea, others Lower overheads: finance, commercial + IT 4Q rolling Full year actual 2015 potential Competitive opera
Slide 12: Reduce Capital Investment
REDUCE CAPITAL INVESTMENT Capital investment - sector Capital investment $ billion, 4Q rolling $ billion Project re-phasing / deferral Supply chain savings Dilutions + exits -20% -20% Shell Peer group Shell BG Combination Revised outlook for Shell 2015: ~$30 billion 2016: Shell + BG ~$35 b
Slide 13: Taking Steps to Manage Capital Investment
TAKING STEPS TO MANAGE CAPITAL INVESTMENT 2013 2014 2015 2016 2017+ Majnoon FFD Carmon Creek ph1-2 FUTURE OPPORTUNITIES Carmon Creek ph3-4 RESOURCES PLAYS Appomattox Vito DEEP WATER Bonga South West Arrow greenfield LNG Elba LNG Browse LNG INTEGRATED GAS Wheatstone LNG Abadi – redesign US
Slide 14: Alaska Offshore Exploration
ALASKA OFFSHORE EXPLORATION 2015 2015 Burger J drilling Well completed - strong HSE performance Encountered non-commercial oil & gas Demobilization under-way Decision to cease Alaska offshore exploration Copyright of Royal Dutch Shell plc 30 September, 2015 14
Slide 15: Driving Lower Cost in New Developments
DRIVING LOWER COST IN NEW DEVELOPMENTS Launched P&T change programme Example: Appomattox FID July 2015 Standardise: Shell’s 7th 4-column host in GOM 20% cost reduction into FID Goal zero: Upfront planning; fewer wells; supply chain No harm, no leaks ~$55 per barrel NPV break-even Improve capit
Slide 16: Portfolio Restructuring
PORTFOLIO RESTRUCTURING Resources plays Oil Products Upstream engine Restructuring $77 billion capital employed Copyright of Royal Dutch Shell plc 30 September, 2015 16
Slide 17: Progress with Restructuring
PROGRESS WITH RESTRUCTURING Downstream Resources plays $ billion % $ billion -30% -35% Cash flow ROACE (RHS) Americas International Potential for sustained 10-12% ROACE + $10 2013-14: restructure Americas billion p.a. CFFO Self-help + improved joint venture performance 2015+: restructure Int
Slide 18: Asset Sales
ASSET SALES Progressing divestments in 2015 despite weaker market Woodside 9.5% Haynesville + Pinedale Elba LNG Australia DS Italy DS UK retail Wheatstone LNG MLP others Asset sales add focus BC-10 dilution Nigeria onshore $ billion Woodside 10% LPG NWE Stanlow refinery
Slide 19: Deliver New Projects + Free Cash Flow
DELIVER NEW PROJECTS + FREE CASH FLOW Top 10 Shell project start-ups 2014+ Potential cash flow in $ billion Appomattox Bonga NW Cardamom Clair ph2 Gorgon Gumusut-Kakap $70 oil price $90 oil price Capex Kashagan ph1 Mars B Potential FCF $70 oil price High-margin production Prelude Schiehallion Ca
Slide 20: Shell + BG Summary
SHELL + BG SUMMARY Further reduces our cash breakeven Enhanced free cash flow Enhances dividend potential + delivers buy-backs Accelerates our strategy LNG & deep water leader Value uplift from Shell capabilities at larger scale ‘Grow to simplify’ Springboard to change Shell More resilie
Slide 21: Shell + BG: Transaction Update
SHELL + BG: TRANSACTION UPDATE US FTC Transaction approval Announcement CADE approval Early 2016 Complete transaction EU approval Q2 Q3 Q4 Q1 << 2015 2016 >> Integration Portfolio + planning team divestment established planning Market strategy update On track for completion in early 2016, as plann
Slide 22: Springboard to Change Shell: 'Grow to Simplify'
SPRINGBOARD TO CHANGE SHELL: ‘GROW TO SIMPLIFY’ Simpler, more Longer term1 CFFO/potential Shell Combination $ billion in $ billion 2014 2020 focused company Other Longer term1 ~$10 billion p.a. Deep More resilient + water competitive Shell Integrated Gas 3 pillars ~$15-20 Predictable + billion
Slide 23: Dividend Track Record + Commitment
DIVIDEND TRACK RECORD + COMMITMENT Dividend track record Managing dividend through cycle $ billion Balance sheet capacity Dividend commitment: More levers to pull if macro conditions 2015 $1.88 per share deteriorate 2016 at least $1.88 per share Shell portfolio development to drive break-eve
Slide 24: Continued Drive to Improve Financial Performance
CONTINUED DRIVE TO IMPROVE FINANCIAL PERFORMANCE Cash flow from operations Free cash flow $ billion $ billion Q215 Q215 Shell Peer group 4Q rolling 4Q rolling ROACE - underlying % Driving competitive performance Q215 4Q rolling Free cash flow: cash flow from operations less cash used in investing
Slide 25: Summary
SUMMARY Integrated business + performance drive supporting results: 12 months CCS earnings $16.2 billion; CFFO $35.6 billion; dividend + buy-back $14 billion Dividend + buy-back commitment $1.88/share 2015; at least $1.88/share 2016 At least $25 billion buy-back expected 2017-2020 Pullin
Slide 26: Questions & Answers
QUESTIONS & ANSWERS BERNSTEIN STRATEGIC DECISIONS CONFERENCE ROYAL DUTCH SHELL 30 SEPTEMBER 2015 Copyright of Royal Dutch Shell plc 30 September, 2015 26
Slide 27: Company Update: Bernstein Strategic Decisions Conference
COMPANY UPDATE BERNSTEIN STRATEGIC DECISIONS CONFERENCE ROYAL DUTCH SHELL 30 SEPTEMBER 2015 Copyright of Royal Dutch Shell plc 30 September, 2015 27
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