Slide 1: Fourth quarter 2016 results
Fourth quarter 2016 results Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc February 2, 2017 #makethefuture Royal Dutch Shell February 2, 2017
Slide 2: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell Royal Dutch Shell February 2, 2017
Slide 3: Definitions & cautionary note
Definitions & 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 consistent with t
Slide 4: Key messages: Re-shaping Shell
Key messages RE-SHAPING PORTFOLIO MANAGING THE SHELL PRIORITIES DOWN-CYCLE Create a world class Cash engines Pulling levers to manage investment case financial framework today’s free cash flow Grow free cash flow per Re-set our costs Growth priorities share, higher ROCE deep water an
Slide 5: Transition 2016 + delivery 2017+
Transition 2016 + delivery 2017+ Business mix underpins results Downstream + Integrated Gas offsetting Upstream World-class Underlying CCS earnings 2016 $7 billion investment case FCF/share + ROCE growth CFFO 2016 $21 billion Leader: value Conservative financial Expected Q117 dividend $0
Slide 6: Driving strategy in multiple time horizons
Re-shape Shell Cash engines: Growth priorities: Future opportunities: Driving strategy today 2016+ 2020+ in multiple time Funds dividends + balance sheet Cash engines 2020+ Material value + upside horizons Affordable growth in Competitive + resilient Path to profitability advantaged positions Strong
Slide 7: Divestments progress: Gaining momentum
Reduce Reduce Deliver Divestments capital investment operating costs new projects Re-shape Shell Showa Shell SADAF JV exit UK North Sea assets Divestments progress: Gaining momentum Showa Shell Sekiyu K.K. Kawasaki Refinery, SADAF Petrochemicals facility, Japan Kingdom of Saudi Arabia Sale of ~31%
Slide 8: Capital discipline, supporting growth
Reduce Reduce Deliver Divestments capital investment operating costs new projects Capital investment Re-shape Shell $ billion 2016 2017E 2018 Capital $ billion Oil products 4 ~4 3-4 discipline, -$20 billion supporting Conventional oil + gas 5 ~4 5-6 Cash growth Integrated gas 4 ~5 4-5 engines Oil sa
Slide 9: 2016: Moving quickly on office footprint
Reduce Reduce Deliver Divestments capital investment operating costs new projects Re-shape Shell 2016: Moving quickly on office footprint x Oslo Prince Rupert Aberdeen x x Stavanger Kitimat Manchester x x Calgary Reading x x London x Astana Vancouver x x Rotterdam Beijing Tokyo x FTE movements x x x
Slide 10: Delivering growth now
Reduce Reduce Deliver Divestments capital investment operating costs new projects Portfolio priorities Delivering growth now Schiehallion redevelopment Kashagan 125 kboe/d 300 kboe/d Shell 17% Shell 55% Q4 2016 Scotford HCU debottleneck Malikai Q4 2016 14 kbpd 60 kboe/d Shell 100%
Slide 11: Financial performance: On-track
Re-shape Shell 2013-15 ~$90 2016 ~$44 2019-21 ~$60 Financial performance: Capital employed Free cash flow* ROACE Capital employed Free cash flow* ROACE Capital employed Free cash flow* ROACE On-track ($ bln end ‘15) ($ bln p.a) (%) ($ bln end ‘16) ($ bln p.a) (%) ($ bln) ($ bln p.a) (%) Cash engines
Slide 12: Simon Henry, Chief Financial Officer
Simon Henry Chief Financial Officer Royal Dutch Shell Royal Dutch Shell February 2, 2017
Slide 13: Financial highlights: Strong cash performance
Q4 2016 $ billion Q4 2015 Q4 2016 Earnings Q4 2015 to Q4 2016 Financial Upstream (1.0) 0.1 $ billion Environment Choice highlights: Integrated Gas 1.2 0.9 Strong cash Downstream (CCS) 1.5 1.3 performance Corporate & non-controlling (0.2) (0.5) interest CCS net earnings 1.6 1.8 CCS earnings, $ per sh
Slide 14: Earnings and cash flow momentum
Q4 2016 Earnings and $ billion $ billion cash flow momentum Earnings Cash flow from operations excluding working capital Cash flow from operations excluding working capital - 4 quarters rolling (RHS) Earnings on CCS basis, excluding identified items Royal Dutch Shell February 2, 2017 14
Slide 15: SEC proved reserves position
Preliminary results 2016 Reserves performance Reserves performance SEC proved 2016 RRR 208% Billion boe reserves position 2014-16 RRR 81% BG Feb’16 ~2.4 billion boe Reserves life at end 2016 ~9.6 years (billion boe) 2015 2016 Avg 3-yr Production 1.1 1.4 1.2 SEC proved reserves1 11.7 13.2 12.
Slide 16: BG portfolio is delivering
Integration with BG Increasing production Synergies BG BG portfolio Thousand boe per day +30% $ billion 4.5 is delivering 4.0 2.8 Conventional oil + gas LNG Deep water Costs Exploration Queensland LNG Brazil pre-salt T2 start up Thousand boe per day Nov 2015 # Thousand boe per day FPSO Cidade de Car
Slide 17: Integrated Gas from growth priority to cash engine
Re-shape Shell Integrated Gas Sakhalin from growth Sabine Pass priority to cash QG-4 Oman engine – Atlantic LNG Nigeria Equatorial Malaysia Brunei Global LNG Guinea Equity capacity Peru LNG Long-term offtake agreement Gorgon NWS Spot offtake in 2015-16 FY Pluto QCLNG Deliveries in 2015-16 FY LNG vol
Slide 18: Improving our Downstream footprint and performance
Improving our Portfolio change Earnings + ROACE Downstream $ billion % footprint and Backbone / grow: Chemicals performance China LNG for transport Premium fuels + lubes Refinery crude flexibility others 2016: Fix: Attractiveness Netherlands Showa Shell Exit: Rheinland Manufactur
Slide 19: Deep water: Growing now
Deep water: Deep water growth Growing now Thousand boe per day 2016 delivery good progress to 2020 production growth to ~900 kboe/d Reducing break-even: new projects less than $45/bbl Brazil pre-salt well below $40/bbl Structural improvements in capital efficiency and operating cost reductio
Slide 20: Americas shales: Growth to come
Americas shales: Material discovered + prospective resources >11 Growth to come Western Canada Gas billion boe 25% liquids, 75% gas Western Canada LRS Fox creek Appalachia Selective acceleration of liquids development Capital investment $2-3 billion per annum Permian Argentina Permian and
Slide 21: Cash flow priorities 2016-18
Manage down-cycle Cash flow 1 2 3 priorities 2016-18 Priorities Buybacks Debt reduction Dividends for cash & capital investment Powerful levers to underpin Reduce capital Reduce Deliver new Divestments financial framework investment operating costs projects Royal Dutch Shell February 2, 2017 21
Slide 22: Divestments
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Divestments 2016-2018 2016-2018 completed + announced ($ billion) 2016 Completed Announced $30 billion 2016-18 Upstream 1.5 ~3.0 Completed: ~$5 billion Integrated Gas 0.4 ~0.9 Announced: ~$5 bil
Slide 23: Predictable high-quality investment funnel
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Capital investment Predictable high- $ billion 58 quality investment 47 -$20 billion funnel 36 $25-30 billion 27 ~25 Base + short cycle Committed growth projects Growth options/exploration BG Shell +
Slide 24: Reduce operating cost: 20% down in 2 years
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Underlying operating cost Reduce $ billion -$10 billion operating cost: $10 billion reductions delivered 20% down in 2 years 39 < $40 billion “Lower for ever” mindset + BG synergies Divestments,
Slide 25: Deliver new projects: ~$10 billion by 2018
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Shell projects start-ups 2014+ Deliver new Thousand boe per day / mtpa $ billion projects: Bonga NW Cardamom ~$10 billion / 15 by 2018 7-9th FPSO Gorgon / 10 Gumusut-Kakap Kashagan /5 ~$
Slide 26: Pulling levers to manage financial framework
Manage down-cycle 2016-18 levers Pulling levers to Reduce Reduce Deliver manage Divestments capital investment operating costs new projects financial framework 2015 baseline: 2017-2018 2016 $ billion Shell + BG potential 39 Reducing our cash break- Operating costs 46 Multi-billion p.a. (underlying
Slide 27: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell Royal Dutch Shell February 2, 2017
Slide 28: Key messages: Re-shaping Shell
Key messages RE-SHAPING PORTFOLIO MANAGING THE SHELL PRIORITIES DOWN-CYCLE Create a world class Cash engines Pulling levers to manage investment case financial framework today’s free cash flow Grow free cash flow per Re-set our costs Growth priorities share, higher ROCE deep water an
Slide 29: Questions & Answers
Questions & Answers Ben van Beurden Simon Henry Chief Executive Officer Chief Financial Officer Royal Dutch Shell February 2, 2017 29
Slide 30: Fourth quarter 2016 results
Fourth quarter 2016 results Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc February 2, 2017 “Let’s make the future” Royal Dutch Shell February 2, 2017
Slide 31: Q1 2017 Outlook
Q1 – Q1 OUTLOOK: Year-ago baseline reflects Shell’s earnings seasonality Q1 2017 BG fully consolidated, Q116 was 2 months Outlook Integrated gas Earnings negatively impacted by reduction ~-100 kboe/d Upstream Divestment impact: ~-45 kboe/d Maintenance: ~-40 kboe/d One additional month
Slide 32: Prices & margins
Q4 2016 Shell oil & gas realisations Industry refining margins Industry chemicals margins Prices & margins $/barrel $/mscf $/barrel $/tonne Oil US West Coast US ethane Gas (RHS) US Gulf Coast coking Western Europe naphtha Rotterdam complex NE/SE Asia naphtha Singapore Royal Dutch Shell February 2, 2
Slide 33: Upstream results
Q4 2016 Earnings Q4 2015 to Q4 2016 Upstream results $ billion Environment Choice Earnings on CCS basis, excluding identified items Royal Dutch Shell February 2, 2017 33
Slide 34: Integrated Gas results
Q4 2016 Earnings Q4 2015 to Q4 2016 Integrated Gas $ billion Environment Choice results 2.0 1.0 0 Earnings on CCS basis, excluding identified items Royal Dutch Shell February 2, 2017 34
Slide 35: Downstream results
Q4 2016 Earnings Q4 2015 to Q4 2016 Earnings mix Downstream $ billion $ billion results Marketing Chemicals Refining & Trading Earnings on CCS basis, excluding identified items Royal Dutch Shell February 2, 2017 35
Slide 36: Oil and gas production
Q4 2016 Upstream + Integrated Gas – oil & gas LNG liquefaction volumes Oil and gas Million boe per day Million tonnes production 4.00 Choice: +31% 3.75 3.50 3.25 3.00 2.75 Royal Dutch Shell February 2, 2017 36
Slide 37: Financial highlights
2016 Earnings 2015 to 2016 Earnings Q4 2015 to Q4 2016 Financial $ billion $ billion highlights Earnings on CCS basis, excluding identified items Royal Dutch Shell February 2, 2017 37
Slide 38: Financial dashboard
Financial Gearing Free cash flow per share dashboard % $/share ROACE Total shareholder return % % 3-years: 2014 - 2016 % 2016 Shell Peer group Competitive financial data as published. Free cash flow: cash flow from operations less cash used in investing activities. $/ADR for European companies. ROAC
Slide 39: Sources and uses of cash
Q4 2016 $ billion Q4 2016 2016 2016 Full year Sources and Beginning cash 20.0 31.8 $ billion uses of cash Earnings 1.6 4.8 Depreciation 6.6 25.0 Working capital / other 1.0 (9.2) Divestments 3.0 4.7 Capex / other investment (6.1) (23.2) BG acquisition cash - (11.4) Shareholder distributions (2.4) (9
Slide 40: Projects under construction
Projects under Start up Project Country Shell share Peak LNG 100% Products Legend Theme Shell construction (direct & Production Capacity mtpa Operated indirect) % 100% kboe/d 2017-18 Baronia / Tukau Timur Malaysia 40 65 Conventional oil + gas Berbigão** Brazil 25 150 Deep water Clair Ph2 United
Slide 41: Pre-FID options
Pre-FID options Phase Project Country Shell share Peak LNG 100% Products Legend Theme Shell (direct & Production Capacity mtpa Operated indirect) % 100% kboe/d Select Bonga Main Integrated Redevelopment Nigeria 55 112 Deep water Libra pilot FPSO* Brazil 20 180 Deep water LNG Canada T3-4 Canada
Slide 42: Royal Dutch Shell February 2, 2017
Royal Dutch Shell February 2, 2017