Shell Plc · LSE:SHEL

Shell — Royal Dutch Shell — Q2 2015 Earnings Presentation

41 slides from Shell's earnings presentation, Jul 30, 2015

1. Slide 1: Company Update Second Quarter 2015

   COMPANY UPDATE SECOND QUARTER 2015 ROYAL DUTCH SHELL 30 JULY 2015 Copyright of Royal Dutch Shell plc 30 July, 2015 1

2. 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 July, 2015 2

3. 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

4. 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 unchanged „ $1.88/share 2015; at least $1.88/share 2016 „ At least $25 billion buy-back expected 2017-202

5. Slide 5: Focus on HSSE

   FOCUS ON HSSE H1 2015 UPDATE Goal Zero on safety Spills - operational Injuries – TRCF/million working hours million working hours Volume in thousand tonnes Year to date Year to date TRCF Working hours (RHS) Energy intensity – refineries Process safety Energy Intensity Index (EEITM) Number of inciden

6. Slide 6: 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 „ Addressing Shell’s cost structure Global OPEC financial policy crisis ch

7. Slide 7: 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 $ billion Gearing % range „ Integrated business + results „ Performance drive „ Balance sheet strength Dividend annou

8. 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 Balance sheet „ Credit rating a priority: debt pay-down „ Dividend policy

9. Slide 9: 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 WA Bonga South West Arrow greenfield LNG : Elba LNG : Browse LNG INTEGRATED NTEGRATED GAS GA : : Wheatstone LNG Abad

10. Slide 10: 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 „Upfront planning; fewer wells; supply chain Goal zero: „~$55 per barrel NPV break-even „ No harm, no leaks Improve capit

11. Slide 11: Simon Henry, Chief Financial Officer

    SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 30 July, 2015 11

12. Slide 12: Q2 2015 Financial Highlights

    Q2 2015 FINANCIAL HIGHLIGHTS Earnings Q2 2014 to Q2 2015 $ billion Q2 Q2 Environment Choice 2014 2015 $ billion UPSTREAM 4.7 1.0 DOWNSTREAM (CCS) 1.3 3.0 CORPORATE & MINORITIES 0.1 (0.2) CCS NET EARNINGS 6.1 3.8 CCS EARNINGS, $ PER SHARE 0.97 0.61 CASH FROM OPERATIONS 8.6 6.1 ROACE (%) 9.4 7.0 SHARE

13. Slide 13: Shell Integrated Gas Performance

    SHELL INTEGRATED GAS PERFORMANCE 2014 Shell LNG* sales + pricing linkage Integrated gas earnings Million tonnes per annum $ billion $ per unit uniit Short-term 10-15% ‘spot’ Gas hubs (e.g. NBP, 20-25% HH) Oil linked: Term contracts 65% 3-6 (2-20 years) months lag Earnings Brent $/bbl (RHS) LNG JKM $

14. Slide 14: 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 „Reduce operating costs Pay-out y Investment $ billion $ billion „Reduce capital investment „Portfolio restructuring 4Q rolling 4Q rolling Cash dividend Buyback CFFI

15. Slide 15: 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 July,

16. Slide 16: Reduce Operating Costs

    REDUCE OPERATING COSTS Operating costs + outlook „ Continuous improvement drive $ billion „ Supply chain re-set -10% „ Targeted programmes: Oil Products, North- America onshore, North Sea, others „ Lower overheads: finance, commercial + IT 4Q rolling Full year actual 2015 potential Competitive opera

17. Slide 17: Reduce Costs + Spend: Examples

    REDUCE COSTS + SPEND: EXAMPLES North Sea Heavy oil Americas - Resources plays „ $250 million operating cost „ >$450 million operating „ ~$750 million cost savings savings in UK ~17% cost savings in 2015 in ’14-’15 „ Better wells „ Staff + contractor reduction „ Staff + contractor reduction: „ Supply

18. Slide 18: 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

19. Slide 19: Portfolio Restructuring

    PORTFOLIO RESTRUCTURING Resources plays Oil Products Upstream engine „ Restructuring $77 billion capital employed Copyright of Royal Dutch Shell plc 30 July, 2015 19

20. Slide 20: Downstream Engine

    PORTFOLIO RESTRUCTURING DOWNSTREAM ENGINE Cash flow + ROACE Asset sales $ billion % $ billion „ Australia DS „ Italy DS „ MLP „ others „ Stanlow refinery „ Shell Chile „ LPG Northwest Europe „ others Cash flow ROACE (RHS) Asset sales „ Potential for sustained 10-12% ROACE + $10 billion p.a. CFFO „ S

21. Slide 21: Resources Plays

    PORTFOLIO RESTRUCTURING RESOURCES PLAYS Russia 8 Lenzitsky W.Canada Germanyy Ukraine 8 8 ia`st Posidonia nia stu studies tu 8 JAA Changbei Gas Liquids rich 88 Appalachia Turkey m On-stream Tunisia Permian 8 E&A 8 Algeria 8Kairouan Sichuan 8Ksar Ghilane 8 Exits/Reduce Oman Om Colombia 8 8 Brazil Arro

22. Slide 22: 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

23. Slide 23: 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 MarsB Potential FCF $70 oil price „ High-margin production „ Capex to free cash flow

24. Slide 24: Ben van Beurden, Chief Executive Officer

    BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 30 July, 2015 24

25. Slide 25: BG Transaction + Update

    BG TRANSACTION + UPDATE ROYAL DUTCH SHELL ROYAL PLCSHELL DUTCH Copyright of Royal Dutch Shell plc 30 July, 2015 25

26. Slide 26: 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

27. Slide 27: Shell + BG: Transaction Update

    SHELL + BG: TRANSACTION UPDATE US FTC Transaction approval Announcement CADE approval Early 2016 Complete transaction Q2 Q3 Q4 Q1 << 2015 2016 >> Integration Portfolio + planning team divestment established planning Market strategy update „ On track for completion in early 2016, as planned „ Good pr

28. Slide 28: Shell + BG: Deep Water and LNG

    SHELL + BG: DEEP WATER AND LNG Deep water: Brazil LNG thousand boe per day Shell BG Combination QCLNG „ Shell and Petrobras: leading global deep-water „ New LNG supply: Atlantic basin + Australia companies „ Strategic + profitable position in giant oil province „ Combination of two world-class tradi

29. Slide 29: Stepping Up Asset Sales

    STEPPING UP ASSET SALES ~$30 BILLION 2016 - 2018 Asset sales „ Opportunity to reshape the company $ billion „ High grading ‘tail’ assets „ Infrastructure + mature positions „ Refocus by reducing long-term options „ Identified substantial options to underpin target „ Divestments from combined portfol

30. Slide 30: Reviewing Longer-Term Options

    REVIEWING LONGER-TERM OPTIONS Actions taken „ Heavy oil: Carmon Creek development re-phased; Pierre River mine regulatory application withdrawn „ Nigeria onshore: SPDC divestments: $3 billion (‘14-’15) „ Iraq: Majnoon review „ Resources plays: capital investment -35%; reduction of international posi

31. Slide 31: 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

32. Slide 32: Springboard to Change Shell: 'Grow to Simplify'

    SPRINGBOARD TO CHANGE SHELL: ‘GROW TO SIMPLIFY’ Longer term1 $ billion CFFO/potential Shell Combination „ Simpler, more in $ billion 2014 2020 focused company Other Longer term1 ~$10 billion p.a. „ More resilient + Deep Water competitive Shell „ Predictable + Integrated Gas 3 pillars ~$15-20 structu

33. Slide 33: 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

34. Slide 34: 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 unchanged „ $1.88/share 2015; at least $1.88/share 2016 „ At least $25 billion buy-back expected 2017-202

35. Slide 35: Questions & Answers Second Quarter 2015 Results

    QUESTIONS & ANSWERS SECOND QUARTER 2015 RESULTS ROYAL DUTCH SHELL 30 JULY 2015 Copyright of Royal Dutch Shell plc 30 July, 2015 35

36. Slide 36: Upstream Results Q2 2015

    UPSTREAM RESULTS Q2 2015 Earnings Q2 2014 to Q2 2015 $ billion „ Significant decline in prices Environment Choice „ Lower volumes: planned maintenance + divestments „ Lower costs Earnings on CCS basis, excluding identified items. Copyright of Royal Dutch Shell plc 30 July, 2015 36

37. Slide 37: Upstream Performance Q2 2015

    UPSTREAM PERFORMANCE Q2 2015 Production million boe per day „ Strong operating performance Underlying 3.1 „ Maintenance in low oil price – 3% environment „ Growth > decline 2.8 2.5 Copyright of Royal Dutch Shell plc 30 July, 2015 37

38. Slide 38: Downstream Results Q2 2015

    DOWNSTREAM RESULTS Q2 2015 Earnings Q2 2014 to Q2 2015 $ billion „ Strong operating performance „ Self-help programmes „ Higher realised refining margins Earnings on CCS basis, excluding identified items Copyright of Royal Dutch Shell plc 30 July, 2015 38

39. Slide 39: Q3 2015 Outlook

    Q3 2015 OUTLOOK Q3 – Q3 OUTLOOK: „Upstream „ Divestment impact: ~-100 kboe/d „ Planned maintenance: ~-33 kboe/d „ Netherlands gas (NAM) curtailment & underground storage: ~-80 kboe/d „Downstream „ Refinery availability lower due to increased maintenance activities „ Divestment impact: ~-60 kbpd refi

40. Slide 40: Sensitivities

    SENSITIVITIES 2015 Outlook „ Brent: $10/bbl Brent +/- ~$3.3 billion earnings per annum „ Henry Hub: $1/mmbtu +/- $300 million earnings per annum „ Tax liability foreign exchange impact to earnings (non-cash; after tax): „Australian dollar: 0.01ct change AUD/USD: ~$60 million earnings impact „Brazili

41. Slide 41: Company Update Second Quarter 2015

    COMPANY UPDATE SECOND QUARTER 2015 ROYAL DUTCH SHELL 30 JULY 2015 Copyright of Royal Dutch Shell plc 30 July, 2015 41

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