Slide 1: Fourth Quarter 2014 Results: Balancing Growth & Returns
FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 1
Slide 2: Definitions & Cautionary Note
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 classified as SEC proved oil and gas reserves. Resources are c
Slide 3: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 3
Slide 4: Focus on HSSE
FOCUS ON HSSE 2014 UPDATE Goal Zero on safety Spills - operational Injuries – TRCF/million working hours million working hours Volume in thousand tonnes TRCF Working hours (RHS) Energy intensity – refineries Process safety Energy Intensity Index (EEITM) Number of incidents HSSE priority Tier 1 inc
Slide 5: Executing a Consistent, Long-Term Strategy
EXECUTING A CONSISTENT, LONG-TERM STRATEGY Unrelenting focus on HSSE Total shareholder returns growth – 10 years Index 1/1/2005 =100 Technology, integration and scale Disciplined capital investment by strategic theme Growth in cash flow through cycle Competitive shareholder returns 2014+
Slide 6: Energy Transitions
ENERGY TRANSITIONS Long-term energy supply mix 2050 outlook Million boe per day Population increases from 7 to 9 billion +50% Enabled by cheap and reliable energy +50% Realities Requirement to mitigate climate change Oil supply -70% by 2030 without new investment Key role of gas & CCS Gas
Slide 7: Oil Market + Shell Response
OIL MARKET + SHELL RESPONSE Oil supply Oil market downturn Million barrels of oil per day Entering 2015 with low oil prices Requirement for $500 billion industry investment in upstream oil during 2014-20 Under-spending amplifies price spike risks Shell response Long-term $70 - $90 - $110 Bre
Slide 8: 2014 Delivery
FINANCIAL PERFORMANCE 2014 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 Well-positioned into oil market downturn Asset sales delivered ahead
Slide 9: Balancing Growth and Returns
2014 DELIVERY BALANCING GROWTH AND RETURNS Improve our financial performance CCS earnings $22.6 billion; CFFO $45.0 billion Dividend growth + buyback Restructuring in Oil Products + North America resources plays Enhance our capital efficiency Moderated spending + growth Improved free cash
Slide 10: Changing Emphasis in 2014+
CHANGING EMPHASIS IN 2014+ SHARPER PORTFOLIO MANAGEMENT + APPRAISAL More rigorous portfolio management Taking hard choices on funnel RESILIENCE STRATEGIC Risk, performance FEED INTENT & FID On-stream uncertainty ASPIRED RESULTS PORTFOLIO & PAY- Identify&Assess Select Define Execute Operate OUT ATTRA
Slide 11: Priorities 2015+
PRIORITIES 2015+ Competitive financial Capital efficiency Project delivery performance Returns and cash flow Choices on new options Continued ramp-up of 2014 start-ups Competitive returns for Supply chain management shareholders 2015 transition year into Managing affordability + 2016/1
Slide 12: Portfolio Restructuring
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING Resources plays Oil Products Upstream engine Capital investment in $ billion $ billion $ billion kboe per day (Shell share) -30% CFFO Production (RHS) LRS Dry gas Acquisitions Asset sales (incl. MLP) Capital investment NA portfolio reductio
Slide 13: Restructuring Resources Plays Portfolio
COMPETITIVE FINANCIAL PERFORMANCE RESTRUCTURING RESOURCES PLAYS PORTFOLIO W. Canada gas Russia Germany Ukraine ` Turkey Changbei W. Canada LRS Algeria Changbei 2 Appalachia Tunisia Oman Sichuan Colombia Permian Arrow CBM Argentina Neuquen Gas Liquids Rich On-stream E&A 2014: North America portfoli
Slide 14: Downstream Engine
COMPETITIVE FINANCIAL PERFORMANCE DOWNSTREAM ENGINE Cash flow + ROACE Earnings 2013 to 2014 $ billion % $ billion Cash flow ROACE (RHS) Operating performance % unplanned downtime Self-help + improved joint venture performance Launched new cost drive at end 2014 10-12% ROACE + $10 billion p.a.
Slide 15: Portfolio Restructuring: Oil Products
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: OIL PRODUCTS Portfolio change Refining capacity Million b/d # of refineries Selective Growth: China ~ -20% LNG for transport Premium fuels + lubes Refinery crude flexibility others Fix: Motiva Attractiveness Singapore fuels P
Slide 16: Portfolio Restructuring: Upstream Engine
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: UPSTREAM ENGINE Upstream engine portfolio Managed decline of legacy positions kboe per day (Shell share) Selective growth: Schiehallion Clair Ph2 Val d’ Agri ph2 ~95 Tempa Rossa kboe/d* Beryl Corrib Maintain Norway Netherlands
Slide 17: Investment Priorities + Performance
INVESTMENT PRIORITIES + PERFORMANCE Engines (Downstream, Upstream engine) CFFO in billion $ Free cash flow businesses Maintain competitiveness Integrated gas Asset integrity + selective growth Downstream engine Growth priority (Integrated Gas, deep water) Upstream engine Global leadership es
Slide 18: Moderating Our Spending + Growth Outlook
COMPETITIVE, CREDIBLE + AFFORDABLE PLANS MODERATING OUR SPENDING + GROWTH OUTLOOK $ billion total capital investment $ billion organic capital investment > -15% Project re-phasing / deferral Supply chain savings Dilutions + exits 2015 2015 potential plan Upstream Downstream / Corporate 2015
Slide 19: Simon Henry, Chief Financial Officer
SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 19
Slide 20: Financial Performance
FINANCIAL PERFORMANCE ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 20
Slide 21: Q4 2014 Financial Highlights
Q4 2014 FINANCIAL HIGHLIGHTS Earnings Q4 2013 to Q4 2014 $ billion Q4 Q4 2013 2014 $ billion Environment Choice UPSTREAM 2.5 1.7 DOWNSTREAM (CCS) 0.6 1.6 CORPORATE & MINORITIES (0.1) (0.0) CCS NET EARNINGS 2.9 3.3 CCS EARNINGS, $ PER SHARE 0.46 0.52 CASH FROM OPERATIONS 6.0 9.6 ROACE (%) 8.9 10.2 SH
Slide 22: Q4 2014 Performance
Q4 2014 PERFORMANCE Upstream earnings + cash flow Oil and gas production $ billion $ billion million boe/d million tonnes per annum Upstream International Upstream Americas Gas Oil LNG Sales volumes (RHS) Cash flow from operations (RHS) Downstream earnings + cash flow Availability and sales volumes
Slide 23: SEC Proved Reserves Position
PRELIMINARY RESULTS SEC PROVED RESERVES POSITION 2014 Reserves performance 2012-14 Reserves additions 2014 RRR 26% 2012-14 RRR 67% Reserves life at end 2014 ~11.2 years 2012-14 Reserves average performance Organic1 additions ~1.0 billion boe Production ~1.2 billion boe Organic reserves r
Slide 24: Oil + Gas Resources Funnel
OIL + GAS RESOURCES FUNNEL Converting resources to production… Billion boe Longer-term upside Appomattox Browse resources plays Val d’Agri ph2 Vito Baronia EOR / others Tukau Timur Bonga Main ph3 Coulomb ph2 Bonga North West Asset sales + capital ceiling Cardamom Gumusut-Kakap Fewer FIDs in 2014
Slide 25: Executing a Consistent and Successful Exploration Strategy
CONVENTIONAL EXPLORATION EXECUTING A CONSISTENT AND SUCCESSFUL EXPLORATION STRATEGY Time to Prospect development size 2015 spend (years) (million boe) Long-term potential for ARCTIC 15+ >500 industry Build-up of acreage in FRONTIER 10+ >250 under-explored basins New plays in Shell NFE HEARTLANDS 3+
Slide 26: Exploration: 2014 Performance
EXPLORATION: 2014 PERFORMANCE Improved delivery in 2014 10 frontier + heartlands successes GOM deep-water heartlands 41 near-field finds 2014: Rydberg, Kaikias, Power Nap + Gettysburg discoveries >1300 mmboe for Shell 2009+ Gabon deep-water frontier Sub-salt deep-water gas discovery Sh
Slide 27: 2015 Outlook
2015 OUTLOOK 2014 asset sales + license expiries (2015 vs. 2014 impact) -100 kboe/d; -0.3 mtpa LNG ~-75 kbpd refining capacity; -145 kbpd marketing ~-$1 billion divestment tax charge impacting CFFO Maintenance downtime / other (2015 vs. 2014 impact) -60 kboe/d (Pearl T1, AOSP, GOM, others) Pearl
Slide 28: Financial Framework and Priorities
CAPITAL EFFICIENCY FINANCIAL FRAMEWORK AND PRIORITIES Priorities for cash Cash performance $ billion 1. Debt service 2. Dividends: growth policy 3. Capital investment: disciplined through-cycle growth CFFO 4. Return surplus cash: buybacks Pay-out Investment $ billion $ billion Cash dividend Buyback
Slide 29: Multi-Billion $ Opportunity in Shell + Supply Chain
CONSISTENT DELIVERY OF COST REDUCTION PROGRAMMES MULTI-BILLION $ OPPORTUNITY IN SHELL + SUPPLY CHAIN North America resources plays Supply chain $ million 2014 savings (opex + capex) Strategic Short term Medium term long term Price Contract renegotiations Design Design to cost/Design to value >15% sa
Slide 30: Early Delivery of 2014-15 $15 Billion Divestment Plan
CAPITAL EFFICIENCY EARLY DELIVERY OF 2014-15 $15 BILLION DIVESTMENT PLAN Asset sales add focus Divestment/exit $ billion 2014 Early delivery of 2014-15 Woodside 9.5% target Australia upstream Wheatstone LNG refocus Australia downstream Monetise non-core Italy downstream Oil Products US midstream MLP
Slide 31: Portfolio Choices Driving Profitability
PORTFOLIO CHOICES DRIVING PROFITABILITY Production Upstream CFFO* million boe per day $ billion +25% Underlying +2% * CFFO excludes working capital + oil & gas price effects Enhancing profitability Copyright of Royal Dutch Shell plc 29 January, 2015 31
Slide 32: Investment Priorities
CAPITAL EFFICIENCY INVESTMENT PRIORITIES Investment themes Organic capital investment Conventional 10% exploration Longer term: 25% Pre-FID large project options 50% Post-FID large projects Growth priorities: 40% Short-cycle projects1 40% Engines: 35% Base 2015 2015 organic capital CFFO impact organ
Slide 33: Cash Performance + Pay-out
CASH PERFORMANCE + PAY-OUT Cash flow Dividend track record $ billion $ billion 2012-2014 2014 Cash flow from operations Cash flow from investments1 Pay-out Dividends announced 1 Includes MLP proceeds Gearing and pay-out $ billion % 2014 dividend and buyback $15 billion 2015 dividend ~$12 billion
Slide 34: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 34
Slide 35: Project Delivery
PROJECT DELIVERY ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 35
Slide 36: Projects Under Construction
PROJECTS UNDER CONSTRUCTION Production Shell-operated started up kboe per day (Shell share) million tonnes per annum 2014 Mars B Gumusut-Kakap Bonga NW Petai Cardamom Sabah gas KBB 2015-16 2017-19 BC-10 ph3 Baronia /Tukau Timur Bonga Main ph3 Carmon Creek Corrib
Slide 37: Managing Our Opportunity Set
PROJECT DELIVERY MANAGING OUR OPPORTUNITY SET 2015-16 FID options 17 potential FIDs 2015-16 Options deferred / FID choices > 700 kboe/d cancelled 2015-16 ~12 mtpa LNG 2.7 mtpa chemicals Carmon Creek ph3+4 Majnoon full field postponed FUTURE OPPORTUNITIES World-wide restructuring Canada, Lower 48, Ar
Slide 38: Competitive Performance: Balancing Growth and Returns
COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS Cash flow from operations Free cash flow $ billion $ billion Shell Peer group ROACE – underlying Total shareholder return (2012-2014) % % Shell competitors Free cash flow: cash flow from operations less cash used in investing activities ROACE und
Slide 39: Priorities 2015+
PRIORITIES 2015+ Competitive financial Capital efficiency Project delivery performance Returns and cash flow Choices on new options Continued ramp-up of 2014 start-ups Competitive returns for Supply chain management shareholders 2015 transition year into Managing affordability + 2016/1
Slide 40: Questions & Answers
QUESTIONS & ANSWERS FOURTH QUARTER 2014 RESULTS Copyright of Royal Dutch Shell plc 29 January, 2015 40
Slide 41: Key Upstream Projects Under Construction
KEY UPSTREAM PROJECTS UNDER CONSTRUCTION Upstream engine Deep water Resources plays Integrated gas Future opportunities Copyright of Royal Dutch Shell plc 29 January, 2015 41
Slide 42: Potential 2015-2016 FEEDs and FIDs
PRE-FID OPTIONS POTENTIAL 2015-2016 FEEDS AND FIDS Downstream engine Deep water Resources plays Upstream engine Integrated gas Future opportunities Copyright of Royal Dutch Shell plc 29 January, 2015 42
Slide 43: 2014 Conventional Exploration: Examples
2014 CONVENTIONAL EXPLORATION: EXAMPLES Frontier: Gabon deep water Heartland: GOM NFE: Oman, Lekhwair campaign Appomattox Ram Powell Nakika Ursa Mars Mars B Vito Rydberg Gettysburg Brutus Kaikias Power Nap On-stream FEED Noble Globetrotter 2 100 km Exploration drilling in North Oman 2014 exploration
Slide 44: Project Management
DELIVER NEW PROJECTS PROJECT MANAGEMENT Upstream project status Construction time elapsed % photo Corrib gas: national grid into Bellanaboy facility Oversight and accountability Track record Construction time elapsed % Copyright of Royal Dutch Shell plc 29 January, 2015 44
Slide 45: Deconstructing Our Portfolio
DECONSTRUCTING OUR PORTFOLIO 2014 organic 2014 Capital CCS earnings CFFO capital ROACE $ billion employed investment 6 11 6 49 11% DOWNSTREAM Engines ENGINE Mature + drives free cash flow 5 8 7 18 27% UPSTREAM ENGINE 10 13 6 58 18% Growth Priorities INTEGRATED GAS Profitable + growing 3 6 7 24 12% D
Slide 46: Conventional Exploration + Appraisal: Key Wells 2015-2016
CONVENTIONAL EXPLORATION + APPRAISAL: KEY WELLS 2015-2016 Alaska Denmark Albania Turkey Canada Egypt US GOM China Brunei Nigeria Malaysia Gabon Australia ‘15 ‘16 Brazil: Libra Namibia Frontier Heartlands New Zealand 2015 drilling in 14 basins Copyright of Royal Dutch Shell plc 29 January, 2015 46
Slide 47: Fourth Quarter 2014 Results: Balancing Growth & Returns
FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 47