Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — FY2011 Earnings Presentation
49 slides from Shell's earnings presentation, Feb 2, 2012
Slide 1: 2011 Results and Company Update
ROYAL DUTCH SHELL 2011 RESULTS AND COMPANY UPDATE February y 2, 2012 1 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 2: Peter Voser, Chief Executive Officer
ROYAL DUTCH SHELL PETER VOSER CHIEF EXECUTIVE OFFICER 2 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 3: Definitions and Cautionary Note
DEFINITIONS AND CAUTIONARY NOTE 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 or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitio
Slide 4: Shell: Managing through extreme volatility
SHELL Managing through extreme volatility Customer and Profitability & Updating our outlook partner focus performance Sustainability & Value added g y investment and portfolio Through-cycle p growth technology choices 4 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 5: Continued Focus on HSSE Performance
CONTINUED FOCUS ON HSSE PERFORMANCE ‘GOAL ZERO’ ON SAFETY injuries – TRCF/million working hours million working hours 5 900 Focus on personall and d process safety f 4 800 3 700 Rigorous global standards 2 600 1 500 Industry leader in Sustainable Development 0 400 '01 '02 '03 '04 '05 '06 '07 '08 '09
Slide 6: Energy Investment Fundamentals Positive
ENERGY INVESTMENT FUNDAMENTALS POSITIVE ROBUST LONGER TERM FUNDAMENTALS MANAGING SHORT-TERM VOLATILITY energy demand outlook in million boe/d $/bbl 140 12 400 120 10 300 100 8 80 6 200 60 4 40 100 2 20 0 0 0 1980 1990 2000 2010 2020 2030 2040 2050 2008 2009 2010 2011 OIL BIOMASS COAL BRENT (LHS) GAS
Slide 7: Strategy and Capital Allocation
STRATEGY AND CAPITAL ALLOCATION STRATEGY CAPITAL INVESTMENT $ billion Upstream p 30 Profitable growth; price upside Exploration + resources plays UP 20 Downstream STREAM Optimize re-shaped portfolio Selective growth 10 Climate change Grow gas and biofuels DOWN DOWN CCS and energy efficiency STREAM S
Slide 8: Improving Our Performance
IMPROVING OUR PERFORMANCE EARNINGS TOTAL SHAREHOLDER RETURN $ billion CCS % 30 60% 40% 10 20% 0% 2009 2010 2011 2006-2008 2009-2011 -10 -20% UPSTREAM CORPORATE DOWNSTREAM DIVESTMENTS/OTHER SHELL OTHER MAJORS CASH FLOW FROM OPERATIONS VOLUMES $ billion kboe/day mtpa 3,300 20 40 3 000 3,000 10 20 0 2,
Slide 9: Portfolio + Project Performance
PORTFOLIO + PROJECT PERFORMANCE DELIVERING NEW PROJECTS North America: Canada: Qatar: Australia Nigeria: tight i h gas AOSP 1 AOSP-1 Q QatarGas4 G 4 LNG (W d id ) Pluto (Woodside): Pl t Gbaran Ubie Ph 1 Russia: Sakhalin II Singapore: Netherlands: Qatar: USA: Chemicals Schoonebeek Pearl GTL Port Arth
Slide 10: Simon Henry, Chief Financial Officer
ROYAL DUTCH SHELL SIMON HENRY CHIEF FINANCIAL OFFICER 10 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 11: Delivering Our Strategy 2009-2011
DELIVERING OUR STRATEGY 2009 - 2011 2009+ PRIORITIES 2009-2011 DELIVERY Cost focus 3 PERFORMANCE FOCUS Corporate reorganization 3 Downstream portfolio reduction 3 14 project start-ups 3 GROWTH DELIVERY Enhanced free cash flow 3 $31 billion dividends declared 3 Exploration + business development 3 NE
Slide 12: Q4 2011 Financial Highlights
Q4 2011 FINANCIAL HIGHLIGHTS CCS EARNINGS CCS EARNINGS Q4 2010 TO Q4 2011 $ billion $ billion 6 Q4 10 Q4 11 UPSTREAM 3.4 5.1 5 DOWNSTREAM (CCS) 0.5 (0.3) BUSINESS SEGMENTS TOTAL 3.9 4.8 4 CORPORATE & MINORITIES 0.2 0.0 CCS NET EARNINGS 4.1 4.8 3 CCS EARNINGS, $ PER SHARE 0.67 0.78 CCS EARNINGS, EARN
Slide 13: Earnings and Performance 2009-2011
EARNINGS AND PERFORMANCE 2009-2011 UPSTREAM PRODUCTION OIL & GAS REALISATIONS UPSTREAM EARNINGS million boe/d mtpa $/barrel $/mscf $ billion 3 20 20 100 6 2 4 10 10 50 1 2 0 0 0 0 0 2009 2010 2011 2009 2010 2011 2009 2010 2011 OIL GAS 2010-11 ASSET SALES OIL GAS (RHS) OTHER UPSTREAM INTEGRATED GAS L
Slide 14: Returns & Cashflow Performance 2009-11
RETURNS & CASHFLOW PERFORMANCE 2009-11 RETURNS CASHFLOW 2009-2011 $ billion $ billion SOURCES USES 250 40% 120 100 200 30% DOWNSTREAM 80 150 DOWNSTREAM 20% 60 100 40 UPSTREAM 10% UPSTREAM 50 20 0 0% 0 2007 2008 2009 2010 2011 2012E CAPITAL IN SERVICE CASH FLOW FROM OPERATIONS ACQUISITIONS CAPITAL UN
Slide 15: Continuous Improvement + Capital Efficiency
PERFORMANCE FOCUS 2009-2011 CONTINUOUS IMPROVEMENT+ CAPITAL EFFICIENCY DIVESTMENTS 2009-2011 ACQUISITIONS 2009-2011 $17 $15 billion billion UPSTREAM UPSTREAM DOWNSTREAM DOWNSTREAM R il Africa Retail, Af i Bi f l Brazil Biofuels, B il Refocus Downstream: Growth oil + gas: • Europe; Africa; Latin-Amer
Slide 16: Converting Resources to Production
GROWTH DELIVERY 2009-2011 CONVERTING RESOURCES TO PRODUCTION billion boe resources 35 Longer-term upside Carmon Creek Geronggong BC-10 Ph. 3 (Massa) 25 Prelude FLNG Tempa Rossa AOSP debottl. Fram NA tight gas / M lik i Malikai shales AOSP debottl. + Quest Clair Ph2 NA tight gas/shales 15 Schiehallio
Slide 17: Delivering Our Targets
GROWTH DELIVERY 2009-2011 DELIVERING OUR TARGETS PRODUCTION CASH FLOW million boe/day $ billion 50 50 2010-2011: 2010 2011 3.5 EXTERNAL / CHOICE 40 40 30 30 3.0 20 20 10 10 2.5 0 0 2009 2010 2011 2012 * 2009 2010 2011 2012 * PSC/OIL PRICE EXTERNAL / 2010-11 ASSET SALES CHOICE CASH FLOW FROM OPERATIO
Slide 18: Updating Our Priorities
ROYAL DUTCH SHELL UPDATING OUR PRIORITIES 18 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 19: 2012+ Priorities
2012+ PRIORITIES 12 billion boe resources on stream CONTINUOUS IMPROVEMENT D i new cashflow Drive hfl growth: th GROWTH DELIVERY +30-50 % CFFO 2012-15 versus 2008-11* Maturing >60 projects; ~20 billion boe resources MATURE NEW OPTIONS Exploration + bolt-on deals PERFORMANCE FOCUS 2017-18 production
Slide 20: Continuous Improvement
2012+ OUTLOOK CONTINUOUS IMPROVEMENT UNPLANNED DOWNTIME PROCESS EFFICIENCY OPPORTUNITIES % Offer to cash 9 Inventoryy management g 6 Well and reservoir management Materials management 3 Asset maintenance and integrity CHEMICALS REFINING 0 2006 2007 2008 2009 2010 2011 TIGHT GAS/SHALE DRILL TIME PROC
Slide 21: 2012+ Growth Projects
ROYAL DUTCH SHELL 2012+ GROWTH PROJECTS 21 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 22: Key Projects Under Construction
GROWTH DELIVERY 2012+ KEY PROJECTS UNDER CONSTRUCTION Schiehallion Redevelopment Clair Ph2 AOSP Debottlenecking Corrib Kashagan Ph1 North America tight gas Eagle Ford Port Arthur Majnoon FCP Mars B UAE Cardamom Amal Steam RESOURCES Harweel Gumusut-Kakap p Sabah Gas billion boe Kebabangan Bonga NW 30
Slide 23: Maintaining LNG Leadership
GROWTH DELIVERY 2012+ MAINTAINING LNG LEADERSHIP AUSTRALIA – INDONESIA: 2011 PROGRESS SHELL GLOBAL LNG CAPACITY GROWTH Abadi entry mtpa • Inpex 60% • Shell 30% • EMPI 10% 40.0 Wheatstone Wh 2012 FEED Pluto T1 & Prelude (Woodside) Abadi FLNG 20.0 Gorgon Greater Sunrise T1-3 FIDs Prelude FLNG Browse 0
Slide 24: Regaining Momentum in Gulf of Mexico
GROWTH DELIVERY 2012+ REGAINING MOMENTUM IN GULF OF MEXICO Vito Appomattox ~100 100 kboe/d potential ~100 100 kboe/d hub potential >200 million boe resources Appraisal drilling underway Shell 55% (operator) > 250 million boe resources Shell 80% (operator) Nakika Mars-B Mars WB W.Boreas, S Deimos S.
Slide 25: Investment in Upstream Heartlands
GROWTH DELIVERY 2012+ INVESTMENT IN UPSTREAM HEARTLANDS UK: ATLANTIC MARGIN AUSTRALIA: NWS LNG JV MALAYSIA 8 ºW 6º 4º 2º 0º 2ºE 0 50 S c a le km F a r o e Is la n d s F aro e C o n tine n ta l S h e lf W est of S h e tla tl ndd S lo p e C la i r S c h ie h a l l i o n F o in a v e n S h e t la n d I
Slide 26: Production Outlook
PRODUCTION OUTLOOK PROJECTS UNDER CONSTRUCTION GROUP PRODUCTION OUTLOOK Region Theme 100% 100% 90% 80% Gorgon LNG, Australia 75% 70% 60% 50% 50% 40% Mars-B, USA 30% 25% 20% 10% 0% 0% 2011 2017 2011 2017 AOSP debottlenecking debottlenecking, Canada MIDDLE EAST, AFRICA, CIS HEAVY OIL & EOR EUROPE DEEP
Slide 27: Maturing New Growth Options
ROYAL DUTCH SHELL MATURING NEW GROWTH OPTIONS 27 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 28: Downstream: Selective Growth
MATURING NEW GROWTH OPTIONS DOWNSTREAM: SELECTIVE GROWTH 2012 CAPEX $ billion 6 UK Retail LNG to transport Lubes Russia Rhineland Connect 4 Gas-to- chemicals Port Arthur China Retail + Lubes 2 Qatar China refining chemicals and chemicals 0 CHEMICALS GROWTH Raízen REFINING BASE UNDER DEVELOPMENT OPTI
Slide 29: 2011 Exploration + Business Development
MATURING NEW GROWTH OPTIONS 2011 EXPLORATION + BUSINESS DEVELOPMENT 2011 EXPLORATION & ACQUISITIONS RESOURCES MATURATION / POTENTIAL billion boe 4 Marcellus Cl i Clair Eagle E l FFord d Groundbirch Abadi Iraq Liquids-rich Arrow shales Marcellus China tight gas Groundbirch 2 Eagle Ford Z d Zaedyus To
Slide 30: 2011 Drilling Success
MATURING NEW GROWTH OPTIONS 2011 DRILLING SUCCESS FRENCH GUIANA – NEW PLAY OPENER WEST AUSTRALIA GAS FOR LNG FFrench hGGuiana i – Guyane Maritime Shell 45% Zaedyus (GM-ES-1) Satyr-3 Acme West 1&2 NWS LNG y Guyana – Stabroek Shell 50%* Vos-1 Gorgon LNG 0 100 200 Kilometers DISCOVERY >300 million boe
Slide 31: Exploration: Consistent Delivery of New Resources
MATURING NEW GROWTH OPTIONS EXPLORATION: CONSISTENT DELIVERY OF NEW RESOURCES DISCOVERED RESOURCES POTENTIAL billion boe 3 2 Cardamom Deep Appomattox 1 Amal SE West Boreas Vito S h Deimos South D i Z d Zaedyus Tologbene G Geronggong 0 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Concerto Achilles Acme TR
Slide 32: Stepping Up 2012 Exploration Pace
MATURING NEW GROWTH OPTIONS STEPPING UP 2012 EXPLORATION PACE EXPLORATION SPEND 2012 EXPLORATION SPEND Alaska N. America N. America liquids- Kazakhstan (1) tight gas rich shales Saudi Arabia (1) China Gulf of Mexico (5) Fr Guiana (2) Brunei (4) Gabon (1) & Nigeria (1) Australia offshore (5) Brazil (
Slide 33: Building World-Wide Tight Gas + Liquids-Rich Shales Portfolio
MATURING NEW GROWTH OPTIONS BUILDING WORLD-WIDE TIGHT GAS + LIQUIDS-RICH SHALES PORTFOLIO Canol Groundbirch Montney Deep Basin Germany Foothills Bakken Ukraine Pinedale Utica Niobrara Marcellus Turkey Wells Manufacturing JV with CNPC Monterey Mississippi Lime Wolfcamp Haynesville Egypt China tight g
Slide 34: Liquids-Rich Shales and Tight Gas Outlook
MATURING NEW GROWTH OPTIONS LIQUIDS-RICH SHALES AND TIGHT GAS OUTLOOK 2012 PRIORITIES + OUTLOOK GLOBAL PRODUCTION POTENTIAL kboe/day bcfe/day 2.0 300 Annual investment decisions + flexibilityy 15 1.5 200 1.0 Focus on lowest cost North America gas 100 0.5 Spending at low-end of potential range 0 0 20
Slide 35: North America Gas Value Chains
MATURING NEW GROWTH OPTIONS NORTH AMERICA GAS VALUE CHAINS LEVERAGE SHELL INTEGRATION KNOW-HOW EXAMPLE: COMMERCIALISING LNG FOR TRANSPORT Fort St John Fort Mc Murray Grande Prairie G into Gas i t oilil pricing i i opportunity t it Canada Green Corridor FID 2011 FID for 0.3 mtpa LNG Edmonton Long dis
Slide 36: Iraq Oil & Gas
MATURING NEW GROWTH OPTIONS IRAQ OIL & GAS WEST QURNA 1 + MAJNOON BASRAH GAS COMPANY (BGC) Majnoon West Qurna1 South Gas Processing Plants BASRAH Rumaila Zubair South Gas LPG Terminal B Barge unloading l di pipe i racks k att th the OIL FIELDS WITH SHELL INTEREST Majnoon Jetty, Shat-al-Arab waterway
Slide 37: Maturing New Projects 2012+
MATURING NEXT GROWTH OPTIONS MATURING NEW PROJECTS 2012+ Long-term growth and investment TIGHT GAS – N. AMERICA CARMON CREEK - CANADA Options to flex annual spending with macro Capex and growth outcomes Investment decisions driven by ARROW - AUSTRALIA APPOMATTOX - USA o o o fit Portfolio Affordabili
Slide 38: Financial Framework
ROYAL DUTCH SHELL FINANCIAL FRAMEWORK 38 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 39: Upstream Capital Investment
CAPITAL INVESTMENT STRONG PROJECT FLOW DRIVES INVESTMENT GROWTH capital investment $ billion Thematic Schiehallion Redevelopment R d l t AOSP Debottlenecking EXPLORATION 30 Clair Ph2 LNG for transport UK Retail HEAVY OIL & EOR North America NA LRS tight gas TIGHT/SHALE OIL/GAS US chemicals Basrah Ga
Slide 40: Updating Our Growth Outlook
GROWTH DELIVERY 2012+ UPDATING OUR GROWTH OUTLOOK OIL & GAS PRODUCTION + OUTCOMES SUSTAINED CASH FLOW GROWTH million boe/day $ billion 4.0 200 200 $100/bbl $80/bbl 3.5 150 150 $87/bbl Brent 100 100 30 3.0 50 50 2.5 0 0 2009 2010 2011 2017-18 2008 -2011 2012 – 2015 average POTENTIAL PRODUCTION + POTE
Slide 41: Upstream Growth Outlook
UPSTREAM GROWTH OUTLOOK UPSTREAM REGIONAL CASH FLOW SCENARIO PRODUCTION POTENTIAL $ billion billion boe Middle East, 2008 -2011 2011 Africa, f CIS 2012 – 2015 Americas POTENTIAL 3.5 4.0 4.5 5.0 5.5 Europe TOTAL PRODUCTION (BILLION BOE) Outlook for enhanced cash growth Asia Pacific Cash flow growth >
Slide 42: Financial Framework
FINANCIAL FRAMEWORK CASH PERFORMANCE +30 50% CFFO 2012 +30-50% 2012-1515 versus 2008-11 Growth free cash flow CFFO drives investment + payout PAY-OUT INVESTMENT Dividend linked to business results ~$30 $30 billi billion nett capex 2012 Scrip dividend with buy back offset Affordability, profitability
Slide 43: Summary
ROYAL DUTCH SHELL SUMMARY 43 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 44: Summary: 2012+ Priorities
SUMMARY 2012+ PRIORITIES 12 billion boe resources on stream CONTINUOUS IMPROVEMENT D i new cashflow Drive hfl growth: th GROWTH DELIVERY +30-50 % CFFO 2012-15 versus 2008-11* Maturing >60 projects; ~20 billion boe resources MATURE NEW OPTIONS Exploration + bolt-on deals PERFORMANCE FOCUS 2017-18 pro
Slide 45: Q&A
ROYAL DUTCH SHELL Q&A 45 Copyright of Royal Dutch Shell plc 2 February 2012
Slide 46: Key Projects Under Construction
KEY PROJECTS UNDER CONSTRUCTION Phase Project Country Shell share Peak pro- LNG (100%) Products Theme Shell (direct & indirect) duction 100% capacity operated % kboe/d mtpa 2012-13 AMAL STEAM OMAN 34 20 AOSP DEBOTTLENECKING CANADA 60 10 3 BAB THAMAMA G and BAB HABSHAN-2 UAE 9.5 80 BC-10 PHASE
Slide 47: Strong Portfolio of Pre-FID Upstream Options
STRONG PORTFOLIO OF PRE-FID UPSTREAM OPTIONS POTENTIAL 2014-2020 START-UPS Phase Project Country Shell share Peak pro- LNG (100%) Theme Shell (direct & indirect) duction 100% capacity operated % kboe/d mtpa CONCEPT ABADI FLNG PHASE 1 INDONESIA 30 65 2.5 SELECTION AOSP DEBOTTLENECKING CANADA 60 55
Slide 48: 2009-2011 Drilling Performance
2009-2011 DRILLING PERFORMANCE Start up Well name Country Shell Share Location Water depth Oil/Gas Shell % Operated 2009 Achilles-1 Australia 25% Offshore ~1150m G Cardamon Deep US, GoM 100% Offshore ~870m OG Concerto Australia 100% Offshore ~280m G Yellowglen Australia 25% Offshore ~1300m G Kentish
Slide 49: Project Management + Performance
PROJECT MANAGEMENT + PERFORMANCE PROJECT STATUS Construction time elapsed % Harweel Pluto LNG T1 (Woodside) Port Arthur refinery expansion Caesar Tonga Phase 1 Kashagan phase 1 North Rankin 2 Amal Steam Bonga NW Gumusut-Kakap Corrib SAS BAB Thamama G & BAB… M j Majnoon FCP Gorgon LNG T1-3 BC-10 Phas