Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Merger or Acquisition (April 2015)
35 slides from Shell's merger presentation, Apr 8, 2015
Slide 1: Recommended Combination with BG Group
RECOMMENDED COMBINATION WITH BG GROUP 8 APRIL 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 1
Slide 2: 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. This presentation has been prepared by Royal Dutch Shell plc (“Shell”
Slide 3: Jorma Ollila, Chairman, Royal Dutch Shell plc
JORMA OLLILA CHAIRMAN ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 3
Slide 4: Andrew Gould, Chairman, BG Group plc
ANDREW GOULD CHAIRMAN BG GROUP PLC Copyright of Royal Dutch Shell plc 8 April, 2015 4
Slide 5: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 5
Slide 6: Shell + BG: A Compelling Combination
SHELL + BG: A COMPELLING COMBINATION Accelerates deep water + LNG strategy Accretive to earnings and cash flow per share Complementary portfolios: synergy opportunity Enhanced portfolio: springboard to high-grade Shell + BG Improved cash flow enhances future dividends + buyback potential G
Slide 7: Summary Terms and Metrics
SUMMARY TERMS AND METRICS 0.4454 Shell B shares and 383p in cash per BG share1 Represents a value per BG ordinary share of 1350p, a premium of 52%2 Values BG equity at £47.0 billion3 BC-10, Brazil BG shareholders to own 19% of Shell Transaction underpinned by intrinsic asset value of BG
Slide 8: Shell + BG Upstream Combination
SHELL + BG UPSTREAM COMBINATION North Sea Kazakhstan Atlantic basin LNG Australia LNG Brazil deep water Shell BG Complementary fit Main BG office locations Key uplift Enhanced position in our growth priorities: LNG + deep water Complementary fit in 15 countries ~$2.5 billion/year synergies* id
Slide 9: BG a Strong Strategic Fit with Shell Portfolio
BG A STRONG STRATEGIC FIT WITH SHELL PORTFOLIO Production BG impact million boe/d Key BG producing assets Longer term: Kazakhstan Kazakhstan: Karachaganak adds to growth potential 2% Lower 48 North America shales bolt-on FUTURE OPPORTUNITIES1 (9)% RESOURCES Brazil PLAYS 12% Growth priorities: DE
Slide 10: Shell + Integrated Gas
SHELL + INTEGRATED GAS A leading global player Shell integrated gas performance $ billion QG4 Sakhalin Pluto LNG North Rankin Repsol LNG Strong returns; growing business Pearl GTL Core strength for Shell Earnings + ~470% Earnings CFFO ROACE (RHS) 2014 CFFO in billion $ Integrated gas Downstrea
Slide 11: Integrated Gas Shell + BG
INTEGRATED GAS SHELL + BG NEW GROWTH IN IOC LEADERSHIP PORTFOLIO Combi- 2014* Shell BG nation Equity LNG UK liquefaction 26 7 33 Spain Sakhalin capacity (mtpa) Sabine Pass Cove Point Elba QG-4 Lake Charles LNG delivered Baja Egypt Hazira 34 11 45 Altamira volumes (mtpa) Nigeria Oman Singapore Equato
Slide 12: LNG: North America and Atlantic Basin
LNG: NORTH AMERICA AND ATLANTIC BASIN Options: North America North America LNG in Canada LNG Canada + W. Canada gas Prince Rupert Gulf Coast export options Upstream gas Appalachia Upstream gas Shell BG Overlap Haynesville Gulf Coast options Elba BG LNG offtake Pre-FID Sabine Pass Lake Char
Slide 13: LNG: Australia and Tanzania
LNG: AUSTRALIA AND TANZANIA Options: Australia Queensland Australia - Queensland Prelude Browse Cash flow growth from QCLNG Gorgon BG Bowen Shell Bowen Further growth potential QCLNG Arrow Energy BG: ~8 mtpa: QCLNG ramping up (BG average BG Surat interest 73.8%) Upstream gas Shell Surat Shel
Slide 14: Shell + Deep Water
SHELL + DEEP WATER DEEPENING OF COMPETITIVE POSITION + CAPABILITY Decades track record in project delivery High returns; growing portfolio Cost leadership + profitable CFFO in billion $ Shell deep water Production 390 kboe/d; >10% of Upstream Integrated gas Downstream engine Upstream engine De
Slide 15: Shell in Brazil: Strong Presence Across the Value Chain
SHELL IN BRAZIL: STRONG PRESENCE ACROSS THE VALUE CHAIN ACTIVE IN BRAZIL >100 YEARS Downstream: a leading + Deep water: a leading player Libra JV: 2013+ established brand 1998+ #1 sugar-ethanol player ~2013+ Bijupirá-Salema: 2003 8–12 billion boe resources (ANP) Retail network ~5500 sites
Slide 16: Deep-Water Brazil Shell + BG
DEEP-WATER BRAZIL SHELL + BG IOC LEADERSHIP IN WORLD-CLASS OIL PROVINCE Shell position Production BC-10 thousand boe per day Bijupirá-Salema Shell: 3 exploration Shell BG Combination /appraisal wells drilled 8-12 billion boe potential (ANP) Shell and Petrobras: leading global deep-water compan
Slide 17: Upstream Engine: New Momentum
UPSTREAM ENGINE: NEW MOMENTUM Managed decline of legacy positions Upstream engine production (2014) thousand boe per day BG* Shell (kboe/d) (kboe/d) UK 105 90 overlap Norway 28** 160 Bolivia 48 - India 18 - new production Thailand 39 - for Shell Tunisia 32 - Shell BG Other - 1,132 270 1,382 Attracti
Slide 18: Enlarged Upstream Portfolio
ENLARGED UPSTREAM PORTFOLIO SPRINGBOARD FOR FURTHER PORTFOLIO HIGH-GRADING Company-wide drive to improve performance Impact of BG combination Shell: 2014 – 2015 YTD delivery New mix: profitable, ramped-up end of decade Grow 160 kboe/d Marks opportunity to rework our long-term options start-ups +
Slide 19: Simon Henry, Chief Financial Officer
SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 19
Slide 20: Recap of Terms and Key Conditions
RECAP OF TERMS AND KEY CONDITIONS 0.4454 Shell B shares and 383p in cash per BG share* Equity increase: 1,532 million new B shares* Election option for A shares BC-10, Brazil ‘Mix and match’ election between cash and shares Purchase price allocation (IFRS 3 + 13) ~ - $2 billion post-ta
Slide 21: Shell + BG Key Metrics
SHELL + BG KEY METRICS 2014 Proved reserves Production billion boe million boe/d +20% +25% Shell/ Shell/ BG* BG ROACE Cash flow from operations % $ billion +15% Shell Combination Shell/ BG Shell BG other majors * Shell’s reserves are calculated on a SEC basis and BG‘s 1P reserves are calculated on a
Slide 22: Financial Framework and Priorities
FINANCIAL FRAMEWORK AND PRIORITIES Revised priorities for cash Grow cash flow from operations + free cash flow 1. Debt reduction Credit rating a priority: debt pay-down 2. Dividends Dividend policy 3. Buybacks + capital investment Financial Framework Substantial share buybacks intended 2017+
Slide 23: Grow Cash Flow + Free Cash Flow
GROW CASH FLOW + FREE CASH FLOW Synergies Asset sales Capital Growth investment ~$2.5 billion in ~$30 billion Reduce organic LNG + deep water 2018* 2016-2018 spend <$40 billion acceleration Additional upside 2016 Shell programmes potential Reduce exploration spend Improved free cas
Slide 24: Synergies + Exploration Spend Reduction: Shell + BG
SYNERGIES + EXPLORATION SPEND REDUCTION: SHELL + BG Corporate, administrative, Operating costs savings SG&A organization and IT operational Complementary presence in 15 countries efficiencies Combining Shell + BG capabilities Procurement Operated procurement spend Marketing & Reduced costs s
Slide 25: Step Up Asset Sales
STEP UP ASSET SALES Asset sales Increased asset sales: ~$30 billion 2016-2018 $ billion Divestment from combined portfolio Opportunity to reshape the company Shell Combination Copyright of Royal Dutch Shell plc 8 April, 2015 25
Slide 26: Continue to Moderate Organic Capital Investment
CONTINUE TO MODERATE ORGANIC CAPITAL INVESTMENT Capital investment Reducing spending 2013+ $ billion Rich opportunity funnel + growth spend Deferrals, cancellations, divestments Supply chain opportunities Expecting < $40 billion for combination in 2016 + further reduction in 2017 Shell (or
Slide 27: Shell + BG: Cash Flow Potential
SHELL + BG: CASH FLOW POTENTIAL $ billion CFFO potential p.a. ~ 2020 Longer term1 ~$10 billion Review + reduce Shell 2014 Deep water ~$15 - $20 billion Growth priorities Integrated ~$15 - $20 billion Gas Downstream + Restructuring + upstream ~$15 - $20 billion selective growth engine CFFO potential
Slide 28: Dividend + Buyback Potential
DIVIDEND + BUYBACK POTENTIAL Shell dividends Dividend policy unchanged $ billion Track record Expected dividend 2015 $1.88/share 2016 at least $1.88/share Scrip dividend expected to be withdrawn 2017 Dividends announced Shell buybacks Stepping up share buybacks $ billion Buyback ~$25 billion
Slide 29: Expected Timeline
EXPECTED TIMELINE Early ‘16: Conclude transaction following regulatory + shareholder approvals 2016: Consolidate BG and Shell Launch ~$30 billion asset sales + ~$2.5 billion synergies programme Prioritize debt pay-down 2016+ 2017-2020: Launch of ~ $25 billion share buyback programme Copyri
Slide 30: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 30
Slide 31: Priorities 2015+
PRIORITIES 2015+ Shell priorities unchanged Shell 2015+ BG combination Competitive financial Restructuring + cost drive ~$2.5 billion synergies performance Returns and cash flow New growth potential Accelerates strategy Supply chain reset Capital efficiency ~$30 billion asset sales C
Slide 32: Shell + BG: A Compelling Combination
SHELL + BG: A COMPELLING COMBINATION Accelerates deep water + LNG strategy Accretive to earnings and cash flow per share Complementary portfolios: synergy opportunity Enhanced portfolio: springboard to high-grade Shell + BG Improved cash flow enhances future dividends + buyback potential G
Slide 33: Questions & Answers
QUESTIONS & ANSWERS COMBINATION WITH BG GROUP Copyright of Royal Dutch Shell plc 8 April, 2015 33
Slide 34: Definitions & Cautionary Note (Continued)
DEFINITIONS & CAUTIONARY NOTE (CONTINUED) This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell plc and of the proposed combination. All statements other than statements of historical fact are, or may be de
Slide 35: Recommended Combination with BG Group
RECOMMENDED COMBINATION WITH BG GROUP 8 APRIL 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 8 April, 2015 35
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