Shell PLC · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (June 2016)
34 slides from Shell's investor day presentation, Jun 7, 2016
Slide 1: Capital markets day 2016: Re-shaping Shell
Capital markets day 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc June 7, 2016 “Let’s make the future” Royal Dutch Shell | June 7, 2016
Slide 2: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell | June 7, 2016
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: Substantial and long lasting shifts in energy
Industry context Global population Growth in oil & gas demand Energy system in transition Substantial + long lasting World needs shifts in energy more energy; less CO2 landscape 2000 2050 From 7 to 9 billion by 2050 Global energy demand to 75% will live in cities double between 2000 & 2050 Customer
Slide 6: "2 degree world"
“2 degree Global energy mix IEA ‘450’ scenario world” Global energy demand, million boe per day 300 Other renewables Oil 32% Nuclear Coal 29% Bio-energy Hydro Gas 21% 200 13.7 9.4 Coal btoe btoe Bio-energy 10% Energy Primary Nuclear 4% energy consumption Gas 100 supply Renewables 4% Losses + Oil 4.3
Slide 7: "Let's make the future"
Strategy “Let’s make the future” Strategic Operational Focus portfolio on Reset cost and capital Shell ambition: resilient positions spending Create a World-class investment case world-class Relevant in our industry + Invest in advantaged investment case First class execution growing value share
Slide 8: BG deal delivery
Re-shape Shell BG deal delivery Shell reset Oil price uplift Synergies: $4.5 billion 2018 >$10 billion Asset value ahead of expectation Considerable upside potential: Oil price recovery Shell reset Consideration Today Pre-completion view paid Valuation based on forward curves / consensus @
Slide 9: Significant changes delivered
Track record $35 billion 8% $35 billion $22 billion 2013-15 >> Significant Free cash flow ROACE Dividend & buybacks Divestments changes delivered Capital employed in $ billion, end 2013 / Q1 2016 300 2013 Today Corporate BG acquisition: Corporate Deep water + LNG growth accelerated Integrated Gas
Slide 10: 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 11: Cash flow performance
Capital Employed Cash flow Free cash flow + ROACE Re-shape Shell Cash Engines $23 billion Cash flow $140 billion 12 % ROACE performance $87 billion Net debt movement 2013-15 & other $4 billion Interest & other $4 billion Growth Priorities $24 billion $0 billion 11 % Free $39 billion cash flow Cash d
Slide 12: Capital allocation
Capital investment Re-shape Shell $ billion 2016 2017-18 Capital $ billion 50 Oil products 3 3-4 allocation -35% Conventional 5 5-6 oil + gas Cash engines Integrated gas 6 4-5 30 Oil sands mining <1 <1 25 25 Deep water 8 6-7 Growth priorities Chemicals 3 3-4 Shales 2 2-3 Future Reducing capital in
Slide 13: Cash engines
Re-shape Shell Conventional oil + gas Cash engines High grade portfolio Exploration to maintain running room Integrated Gas Moderate capacity growth rate Prioritise for cash delivery Oil Products Strengthen the retained core Selective marketing growth Oil sands mining Improve macro res
Slide 14: Integrated Gas from growth priority to cash engine
Re-shape Shell Liquefaction capacity Integrated Gas Period-end in million tonnes per annum from growth Sakhalin 45 2018 30 priority to cash 15 Sabine Pass engine QG-4 0 2000 2005 2010 2015 Nigeria Oman Brunei Equatorial Atlantic LNG Guinea Malaysia LNG liquefaction volumes LNG Peru Million tonnes pe
Slide 15: Growth priorities
Re-shape Shell Deep water Growth priorities Growth in advantaged geology Brazil + GOM in focus Multi-billion barrels potential Chemicals Advantaged feedstock + growth markets USA + China growth Royal Dutch Shell | June 7, 2016 15
Slide 16: Future opportunities
Re-shape Shell Shales Future ~12 billion barrels resources + potential opportunities Mature to ‘growth priority’ New energies Energy transition themes Explore + invest for longer term Royal Dutch Shell | June 7, 2016 16
Slide 17: New energies
Future opportunities New energies Investment context New energies Mobility Renewables transition growth New fuels Digital Energy Increasing platforms Transition electrification Integrated Connected energy customer solutions Disruptive Greater business customer models choice Hydrogen & biofuels W
Slide 18: Simon Henry, Chief Financial Officer
Simon Henry Chief Financial Officer Royal Dutch Shell plc Royal Dutch Shell | June 7, 2016
Slide 19: Financial framework
Financial framework Cash Performance Creating value for shareholders through cycle CFFO + Divestments Pulling levers today to manage the financial framework Pay-out Investment Dividends + Attractiveness, Buybacks resilience Multi-year timescales and planning Balance Sheet Positioning to cove
Slide 20: Portfolio: Integration with BG
Integration with BG LNG Oil and gas production Portfolio Equity liquefaction capacity in million tonnes per annum Million boe per day 50 4 25 2 0 0 Shell + BG Exxon Chevron Total BP Exxon Shell + BG Chevron Total BP 2015 2018 Liquids Gas Oil & gas proved reserves - 2015 billion boe 30 20 BG transa
Slide 21: Integration timeline
Integration with BG Integration 15 February 2016 End 2016 timeline BG acquisition Integration completed completed August 2015 Day 30 Day 60 Day 90 Today Joint integration Deliver safe, efficient operations Combine best practices and retain best staff planning team established Management anno
Slide 22: Synergies update
Integration with BG Synergies update Synergies Corporate, administrative, $ billion update SG&A organisation and IT operational efficiencies 4 Additional synergies Procurement Procurement spend1 3 Marketing & Reduced costs 2 shipping 1 Exploration Reduced activity via BG combination 0 2016 2
Slide 23: 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 Reduce capital Reduce Deliver new Divestments investment operating costs projects Powerful levers to underpin financial framework Royal Dutch Shell | June 7, 2016 23
Slide 24: Divestments
Manage down-cycle 2016-18 Divestments program Divestments $ billion Portfolio simplification and 30 high-grading 2016-18 announced: Showa Shell Earmarked for disposal Maui pipeline 20 Denmark marketing Up to10% of oil + gas Malaysia refining production Motiva JV end ~5-10 oil + g
Slide 25: Deliver new projects
Manage down-cycle Significant oil & gas + Deliver new Downstream production under Thousand boe per day* Million tonnes per annum projects construction 1200 15 Capex to free cash flow 800 10 High margin / price upside 400 5 barrels 0 0 2014-15 2016-17 2018+ 2014-15 start-ups 2018+ start-ups 201
Slide 26: Significant reduction in project flow
2013 2014 2015 2016 2017+ Track record Oil sands mining Carmon Creek Significant Shales Deep water Shales Appomattox reduction in Integrated Gas Bonga South West Arrow Greenfield LNG project flow Elba LNG Browse LNG US GTL Wheatstone LNG Abadi redesign MLNG Dua JVA LNG Canada Lake Char
Slide 27: Reduced exploration spend
Reduced Exploration expenditure exploration $ billion 8 spend 7 6 5.5 5 $3 billion reduction 4 ~2.5 ~2.5 2 0 2013 2014 2015 2016E 2017/18 avg Heartlands Frontier BG Material reduction in exploration spend BG acquisition + recent Shell discoveries reduces our requirement for exploration More
Slide 28: Lower and more predictable capital investment
Manage down-cycle Capital investment Lower & more $ billion; excludes BG acquisition in 2016 predictable 60 58 capital 47 -35% investment 40 36 $25-30 billion 29 20 0 2013 2014 2015 2016E 2017 - 20 avg Base + short cycle Committed growth projects Growth options/exploration BG Planning for $25-$30
Slide 29: Reduce operating cost
Manage down-cycle Operating cost Reduce $ billion operating cost 60 50 48 46 -20% 40 40 20 $40 billion 0 2013 2014 2015 end-2016 run-rate Shell BG Substantial reductions delivered “Lower for ever” mindset + BG synergies Staff, supply chain + contractors Divestments , growth, FX impacts Royal
Slide 30: Pulling levers to manage financial framework
Manage down-cycle 2016-18 levers Pulling levers to Reduce Reduce manage Divestments capital investment operating costs Deliver new projects financial framework 2015 baseline: 2017-2018 $ billion Shell + BG 2016 potential Trend to 40 Reducing our cash break-even Operating costs 46 Multi-billion p.a
Slide 31: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell | June 7, 2016
Slide 32: Transformation
2013-2015 2019-2021 Transformation average average ROACE 8% ~10% CREATE A WORLD CLASS INVESTMENT CASE Organic free cash flow $5 billion p.a. $20-25 billion p.a. Brent ~$90 ~$60 Improved capital Capital efficiency: Less cost + fewer Portfolio growth: efficiency: reduced 2013 spending people with BG t
Slide 33: Questions & Answers
Questions & Answers Royal Dutch Shell | June 7, 2016
Slide 34: Capital markets day 2016: Re-shaping Shell
Capital markets day 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc June 7, 2016 “Let’s make the future” Royal Dutch Shell | June 7, 2016