Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Q1 2006 Earnings Presentation
85 slides from Shell's earnings presentation, Sep 8, 2006
Slide 1: Delivery and growth - leveraging a strong portfolio
1 Delivery and growth - leveraging a strong portfolio Royal Dutch Shell plc
Slide 2: Disclaimer statement
2 Disclaimer statement This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking
Slide 3: Jeroen van der Veer
3 Jeroen van der Veer Chief Executive
Slide 4: Agenda
4 Agenda Introduction Jeroen van der Veer Chief Executive Exploration & Production Malcolm Brinded Executive Director – Exploration & Production Gas & Power Linda Cook Executive Director – Gas & Power Oil Products Rob Routs Executive Director – Downstream Financial Framework Peter Voser Chief Financ
Slide 5: Positive momentum continues
5 Positive momentum continues • Royal Dutch Shell unification – one board, one company • Record profitability and cash generation – returns to shareholders over $25 billion in 2004-05 – Q1 2006 CCS earnings $6.1 billion • Strategy reconfirmed – more upstream, profitable downstream
Slide 6: Group investment framework
6 Group investment framework Strategy Context More upstream, Growth energy demand profitable downstream • Cash generation + reinvestment • Portfolio choices • Environment + sustainability Competitive Returns • Unconventionals + renewables • Competition • Downstream includes chemicals Priorities Deli
Slide 7: Strategic context: number of major projects
7 Strategic context 80 Tight energy markets • Positioning for higher prices Portfolio build-up Number of major projects • Robust in conservative conditions creates choices 60 • Prudent planning: projects tested in the $20’s 40 Cautious outlook downstream • Selected growth platforms 20 • Downstream i
Slide 8: Emphasis on technology
8 Emphasis on technology Resources Differentiated fuels Renewables Enhanced oil recovery Low sulphur fuels Hydrogen Exploration technologies High performance fuels Wind Oil sands Biofuels Solar In-situ conversion GTL / CTL Biomass CO2 solutions
Slide 9: Shell global reach & track record
9 Shell global reach & track record Petrochemicals LNG: 1999-2005 Nanhai 11 new trains • Chinese first • Delivered overall on time, within budget • On time, on budget • Shell JVs: total 22 trains, 61.6 mpta • $4.3bln / 2.3mtpa • ~40% world LNG capacity • 1,500 staff, 95% • Qalhat LNG in Oman, lowest
Slide 10: Stronger implementation capabilities
10 Stronger implementation capabilities New hires 3000 • Deepening professionalism Asia/Pacific – Group Chief Technologist – Shell Technology India 2000 – Project Academy USA – Commercial Academy 1000 Europe/Africa Middle East/ • Strong growth in both graduate Russia and experienced hires 0 2001 200
Slide 11: Malcolm Brinded
11 Malcolm Brinded Executive Director – Exploration & Production
Slide 12: Sustained EP focus
12 Sustained EP focus Where we want to be • Existing oil Upside Higher • New material oil • More integrated gas • More unconventional oil Portfolio today • Robust cash generation Exploration & new positions • Leader in gas • Around 60 bln boe of resources Consistent project delivery Operational exce
Slide 13: Strong performance
13 Strong performance 22 2005 Competitor range 20 Shell • Top quartile unit cash generation 18 • Production on target despite 16 hurricanes 14 12 • Strong portfolio progress $ / boe 10 8 Q1 2006 6 • Upstream unit earnings up 35% on Q1 4 2005 2 • Brent up 29% on Q1 2005 0 2000 2001 2002 2003 2004 200
Slide 14: Delivering production, demonstrating capability
14 Delivering production, demonstrating capability Deepwater: Bonga Tight gas: Pinedale Russia: Salym February 2005 Central Processing Facility December 2005 • First Nigerian deepwater • World class gas field • On time, on budget hub • 400% increase in production • Record drilling • Flawless start-u
Slide 15: Production outlook for 2006
15 Production outlook for 2006 August 2005 April 2006 • 75% of GoM production restored by end 2005 • Mars expected on-stream in May - ahead of schedule • Industry first seafloor pipeline repair - 3000 ft water depth • Nigeria shut-ins - impact ongoing Overall outlook 3.5-3.6 mln boe/d
Slide 16: Not just the oil price has changed
16 Not just the oil price has changed NOCs, independents going international New entrants Supply Environment Host government pressures transformed demands People, rigs, Tax regimes, steel, yard capacity local content
Slide 17: Industry cost escalation
17 Industry cost escalation Rig rates Corrosion resistant alloy pipe (increases since 2002) (increases since 2002) North Sea Jack-up Alloy 825 GoM Jack-up 250-300 WW Semi-sub 2001-5000' 316L WW Floater 5000'+ 0% 100% 200% 300% 400% 500% 0% 20% 40% 60% 80% Source: ODS Petrodata Source: London Metals
Slide 18: Rig build activity - mobile units delivered and rates
18 Rig build activity – mobile units delivered and rates Rig rate Number of units delivered US$ 000/d 50 300 Floaters ?? Jack-ups 250 40 Worldwide semi rate 200 30 150 20 100 10 50 0 0 94 96 98 00 02 04 06 08 10 Source: Fearnley, ODS Petrodata, April 2006
Slide 19: Our response
19 Our response Projects • Delivering well positioned, profitable, long-life projects • Selective – economic value is priority Portfolio • Capturing value - rationalisation and swaps • Strong and growing opportunity set Capability • Leveraging technology, partnerships, integration • Securing people,
Slide 20: Strong resources position
20 Strong resources position Exploration More Unconventionals 2005 Resource adds 2+ bln boe Reserves adds¹ 1.0 bln boe Proven mining reserves (0.7 Production2 1.3 bln boe bln boe) ¹ includes 2005 oil sands reserves additions of 166 mln boe Americas Proved SEC reserves ² including oil sands Middle Ea
Slide 21: Opening up new resources
21 Opening up new resources Exploration More Unconventionals Emerging new technologies •60 Producible resources, bln boe, e.g. further volumes in Sakhalin, Kazakhstan, Nigeria, oil sands, Asia Pacific gas, EOR Longer-term scope •40 Athabasca expansions, Bonga SW, Bosi, BC-10, Changbei, Gbaran Ubie,
Slide 22: Major project flow and optionality
22 Major project flow and optionality Major projects based on Shell share capital investment > $100 million Shell share Resources bln boe 15 0 Business Design Under construction Onstream development 2005 2006-2009 start up Post 2009 start-up and options Selecting from a stronger project opportunity
Slide 23: On track for production growth
23 On Track for Production Growth Aspiration • 3.5 mln boe/d in 2005 5.0 4.5-5.0 mln boe/d 4.5 Production mln boe/d • 3.5 – 3.6 mln boe/d in 2006 3.8-4.0 mln boe/d 4.0 3.5-3.8 mln boe/d • 3.5 – 3.8 mln boe/d in 2007 3.5-3.6 mln boe/d 3.5 • 2009 outlook reconfirmed 3.0 • 2014 aspiration unchanged – 2
Slide 24: EP Funnel - Key Projects 2006-2012
24 EP Funnel - Key Projects 2006-2012 Peace River Ormen Lange AOSP Debottlenecking Skarv AOSP Expansion 1 Statfjord LL Groningen LT Sakhalin II Kashagan 450 PLNG Changbei Qatar Pearl GTL Great White Qatargas 4 LNG Deimos Harweel Ursa Waterflood Gbaran/Ubie Phase 1 H-Block Gbaran/Ubie Phase 2 Erha +
Slide 25: Production contribution
25 Around 2.3 mln boe/d of long-life production from 2010 Long life growth projects • Average unit cashflows* Long life existing gas stronger than existing Long life existing oil portfolio today Production contribution 3.0 • ~70% of investment in areas with high price upside (mln boe/d) 2.0 • Typica
Slide 26: Unconventional oil: Canada
26 Unconventional oil: Canada SURE Northern Heavy oil • Peace River: 7 bln oil in place • SURE Northern Energy Ltd - estimated >30 bln oil in place (new technology target) PEACE RIVER SCL Peace AOSP Mining: AOSP River EDMONTON • growth to 500 kboe/d by ca 2015 • >6.5 bln bbls recoverable resource* C
Slide 27: Portfolio growth 2004-2005
27 Portfolio growth 2004-2005 Alaska Zapolyarnoye-Sakhalin swap Orphan Basin Canadian Ukraine Salym licence extension NA Gas unconventional Plays oil Kazakhstan Algeria Libya LNG South Texas swap PLNG Libya Gas Qatargas 4 LNG/Qatar Pearl GTL Oman licence extension Malaysia East Olokola LNG Sabah Gor
Slide 28: Managing EP
28 Managing EP • Clear Roadmap – clear priorities • Right people – in key jobs, new top team • Clear accountabilities and line of sight • Tough performance management • Deep professionalism Improving performance
Slide 29: Summary
29 Summary • EP environment transformed • Stronger opportunity set • Choice + performance = value • Top quartile unit cash generation • On track for 3.8 – 4.0 mln boe/d in 2009 • Sustained longer term growth - 2014 aspiration
Slide 30: Exploration & Production - Additional information
30 Exploration & Production Additional information
Slide 31: EP Funnel - Key Projects
31 EP Funnel - Key Projects Peak Production Project Country Project type Shell share 100% kboe/d Erha + Extensions Nigeria Offshore Deepwater 44% 180 * Full refurbishment of Groningen securing average annual Pohokura New Zealand Offshore Shallow Water 48% 40 production levels for the long term Chang
Slide 32: Linda Cook
32 Linda Cook Executive Director Gas & Power
Slide 33: Setting the pace in Integrated Gas
33 Setting the agenda Setting the pace in Integrated Gas Gulf Landing & Divested Intergen Qatargas 4 LNG 1st LNG cargo Sakhalin progress Broadwater & Gasunie FID Hazira, India progress midstream Additional capacity Development Elba Island agreement Italy Regas 14th coal gas license & Dongting constr
Slide 34: Delivering earnings growth
34 Setting the agenda Delivering earnings growth NIBIAT - $ bln* 2.5 Divestment gains Other LNG 2.0 Driven by LNG: • Volume growth 1.5 • Operational excellence • Oil prices 1.0 0.5 0.0 2002 2003 2004 2005 Q1 2006 *2001-2003 USGAAP, 2004-2005 based on IFRS
Slide 35: LNG: 14% aai growth target to 2009
35 Delivering Growth LNG: 14% aai growth target to 2009 LNG Capacity (equity share*), mtpa 25 8 new trains onstream adding: 20 • 34 mtpa (100%) • 11 mtpa (Shell share) 15 Major Competitors** 10 5 0 2004 2005 2006 2007 2008 2009 * Incl. Sakhalin at 55% Shell Share and indirect interest in Woodside. *
Slide 36: Trends in global LNG
36 Setting the agenda Trends in global LNG 1990 2020 Europe 65 mt ~ 500 mt Asia (4% global gas) (~17%) Americas • Asia Pacific focus • Global business • ‘Niche’ technology, risky • Security of supply • Capital intensive • Cost competitive • Long term contracts • Increasing spot/flexibility • Oil lin
Slide 37: Consistent strategy: profitability & growth
37 Setting the agenda Consistent strategy: profitability & growth Global Capabilities Global Global market supply presence portfolio
Slide 38: Proven track record in project delivery
38 Global capabilities Proven track record in project delivery 11 new LNG trains 1999-2006 • 39 mtpa* • $12 bln investment* • Overall on time and within budget • Competitive cost Qalhat LNG in Oman • Ahead of schedule • Lowest ever unit capex • 9 day start up – an industry record • 20 mln hours – no
Slide 39: Leveraging LNG operating capabilities
39 Global capabilities Leveraging LNG operating capabilities LNG plant utilisation 2000-2004 96% Technical support to Shell JVs: 92% • ~ 40 years operating experience Equivalent to ~ 500 cargoes • ~ 40% world LNG production • Top quartile reliability 88% (97% in 2005) 84% Shell JVs Others Shell anal
Slide 40: Qatargas 4 LNG: adding value for Qatar
40 Global supply portfolio Qatargas 4 LNG: adding value for Qatar Shell’s proposition • Premium market access on US east coast • LNG project management, Elba operations and shipping expertise Project dimensions (100%) • 7.8mtpa train • 1.4 bcf/d gas production • 70,000 b/d NGLs Ras Laffan 30% Shell
Slide 41: Nigeria: continued growth
41 Global supply portfolio Nigeria: continued growth Olokola LNG Shell Share LNG Capacity mtpa 14 12 NLNG 10 Olokola 8 NLNG NLNG T1-6 expansion 6 4 Olokola LNG project dimensions (100%) 2 • 4 trains in 2 phases 0 • Total 22 mtpa Firm Potential 18.5% Shell Share Nigeria NLNG
Slide 42: Australia: advancing additional growth
42 Global supply portfolio Australia: advancing additional growth BONAPARTE BROWSE Basin Shell LNG Capacity* Basin mtpa CARNARVON Sunrise 38% Basin Evans shoal 50% 25 NWS WA-371-P 100% Scott Reef Brecknock 25% 20 Gorgon LNG T1-2 25% Pluto 34% 15 10 Advantages: - Large resource base - Stable governme
Slide 43: Libya: entry via LNG capabilities
43 Global supply portfolio Libya: entry via LNG capabilities Marsa al Brega LNG Marsa al Brega LNG • Marsa al Brega LNG plant rejuvenation underway • 22,000 km2 exploration license • Possible upgrade from 0.7 to 3.0 mtpa • Potential greenfield LNG project Marsa al Brega LNG
Slide 44: The leading global supply portfolio
44 Global supply portfolio The leading global supply portfolio Shell LNG capacity* mtpa 70 60 50 40 30 20 10 0 In operation Under Design Business construction development * Shell Share including Sakhalin at 55% and indirect interest in Woodside.
Slide 45: Leading market presence
45 Global market presence Leading market presence Shell in Europe Pan-European marketer Coral in North America #1 LNG importer* Shell in Asia Pacific #3 energy marketer #1 LNG supplier* 4 LNG import sites India and China access 19% 29% 14% % global gas demand** Sources*: Shell, Poten & Partners, Pla
Slide 46: Selective LNG market access
46 Global market presence Selective LNG market access Shell Share • Premium netbacks regas capacity • East & West North America >50 mtpa • Emerging markets Baja construction Possible new positions Possible expansions Construction Operation Hazira, India
Slide 47: Adding value through strategic marketing
47 Global market presence Adding value through strategic marketing LNG volume marketed by Shell • Building capabilities, portfolio mtpa and new markets 30 • Supporting LNG JVs and Pre FID customers 25 Post FID • Driving optimisation 20 Others Marketing optimisation example 15 Qatargas 4 LNG Actual 1
Slide 48: Transforming market exposure
48 Global market presence Transforming market exposure • Diversifying market portfolio • Increasing exposure to North America • Emerging market presence Shell Share LNG JV sales 2012-14 Estimate India & China 2005 Europe Japan, Europe Korea & West Taiwan Americas Asia Coast Americas East Coast Total
Slide 49: Leader in conversion technologies
49 Technologies for the future Leader in conversion technologies Gas Syngas to Liquids (GTL, CTL, BTL) Gasoil, naptha, lubes etc. Syngas production Syngas to Chemicals Coal Syngas to Power Biomass Proprietary Shell Technologies
Slide 50: Qatar Pearl GTL: world scale integration
50 Technologies for the future Qatar Pearl GTL: world scale integration Project status • 2 appraisal wells drilled Ras Laffan • Front end design complete Doha • Revised contracting strategy (EPC market pressures) • Currently out for bids Project dimensions (100%) • Progressing towards investment dec
Slide 51: Clean coal technology for the future
51 Technologies for the future Clean coal technology for the future Dongting Buggenum Coal gasification Clean coal to Power Coal to liquids (IGCC) (CTL) • 14 licenses in China • Buggenum (250 MW): • Economic at today’s 12 yrs in operation oil and coal prices • Dongting JV with Sinopec • 15% lower CO
Slide 52: Consistent strategy: profitability & growth
52 Delivering Profitability & Growth Consistent strategy: profitability & growth • Strong earnings growth • Successful track record • 14% aai LNG capacity growth 2004 – 09* • Global capabilities and market presence • Excellent growth portfolio • Leading new technologies * Shell Share including Sakha
Slide 53: Rob Routs
53 Rob Routs Executive Director - Downstream
Slide 54: A profitable Downstream strategy
54 A profitable Downstream strategy • Divest underperforming/ non strategic assets Reshape • Selective manufacturing investment the portfolio • Investment in high growth markets • Leader in brand share of preference Customer • Number one marketer of differentiated fuels Focus • Market leader in lubr
Slide 55: Oil Products - leadership in profitability
55 Oil Products – leadership in profitability Oil Products - unit earnings Oil Products – unit cash flow rolling 4 quarters $/bbl $/bbl 3.0 4.5 Competitor range Competitor range 4.0 2.5 Shell Shell 3.5 2.0 3.0 2.5 1.5 2.0 1.0 1.5 1.0 0.5 0.5 0.0 0.0 2002 2003 2004 2005 Q1 2001 2002 2003 2004 2005 20
Slide 56: Nanhai Petrochemical Complex - On Time/On Budget
56 Nanhai Petrochemical Complex - OnTime/OnBudget Integrated petrochemicals complex using most advanced technology $4.3 bln project, 2.3 mln tonnes of products per year World-scale cracker with feedstock flexibility (naphtha/condensate) Proximity to markets – sales mainly in Guangdong and Ea
Slide 57: Industry response to increased demand
57 Industry response to increased demand… 2006 – 2010 Global Refining kbpd Capacity Additions 12000 • High Growth ~ 22% East of Suez 9000 Range of estimates Vs ~6% Americas Vs ~ 2% Europe and Africa 6000 • Higher Complexity – USA/Europe 3000 0 2006 2007 2008 2009 2010 2005 base …risk of capacity ove
Slide 58: Re-shaping the Downstream portfolio, 2004-2005
58 Re-shaping the Downstream portfolio, 2004-2005 • $7.9 bln cumulative divestment proceeds since ‘03 • Reduced exposure Growth – Refining / Bio Fuels Less attractive assets/markets Divestment – Refining / Pipelines / Chemicals Weakly positioned Growth - Chemicals / Marketing • Maintaining stron
Slide 59: Creating value through Downstream partnerships
59 Creating value through Downstream partnerships with major resource holders • Partner since 1984 • Motiva, USA Refining, Marketing/Distribution • Al Jubail, Saudi Arabia Refining (SASREF) • Japan – Showa Shell • Partner since 1984 • Partner since 1993 • SADAF Chemicals Complex • Deer Park Refi
Slide 60: Looking East
60 Looking East… Russia • Retail Turkey • 13 stations • Retail JV – 1,200 stations - 20 sites secured • Refining interest China • Nanhai Petrochemical Complex • Sinopec JV & others - Retail - 200 stations, 300 pending - Lubricants - 3rd largest Shell market - Bitumen acquisition India • Exploring re
Slide 61: Shell - The retail brand leader
61 Shell – The retail brand leader Brand Share of Preference - 2005 % 25 • Shell Brand - A key asset 20 • Leader in brand preference among global brands 15 • # 1 global market share 10 5 0 Shell Exxon BP Chevron Total Mobil Source: Global Brand Tracker GFK / NOP
Slide 62: Oil-Chemicals advantage
62 Oil-Chemicals advantage Integration Value Integration Benefits $mln 800 • Advantaged feedstocks • Operational integration & flexibility 600 • Logistics synergies • Site infrastructure synergies 400 Margin uplift 200 Capex/Opex efficiency 0 2004 2005 Integration yielding significant value
Slide 63: Extensive and profitable integrated oil trading activities
63 Extensive and profitable integrated oil trading activities London Moscow Calgary Rotterdam • Global coverage – offices in 11 cities Houston Tokyo Barbados Dubai • High volume base Singapore Crude - 7 mln bbls/day Products – 4 mln bbls/day • Generating value % Downstream Indexed Earnings 400
Slide 64: Significant opportunities - improved refinery performance
64 Significant opportunities - improved refinery performance 1600 • Equipment defect elimination Availability • Turnaround optimisation 1400 • Maintenance contracting strategies Cost 1200 • Cost leadership process Identified 1000 Annual • Yield maximisation Margin 800 Margin • Increased crude flexib
Slide 65: Operational excellence - Retail
65 Operational excellence - Retail Global simplification Shell US retail performance and standardisation 2001 = 100 140 • Operator models: 150 4 • Focus on key customer basics 120 • Consistent global customer offer 100 • Deliver innovative, new products and services 80 Efficiency Thru’put Shell Over
Slide 66: Shell leads in Bio-fuels
66 Shell leads in Bio-fuels Bio-component Volume • Cellulose ethanol (from wheat straw) Kt/year (Ethanol, FAME) 2500 • Canadian Demo plant online • Potential plans – Canada/US/Germany 2000 • VW feasibility - Germany 1500 1000 • Synthetic GTL (from biomass) • Beta plant – 2007 500 • Reviewing full sc
Slide 67: A profitable Downstream strategy
67 A profitable Downstream strategy • Divest underperforming/ non strategic assets Reshape • Selective manufacturing investment the portfolio • Investment in high growth markets • Leader in brand share of preference Customer • Number one marketer of differentiated fuels Focus • Market leader in lubr
Slide 68: Peter Voser
68 Peter Voser Chief Financial Officer
Slide 69: Q1 2006 results highlights
69 Q1 2006 results highlights Q1 2006 Q1 2005 $ bln $ bln CCS* earnings 6.1 5.5 +12% Basic CCS earnings per share (US$) 0.94 0.82 +15% Cash from operations** 9.2 9.1 +1% Dividend per share (euro) 0.25 0.23 *** +9% * CCS for Oil Products and Chemicals segments only ** Excluding working capital, taxat
Slide 70: Q1 2006 segment earnings
70 Q1 2006 segment earnings Q1 2006 Q1 2005 $ bln $ bln Exploration & Production 3.7 3.0 Gas & Power 0.8 0.5 Oil Products (CCS basis) 1.3 1.9 Chemicals (CCS basis) 0.1 0.4 Other segments/Corporate/Minority interest 0.1 (0.2) CCS earnings* 6.1 5.5 * CCS for Oil Products and Chemicals segments only
Slide 71: Financial framework
71 Financial framework Context Strategy • Superior cash generation • Robust project economics • Disciplined re-investment Competitive Returns • Through-cycle balance sheet • Competitive costs • Disposals, asset swaps Priorities • Dividend • Plan capital investment • Incremental growth + payout
Slide 72: Competitive financial performance
72 Competitive financial performance Robust profitability Strong cash flow growth 35% 250 2005 ROACE Cash Cashflow flowper pershare share 30% 200 25% 20% 150 15% 100 10% 50 5% 0% 0 2000 2005 ROACE on clean earnings. Cash flow excluding working capital, taxation and taxation paid. Competitors are Exx
Slide 73: Strong cash generation
73 Strong cash generation Cash sources and uses 30 Operating cash flow* 25 Divestments • Surplus cash generation Capital investment** 20 • Cash choices 15 10 5 0 Upstream Downstream 12 months to end Q1 2006 $bln *Excluding working capital, taxation and taxation paid **Excluding minority interest in
Slide 74: Portfolio highgrading continues
74 Portfolio highgrading continues Divestments 2004-2005 OP • 2004-05 disposals $14.3 bln • Continued scrutiny of portfolio and Chem cost structure • Disposals & swaps: guidance for Other average $2-$3 bln per year InterGen EP Midstream gas
Slide 75: Robust payout track record
75 Robust payout track record Dividend growth* versus inflation 225 Dividends 200 Royal Dutch Shell • Track record ahead of policy • Q1 dividend +9% to €0.25 175 per share 150 Share buy-backs 125 Dutch inflation • Buy-backs will continue UK inflation US inflation • Likely to exceed $5 bln in 2006 10
Slide 76: Robust payout track record
76 Robust payout track record 2003-2005 average dividend Dividends plus share buy-back payout ratio 400 50% Includes RD buy-out 350 and extra dividend Competitor range 40% 300 30% 250 200 20% 150 10% 100 50 0% 2000 2001 2002 2003 2004 2005 US Dollars, based on dividend and earnings per ADR for Shell
Slide 77: Investment strategy aimed at organic growth
77 Investment strategy aimed at organic growth Capital investment $ bln No. Projects* 25 90 Organic spending Projects at design • Project flow accelerating stage or beyond 20 • 2006 base plan around $19 bln • Around $21 bln in 2007 (75% Upstream) 15 Capital discipline 10 • Measured, long-term approa
Slide 78: Portfolio development: number of major projects
78 Portfolio development 80 Upstream Downstream Number of major projects • Expanding opportunity set 60 • Capital discipline 40 • Choices 20 0 Business Design Under development construction 2006-2009 start up 2010-2014 start-ups & options Projects larger than $100 mln potential capital investment Sh
Slide 79: Through-cycle balance sheet strength
79 Through-cycle balance sheet strength $ bln Gearing % 30 25% Balance sheet capability Through cycle average • Dividend 20-25% 20% • Sustained organic spending 20 15% 15% 12% 12% 20-25% gearing through-cycle $9 10% 10 $10 $12 Capital employed 5% $7 • Upstream ~60% of group 2010-12 $3 $2 0 0% • Capi
Slide 80: Financial framework
80 Financial framework Strategy Context • Emphasis on organic growth • Q1 06 cash flow $9.2 bln • $2-3bn/year avg. disposals • Q1 06 ROACE 25.3% • 20-25% gearing average through • Global portfolio ranking cycle Competitive Returns • Capital discipline Priorities • Dividend +9% Q1-Q1 • 2006 base capi
Slide 81: Jeroen van der Veer
81 Jeroen van der Veer Chief Executive
Slide 82: Shell: our business
82 Shell Our business 80 • Oil & gas Number of major projects • Chemicals 60 • Clean coal • Alternative energy 40 Diverse opportunities • Organic growth • Sustainability 20 Building our capabilities • 0 Technology Business Design Under • People Development construction • Execution 2006-2009 start up
Slide 83: Global portfolio, global choices
83 Global portfolio, global choices 2006 capital investment Exploration Asia Americas Pacific Russia Firm Options Upstream Middle Europe East Downstream Africa Excluding minority interest in Sakhalin Map shows selected key projects
Slide 84: Group investment framework
84 Group investment framework Strategy Context More upstream, Growth energy demand profitable downstream • Organic growth • 3.8-4.0 mboed 2009 • Around $19 bln base capital Competitive Returns • Selective downstream growth investment 2006 • Returns to shareholders Priorities Delivery + growth • Proj
Slide 85: Delivery and growth - leveraging a strong portfolio
85 Delivery and growth - leveraging a strong portfolio Royal Dutch Shell plc