Shell Plc · LSE:SHEL

Shell — Royal Dutch Shell — Investor Day (March 2011)

48 slides from Shell's investor day presentation, Mar 15, 2011

  1. Slide 1: Royal Dutch Shell plc Investor Presentation

    ROYAL DUTCH SHELL PLC INVESTOR PRESENTATION LONDON MARCH 15, 2011 1 Copyright of Royal Dutch Shell plc 15/03/2011

  2. Slide 2: Peter Voser, Chief Executive Officer

    ROYAL DUTCH SHELL PLC PETER VOSER CHIEF EXECUTIVE OFFICER 2 Copyright of Royal Dutch Shell plc 15/03/2011

  3. Slide 3: Definitions and Cautionary Note

    DEFINITIONS AND CAUTIONARY NOTE Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves for all 2009 and 2010 data, and includes both SEC proved oil and gas reserves and SEC proven mining reserves for 2008 data. Resources: Our use of the term “resources” i

  4. Slide 4: Strategy Update

    ROYAL DUTCH SHELL STRATEGY UPDATE 4 Copyright of Royal Dutch Shell plc 15/03/2011

  5. Slide 5: Energy Outlook

    ENERGY OUTLOOK GLOBAL ENERGY MIX Mln Boe/d Industry outlook 400  Hydrocarbons dominate outlook 300  Growth required in all sectors of energy mix  Energy policy + sustained investment 200 Shell 100  Crude oil & oil products  Natural gas & LNG 0  Biofuels, wind, carbon capture + storage 1980 199

  6. Slide 6: Goal Zero on Safety

    SHELL ‘GOAL ZERO’ ON SAFETY Injuries – TRCF per million working hours 4 3 2 Customer and Profitability & 1 partner focus performance 0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Sustainability & Value added growth technology  Focus on personal and process safety  Industry leader in Sustainabl

  7. Slide 7: Strategy & Capital Allocation

    STRATEGY & CAPITAL ALLOCATION STRATEGY CAPITAL INVESTMENT $ Bln Upstream 150  Profitable growth; price upside  >80% of total capital spending  Sustained exploration investment 100 Downstream UPSTREAM  Stable capital employed  Fewer refineries; upgrade chemicals assets 50  More concentrated mar

  8. Slide 8: Financial Performance and Priorities

    FINANCIAL PERFORMANCE AND PRIORITIES EARNINGS PRIORITIES $ Bln 35 30 PERFORMANCE FOCUS 25 20 15 NEW WAVE OF PRODUCTION GROWTH 10 5 0 MATURING NEXT GENERATION OF PROJECT OPTIONS -5 2006 2007 2008 2009 2010 UPSTREAM CORPORATE DOWNSTREAM DIVESTMENTS/OTHER CURRENT COST OF SUPPLY EARNINGS 8 Copyright of

  9. Slide 9: 2010 Performance

    2010 PERFORMANCE PRIORITIES 2010 DELIVERY  CCS earnings $18 bln (+56% 2009-10) PERFORMANCE FOCUS  $2 bln underlying cost savings  $7 bln asset sales / $7 bln acquisitions  6 new project start-ups; oil & gas volumes + 5% NEW WAVE OF PRODUCTION  Launched 2 new deep water projects GROWTH  2010 or

  10. Slide 10: Performance Focus

    ROYAL DUTCH SHELL PERFORMANCE FOCUS 10 Copyright of Royal Dutch Shell plc 15/03/2011

  11. Slide 11: Cost Improvement

    PEFORMANCE FOCUS COST IMPROVEMENT UPSTREAM COSTS (> $1.5 BLN 2008-10 COST SAVINGS) GROUP COSTS $/Bbl $ Bln FX 20 PENSIONS 45 PROVISIONS 40 COST SAVINGS 35 15 30 2009 2010 2008 2009 2010 DOWNSTREAM COSTS (> $2.5 BLN 2008-10 COST SAVINGS) CONTINUOUS IMPROVEMENT $/Bbl $/Mt  Offshoring 17 200 180  Glo

  12. Slide 12: Downstream

    PEFORMANCE FOCUS DOWNSTREAM THREE KEYS TO WINNING DOWNSTREAM EARNINGS CCS Earnings - $ Bln $/Bbl Operational Excellence 8 8  Brand 6 6  Cost discipline 4 4 2 2  Improving manufacturing availability 0 0  Asset integrity -2 -4 -2 03 04 05 06 07 08 09 10 -6 -4 Concentrating the Portfolio GLOBAL IND

  13. Slide 13: Downstream: Cost + Operational Performance

    PEFORMANCE FOCUS DOWNSTREAM: COST + OPERATIONAL PERFORMANCE EXAMPLE: PROCESS EFFICIENCY COST REDUCTION Business-2-Business: Unit margin & costs to serve 150% 20 ~ $15  2009+10: > $2.5 billion underlying cost reduction 15 100% • Headcount: - 5,000 ~ $8 10  2011-12: $1 billion underlying cost reduct

  14. Slide 14: Downstream: Refocusing Manufacturing

    PEFORMANCE FOCUS DOWNSTREAM: REFOCUSING MANUFACTURING FOCUS ON LARGE INTEGRATED SITES PORTFOLIO CHANGE* Shell refining capacity – Mln bbl/d Refinery capacity Kbbl/d (100%) 4.7 5 -30% 4 3.3 3 400  > 700,000 bbl/d exited since end-2009 2  1.6 million bbl/d exited since 2002 1 300  Larger scale + in

  15. Slide 15: Downstream: Refocusing Marketing

    PEFORMANCE FOCUS DOWNSTREAM: REFOCUSING MARKETING RETAIL GROWTH PORTFOLIO CHANGE SINCE END-2009* Retail sales volume - Bln litres 135 130 125 120 2007 2008 2009 2010 MARKETING REFOCUS DIRECT INDIRECT/PART EXIT EXITS 100% CHANGE SINCE 2009 2009-11 DIRECT TO INDIRECT/PART EXIT INDIRECT 50% DIRECT 0% 4

  16. Slide 16: Downstream: Cashflow and Returns

    PEFORMANCE FOCUS DOWNSTREAM: CASHFLOW AND RETURNS DOWNSTREAM CASH FLOW $ Bln 40 Focus on cashflow  Free cashflow underpins Upstream growth + payout 8 30 2006-10  Business mix supports through-cycle performance ~$21 billion 6 2010 20  Growth potential 4 ~$6 billion 10 2 0 0 2006-10 2010 CASH FLOW

  17. Slide 17: Growth Delivery

    ROYAL DUTCH SHELL GROWTH DELIVERY 17 Copyright of Royal Dutch Shell plc 15/03/2011

  18. Slide 18: Converting Resources to Production

    GROWTH DELIVERY CONVERTING RESOURCES TO PRODUCTION Bln Boe resources Longer-term upside 35 NA tight gas Australia Cardamom Deep Appomattox Prelude Prelude Vito Malikai 25 10 8 Pearls (CMOC) 8 AOSP debottleneck NA tight gas Schiehallion Gorgon Mars-B Clair NA tight gas BC-10 Phase2 15 10 11 11 Pearl

  19. Slide 19: SEC Proved Reserves Position

    GROWTH DELIVERY SEC PROVED RESERVES POSITION 2008-10 RESERVES ADDITIONS 2010 RESERVES PERFORMANCE  2010 organic3 RRR 133% Canada Denmark, Germany,UK Russia  Reserves life at end 2010 ~11 years USA 2008-10 RESERVES AVG. PERFORMANCE Oman Brunei  Organic additions ~2.0 billion boe Brazil Nigeria  P

  20. Slide 20: Delivering on New Projects

    GROWTH DELIVERY DELIVERING ON NEW PROJECTS KEY POST-FID PROJECTS RESOURCES 2010 - Bln boe Gjoa P 30 Study AOSP-1 P Schoonebeek P NA Port Arthur 20  ~11 billion Boe Tight gas P Iraq FCP/IPT resources Perdido P Qatargas 4 P Pearl GtL Singapore Under  20 Upstream Chemicals P 10 Construction start-ups

  21. Slide 21: Integrated Gas

    GROWTH DELIVERY INTEGRATED GAS PEARL GTL (QATAR) QATARGAS 4 (QATAR) GORGON (AUSTRALIA) Pearl GtL plant under construction Inaugural Qatargas 4 cargo arriving at Shell Barrow Island Hazira Regasification Terminal  Commissioning underway; ~12  7.8 mtpa LNG + 70 kboe/d  3 LNG trains; 15 mtpa months

  22. Slide 22: Deepwater

    GROWTH DELIVERY DEEPWATER MARS-B (GULF OF MEXICO) BC-10 PHASE 2 (CAMPOS, BRAZIL) GUMUSUT-KAKAP (MALAYSIA) Development concept Phase 1 FPSO Construction yard at Johor Bahru  TLP capacity ~100 kboe/d  Peak production ~30 kboe/d  Peak production ~135 kboe/d  New resources at Mars field  Argonauta

  23. Slide 23: Heavy Oil & EOR

    GROWTH DELIVERY HEAVY OIL & EOR AOSP-1 (CANADA) SCHOONEBEEK (NETHERLANDS) PDO (OMAN) AOSP Jackpine mine Schoonebeek EOR development Qarn Alam steam development  AOSP-1 mine expansion 2010 -  Started up Jan 2011  Qarn Alam steam injection adds ~100 kboe/d  Steam injection for 20 kboe/d  Harweel

  24. Slide 24: North America Tight Gas

    GROWTH DELIVERY NORTH AMERICA TIGHT GAS PRODUCTION GROWTH Kboe/d Mmscf/d 2011 investment: ~$3 billion; >400 wells 2,000 300 Deep Basin Canada 1,500 Foothills 200 Groundbirch 1,000 Pinedale 100 Haynesville USA 500 Marcellus 0 0 Eagleford 2006 2007 2008 2009 2010 2011 2012 SHELL ASSET BREAK EVEN PRICE

  25. Slide 25: Upstream Profitability + Production

    GROWTH DELIVERY UPSTREAM PROFITABILITY + PRODUCTION OIL & GAS PRODUCTION GROWTH PRODUCTION SPLIT Kboe/d Regional Thematic 4,000 100% 100% 90% 80% 75% 70% 60% 3,500 50% 50% 40% 30% 25% 20% 10% 3,000 0% 0% 2009 2010 2011 2012 2014 2010 2014 2010 2014 ASIA PACIFIC OTHER HEAVY OIL & EOR TIGHT GAS OIL &

  26. Slide 26: Maturing Next Generation Project Options

    ROYAL DUTCH SHELL MATURING NEXT GENERATION PROJECT OPTIONS 26 Copyright of Royal Dutch Shell plc 15/03/2011

  27. Slide 27: Adding New Resources

    MATURING NEXT GENERATION OF PROJECT OPTIONS ADDING NEW RESOURCES EXPLORATION & ACQUISITIONS EXPLORATION SPEND $ Bln 3 AMERICAS OTHER 2 ASIA PACIFIC EUROPE 1 0 EAGLEFORD EAST RESOURCES 2010 2011 APPOMATTOX SOUTH DEIMOS AMAL SE CARDAMOM DEEP 2010/11 average exploration spend GERONGGONG ACME BC-10 MASS

  28. Slide 28: Exploration & Business Development

    MATURING NEXT GENERATION OF PROJECT OPTIONS EXPLORATION & BUSINESS DEVELOPMENT TOTAL POTENTIAL RESOURCES MOVEMENTS 2010 EXPLORATION RESOURCES ADDITION Bln boe resources/potential 8 100% 100% 100% 80% 80% 6 75% GAS EAST 60% 60% 4 ARROW 50% IRAQ 40% 40% 2 25% 20% 20% OIL 0 0% 0% 0% -2 ' 10 ' 10 ' 10 '

  29. Slide 29: LNG Outlook: Australia in Focus

    MATURING NEXT GENERATION OF PROJECT OPTIONS LNG OUTLOOK: AUSTRALIA IN FOCUS Prelude Floating LNG  2007 discovery Arrow Energy LNG  Targeting FID in 2011 Greater Sunrise • Environmental approval received • FEED progressing • Field Development Plan submitted Prelude  3.6 mtpa LNG, 0.4 mtpa LPG and

  30. Slide 30: Middle East Potential & NOC Partnering

    MATURING NEXT GENERATION OF PROJECT OPTIONS MIDDLE EAST POTENTIAL & NOC PARTNERING MAJNOON (IRAQ) QATAR CHEMICALS KIDAN (SAUDI-ARABIA)  ~38 billion boe oil in place  MOU signed in December  Multi-TCF sour gas opportunity  FCP ~2012: 175 kboe/d (Shell) 2010  New seismic + wells planned  Long-te

  31. Slide 31: China Growth + Partnerships

    MATURING NEXT GENERATION OF PROJECT OPTIONS CHINA GROWTH + PARTNERSHIPS China Changbei tight gas Daning CBM Jinqiu + Fushun tight gas Jinqiu drill-pad SHELL CHINA Nanhai – Chemicals Shell – Qatar Kboe/d Mtpa Petroleum-PetroChina International refining proposal 60 Oil & gas 2 Oil products Syria : She

  32. Slide 32: Maturing New Projects

    MATURING NEXT GENERATION OF PROJECT OPTIONS MATURING NEW PROJECTS OIL & GAS RESOURCES 2010 Resources in Bln boe TIGHT GAS – N. AMERICA PRELUDE - AUSTRALIA Longer-term upside 30  >10 billion boe ARROW - AUSTRALIA APPOMATTOX - USA resources  > 30 new projects  > 1 mln boe/d STUDY potential 2018-20.

  33. Slide 33: Financial Framework Update

    ROYAL DUTCH SHELL PLC FINANCIAL FRAMEWORK UPDATE SIMON HENRY CHIEF FINANCIAL OFFICER 33 Copyright of Royal Dutch Shell plc 15/03/2011

  34. Slide 34: Continuous Improvement

    CONTINUOUS IMPROVEMENT CONTRACTING & PROCUREMENT DOWNSTREAM PORTFOLIO OFFSHORING Procurement from emerging markets # of Retail sites „000 # of staff in shared service centres $Mln # of Suppliers 120% 3,000 160 40 8,000 120 30 2,000 6,000 100% 80 20 4,000 1,000 40 10 2,000 0 0 0 80% 0 2008 2009 2010

  35. Slide 35: Asset Sales + Capital Efficiency

    ASSET SALES + CAPITAL EFFICIENCY ASSET SALES PROGRESS 2010 & 2011 YTD ~$30 BILLION DIVESTMENTS – 5 YEARS $ Bln Cumulative 30 Upstream CORPORATE  85 kboe/d production UPSTREAM  Woodside reduction, South Texas, GOM, SPDC DOWNSTREAM licences, Statfjord 20 Downstream  > 700 kbbl/d refining capacity e

  36. Slide 36: Converting Investment to Cashflow: 2009-12

    CONVERTING INVESTMENT TO CASHFLOW: 2009-12 INVESTING FOR NEW GROWTH $ Bln $ Bln 60 60 50 50 40 40 OTHER 30 30 20 20 CANADA 2011 10 10 START-UPS QATAR 0 0 2007 2008 2009 2010 2011E 2012E 2010 CAPITAL UNDER CAPITAL UNDER CONSTRUCTION EXPLORATION & EVALUATION CONSTRUCTION AOSP debottle ph-1 Pearl GtL G

  37. Slide 37: Rebalancing the Financial Framework

    REBALANCING THE FINANCIAL FRAMEWORK SURPLUS CASHFLOW THROUGH THE CYCLE 2009 2010 2012E $ Bln $ Bln $ Bln 2009-12 targets ~50% @ $60 scenario 50 50 50 >80% @ $80 scenario SOURCES USES $80/bbl 40 40 $80/bbl 40 $60/bbl 30 30 30 $62/bbl 20 20 20 10 10 10 0 0 0 $/bbl BRENT FREE CASH FLOW CASH FLOW FROM O

  38. Slide 38: Capital Spending + Outlook

    CAPITAL SPENDING + OUTLOOK UPSTREAM NET CAPITAL INVESTMENT % Capital investment $ Bln 30 100% EXPLORATION 80% OTHERS HEAVY OIL & EOR 20 TIGHT GAS EUROPE SOUR 60% ASIA PACIFIC DEEPWATER 10 40% AMERICAS INTEGRATED GAS 20% 0 TRADITIONAL 2009 2010 2011 2012-14 0% 2007-10 2011-14 2007-10 2011-14 NET CAPI

  39. Slide 39: Maturing New Projects: 2011-12

    MATURING NEW PROJECTS: 2011-12 Linnorm Schiehallion Redev Clair Phase 2 AOSP Debottlenecking Canada Fram Quest CCS Kazakhstan Tempa Rossa Syria China US Onshore CMOC Appomattox Majnoon & West Qurna FFD Gulf of Mexico Cardamom Deep Oman Saudi Arabia Stones Fr Guiana Philippines Vito Rabab/Harweel Erh

  40. Slide 40: Financial Framework

    FINANCIAL FRAMEWORK CASH PERFORMANCE  ~50-80% CFFO increase 2009-12 ($60-$80 oil price scenarios)  Surplus cash flow 2012 at $60/bbl INVESTMENT PAY-OUT  $25-27 bln net capex /year  Dividend linked to results  Up to $3 bln asset sales/year  Scrip dividend option 2012+  ~$10 billion expected 20

  41. Slide 41: Peter Voser, Chief Executive Officer

    ROYAL DUTCH SHELL PLC PETER VOSER CHIEF EXECUTIVE OFFICER 41 Copyright of Royal Dutch Shell plc 15/03/2011

  42. Slide 42: Outlook

    OUTLOOK PRIORITIES 2011-12 OUTLOOK  $1 billion Downstream cost savings PERFORMANCE FOCUS  Continuous improvement embedded in Shell  Up to $8 bln asset sales; capital efficiency  >20 projects under construction NEW WAVE OF PRODUCTION  +6% production 2010-12 GROWTH  On track for 2012 cashflow ta

  43. Slide 43: Strategy Update Q&A

    ROYAL DUTCH SHELL STRATEGY UPDATE Q&A 43 Copyright of Royal Dutch Shell plc 15/03/2011

  44. Slide 44: Appendix: Reserves & Projects

    ROYAL DUTCH SHELL STRATEGY UPDATE APPENDIX RESERVES S V S & PROJECTS OJ C S 44 Copyright of Royal Dutch Shell plc 15/03/2011

  45. Slide 45: 2008-2010 Reserves Summary

    2008-2010 RESERVES SUMMARY RESERVES IN MLN BOE Movements 2008 2009 2010 Organic1 reserves additions 1,132 3,158 1,653 Year end price effect 19 260 -198 Production -1,189 -1,187 -1,242 Acquisition & divestment 13 2 -85 Total subsidiaries and affiliates movements 1,164 3,420 1,370 Year end positions T

  46. Slide 46: Key Projects Under Construction

    KEY PROJECTS UNDER CONSTRUCTION Start up Project Country Shell Share Peak Production LNG 100% Products Category Shell % kboe/d Capacity Operated mtpa 2010-11 AOSP EXP 1 P CANADA 60 100  GBARAN UBIE PH 1 P NIGERIA 30 250  GJOA P NORWAY 12 105 NORTH AMERICA TIGHT GAS P USA/CANADA Various ~150 *  PE

  47. Slide 47: Studying Strong Portfolio of Pre-FID Options

    STUDYING STRONG PORTFOLIO OF PRE-FID OPTIONS POTENTIAL 2014-2020 START-UPS Phase Project Country Shell share Peak production LNG (100%) Theme Shell operated 100% capacity Kboe/d mtpa CONCEPT Appomattox USA 80 100  SELECTION Bonga North Nigeria 55 105  Bonga South West Nigeria 44 200  Bosi Field D

  48. Slide 48: 2008-2010 Drilling Performance

    2008-2010 DRILLING PERFORMANCE Start up Well name Country Shell Share Location Water depth Oil/Gas Shell % Operated 2008 Auezov-1 Kazakhstan 55 Offshore ~10m O Deep Basin West, BCG Canada ~ 70% Onshore - G  Groundbirch Canada 100 Onshore - G  Haynesville US, Louisiana 50 Onshore - G  Libra-1 A

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