Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Investor Day (November 2016)
44 slides from Shell's investor day presentation, Nov 8, 2016
Slide 1: Re-shaping Shell, to create a world-class investment case
North America Investor Day 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc November 8, 2016 “Let’s make the future” Royal Dutch Shell November 8, 2016
Slide 2: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell November 8, 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: Breakout Q&A panels
Upstream + Projects & Technology Breakout Q&A Andrew Brown – Upstream Director panels Harry Brekelmans – Projects & Technology Director Andrew Brown Harry Brekelmans Downstream John Abbott – Downstream Director Graham van ‘t Hoff – EVP Chemicals John Abbott Graham van ‘t Hoff Integrated Gas
Slide 5: 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 6: HSSE performance
HSSE Goal Zero on safety Spills - operational performance Injuries – TRCF/million working hours million working hours Volume in thousand tonnes 2016 2016 Q3 Q3 TRCF Working hours (RHS) Energy intensity – refineries Process safety Energy Intensity Index (EEITM) Number of incidents HSSE priority 201
Slide 7: Substantial and long lasting shifts in energy landscape
Industry context Global population Growth in oil & gas demand Energy system in transition Substantial + long lasting shifts in energy landscape From 7 to 9 billion by 2050 Global energy demand to World needs more energy; 75% will live in cities double between 2000 & 2050 less CO2 Customer choice Con
Slide 8: "Let's make the future" Strategy
Strategy “Let’s make the future” STRATEGIC Focus portfolio on resilient positions Invest in advantaged projects World-class Value chain integration investment case FCF/share + ROCE growth Leader: value + Conservative financial influence management OPERATIONAL Reducing our Shared value Re
Slide 9: 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 10: Capital allocation
Capital investment Re-shape Shell $ billion 2016E 2017-18 Capital $ billion Oil products 4 3-4 allocation -$18 billion Conventional 5 5-6 oil + gas Cash engines Integrated gas 5 4-5 30 Oil sands mining <1 <1 25 Deep water 10 6-7 Growth priorities Chemicals 3 3-4 Shales 2 2-3 Future opportunities New
Slide 11: 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 12: Growth priorities
Re-shape Shell Deep water Chemicals Growth priorities Growth in advantaged geology Advantaged feedstock + growth markets Brazil + GOM in focus USA + China growth Multi-billion barrels potential Deep water production Chemicals capacity Thousand boe per day Million tonnes per annum, ethylene
Slide 13: Deep water
Growth Priority Brazil pre-salt Gulf of Mexico Appomattox Deep water FPSO 7 + 8 on-stream (Shell 25%) Host ~40% complete Each FPSO 150kboe/d capacity Well cost savings ~20% cost reduction since FID Growth outlook driven by Significant ramp-up in Brazil pre-salt volumes 175 kboe/d potenti
Slide 14: Chemicals
Growth priority Under construction Geographic balance Chemicals Million metric tonnes Ethylene and Propylene 425,000 tonnes additional Alpha Olefins capacity North America 2016 Europe Geismar, USA Asia Pacific & Middle East New liquids cracker and derivatives units Feedstock balance Capacity:
Slide 15: Future opportunities
Re-shape Shell Shales Future ~12 billion boe discovered + prospective opportunities resources Mature to ‘growth priority’ New energies Energy transition themes Explore + invest for longer term Discovered + prospective resources shown at year end 2015 Royal Dutch Shell November 8, 2016 15
Slide 16: Americas shales
Maturing a new growth Resources option 2020+ ~12 billion boe Americas shales Western Canada Western Canada Liquids rich shales 2P reserves Dry gas 465k net acres Contingent resources - Maximize existing Premier Duvernay development pending infrastructure position Contingent resources - oth
Slide 17: New energies
Exploring new opportunities New energies New fuels Integrated Connected energy customer solutions New fuels Integrated energy Connected customer solutions Cleaner transportation NL + USA wind Connected mobility Biofuels + hydrogen Solar for EOR Oman Connected energy Established credentia
Slide 18: Expectation: end of decade
Re-shape Shell 2013-15 ~$90 2019-21 ~$60 Expectation: Capital Free ROACE Capital Free ROACE end of decade employed cash flow employed cash flow ($ bln end ‘15) ($ bln p.a) (%) ($ bln) ($ bln p.a.) (%) Oil products 5 12 >5 ~15 Conventional oil + gas -1 13 ~5 ~10 CASH ENGINES Integrated gas 4 13 >5 ~1
Slide 19: Maarten Wetselaar, Integrated Gas & New Energies Director
Maarten Wetselaar Integrated Gas & New Energies Director Royal Dutch Shell plc Royal Dutch Shell November 8, 2016
Slide 20: Integrated Gas + new energies
Integrated Gas Cash engine Future opportunities + new energies Integrated Gas New energies LNG Gas-to-Liquids Oil + gas production Sakhalin LNG Liquefaction Pearl GTL Qatargas 4 Marketing & trading Muscat LNG Regasification Focus on: Cash + returns Hazira India Create + secure new demand IOC
Slide 21: Financial performance
Integrated Gas Earnings Capital employed Financial $ billion $88 billion as at Q3 2016 performance In service Under construction Cash flow + ROACE LNG plant availability $ billion % % Cash flow ROACE (RHS) Earnings and ROACE on CCS basis, excluding identified items Royal Dutch Shell November 8, 2016
Slide 22: LNG supply + demand
LNG supply + Global LNG supply + demand outlook Overview of LNG FIDs demand Million tonnes per annum Million tonnes per annum In operation Under construction Demand forecasts Shell BG Peers 2015-20: >100 mtpa supply growth Predominantly contracted volumes Supply driven market until end of deca
Slide 23: LNG supply + demand
LNG supply + LNG – Supply development LNG – Demand demand Million tonnes Million tonnes Supply growth led by Australia New buyers Royal Dutch Shell November 8, 2016 23
Slide 24: Global LNG footprint
Global LNG footprint Sakhalin Sabine Pass QG-4 Oman Nigeria Brunei Atlantic LNG Equatorial Guinea Malaysia Equity capacity LNG Peru Long-term offtake agreement Gorgon NWS Spot offtake in 2015-16 YTD Pluto QCLNG Deliveries in 2015-16 YTD LNG volumes Liquefaction capacity Million tonnes per annum Mill
Slide 25: LNG pricing
LNG pricing Shell LNG sales + pricing linkage Regional gas prices Million tonnes per annum (2015 basis, Shell +BG) $ per mmbtu Term contracts (2-20 years) ~80% Continued demand for oil + Sources Deliveries 2016 Q3 gas hub linked LNG pricing Spot purchase Short-term ‘spot’ Oil-price linkage reinf
Slide 26: Example: LNG pricing
Example: LNG Oil-parity slopes Oil linked with S-curve Oil and HH indexed prices pricing $/MMBtu $/MMBtu $/MMBtu $/bbl $/bbl $/bbl Complete oil-parity Typical Asian LNG contract (oil-indexed) Typical Asian LNG contract (oil-indexed) Typical Asia LNG contract (oil-indexed) Floor at $40/bbl and ceilin
Slide 27: Developing new gas & LNG markets
Developing new gas & LNG markets Existing capacity rights Under construction Business development Downstream LNG Gibraltar Growing and diversifying Asian market Million tonnes per annum Marketing LNG to new customers Infrastructure development Downstream LNG LNG truck re-fuelling station Rotte
Slide 28: LNG to transport
Downstream LNG Marine Heavy-duty road transport LNG to transport Economic and environmental benefits Cleaner than diesel and heavy fuel oil Reduce well-to-wheel GHG emissions Offers a compelling case to customers Long run potential Working across value chain to unlock demand LNG truck re-f
Slide 29: Selective LNG growth
Opportunity funnel Options FEED Under construction LNG liquefaction volumes Selective LNG on stream 9 MTPA 29 MTPA (2016E) growth Abadi Lake Charles Gorgon T3 NLNG T7 LNG Canada Prelude Sabine Pass T3-4* Browse Elba* Tanzania LNG Others* Sakhalin T3 Baltic LNG Prelude Prelude Gorgon Reduce FID pac
Slide 30: Simon Henry, Chief Financial Officer
Simon Henry Chief Financial Officer Royal Dutch Shell plc Royal Dutch Shell November 8, 2016
Slide 31: 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 32: BG portfolio is delivering
Integration with BG Increasing production Synergies BG BG portfolio Thousand boe per day $ billion 4.5 is delivering +26% 4.0 2.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 Conventional oil + gas LNG Deep water Costs Exploration Royal Dutch Shell November 8, 2016 32
Slide 33: Cash flow priorities 2016-18
Manage down-cycle Cash flow priorities 2016-18 1 2 3 Priorities Buybacks Debt reduction Dividends for cash & capital investment Royal Dutch Shell November 8, 2016 33
Slide 34: Pulling levers to manage financial framework
Manage down-cycle 2016-18 levers Pulling levers to Reduce Reduce Deliver manage Divestments capital investment operating costs new projects financial framework 2015 baseline: 2017-2018 2016 $ billion Shell + BG potential Trend to 40 Operating costs 46 Multi-billion p.a. (underlying) Reducing our c
Slide 35: Divestments
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Divestment program Divestments $ billion 2016-2018 completed + announced $ billion MLP 0.8 Denmark marketing 0.3 N.Z.: Maui pipeline 0.2 MGL IPO 0.1 Others 0.3 Total Completed 1.7 Showa Shell 1.4 West
Slide 36: Leveraging the midstream
SHLX MLP focus: Leveraging the Fee-based, predictable cash flows midstream Insulated from commodity price exposure High growth $2.2 billion sold into the MLP in 2015 - 2016 10-15% of divestment target from MLP EBITDA $ million MLP is a natural vehicle for infrastructure divestments 4Q ro
Slide 37: Lower & more predictable capital investment
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Capital investment Lower & more $ billion 58 predictable capital 47 -35% investment 36 $25-30 billion 28 29 ~25 4Q rolling Base + short cycle Committed growth projects Growth options/exploration BG Sh
Slide 38: Reduce operating cost
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Reduce Substantial reductions delivered operating cost “Lower for ever” mindset + BG synergies Staff, supply chain + contractors Divestments, growth, FX impacts Underlying operating cost $ bil
Slide 39: Deliver new projects
Reduce Reduce Deliver Divestments capital investment operating costs new projects Manage down-cycle Significant oil & gas + chemicals production Deliver new under construction projects Capex to free cash flow High margin / price upside barrels Thousand boe per day* Million tonnes per annum C
Slide 40: 2016-17 start-ups
Reduce Reduce Deliver Divestments capital investment operating costs new projects Deliver new projects 2016-17 start-ups Schiehallion redevelopment Kashagan 125 kboe/d 300 kboe/d Shell 17% Shell 55% Scotford HCU debottleneck Malikai 14 kbpd 60 kboe/d Shell 100% Shell 35% Pernis – S
Slide 41: Ben van Beurden, Chief Executive Officer
Ben van Beurden Chief Executive Officer Royal Dutch Shell plc Royal Dutch Shell November 8, 2016
Slide 42: 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 43: Questions & Answers
Questions & Answers Royal Dutch Shell November 8, 2016
Slide 44: Re-shaping Shell, to create a world-class investment case
North America Investor Day 2016 Re-shaping Shell, to create a world-class investment case Royal Dutch Shell plc November 8, 2016 “Let’s make the future” Royal Dutch Shell November 8, 2016