Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Q4 2014 Earnings Presentation
39 slides from Shell's earnings presentation, Jan 29, 2015
Slide 1: Fourth Quarter 2014 Results: Balancing Growth & Returns
FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 1
Slide 2: Definitions & Cautionary Note
DEFINITIONS & CAUTIONARY NOTE 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 c
Slide 3: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 3
Slide 4: Focus on HSSE
FOCUS ON HSSE 2014 UPDATE Goal Zero on safety Spills - operational Injuries – TRCF/million working hours million working hours Volume in thousand tonnes TRCF Working hours (RHS) Energy intensity – refineries Process safety Energy Intensity Index (EEITM) Number of incidents HSSE priority Tier 1 inc
Slide 5: Executing a Consistent, Long-Term Strategy
EXECUTING A CONSISTENT, LONG-TERM STRATEGY Unrelenting focus on HSSE Total shareholder returns growth – 10 years Index 1/1/2005 =100 Technology, integration and scale Disciplined capital investment by strategic theme Growth in cash flow through cycle Competitive shareholder returns 2014+
Slide 6: Energy Transitions
ENERGY TRANSITIONS Long-term energy supply mix 2050 outlook Million boe per day Population increases from 7 to 9 billion +50% Enabled by cheap and reliable energy +50% Realities Requirement to mitigate climate change Oil supply -70% by 2030 without new investment Key role of gas & CCS Gas Coal
Slide 7: Oil Market + Shell Response
OIL MARKET + SHELL RESPONSE Oil supply Oil market downturn Million barrels of oil per day Entering 2015 with low oil prices Requirement for $500 billion industry investment in upstream oil during 2014-20 Under-spending amplifies price spike risks Shell response Long-term $70 - $90 - $110 Brent o
Slide 8: 2014 Delivery
FINANCIAL PERFORMANCE 2014 DELIVERY Earnings + ROACE Cash flow $ billion % $ billion $ billion Upstream Corporate/Other CFFO CFFI Free cash flow (RHS) Downstream ROACE (RHS) Dividend, buyback + gearing $ billion Gearing % range Well-positioned into oil market downturn Asset sales delivered ahead
Slide 9: Balancing Growth and Returns
2014 DELIVERY BALANCING GROWTH AND RETURNS Improve our financial performance CCS earnings $22.6 billion; CFFO $45.0 billion Dividend growth + buyback Restructuring in Oil Products + North America resources plays Enhance our capital efficiency Moderated spending + growth Improved free cash
Slide 10: Changing Emphasis in 2014+
CHANGING EMPHASIS IN 2014+ SHARPER PORTFOLIO MANAGEMENT + APPRAISAL More rigorous portfolio management Taking hard choices on funnel RESILIENCE STRATEGIC Risk, performance FEED INTENT & FID On-stream uncertainty ASPIRED RESULTS PORTFOLIO & PAY- Identify&Assess Select Define Execute Operate OUT ATTRA
Slide 11: Priorities 2015+
PRIORITIES 2015+ Competitive financial Capital efficiency Project delivery performance Returns and cash flow Choices on new options Continued ramp-up of 2014 start-ups Competitive returns for Supply chain management shareholders 2015 transition year into Managing affordability + 2016/1
Slide 12: Portfolio Restructuring
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING Resources plays Oil Products Upstream engine Capital investment in $ billion $ billion $ billion kboe per day (Shell share) -30% CFFO Production (RHS) LRS Dry gas Acquisitions Asset sales (incl. MLP) Capital investment NA portfolio reductio
Slide 13: Restructuring Resources Plays Portfolio
COMPETITIVE FINANCIAL PERFORMANCE RESTRUCTURING RESOURCES PLAYS PORTFOLIO W. Canada gas Russia Germany Ukraine ` Turkey Changbei W. Canada LRS Algeria Changbei 2 Appalachia Tunisia Oman Sichuan Colombia Permian Arrow CBM Argentina Neuquen Gas Liquids Rich On-stream E&A 2014: North America portfoli
Slide 14: Downstream Engine
COMPETITIVE FINANCIAL PERFORMANCE DOWNSTREAM ENGINE Cash flow + ROACE Earnings 2013 to 2014 $ billion % $ billion Cash flow ROACE (RHS) Operating performance % unplanned downtime Self-help + improved joint venture performance Launched new cost drive at end 2014 10-12% ROACE + $10 billion p.a.
Slide 15: Portfolio Restructuring: Oil Products
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: OIL PRODUCTS Portfolio change Refining capacity Million b/d # of refineries Selective Growth: China ~ -20% LNG for transport Premium fuels + lubes Refinery crude flexibility others Fix: Motiva Attractiveness Singapore fuels P
Slide 16: Portfolio Restructuring: Upstream Engine
COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: UPSTREAM ENGINE Upstream engine portfolio Managed decline of legacy positions kboe per day (Shell share) Selective growth: Schiehallion Clair Ph2 Val d’ Agri ph2 ~95 Tempa Rossa kboe/d* Beryl Corrib Maintain Norway Netherlands
Slide 17: Investment Priorities + Performance
INVESTMENT PRIORITIES + PERFORMANCE Engines (Downstream, Upstream engine) CFFO in billion $ Free cash flow businesses Maintain competitiveness Integrated gas Asset integrity + selective growth Downstream engine Growth priority (Integrated Gas, deep water) Upstream engine Global leadership es
Slide 18: Moderating Our Spending + Growth Outlook
COMPETITIVE, CREDIBLE + AFFORDABLE PLANS MODERATING OUR SPENDING + GROWTH OUTLOOK $ billion total capital investment $ billion organic capital investment > -15% Project re-phasing / deferral Supply chain savings Dilutions + exits 2015 2015 potential plan Upstream Downstream / Corporate 2015
Slide 19: Simon Henry, Chief Financial Officer
SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 19
Slide 20: Financial Performance
FINANCIAL PERFORMANCE ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 20
Slide 21: 2014 Financial Highlights
2014 FINANCIAL HIGHLIGHTS Earnings 2013 to 2014 $ billion 2013 2014 $ billion Environment Choice UPSTREAM 15.1 16.5 DOWNSTREAM (CCS) 4.5 6.3 CORPORATE & MINORITIES (0.1) (0.2) CCS NET EARNINGS 19.5 22.6 CCS EARNINGS, $ PER SHARE 3.10 3.57 CASH FROM OPERATIONS 40.4 45.0 ROACE (%) 8.9 10.2 SHARE BUYBA
Slide 22: SEC Proved Reserves Position
PRELIMINARY RESULTS SEC PROVED RESERVES POSITION 2014 Reserves performance 2012-14 Reserves additions 2014 RRR 26% 2012-14 RRR 67% Reserves life at end 2014 ~11.2 years 2012-14 Reserves average performance Organic1 additions ~1.0 billion boe Production ~1.2 billion boe Organic reserves r
Slide 23: Oil + Gas Resources Funnel
OIL + GAS RESOURCES FUNNEL Converting resources to production… Billion boe Longer-term upside Appomattox Browse resources plays Val d’Agri ph2 Vito Baronia EOR / others Tukau Timur Bonga Main ph3 Coulomb ph2 Bonga North West Asset sales + capital ceiling Cardamom Gumusut-Kakap Fewer FIDs in 2014
Slide 24: Executing a Consistent and Successful Exploration Strategy
CONVENTIONAL EXPLORATION EXECUTING A CONSISTENT AND SUCCESSFUL EXPLORATION STRATEGY Time to Prospect development size 2015 spend (years) (million boe) Long-term potential for ARCTIC 15+ >500 industry Build-up of acreage in FRONTIER 10+ >250 under-explored basins New plays in Shell NFE HEARTLANDS 3+
Slide 25: Exploration: 2014 Performance
EXPLORATION: 2014 PERFORMANCE Improved delivery in 2014 10 frontier + heartlands successes GOM deep-water heartlands 41 near-field finds 2014: Rydberg, Kaikias, Power Nap + Gettysburg discoveries >1300 mmboe for Shell 2009+ Gabon deep-water frontier Sub-salt deep-water gas discovery Sh
Slide 26: Financial Framework and Priorities
CAPITAL EFFICIENCY FINANCIAL FRAMEWORK AND PRIORITIES Priorities for cash Cash performance $ billion 1. Debt service 2. Dividends: growth policy 3. Capital investment: disciplined through-cycle growth CFFO 4. Return surplus cash: buybacks Pay-out Investment $ billion $ billion Cash dividend Buyback
Slide 27: Multi-Billion $ Opportunity in Shell + Supply Chain
CONSISTENT DELIVERY OF COST REDUCTION PROGRAMMES MULTI-BILLION $ OPPORTUNITY IN SHELL + SUPPLY CHAIN North America resources plays Supply chain $ million 2014 savings (opex + capex) Strategic Short term Medium term long term Price Contract renegotiations Design Design to cost/Design to value >15% sa
Slide 28: Early Delivery of 2014-15 $15 Billion Divestment Plan
CAPITAL EFFICIENCY EARLY DELIVERY OF 2014-15 $15 BILLION DIVESTMENT PLAN Asset sales add focus Divestment/exit $ billion 2014 Early delivery of 2014-15 Woodside 9.5% target Australia upstream Wheatstone LNG refocus Australia downstream Monetise non-core Italy downstream Oil Products US midstream MLP
Slide 29: Portfolio Choices Driving Profitability
PORTFOLIO CHOICES DRIVING PROFITABILITY Production Upstream CFFO* million boe per day $ billion +25% Underlying +2% * CFFO excludes working capital + oil & gas price effects Enhancing profitability Copyright of Royal Dutch Shell plc 29 January, 2015 29
Slide 30: Investment Priorities
CAPITAL EFFICIENCY INVESTMENT PRIORITIES Investment themes Organic capital investment Conventional 10% exploration Longer term: 25% Pre-FID large project options 50% Post-FID large projects Growth priorities: 40% Short-cycle projects1 40% Engines: 35% Base 2015 2015 organic capital CFFO impact organ
Slide 31: Cash Performance + Pay-out
CASH PERFORMANCE + PAY-OUT Cash flow Dividend track record $ billion $ billion 2012-2014 2014 Cash flow from operations Cash flow from investments1 Pay-out Dividends announced 1 Includes MLP proceeds Gearing and pay-out $ billion % 2014 dividend and buyback $15 billion 2015 dividend ~$12 billion
Slide 32: Ben van Beurden, Chief Executive Officer
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 32
Slide 33: Project Delivery
PROJECT DELIVERY ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 33
Slide 34: Projects Under Construction
PROJECTS UNDER CONSTRUCTION Production Shell-operated started up kboe per day (Shell share) million tonnes per annum 2014 Mars B Gumusut-Kakap Bonga NW Petai Cardamom Sabah gas KBB 2015-16 2017-19 BC-10 ph3 Baronia /Tukau Timur Bonga Main ph3 Carmon Creek Corrib
Slide 35: Managing Our Opportunity Set
PROJECT DELIVERY MANAGING OUR OPPORTUNITY SET 2015-16 FID options 17 potential FIDs 2015-16 Options deferred / FID choices > 700 kboe/d cancelled 2015-16 ~12 mtpa LNG 2.7 mtpa chemicals Carmon Creek ph3+4 Majnoon full field postponed FUTURE OPPORTUNITIES World-wide restructuring Canada, Lower 48, Ar
Slide 36: Competitive Performance: Balancing Growth and Returns
COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS Cash flow from operations Free cash flow $ billion $ billion Shell Peer group ROACE – underlying Total shareholder return (2012-2014) % % Shell competitors Free cash flow: cash flow from operations less cash used in investing activities ROACE und
Slide 37: Priorities 2015+
PRIORITIES 2015+ Competitive financial Capital efficiency Project delivery performance Returns and cash flow Choices on new options Continued ramp-up of 2014 start-ups Competitive returns for Supply chain management shareholders 2015 transition year into Managing affordability + 2016/1
Slide 38: Questions & Answers
QUESTIONS & ANSWERS FOURTH QUARTER 2014 RESULTS Copyright of Royal Dutch Shell plc 29 January, 2015 38
Slide 39: Fourth Quarter 2014 Results: Balancing Growth & Returns
FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC Copyright of Royal Dutch Shell plc 29 January, 2015 39