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Peter Voser, CEO of Royal Dutch Shell plc, presented the Royal Dutch Shell plc second quarter 2013 results on August 1, 2013.
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Copyright of Royal Dutch Shell plc 1 August, 2013 1
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DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
Lubricants Zhuhai blending and filling plant, China, 2009
SECOND QUARTER 2013 RESULTS
ROYAL DUTCH SHELL PLC 1 AUGUST 2013
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BC-10, offshore Floating Production Storage and Offloading facility, Brazil, 2013
PETER VOSER CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
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The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. 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 statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2012 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 1 August, 2013. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
DEFINITIONS AND CAUTIONARY NOTE
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Q2 2013 results Q2 underlying earnings $4.6 billion; EPS -21% CFFO $12.4 billion Q2 2013 dividend $0.45 per share Nigeria security challenges Growth delivery Maturing new options 5 major start-ups to come in ‘13-’14: >$4 billion/year CFFO potential*
Capital discipline + long term approach >$3 billion buy-back completed; $4-5 billion ’13 Pace of asset sales to increase Refocusing in Nigeria and North America shales
SUMMARY
Mars-B platform sail-away to final location, July 2013 *$100/bbl Brent scenario 2015+
(Kashagan phase 1, Mars-B, Gumusut-Kakap, Cardamom, Repsol LNG)
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NIGERIA
Fire on the 24” TNP, Bodo West; April 2013
Illegal refinery, Krakrama; October 2012
NLNG Blockade, June/July 2013
LARGE SCALE CRUDE THEFT AND ASSOCIATED DAMAGE LNG GAS SUPPLY DISRUPTION + BLOCKADE
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FLNG Prelude Keel laying, S Korea, 2013
SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC
DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
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5
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80
90
100
110
Q212 Q312 Q412 Q113 Q213 -2
0
2
4
6
8
10
12
Q212 Q312 Q412 Q113 Q213 0
200
400
600
800
1000
Q212 Q312 Q412 Q113 Q213
SHELL OIL & GAS REALISATIONS INDUSTRY REFINING MARGINS INDUSTRY CHEMICALS MARGINS
$/barrel $/barrel $/tonne $/mscf
Oil Gas (RHS)
US West Coast US Gulf Coast coking Rotterdam complex Singapore
US ethane Western Europe naphtha NE/SE Asia naphtha
PRICES & MARGINS
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Q2 2013 FINANCIAL PERFORMANCE
Earnings CCS basis; earnings and EPS excluding identified items
$ billion
5.7
4.6
(1.0) (0.1) (0.0)
0
2
4
6
Q2 2012
Q2 2013
$ billion
UPSTREAM 4.5 3.5
DOWNSTREAM (CCS) 1.3 1.2
CORPORATE & MINORITIES -0.1 -0.1
CCS NET EARNINGS 5.7 4.6
CCS EARNINGS, $ PER SHARE 0.92 0.73
CASH FROM OPERATIONS 13.3 12.4
SHARE BUY BACKS 0.9 1.9
DIVIDENDS 2.8 2.8
DIVIDEND, $ PER SHARE 0.43 0.45
EARNINGS Q2 2012 TO Q2 2013
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5
7
75
80
85
90
95
100
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
0
2
4
6
0
2
4
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
UPSTREAM million boe/day million tonnes
Oil Gas
LNG Sales (RHS)
DOWNSTREAM % availability volume
Refinery availability Chemicals availability
Oil products sales (mln bbl/d) Chemicals sales (million tonnes)
UPSTREAM Growth from Pearl GTL, Malaysia and Australia Nigeria sabotage Royalty reporting change Q2-Q2 underlying growth +2%
DOWNSTREAM Chemicals: planned downtime in Europe and
North America Underlying volume decrease
Q2 2013 OPERATIONAL PERFORMANCE
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EARNINGS Q2 2012 TO Q2 2013 $ billion
Q2 2013 EARNINGS
5.7
4.6
0.1 0.4 0.5
0.2
(0.3) (0.2) (0.4) (0.4)
(0.5)
(0.5)
0
2
4
6
Q2
2012
cle
an
Oil
& G
as p
rices
Ref.
& C
hem
. Mar
gins
Mar
ketin
g &
Tra
ding
Nig
eria
Aus
tr. T
ax L
iabi
lity
FX
Vol
ume
& M
ix
DD
&A
Expl
orat
ion
Cos
t
Tax,
Cor
p, O
ther
Q2
2013
cle
an
Environment Choice Q3 2013 OUTLOOK
CONTINUED NIGERIA DOWNTIME
INCREASED UPSTREAM MAINTENANCE: ~35 KBOE/D Q3-Q3
~$1.3 BILLION EXPLORATION CHARGE
HIGHER CHEMICALS AVAILABILITY Q3-Q3
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GROUP UPSTREAM DOWNSTREAM/CORPORATE
12 MONTHS CASH PERFORMANCE
0 15 30 45 0 15 30 45
$ billion $ billion $ billion
0 15 30 45
CFFO ex WC movements Acquisitions Dividend
Buybacks Capex Asset Sales
Working capital movements
BALANCING CASH GENERATION, INVESTMENT + PAYOUT
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-5 0 5 10
Resources plays
Deep water
Heavy oil
pre-FID/Arctic /Other
BALANCE SHEET $ billion
-
10
20
30
40
50
60
Non productive leases Under construction
Heavy oil / Arctic Deep water
FINANCIAL PERFORMANCE (12 MONTHS ROLLING)
kboe/day
$ billion
Earnings (clean) Capex
Production (bottom axis scale)
UPSTREAM AMERICAS FINANCIALS
GROWTH PORTFOLIO CASH GENERATION $5 BLN CFFO – 12 MONTHS EARNINGS IMPACTED BY GROWTH COSTS
On stream Resources plays
200 400 0
2012 acquisitions
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PORTFOLIO DEVELOPMENT Q2 2013
Acquisition / entry Notable discovery /
option progress FID Start-ups Divestment / (Project re-framing)
G/U Phase 2
(215 kboe/d) TNP loop-line
(45 kboe/d)
Basrah Gas Company
Nigeria onshore review
North America review
Vicksburg discovery
Zabazaba-4 appraisal Stones
(50 kboe/d)
Additional 5%
equity: Abadi FLNG (35%)
Repsol LNG anti-trust clearance
FEED LNG import facility Philippines
Bab Sour gas (40%)
Poland: ~100 Retail stations
UPSTREAM ENGINE
INTEGRATED GAS
RESOURCES PLAYS
DEEP-WATER
FUTURE OPPORTUNITIES
DOWNSTREAM ENGINE
3 FINAL INVESTMENT DECISIONS; FURTHER PORTFOLIO PROGRESS
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10
20
30
0%
10%
20%
30%
2009 2010 2011 2012 13Q2
FREE CASH FLOW AND PAYOUT $ billion
-10
0
10
20
2009 2010 2011 2012 13Q2 12 months
rolling Free cash flow Dividend
Buyback
NET DEBT AND GEARING $ billion
Gearing (LHS) Net Debt (RHS)
FINANCIAL FRAMEWORK
Gearing range
2012-15 OUTLOOK: CFFO $175-$200 BILLION NET CAPEX $120-130 BILLION
* CFFO and capex outlook @$80-$100/bbl Brent and assumes improved US gas and Downstream environment from 2012; CFFO excludes working capital movements
$ billion 2012-H1 2013 2012-15 Outlook*
Cash flow from operations 70 175-200
Net Capital Investment 49 120-130
2013 net capex ~$40 billion Repsol LNG closing H2 ‘13 New investments + options: Stones
(100%), Elba, gas to transport, others Includes ~$3 billion non-cash items
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BC-10, offshore Floating Production Storage and Offloading facility, Brazil, 2013
PETER VOSER CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
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OUTLOOK
LONGER TERM
GROWTH PRIORITY
ENGINES
0
10
20
30
FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM
DOWNSTREAM
$ billion
2013 ORGANIC CAPEX
FINANCIAL MANAGEMENT OF STRONG PROJECT PIPELINE
DIVIDEND COMMITMENT CAPITAL CEILING DRIVES HARD CHOICES
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MARS B TLP SECURED ON LOCATION Mars B extends Mars field life to 2050+ Mars + satellites ~1 billion boe TLP towed to location in July Start-up on schedule for 2014 100 kboe per day Shell 71.5% (operator)
STONES FINAL INVESTMENT DECISION MAY 2013 Gulf of Mexico Lower Tertiary reservoir >250 million boe FPSO design Start-up 2016 -17 50 kboe per day Shell 100% (operator)
DEEP WATER GULF OF MEXICO PROGRESS H1 2013
Mars-B TLP July 2013 Stones: FPSO model with disconnectable buoy
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NORTH AMERICA RESOURCES PLAYS REFOCUSSING OUR SHALES PORTFOLIO
0
1
2
0.0
0.2
0.4
2010 2011 2012 2013 1H
CAPEX $ billion
PRODUCTION million boe per day bcfe per day
LRS Dry gas Divestments Acquisitions
Liquids Gas
PORTFOLIO WILL BE REFOCUSED MATERIALITY FEWER SHALES OPERATING THEATRES BEST INTEGRATION OPTIONS
Gas
Liquids Rich Shales
-2
0
2
4
6
8
10
2010 2011 2012 2013 1H
Integration options/projects
GTL
Elba LNG
Gas-to-Chemicals
LNG to Transport
LNG Canada
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BASRAH GAS COMPANY, IRAQ NIGERIA SPDC
$3.9 billion new 2013 investment in pipelines and LNG feed gas
2008-2012 divestments $1.8 billion (Shell) Strategic review of eastern onshore licenses ~80-100 kboe/d divestments potential (Shell) Shell Nigeria: focus on deep water + gas
JV commenced operations 1st of May ‘13 Processing 450 million scfe/day gas 2 billion scfe/day potential Value driven; no volume entitlement
FUTURE OPPORTUNITIES IRAQ GAS JV; NEW SPDC NIGERIA INVESTMENTS
Divestment completed SPDC JV
Khor Al Zubair NGL plant Basrah, Iraq, Q2 2013
2012-13 FIDs
TNP loopline
Gbaran-Ubie phase 2
FYIP
Southern Swamp
NLNG
50 km
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KASHAGAN DEVELOPMENT PHASE 1 OVERVIEW D ISLAND
300 kboed average production 2 train development; 2 year ramp-up sequence Shell 16.81%; production operations delegated
to Shell and KMG
KASHAGAN START-UP
Train 2
Train 1
Raw gas compressors
Well heads
Living quarters Utilities
2013 H2: START-UP OF PRODUCTION FACILITIES
Kashagan, D island facilities, April 2013
D island Bolashak onshore Offshore flare lit 07/13
50km
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Kashagan phase 1
Commencing start-up 2013 H2
Gumusut-Kakap Platform loaded out to final location
Mars-B Topsides fitted TLP secured on location
Cardamom Installation of subsea manifold and
umbilical completed Tie-in to Auger platform underway
Repsol LNG Completion 2013 H2
TOP 5 PROJECT START-UPS ‘13-’14
INTEGRATED GAS
FUTURE OPPORTUNITIES
DEEP-WATER
DEEP-WATER
DEEP-WATER
*$100/bbl Brent scenario, 2015+
>$4 BILLION/YEAR* CFFO POTENTIAL FOR SHELL
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Q2 2013 results Q2 underlying earnings $4.6 billion; EPS -21% CFFO $12.4 billion Q2 2013 dividend $0.45 per share Nigeria security challenges Growth delivery Maturing new options 5 major start-ups to come in ‘13-’14: >$4 billion/year CFFO potential*
Capital discipline + long term approach >$3 billion buy-back completed; $4-5 billion ’13 Pace of asset sales to increase Refocusing in Nigeria and North America
SUMMARY
Mars-B platform sail-away to final location, July 2013 *$100/bbl Brent scenario 2015+
(Kashagan phase 1, Mars-B, Gumusut-Kakap, Cardamom, Repsol LNG)
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Groundbirch and Gundy, Canada, Upstream Americas, 2013
SECOND QUARTER 2013 RESULTS
QUESTIONS & ANSWERS
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DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
Lubricants Zhuhai blending and filling plant, China, 2009
SECOND QUARTER 2013 RESULTS
ROYAL DUTCH SHELL PLC 1 AUGUST 2013
