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Simon Henry, Chief Financial Officer of Royal Dutch Shell plc, presented the Shells updated strategy as laid out in February of 2012 and the financial and operational highlights of 2011.
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ROYAL DUTCH SHELL
COMPANY UPDATEFebruary 8, 2012
1 Copyright of Royal Dutch Shell plc 2 February 2012
ROYAL DUTCH SHELL
SIMON HENRYCHIEF FINANCIAL OFFICER
2 Copyright of Royal Dutch Shell plc 2 February 2012
DEFINITIONS AND CAUTIONARY NOTE
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 or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.
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 24% 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
3 Copyright of Royal Dutch Shell plc 2 February 2012
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, 2010 (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, 8 February 2012. 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 resources, 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 these forms from the SEC by calling 1-800-SEC-0330.
SHELL
Customer and partner focus
Profitability & performance
� Managing through extreme volatility
� Updating our outlook
4 Copyright of Royal Dutch Shell plc 2 February 2012
partner focus performance
Sustainability & growth
Value added technology
� Through-cycle investment and portfolio choices
injuries – TRCF/million working hours million working hours
‘GOAL ZERO’ ON SAFETY
CONTINUED FOCUS ON HSSE PERFORMANCE
400
500
600
700
800
900
0
1
2
3
4
5� Focus on personal and process safety
� Rigorous global standards
� Industry leader in Sustainable Development
5 Copyright of Royal Dutch Shell plc 2 February 2012
EMPLOYEES AND CONTRACTORS PER MILLION WORKING HOURS; SHELL OPERATED FACILITIES; PRELIMINARY ESTIMATE FOR 2011
4000'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
� Industry leader in Sustainable Development
WORKING HOURS (RHS) TRCF
Carmon CreekGeronggong
BC-10 Ph. 3 (Massa)
GROWTH DELIVERY 2009-2011CONVERTING RESOURCES TO PRODUCTION
15
25
35
billion boe resources
Longer-term upside
Prelude FLNGAOSP debottl.NA tight gas /
shalesClair Ph2
Tempa RossaFramMalikai
AOSP debottl. + QuestNA tight gas/shales
6 Copyright of Royal Dutch Shell plc 2 February 2012
2010 2011-5
5
15
2008 2009
Growing opportunity funnel12 bln boe on stream, maturing additional ~20 billion boe
PRODUCTIONON-STREAM STUDYUNDER CONSTRUCTION
2012
Clair Ph2Schiehallion
Pearl GTLQatarGas-4Schoonebeek
Qarn Alam EORWest Qurna 1 IPT
Pluto (Woodside) Harweel
NA tight gas/shalesEagle Ford
� 12 billion boe resources on stream
� Drive new cashflow growth:
� +30-50 % CFFO 2012-15 versus 2008-11*
2012+ PRIORITIES
GROWTH DELIVERY
CONTINUOUS IMPROVEMENT
7 Copyright of Royal Dutch Shell plc 2 February 2012
* CFFO OUTLOOK @$80-$100/BBL BRENT AND ASSUMES IMPROVED US GAS AND DOWNSTREAM ENVIRONMENT FROM 2011; CFFO EXCLUDES WORKING CAPITAL MOVEMENTS
� +30-50 % CFFO 2012-15 versus 2008-11*
� Maturing >60 projects; ~20 billion boe resources
� Exploration + bolt-on deals
� 2017-18 production potential ~4 mboe/d average
MATURE NEW OPTIONS
PERFORMANCE FOCUS
ROYAL DUTCH SHELL
2012+ GROWTH PROJECTS
8 Copyright of Royal Dutch Shell plc 2 February 2012
GROWTH DELIVERY 2012+KEY PROJECTS UNDER CONSTRUCTION
Eagle Ford
Mars B
North America tight gas
AOSPDebottlenecking
Clair Ph2Schiehallion
Redevelopment
CorribKashagan Ph1
Majnoon FCP
UAE
Port Arthur
9 Copyright of Royal Dutch Shell plc 2 February 2012
26 projects under construction
2012-13
2016+
2014-15
START-UP DATE
Bonga NW
BC-10 Phase 2
Mars B
Cardamom
Harweel
Amal Steam
UAE
Gumusut-KakapSabah Gas Kebabangan
Pluto LNG T1 (Woodside)Gorgon LNG T1-3
North Rankin 2
Prelude FLNGWheatstone LNG
Greater Western Flank Ph 1
0
10
20
30
Under Construction
billion boe
RESOURCES
Browse 0.0
20.0
40.0
GROWTH DELIVERY 2012+ MAINTAINING LNG LEADERSHIP
SHELL GLOBAL LNG CAPACITY GROWTH
Wheatstone& Prelude
Gorgon T1-3
Pluto T1 (Woodside)
mtpa
2011 ~2020+
ONSTREAM CONSTRUCTION OPTIONS
AUSTRALIA – INDONESIA: 2011 PROGRESS
Prelude FLNG
Abadi FLNG
Greater Sunrise
Abadi entry• Inpex 60%• Shell 30%• EMPI 10%
2012 FEED
Wheatstone North West Shelf
FIDs
10 Copyright of Royal Dutch Shell plc 2 February 2012
0
10
20
30
Shell Exxon Chevron BG Total BP
year end mtpa
� ~20 mtpa on-stream � ~8 mtpa under construction� Assessing ~ 15 mtpa future options
� ~90% long-term contracted
� ~80% of portfolio oil price linked
SHELL LNG LEADERSHIP
ONSTREAM CONSTRUCTION OPTIONS
2011 2017
PROJECTS ONSTREAM OR UNDER CONSTRUCTION
Arrow Energy LNG:Bow Energy acquisitionShell-PetroChina 50/50
UNDER CONSTRUCTION
PRODUCTION
OPTIONS
Pluto (Woodside)
Wheatstone
Gorgon
North West Shelf
GROWTH DELIVERY 2012+ REGAINING MOMENTUM IN GULF OF MEXICO
MarsUrsa
Nakika
Brutus
Vito� ~100 kboe/d potential� >200 million boe resources� Shell 55% (operator)
Appomattox� ~100 kboe/d hub potential � Appraisal drilling underway� > 250 million boe resources� Shell 80% (operator)
Mars-BW.Boreas, S. Deimos
100 km
Mars-B, Olympus tension leg platform
11 Copyright of Royal Dutch Shell plc 2 February 2012
UNDER CONSTRUCTIONONSTREAM OPTIONS
Auger
HolsteinPerdido
Stones� 45 kboe/d potential� Shell 35% (operator)
Caesar Tonga
Cardamom Deep
2005 2010 2015 2020
Caesar Tonga
Mars B
Cardamom
Stones
Appomattox
Vito
FID START-UPDISCOVERY
~185 kboe/d 2011- ~350 kboe/d potential ~2017
Drilling 5+ exploration wells 2012
Mars-B, Olympus tension leg platform
ROYAL DUTCH SHELL
MATURING NEW GROWTH OPTIONS
12 Copyright of Royal Dutch Shell plc 2 February 2012
0
2
4
6
MATURING NEW GROWTH OPTIONSDOWNSTREAM: SELECTIVE GROWTH
CHEMICALS
REFINING
GROWTH
BASE
2012 CAPEX
Qatarchemicals
Gas-to-chemicals
UK Retail
Raízen
Port Arthur
UNDER DEVELOPMENT
$ billion
Lubes RussiaLNG to transport
Rhineland Connect
China Retail + LubesChina refining and chemicals
13 Copyright of Royal Dutch Shell plc 2 February 2012
MARKETING/OTHER
REFINING BASE
Value chains and leveraging our brand
UNDER DEVELOPMENT
OPTIONS
2011 DEALS
Qatar chemicals
Gas-to-chemicals US
China
Singapore chemicals Raízen Port ArthurNanhai chemicals
2006 2010 2011 2012 FUTURE
MATURING NEW GROWTH OPTIONS 2011 EXPLORATION + BUSINESS DEVELOPMENT 2011 EXPLORATION & ACQUISITIONS
0
2
4
RESOURCES MATURATION / POTENTIAL
Zaedyus
Acme West
Clair
Tologbene
Marcellus
Eagle Ford
Groundbirch
China tight gas
billion boe
MarcellusEagle Ford
IraqArrow
AbadiLiquids-rich
shales
OIL
GAS
Groundbirch
14 Copyright of Royal Dutch Shell plc 2 February 2012
-2
0
'08 '09 '10 '11
� 2011 delivery:� 2.3 billion exploration + appraisal� >4 billion boe E&A + deals~; ~30% tight/shale gas
� >140,000 km2 new acreage in 2011
� 2008-11 delivery: ~13 billion boe at $2-3/boe (E&A + deals)
APPRAISAL
DISCOVERY NEW EXPLORATION ACREAGE
RESOURCES PLAY ENTRY
Acme West
Vos
Arrow
Satyr-3
EXPLORATION/APPRAISAL
DISPOSALS
PRODUCTION
RESOURCES-BASED DEALS
MATURING NEW GROWTH OPTIONS BUILDING WORLD-WIDE TIGHT GAS + LIQUIDS-RICH SHALES PORTFOLIO
Pinedale
Groundbirch
Deep Basin
Foothills
Egypt
Utica
Wolfcamp
Turkey
Oman
Bakken
Niobrara
Mississippi Lime
Eagle Ford
GermanyMontney
Canol
MontereyHaynesville
Ukraine
China tight gas
Wells Manufacturing JV with CNPCMarcellus
15 Copyright of Royal Dutch Shell plc 2 February 2012
Drilling rig – Alberta
~50,000 km2 (~12 million acres) acreage world wide ~12,000 km2 (~3 million acres) liquids-rich shales added 2011; ~$2 billion, ~$825/acre
Oman
Neuquen
Colombia
LIQUIDS POTENTIAL
2011 ENTRY
TIGHT GAS
LEVERAGE SHELL INTEGRATION KNOW-HOW
� Gas into oil pricing opportunity
� Assessing gas potential:
• LNG-for transport Canada
MATURING NEW GROWTH OPTIONSNORTH AMERICA GAS VALUE CHAINS
Canada Green Corridor FID 2011� FID for 0.3 mtpa LNG� Long distance truck fuel� LNG retail infrastructure
Fort Mc Murray
Edmonton
Calgary
Jumping PoundVancouver
Fort St John
Grande Prairie
EXAMPLE: COMMERCIALISING LNG FOR TRANSPORT
16 Copyright of Royal Dutch Shell plc 2 February 2012
• LNG-for transport Canada
• Western Canada LNG
• Gas-to-chemicals in Appalachia
• GTL options
Canada: Jumping Pound Gas Plant LNG powered truck
ENGINES MODIFIED FOR LNG
20
30
CAPITAL INVESTMENT
capital investment $ billion
Clair Ph2
Cardamom Sabah Gas Kebabangan
AOSP Debottlenecking
SchiehallionRedevelopment
North America tight gas
Basrah Gas Company
Abadi FLNG
Qatar chemicals
US chemicals
NA LRS
Eagle Ford
UPSTREA
M
TIGHT/SHALE OIL/GAS
Thematic
HEAVY OIL & EOR
DEEPWATER
EXPLORATION
UK RetailLNG for transport
Mars-B
STRONG PROJECT FLOW DRIVES INVESTMENT GROWTH
17 Copyright of Royal Dutch Shell plc 2 February 2012
20120
10
Wheatstone LNG
Prelude FLNGRaízen
Abadi FLNG
$ billion 2010
2011
Target 2011
2012
Target
Organic investment 24 28 26 ~32
Acquisitions 7 2.5 5
Disposals (7) (5) (7) (~2-3)
Net Capital Investment 24 25-27 24 ~30
FID 2010-2011
2011 PORTFOLIO GROWTH
NWS GWF Ph1
UPSTREA
M
INTEGRATED GAS
TRADITIONAL
DOWNSTREAM
BC-10 Ph2
100
150
200
$ billion
$87/bbl Brent
$80/bbl
3.5
4.0
million boe/day
OIL & GAS PRODUCTION + OUTCOMES SUSTAINED CASH FLOW GROWTH
GROWTH DELIVERY 2012+UPDATING OUR GROWTH OUTLOOK
$100/bbl
100
150
200
18 Copyright of Royal Dutch Shell plc 2 February 2012
0
50
100
2008 -2011 2012 – 2015 POTENTIAL
2.5
3.0
2009 2010 2011 2017-18 average
PRODUCTION + POTENTIAL
FUTURE ASSET SALES AND LICENSE EXPIRIES
2010-11 ASSET SALES
PRODUCTION OUTLOOK @ $80/BBL BRENT. CFFO OUTLOOK ASSUMES IMPROVED US GAS AND DOWNSTREAM ENVIRONMENT FROM 2011; CFFO EXCLUDES WORKING CAPITAL MOVEMENTS
CASH FLOW FROM OPERATIONS
NET CAPITAL INVESTMENT
DIVIDENDS AND BUYBACKS
0
50
100
� 12 billion boe resources on stream
� Drive new cashflow growth:
� +30-50 % CFFO 2012-15 versus 2008-11*GROWTH DELIVERY
CONTINUOUS IMPROVEMENT
2012+ PRIORITIES
SUMMARY
19 Copyright of Royal Dutch Shell plc 2 February 2012
* CFFO OUTLOOK @$80-$100/BBL BRENT AND ASSUMES IMPROVED US GAS AND DOWNSTREAM ENVIRONMENT FROM 2011; CFFO EXCLUDES WORKING CAPITAL MOVEMENTS
� +30-50 % CFFO 2012-15 versus 2008-11*
� Maturing >60 projects; ~20 billion boe resources
� Exploration + bolt-on deals
� 2017-18 production potential ~4 mboe/d average
MATURE NEW OPTIONS
PERFORMANCE FOCUS
ROYAL DUTCH SHELL
Q&A
20 Copyright of Royal Dutch Shell plc 2 February 2012