DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE SECOND QUARTER 2013 RESULTS
ROYAL DUTCH SHELL PLC
1 AUGUST 2013
Copyright of Royal Dutch Shell plc 1 August, 2013 1 Lubricants Zhuhai blending and filling plant, China, 2009
DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
PETER VOSER CHIEF EXECUTIVE OFFICER
ROYAL DUTCH SHELL PLC
Copyright of Royal Dutch Shell plc 1 August, 2013 2 BC-10, offshore Floating Production Storage and Offloading facility, Brazil, 2013
DEFINITIONS AND CAUTIONARY NOTE
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.
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SUMMARY
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
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
Illegal refinery, Krakrama; October 2012
Fire on the 24” TNP, Bodo West; April 2013 NLNG Blockade, June/July 2013
LARGE SCALE CRUDE THEFT AND ASSOCIATED DAMAGE LNG GAS SUPPLY DISRUPTION + BLOCKADE
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DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
SIMON HENRY CHIEF FINANCIAL OFFICER
ROYAL DUTCH SHELL PLC
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Q2 2013 FINANCIAL PERFORMANCE
EARNINGS Q2 2012 TO Q2 2013 Q2 Q2 $ billion 2012 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 CCS basis; earnings and EPS excluding identified items
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Q2 2013 OPERATIONAL PERFORMANCE
UPSTREAM UPSTREAM million boe/day million tonnes Growth from Pearl GTL, Malaysia and Australia Nigeria sabotage Royalty reporting change Q2-Q2 underlying growth +2%
Oil LNG Sales (RHS) Gas
DOWNSTREAM DOWNSTREAM % availability volume Chemicals: planned downtime in Europe and North America Underlying volume decrease
Refinery availability Oil products sales (mln bbl/d) Chemicals availability Chemicals sales (million tonnes)
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12 MONTHS CASH PERFORMANCE
GROUP UPSTREAM DOWNSTREAM/CORPORATE $ billion $ billion $ billion
CFFO ex WC movements Asset Sales Acquisitions Buybacks Working capital movements Capex Dividend
BALANCING CASH GENERATION, INVESTMENT + PAYOUT
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PORTFOLIO DEVELOPMENT Q2 2013
Divestment / Notable discovery / Acquisition / entry FID Start-ups (Project re- option progress framing) . G/U Phase 2 (215 kboe/d) . Basrah Gas . Nigeria
FUTURE . TNP loop-line Company onshore review OPPORTUNITIES (45 kboe/d)
. North America
RESOURCES review PLAYS
. Vicksburg discovery . Stones
(50 kboe/d) DEEP-WATER . Zabazaba-4 appraisal
. Repsol LNG . Additional 5% anti-trust clearance equity: Abadi INTEGRATED . FEED LNG import GAS FLNG (35%) facility Philippines
. Bab Sour gas UPSTREAM (40%) ENGINE
. Poland: ~100 DOWNSTREAM Retail stations ENGINE
3 FINAL INVESTMENT DECISIONS; FURTHER PORTFOLIO PROGRESS
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FINANCIAL FRAMEWORK
FREE CASH FLOW AND PAYOUT $ billion 2012-15 OUTLOOK: CFFO $175-$200 BILLION NET CAPEX $120-130 BILLION
$ billion 2012-H1 2013 2012-15 Outlook*
Cash flow from operations 70 175-200
Free cash flow Dividend Net Capital Investment 49 120-130 Buyback
NET DEBT AND GEARING $ billion
Gearing range 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
Gearing (LHS) Net Debt (RHS)
* CFFO and capex outlook @$80-$100/bbl Brent and assumes improved US gas and Downstream environment from 2012; CFFO excludes working capital movements
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DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE
PETER VOSER CHIEF EXECUTIVE OFFICER
ROYAL DUTCH SHELL PLC
Copyright of Royal Dutch Shell plc 1 August, 2013 12 BC-10, offshore Floating Production Storage and Offloading facility, Brazil, 2013
OUTLOOK
2013 ORGANIC CAPEX $ billion
FUTURE LONGER TERM OPPORTUNITIES
RESOURCES PLAYS FINANCIAL MANAGEMENT OF STRONG GROWTH PROJECT PIPELINE PRIORITY DEEP-WATER DIVIDEND COMMITMENT
CAPITAL CEILING DRIVES HARD CHOICES
INTEGRATED GAS
UPSTREAM ENGINES
DOWNSTREAM
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DEEP WATER GULF OF MEXICO PROGRESS H1 2013
MARS B TLP SECURED ON LOCATION STONES FINAL INVESTMENT DECISION MAY 2013
Mars B extends Mars field life to 2050+ Gulf of Mexico Lower Tertiary reservoir Mars + satellites ~1 billion boe >250 million boe TLP towed to location in July FPSO design Start-up on schedule for 2014 Start-up 2016 -17 100 kboe per day 50 kboe per day Shell 71.5% (operator) Shell 100% (operator)
Mars-B TLP July 2013 Stones: FPSO model with disconnectable buoy
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NORTH AMERICA RESOURCES PLAYS REFOCUSSING OUR SHALES PORTFOLIO
CAPEX $ billion
LNG Canada LNG to Transport
Gas-to-Chemicals
Elba LNG LRS Dry gas Gas Divestments Acquisitions GTL Liquids Rich Shales PRODUCTION Integration options/projects million boe per day bcfe per day
PORTFOLIO WILL BE REFOCUSED MATERIALITY FEWER SHALES OPERATING THEATRES
BEST INTEGRATION OPTIONS
Liquids Gas
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FUTURE OPPORTUNITIES IRAQ GAS JV; NEW SPDC NIGERIA INVESTMENTS
BASRAH GAS COMPANY, IRAQ NIGERIA SPDC
Divestment completed SPDC JV 2012-13 FIDs NLNG
FYIP
Gbaran-Ubie phase 2
Southern Swamp TNP loopline
Khor Al Zubair NGL plant Basrah, Iraq, Q2 2013 50 km
JV commenced operations 1st of May ‘13 $3.9 billion new 2013 investment in pipelines Processing 450 million scfe/day gas and LNG feed gas 2 billion scfe/day potential 2008-2012 divestments $1.8 billion (Shell) Value driven; no volume entitlement Strategic review of eastern onshore licenses ~80-100 kboe/d divestments potential (Shell) Shell Nigeria: focus on deep water + gas
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KASHAGAN START-UP
KASHAGAN DEVELOPMENT PHASE 1 OVERVIEW D ISLAND
Train 2 Raw gas compressors Well heads
Train 1
Utilities Living quarters
50km
Kashagan, D island facilities, April 2013
300 kboed average production 2 train development; 2 year ramp-up sequence
Shell 16.81%; production operations delegated Bolashak onshore Offshore flare lit 07/13 D island to Shell and KMG
2013 H2: START-UP OF PRODUCTION FACILITIES
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TOP 5 PROJECT START-UPS ‘13-’14
Kashagan phase 1 FUTURE Commencing start-up 2013 H2 OPPORTUNITIES
Gumusut-Kakap Platform loaded out to final location DEEP-WATER
Topsides fitted Mars-B DEEP-WATER TLP secured on location
Installation of subsea manifold and
Cardamom umbilical completed DEEP-WATER Tie-in to Auger platform underway
INTEGRATED Repsol LNG Completion 2013 H2 GAS
>$4 BILLION/YEAR* CFFO POTENTIAL FOR SHELL
*$100/bbl Brent scenario, 2015+
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SUMMARY
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
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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QUESTIONS & ANSWERS
SECOND QUARTER 2013 RESULTS
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DELIVERING INNOVATIVE & COMPETITIVE PERFORMANCE SECOND QUARTER 2013 RESULTS
ROYAL DUTCH SHELL PLC
1 AUGUST 2013
Copyright of Royal Dutch Shell plc 1 August, 2013 21 Lubricants Zhuhai blending and filling plant, China, 2009