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Royal Dutch Shell plc fourth quarter 2014 results analyst webcast presentation

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Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc hosts a video webcast of the fourth quarter 2014 and full year results on Thursday January 29, 2015.

See http://www.shell.com/results for more information.

Veröffentlicht in: Investorbeziehungen
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Royal Dutch Shell plc fourth quarter 2014 results analyst webcast presentation

  1. 1. 1Copyright of Royal Dutch Shell plc 29 January, 2015 FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC
  2. 2. 2Copyright of Royal Dutch Shell plc 29 January, 2015 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 consistent with the Society of Petroleum Engineers 2P and 2C definitions. Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact. Resources plays: Our use of the term ‘resources plays’ refers to tight, shale and coal bed methane oil and gas acreage. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document “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 document refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect 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, 2013 (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, 29 January, 2015. 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.
  3. 3. 3Copyright of Royal Dutch Shell plc 29 January, 2015 BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
  4. 4. 4Copyright of Royal Dutch Shell plc 29 January, 2015 FOCUS ON HSSE 2014 UPDATE Injuries – TRCF/million working hours Goal Zero on safety Injuries – TRCF/million working hours Spills - operational Volume in thousand tonnes Energy intensity – refineries Energy Intensity Index (EEITM) Process safety Number of incidents million working hours Working hours (RHS)TRCF  HSSE priority  Performance + transparency Tier 1 incidents Tier 2 incidents
  5. 5. 5Copyright of Royal Dutch Shell plc 29 January, 2015 EXECUTING A CONSISTENT, LONG-TERM STRATEGY  Unrelenting focus on HSSE  Technology, integration and scale  Disciplined capital investment by strategic theme  Growth in cash flow through cycle  Competitive shareholder returns Total shareholder returns growth – 10 years Index 1/1/2005 =100  2014+ drive to rebalance growth and returns Shell S&P500 FTSE100
  6. 6. 6Copyright of Royal Dutch Shell plc 29 January, 2015 2050 outlook  Population increases from 7 to 9 billion  Enabled by cheap and reliable energy Realities  Requirement to mitigate climate change  Oil supply -70% by 2030 without new investment  Key role of gas & CCS ENERGY TRANSITIONS Long-term energy supply mix Million boe per day Gas Biomass Wind Coal Nuclear Other renewables Solar Shell activities Oil  Energy transitions underway +50% +50%
  7. 7. 7Copyright of Royal Dutch Shell plc 29 January, 2015 Oil market downturn  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 oil price screens unchanged  Planning for low prices 2015+; uncertain recovery timing  Hard choices on our growth pipeline + options  Opportunity to reduce costs OIL MARKET + SHELL RESPONSE Source: IEA estimates Oil supply Million barrels of oil per day
  8. 8. 8Copyright of Royal Dutch Shell plc 29 January, 2015 FINANCIAL PERFORMANCE 2014 DELIVERY CCS earnings + ROACE excluding identified items Earnings + ROACE $ billion Cash flow $ billion Dividend, buyback + gearing $ billion % % Upstream Downstream Corporate/Other Dividend announced Buyback CFFO CFFI ROACE (RHS) Free cash flow (RHS) Gearing (RHS) $ billion Gearing range  Well-positioned into oil market downturn  Asset sales delivered ahead of oil price decline  Enhanced free cash flow + lower gearing
  9. 9. 9Copyright of Royal Dutch Shell plc 29 January, 2015 2014 DELIVERY BALANCING GROWTH AND RETURNS CCS earnings excluding identified items  CCS earnings $22.6 billion; CFFO $45.0 billion  Dividend growth + buyback  Restructuring in Oil Products + North America resources plays  Moderated spending + growth  Improved free cash flow; reduced gearing  Early completion of 14-15 divestment plan  4 operated deep-water start-ups  Repsol LNG integration: >$1 billion CFFO impact  New options in FEED; improved exploration Improve our financial performance Enhance our capital efficiency Deliver new projects
  10. 10. 10Copyright of Royal Dutch Shell plc 29 January, 2015 More rigorous portfolio management Taking hard choices on funnel ~140 performance units add focus  Increased shareholding requirements for management  Bottom line focus  Credible, competitive + affordable plans Resilience Attractiveness FEED FID On-stream Identify&Assess Select Define Execute Operate ASPIRED PORTFOLIO ATTRACTIVENESS Growth & returns Opportunity scale RESILIENCE Risk, performance & uncertainty STRATEGIC INTENT RESULTS & PAY- OUT Grow Exit Fix/maintain CHANGING EMPHASIS IN 2014+ SHARPER PORTFOLIO MANAGEMENT + APPRAISAL
  11. 11. 11Copyright of Royal Dutch Shell plc 29 January, 2015 PRIORITIES 2015+  Choices on new options  Supply chain management  Managing affordability + financial flexibility  Preserving our competitive growth pipeline in downturn  Continued ramp-up of 2014 start-ups  2015 transition year into 2016/17+ growth  Returns and cash flow  Competitive returns for shareholders  Restructuring underperforming businesses  Cost reduction programmes Competitive financial performance Capital efficiency Project delivery
  12. 12. 12Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING  Optimise footprint  Integrated value capture  Selective investment in growth markets  Capital discipline and project delivery  Strong ROACE, 27% 2014  Free cash flow reduction:  Investment-heavy phase  Cost and profitability pressures  Late-life asset challenges Resources plays Oil Products Upstream engine Dry gas AcquisitionsLRS  NA portfolio reduction completed  2015+ reduction of International portfolio  Capital ceiling + cost reduction Capital investment in $ billion Asset sales (incl. MLP) $ billion $ billion kboe per day (Shell share) CFFO Production (RHS) Capital investment -30%
  13. 13. 13Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE FINANCIAL PERFORMANCE RESTRUCTURING RESOURCES PLAYS PORTFOLIO Production excludes volumes from divestments Production kboe per day Capital investment $ billion E&A On-stream Gas Liquids Rich Colombia Argentina Neuquen Ukraine Oman Sichuan Changbei Arrow CBM Changbei 2 Russia Americas InternationalLiquids Gas Permian Appalachia W. Canada LRS W. Canada gas  2014: North America portfolio restructured ($3.3 billion asset sales / 110 kboe/d)  2015+:  International portfolio reduction + possible write-downs  Potential to further reduce spending Tunisia -30% ` Germany Algeria Turkey
  14. 14. 14Copyright of Royal Dutch Shell plc 29 January, 2015 Cash flow + ROACE COMPETITIVE FINANCIAL PERFORMANCE DOWNSTREAM ENGINE CCS earnings excluding identified items % Earnings 2013 to 2014 $ billion Operating performance % unplanned downtime Cash flow ROACE (RHS) Refining Chemicals $ billion  Self-help + improved joint venture performance  Launched new cost drive at end 2014  10-12% ROACE + $10 billion p.a. CFFO potential
  15. 15. 15Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: OIL PRODUCTS Equity refinery positions Portfolio change Resilience Attractiveness Selective Growth:  China  LNG for transport  Premium fuels + lubes  Refinery crude flexibility  others Fix:  Motiva  Singapore fuels  Pernis + Rheinland  Malaysia  Moerdijk  others Exit: Italy  Australia  Norway Denmark others  2014 asset sales + MLP: >$4 billion  Ongoing divestments  Efficiency + cost drive  completed Million b/d Refining capacity Europe Asia, Oceania, Africa Americas ~ -20% # of refineries Refineries (RHS)
  16. 16. 16Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE FINANCIAL PERFORMANCE PORTFOLIO RESTRUCTURING: UPSTREAM ENGINE * 2018/19 potential, Shell share Upstream engine portfolio Managed decline of legacy positions kboe per day (Shell share)  Restructuring focused on UKCS  Reducing overheads  Divesting assets  Free cash flow improvement  Operating costs and operational performance  Exit tail-end and underperforming assets  2017+ start-up of growth projects Resilience Attractiveness ~95 kboe/d* Selective growth:  Schiehallion  Clair Ph2  Val d’ Agri ph2  Tempa Rossa  Beryl  Corrib Maintain  Norway  NAM  Malaysia  Oman  New Zealand  Philippines Fix Denmark Brunei Gabon onshore Exit / Dilute / Decommissioning: Nelson Anasuria Sean Brent decommissioning others Netherlands Oman Malaysia Norway Brunei UK Abu Dhabi Others 14 kboe/d
  17. 17. 17Copyright of Royal Dutch Shell plc 29 January, 2015 INVESTMENT PRIORITIES + PERFORMANCE 1 Iraq, Nigeria onshore (SPDC), Kazakhstan, Arctic, heavy oil Engines (Downstream, Upstream engine)  Free cash flow businesses  Maintain competitiveness  Asset integrity + selective growth Growth priority (Integrated Gas, deep water)  Global leadership established  High-grading our rich opportunity set Longer term (resources plays, future opportunities1)  Major potential; managing non-technical risks  Slower pace + capital allocation  Investment choices driven on a global thematic basis  Assets tested for attractiveness + resilience ROACE (%) CFFO in billion $ Downstream engine Upstream engine Integrated gas Deep water Resources plays Future opportunities 2014 (Brent $99/bbl) 2013 (Brent $109/bbl) Bubble size represents year-end capital employed
  18. 18. 18Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE, CREDIBLE + AFFORDABLE PLANS MODERATING OUR SPENDING + GROWTH OUTLOOK 2014 acquisitions: Repsol LNG $ billion total capital investment $ billion organic capital investment  Project re-phasing / deferral  Supply chain savings  Dilutions + exits > -15%  2015 organic spending lower than 2014  Retaining options for medium term  Flexibility to reduce further Upstream Downstream / Corporate Acquisitions 2015 potential 2015 plan
  19. 19. 19Copyright of Royal Dutch Shell plc 29 January, 2015 ROYAL DUTCH SHELL PLC SIMON HENRY CHIEF FINANCIAL OFFICER
  20. 20. 20Copyright of Royal Dutch Shell plc 29 January, 2015 ROYAL DUTCH SHELL PLC FINANCIAL PERFORMANCE
  21. 21. 21Copyright of Royal Dutch Shell plc 29 January, 2015 Q4 2014 FINANCIAL HIGHLIGHTS Earnings and ROACE on CCS basis, excluding identified items; ROACE 12 months rolling Earnings Q4 2013 to Q4 2014 $ billion Q4 2013 Q4 2014 $ billion UPSTREAM 2.5 1.7 DOWNSTREAM (CCS) 0.6 1.6 CORPORATE & MINORITIES (0.1) (0.0) CCS NET EARNINGS 2.9 3.3 CCS EARNINGS, $ PER SHARE 0.46 0.52 CASH FROM OPERATIONS 6.0 9.6 ROACE (%) 8.9 10.2 SHARE BUYBACKS 1.0 1.0 DIVIDENDS 2.8 3.0 DIVIDEND, $ PER SHARE 0.45 0.47 Environment Choice
  22. 22. 22Copyright of Royal Dutch Shell plc 29 January, 2015 Q4 2014 PERFORMANCE Earnings on CCS basis, excluding identified items Upstream earnings + cash flow $ billion Oil and gas production million boe/d Downstream earnings + cash flow $ billion Availability and sales volumes % million tonnes per annum Upstream International Upstream Americas Cash flow from operations (RHS) sales volumes Refinery availability Chemicals availability Oil products (million bbls/d) (RHS) Chemicals (million tonnes) (RHS)Oil Products Chemicals CFFO (RHS) Gas Oil LNG Sales volumes (RHS) $ billion $ billion
  23. 23. 23Copyright of Royal Dutch Shell plc 29 January, 2015 PRELIMINARY RESULTS SEC PROVED RESERVES POSITION 1 Excludes acquisitions, divestments and price impacts 2 Reserves attributable to Royal Dutch Shell shareholders 2014 Reserves performance  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 replacement 85% Reserves Replacement SEC proved reserves Major reserves additions 2012-14 Reserves additions 2012-14 2014 Organic 85% 47% Organic incl. price effects 76% 50% SEC proved reserves2 67% 26% (billion boe) 2012 2013 2014 Organic reserves additions 1.0 1.5 0.5 Production 1.2 1.2 1.2 SEC proved reserves2 13.6 13.9 13.1
  24. 24. 24Copyright of Royal Dutch Shell plc 29 January, 2015 OIL + GAS RESOURCES FUNNEL Converting resources to production… Billion boe Baronia EOR / Tukau Timur Bonga Main ph3 Coulomb ph2 Longer-term upside 2010 2011 2012 2013 2014 On-stream Execute (under construction) Select/Define Production Bonga North West Cardamom Gumusut-Kakap Mars B Petai Sabah gas KBB  Asset sales + capital ceiling  Fewer FIDs in 2014  Maintaining attractive project flow Appomattox Browse resources plays Val d’Agri ph2 Vito others
  25. 25. 25Copyright of Royal Dutch Shell plc 29 January, 2015 CONVENTIONAL EXPLORATION EXECUTING A CONSISTENT AND SUCCESSFUL EXPLORATION STRATEGY ARCTIC Long-term potential for industry FRONTIER Build-up of acreage in under-explored basins HEARTLANDS New plays in Shell producing basins NEAR-FIELD High-value add-ons Prospect size (million boe) Time to development (years) 15+ 10+ 3+ <3 5-50 50-250 >250 >500 Spend includes acquisitions  Low-cost access to new barrels: balancing exploration risk and returns 2015 spend Frontier / Arctic NFE Heartlands / Libra
  26. 26. 26Copyright of Royal Dutch Shell plc 29 January, 2015 EXPLORATION: 2014 PERFORMANCE Malaysia heartlands  NFE success, 3 heartland discoveries, 1 successful appraisal  ~300 mmboe for Shell in 2014 Gabon deep-water frontier  Sub-salt deep-water gas discovery  Shell 75%, operator Frontier Near-field Frontier basin  Improved delivery in 2014  10 frontier + heartlands successes  41 near-field finds Australia heartlands  2014: Lympstone discovery  NFE success 2014 drilling success Heartlands GOM deep-water heartlands  2014: Rydberg, Kaikias, Power Nap + Gettysburg discoveries  >1300 mmboe for Shell 2009+ Brazil - Libra NW1 successful appraisal C-1 well drilling Shell 20%
  27. 27. 27Copyright of Royal Dutch Shell plc 29 January, 2015 2015 OUTLOOK Macro sensitivity @ $70-110/bbl Brent 2014 asset sales + license expiries (2015 vs. 2014 impact) -100 kboe/d; -0.3 mtpa LNG ~-75 kbpd refining capacity; -145 kbpd marketing ~-$1 billion divestment tax charge impacting CFFO Maintenance downtime / other (2015 vs. 2014 impact) -60 kboe/d (Pearl T1, AOSP, GOM, others) Reduced Chemicals availability (80% in 2015 vs. 85% in 2014) Ramp-up of 2014 + 2015 start-ups Macro $10/bbl Brent +/- ~$3.3 billion CFFO/earnings per annum Q1-Q1 outlook:  Maintenance -90 kboe/d (Pearl + Auger)  Divestment, license expiry, Majnoon cost recovery: ~ -200 kboe/d  Moerdijk chemicals downtime Pearl GTL, Qatar
  28. 28. 28Copyright of Royal Dutch Shell plc 29 January, 2015 CAPITAL EFFICIENCY FINANCIAL FRAMEWORK AND PRIORITIES Priorities for cash 1. Debt service 2. Dividends: growth policy 3. Capital investment: disciplined through-cycle growth 4. Return surplus cash: buybacks Cash performance Investment Balance sheet CFFO Pay-out Cash dividend Buyback Gearing CFFI $ billion % $ billion $ billion $ billion Net debt  Balancing cash in / cash out across cycle  Maintaining strong balance sheet
  29. 29. 29Copyright of Royal Dutch Shell plc 29 January, 2015 Short term Medium term Strategic long term CONSISTENT DELIVERY OF COST REDUCTION PROGRAMMES MULTI-BILLION $ OPPORTUNITY IN SHELL + SUPPLY CHAIN North America resources plays $ million 2014 savings (opex + capex) Supply chain Drilling, projects and operating costs excludes portfolio effects Contract renegotiations Design to cost/Design to value Use of EFAs/location choice Price Design Demand >15% savings Supply chain  Low-cost countries + global suppliers  Standardisation Overheads  Right-sizing with asset sales  Offshoring + efficiency drive  Multi-billion dollar reduction in supply chain  Operating cost reduction 2014-15
  30. 30. 30Copyright of Royal Dutch Shell plc 29 January, 2015 2014 Woodside 9.5% Wheatstone LNG Australia downstream Italy downstream US midstream MLP NA non-core LRS Pinedale + Haynesville dry gas BC-10 dilution ADCO license expiry Nigeria onshore 315 kboe/d oil + gas ~120,000 b/d refining capacity 240,000 b/d marketing 0.6 mtpa LNG CAPITAL EFFICIENCY EARLY DELIVERY OF 2014-15 $15 BILLION DIVESTMENT PLAN Divestment/exitAsset sales add focus $ billion Asset sales + MLP proceeds  $5-6 billion p.a. ongoing divestment  2015 divestments likely lower pace Early delivery of 2014-15 target Australia upstream refocus Monetise non-core Oil Products Resources plays reduction ongoing footprint reduction
  31. 31. 31Copyright of Royal Dutch Shell plc 29 January, 2015 PORTFOLIO CHOICES DRIVING PROFITABILITY Upstream CFFO* $ billion Production million boe per day  Enhancing profitability +25% * CFFO excludes working capital + oil & gas price effects Underlying +2%
  32. 32. 32Copyright of Royal Dutch Shell plc 29 January, 2015  Growth priorities unchanged  Driving competitive cash flow CAPITAL EFFICIENCY INVESTMENT PRIORITIES 1 Resources plays, Majnoon, infill drilling Organic capital investmentInvestment themes Growth priorities: 40% Longer term: 25% Engines: 35% 2015 organic capital investment 50% 10% 40% Pre-FID large project options Base Short-cycle projects1 Post-FID large projects Conventional exploration 2015 organic capital investment CFFO impact of 2015 investment ’15-’16 ’17-’18 ‘19+
  33. 33. 33Copyright of Royal Dutch Shell plc 29 January, 2015 CASH PERFORMANCE + PAY-OUT Cash flow $ billion Cash flow from operations Cash flow from investments1  2014 dividend and buyback $15 billion  2015 dividend ~$12 billion  Buybacks in 2015 subject to oil prices  Gearing likely to increase in 2015 $ billion Gearing and pay-out Dividend track record $ billion Dividends announced 2012-2014 2014 Dividend Free cash flow % Gearing (RHS)Buybacks Pay-out Dividend is dividend announced 1 Includes MLP proceeds
  34. 34. 34Copyright of Royal Dutch Shell plc 29 January, 2015 BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
  35. 35. 35Copyright of Royal Dutch Shell plc 29 January, 2015 ROYAL DUTCH SHELL PLC PROJECT DELIVERY
  36. 36. 36Copyright of Royal Dutch Shell plc 29 January, 2015  BC-10 ph3  Bonga Main ph3  Corrib  Erha North ph2  Forcados Yokri  Gbaran-Ubie ph2  Gorgon LNG  ML South  NA LRS/tight gas  Stones 2017-192015-16 PROJECTS UNDER CONSTRUCTION Production kboe per day (Shell share) million tonnes per annum  >700 kboe/d + 7.5 mtpa LNG under construction  High-margin production  Growth uptick 2017+ 2015-16 start-ups2014 start-ups LNG volume (RHS)2017-19 start-ups  Mars B   Bonga NW   Cardamom   Baronia /Tukau Timur  Carmon Creek  Clair ph2  Coulomb  Kashagan ph1  Malikai  MMLS LNG (Elba)  Prelude FLNG  Rabab Harweel  Schiehallion  Southern Swamp  Tempa Rossa  TNP loopline  Gumusut-Kakap   Petai   Sabah gas KBB  2014 Shell-operated  started up
  37. 37. 37Copyright of Royal Dutch Shell plc 29 January, 2015 PROJECT DELIVERY MANAGING OUR OPPORTUNITY SET 2015-16 FID options 17 potential FIDs 2015-16  >$15 billion spending mitigation planned 2015-17:  Re-phasing / deferral  Supply chain  Dilutions + exits Downstream Upstream Options deferred / cancelled FID choices 2015-16 FUTURE OPPORTUNITIES Carmon Creek ph3+4 postponed Majnoon full field RESOURCES PLAYS World-wide restructuring Canada, Lower 48, Argentina, other DEEP WATER Deferral of FIDs Slower pace in Nigeria Appomattox Vito Bonga South West Libra pilot FPSO vessel INTEGRATED GAS Asia Pacific slow-down Arrow LNG greenfield cancelled Elba LNG (site) LNG Canada T1+2 Browse LNG UPSTREAM ENGINE Selected base projects Val d’Agri ph2 Bokor DOWNSTREAM ENGINE Al Karaana chemicals cancelled Selected base projects Pennsylvania chem. Geismar alpha olefins China chemicals Debottleneck projects > 700 kboe/d ~12 mtpa LNG 2.7 mtpa chemicals
  38. 38. 38Copyright of Royal Dutch Shell plc 29 January, 2015 COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS Free cash flow: cash flow from operations less cash used in investing activities ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items Cash flow from operations $ billion Free cash flow $ billion ROACE – underlying % Total shareholder return (2012-2014) % Shell Peer group Shell competitors
  39. 39. 39Copyright of Royal Dutch Shell plc 29 January, 2015 PRIORITIES 2015+  Choices on new options  Supply chain management  Managing affordability + financial flexibility  Preserving our competitive growth pipeline in downturn  Continued ramp-up of 2014 start-ups  2015 transition year into 2016/17+ growth  Returns and cash flow  Competitive returns for shareholders  Restructuring underperforming businesses  Cost reduction programmes Competitive financial performance Capital efficiency Project delivery
  40. 40. 40Copyright of Royal Dutch Shell plc 29 January, 2015 QUESTIONS & ANSWERS FOURTH QUARTER 2014 RESULTS
  41. 41. 41Copyright of Royal Dutch Shell plc 29 January, 2015 KEY UPSTREAM PROJECTS UNDER CONSTRUCTION Deep water Integrated gas Resources plays Future opportunities Upstream engine
  42. 42. 42Copyright of Royal Dutch Shell plc 29 January, 2015 PRE-FID OPTIONS POTENTIAL 2015-2016 FEEDS AND FIDS Deep water Integrated gas Resources plays Future opportunities Downstream engine Upstream engine
  43. 43. 43Copyright of Royal Dutch Shell plc 29 January, 2015 2014 CONVENTIONAL EXPLORATION: EXAMPLES Frontier: Gabon deep water Heartland: GOM NFE: Oman, Lekhwair campaign Noble Globetrotter 2 Exploration drilling in North Oman  Leopard sub-salt gas discovery  Multi-TCF potential  New gas play  Shell 75%  4 deep-water oil discoveries  Rydberg oil discovery in Norphlet  ~110 million boe (Shell 57%)  Kaikias oil discovery  ~35 million boe (Shell 100%)  Assessing new Power Nap + Gettysburg finds  11 wells drilled in 2014  ~150 million barrels oil (100%)  Further potential Greater Lekhwair area  Shell 34% Mars Kaikias Nakika Vito Appomattox Mars B Rydberg Ram Powell Ursa On-stream FEED 2014 exploration success Brutus 100 km Power Nap Gettysburg
  44. 44. 44Copyright of Royal Dutch Shell plc 29 January, 2015 DELIVER NEW PROJECTS PROJECT MANAGEMENT Upstream project status Construction time elapsed %  Oversight and accountability  Track record Construction time elapsed % photo Corrib gas: national grid into Bellanaboy facility
  45. 45. 45Copyright of Royal Dutch Shell plc 29 January, 2015 2014 $ billion CCS earnings CFFO 2014 organic capital investment Capital employed ROACE Engines DOWNSTREAM ENGINE 6 11 6 49 11% UPSTREAM ENGINE 5 8 7 18 27% GrowthPriorities INTEGRATED GAS 10 13 6 58 18% DEEP WATER 3 6 7 24 12% LongerTerm RESOURCES PLAYS (2) 0 4 20 (9)% FUTURE OPPORTUNITIES1 1 5 5 30 2% DECONSTRUCTING OUR PORTFOLIO Mature + drives free cash flow Profitable + growing Returns impacted by growth spend CCS earnings excluding identified items; ROACE based on CCS earnings excluding identified items 1 Iraq, Nigeria onshore (SPDC), Kazakhstan, Arctic, heavy oil
  46. 46. 46Copyright of Royal Dutch Shell plc 29 January, 2015 CONVENTIONAL EXPLORATION + APPRAISAL: KEY WELLS 2015-2016 ‘15 ‘16 Frontier Heartlands  2015 drilling in 14 basins Albania US GOM Brunei Nigeria Australia Gabon Turkey China Malaysia Namibia Canada Denmark Egypt Brazil: Libra Alaska New Zealand
  47. 47. 47Copyright of Royal Dutch Shell plc 29 January, 2015 FOURTH QUARTER 2014 RESULTS BALANCING GROWTH & RETURNS 29 JANUARY 2015 ROYAL DUTCH SHELL PLC

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