Simon Henry – Société Générale Premium Conference Paris - November 30, 2011
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Transcript of Simon Henry – Société Générale Premium Conference Paris - November 30, 2011
1 Copyright of Royal Dutch Shell plc 30 November 2011
ROYAL DUTCH SHELL PLC
PREMIUM CONFERENCE SOCIETE GENERALE PARIS 30 NOVEMBER 2011
2 Copyright of Royal Dutch Shell plc 30 November 2011
SIMON HENRY CHIEF FINANCIAL OFFICER
ROYAL DUTCH SHELL PLC
3 Copyright of Royal Dutch Shell plc 30 November 2011
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 are identified by their use of terms and phrases such as „„anticipate‟‟, „„believe‟‟, „„could‟‟, “scheduled”, „„estimate‟‟, „„expect‟‟, „„goals‟‟, „„intend‟‟, „„may‟‟, „„objectives‟‟, „„outlook‟‟, „„plan‟‟, „„probably‟‟, „„project‟‟, „„risks‟‟, „„seek‟‟, „„should‟‟, „„target‟‟, „„will‟‟ 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 regulatory measures addressing climate change; (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 Annual Presentation / Form 20-F for the year ended December 31, 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, 30 November 2011. 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. We may have used certain terms in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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.
4 Copyright of Royal Dutch Shell plc 30 November 2011
0
100
200
300
400
1980 1990 2000 2010 2020 2030 2050
Mln Boe/d
GLOBAL ENERGY MIX
Industry outlook
Hydrocarbons dominate outlook
Growth required in all sectors of energy mix
Energy policy + sustained investment
Shell
Crude oil & oil products
Natural gas & LNG
Biofuels, wind, carbon capture + storage
Petrochemicals
ENERGY OUTLOOK
OIL GAS
COAL BIOMASS WIND
SOLAR
OTHER RENEWABLES
NUCLEAR
SHELL ACTIVITIES
SHELL ESTIMATES
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Injuries – TRCF per million working hours Million working hours
‘GOAL ZERO’ ON SAFETY
EMPLOYEES AND CONTRACTORS PER MILLION WORKING HOURS; SHELL OPERATED FACILITIES
SHELL
Customer and partner focus
Profitability & performance
Sustainability & growth
Value added technology
400
500
600
700
800
900
0
1
2
3
4
5
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 H1 11
Focus on personal and process safety Industry leader in Sustainable Development
WORKING HOURS (RHS) TRCF
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STRATEGY CAPITAL INVESTMENT
STRATEGY & CAPITAL ALLOCATION
Upstream Profitable growth; price upside
>80% of total capital spending
Sustained exploration investment
Downstream Stable capital employed
Fewer refineries; upgrade chemicals assets
More concentrated marketing positions
Financial outlook Generating surplus cash flow through cycle
Investing for growth; competitive payout
Substantial cash flow growth
Growth Investment – Through Cycle Returns
0
50
100
150
2007-10 2011-14
UPSTREAM
DOWNSTREAM
$ Bln
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EARNINGS
CURRENT COST OF SUPPLY EARNINGS
$ Bln
UPSTREAM
DOWNSTREAM
CORPORATE
DIVESTMENTS/OTHER
FINANCIAL PERFORMANCE AND PRIORITIES
-5
0
5
10
15
20
25
30
35
2007 2008 2009 2010 Q1-Q3 '11
PRIORITIES
PERFORMANCE FOCUS
NEW WAVE OF PRODUCTION GROWTH
MATURING NEXT GENERATION OF PROJECT OPTIONS
7
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ROYAL DUTCH SHELL PERFORMANCE FOCUS
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CONTINUOUS IMPROVEMENT
PERFORMANCE FOCUS
EXAMPLE: CAPITAL EFFICIENCY
Asset sales - $ Bln (cumulative)
Continuous improvement
Cost focus
Operational excellence
Capital efficiency
Simplification EXAMPLE: WELLS MANUFACTURING JV WITH CNPC
DOWNSTREAM
UPSTREAM
CORPORATE
9
0
10
20
30
40
07 08 09 10 Q1-Q3 2011
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DOWNSTREAM VALUE CHAINS
3 keys to winning Operational excellence – Concentrating the portfolio – Selective growth
Refining
Chemicals
Supply & Distribution
Chemicals
Retail
Business-to- Business
Trading
Lubricants
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0%
50%
100%
'09 '10 '11 YTD
'12 '09 '10 '11 YTD
'12 '09 '10 '11 YTD
'12 '09 '10 '11 YTD
'12
0
5
10
15
20
DOWNSTREAM PORTFOLIO + PERFORMANCE
% Global Brand Preference
CHEMICALS EARNINGS
MARKETING REFOCUS
BRAND STRENGTH
Q2 2010 Q2 2011
Aviation Fuels markets
Lubricants markets
Retail sites
Bulk Fuels markets
DIRECT EXITS INDIRECT/PART EXIT
0
1
2
3
4
5
2002 2006 2009 2011 YTD* 2012
Refinery capacity Mln bbl/d (100%)
REFINERY PORTFOLIO REDUCTION
EUROPE & AFRICA ASIA PACIFIC AMERICAS
-30% 4.7
3.3
0
1
2
2005 2006 2007 2008 2009 2010 Q1-Q3 2011
$ Bln
SOURCE: GLOBAL BRAND TRACKER
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GROWTH DELIVERY BIOFUELS GROWTH: BRAZIL GLOBAL BIOFUELS GROWTH POTENTIAL
RAìZEN: LARGEST IOC BIOFUELS PRODUCER
RAìZEN JOINT VENTURE
Kboe/d production
2nd generation technology portfolio
lowest CO2
most sustainable
most cost competitive
of today‟s biofuels
Brazilian sugarcane ethanol
0
1,000
2,000
3,000
2005 2010 2015 2020
SOYBEAN RAPESEED PALM OIL OTHER CORN SUGARCANE
Marketing JV ~4,500 retail sites; ~10% of Shell world-
wide portfolio ~19% market share in Brazil
Rebranding and enhanced customer offering
Synergies + growth potential
Biofuels JV Leading Brazil and Top 5 global ethanol
player • > 30 kbd ethanol production capacity
• > 80 kbd potential ~ 5 years
Shell world-wide trading opportunities
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ROYAL DUTCH SHELL GROWTH DELIVERY
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9 9 10
10 11 11
8 8 10
-5
5
15
25
35
2008 2009 2010
GROWTH DELIVERY CONVERTING RESOURCES TO PRODUCTION Bln Boe resources
Longer-term upside
Gorgon NA tight gas
Sakhalin BC-10
Prelude Pearls (CMOC)
Prelude AOSP debottleneck
Schiehallion Cardamom
NA tight gas Clair Ph2
Pearl GTL QG-4
Schoonebeek Oman EOR
Others
Maintaining Upstream momentum
Mars-B BC-10 Phase2
AOSP-Exp 1 Gjoa
Perdido Gbaran Ubie NA tight gas
NA tight gas Australia
Cardamom Deep Appomattox
Vito
PRODUCTION ON-STREAM STUDY UNDER CONSTRUCTION
2011 PROGRESS
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* PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO
GROWTH DELIVERY 2011 START-UPS
Qatar – Qatargas 4 LNG shipment
Canada - Scotford upgrader
Qatar - Pearl
INNOVATIVE TECHNOLOGY, FULL VALUE CHAIN, LONG-LIFE RETURNS
~ $30 bln capital investment >400,000 boe/d* for Shell
Underpins target for 3.1 - 3.5 mln boe/d 2009-12
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Prelude FLNG – Australia 110 kboe/d; 100% Shell
GROWTH DELIVERY LAUNCHING NEW UPSTREAM PROJECTS
Cardamom – USA 50 kboe/d; 100% Shell
Schiehallion
Sabah Gas KBB
AOSP Debottlenecking 1st FID
BC-10 Phase 2
Mars-B – USA 100 kboe/d; 72% Shell
2010-11 FIDs: >400,000 boe/d* potential
NA tight gas (various)
2010 + 2011 YEAR-TO-DATE INVESTMENT DECISIONS
Sabah Gas Kebabangan (KBB) - Malaysia 130 kboe/d; 30% Shell; PSC
Prelude FLNG
Mars-B Cardamom
* PEAK PRODUCTION; SHELL SHARE ENTITLEMENT AT $80/BBL; 2014 OUTLOOK ASSUMES LICENCE EXTENSIONS + 2010 ANNOUNCED ASSET SALES
Clair Ph2
Wheatstone
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Development concept
MARS-B (GULF OF MEXICO) BC-10 PHASE 2 (CAMPOS, BRAZIL)
GROWTH DELIVERY DEEPWATER UNDER CONSTRUCTION
CARDAMOM (GULF OF MEXICO)
TLP capacity ~100 kboe/d
West Boreas + South Deimos
Water depth 950 meters
Shell 72% (operator)
Peak production ~30 kboe/d
Argonauta O-North field
Water depth 1,600 meters
Shell 50% (operator)
Peak production ~50 kboe/d
Tie back to Auger platform
Water depth 830 meters
Shell 100% (operator)
Phase 1 FPSO
Part of >250 kboe/d deepwater production under construction
Surface System and Subsea View
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GROWTH DELIVERY AUSTRALIA LNG UNDER CONSTRUCTION
First FID ever on Floating LNG
110 kboe/d peak production
3.6 mtpa LNG capacity + condensate/LPG
2007 discovery; 2011 FID
Shell 100% (operator)
PRELUDE FLOATING LNG GORGON LNG
Greenfield LNG on Barrow Island
3 x 5 MTPA LNG trains and domestic gas plant
Carbon capture and storage 4 mtpa
Shell 25%
Part of 9 mtpa under construction
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ROYAL DUTCH SHELL MATURING NEXT GENERATION PROJECT OPTIONS
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DISCOVERY
MATURING NEXT GENERATION OF PROJECT OPTIONS ADDING NEW RESOURCES EXPLORATION & BUSINESS DEVELOPMENT ADDING NEW RESOURCES AT LOW COST
Bln boe
-2
0
2
4
6
'08 '09 '10
EXPLORATION
DISPOSALS
ACQUISITION/NEGOTIATED ENTRY
PRODUCTION
2008
2009
2010 2011/12
GoM – Cardamom
GoM - Vito
Norway – Fram
Canada – Groundbirch
GoM – South Deimos
GoM – Appomattox
Brazil – Gato do Matto
Brazil – Massa
Brunei - Geronggong
Australia - Concerto
Alaska
China – Tight gas
USA - GoM
F. Guyana - Zaedyus
Brazil - DW
Canada - Duvernay
US - East Resources
US - Eagle Ford
Australia - Arrow
ACQUISITION
EXPLORATION PROSPECT
Kazahkstan - Auezov
Nigeria - Offshore
Brunei – ML-J206T1
Australia – Iago 2
Australia – Libra 1
Brunei
US - Haynesville
GoM – West Boreas
Australia - NWS
<$2/boe entry cost
21 Copyright of Royal Dutch Shell plc 30 November 2011
ACREAGE
DRILLING TECHNOLOGY UNLOCKS NEW GROWTH
Haynesville JV
Pinedale
Groundbirch
Eagle Ford
Marcellus
Deep Basin Foothills
TIGHT GAS
CHINA + AUSTRALIA JVs WITH PETROCHINA
Arrow Energy LNG
COAL BED METHANE
NORTH AMERICA
China: Changbei drilling rig
Changbei tight gas
Daning CBM
North Shilou CBM
Jinqiu tight gas
Fushun tight gas
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MATURING NEXT GENERATION OF PROJECT OPTIONS MATURING NEW PROJECTS INVESTMENT OPTIONS
Portfolio can support profitable growth to ~2020
Long-term growth and investment
Options to flex annual spending with macro
Capex and growth outcomes
Investment decisions driven by
Portfolio fit
Affordability
Profitability
Tight Gas – N. America
Arrow - Australia Appomattox - USA
Qatar Chemicals
Vito - USA Gbaran Ubie Ph2 - Nigeria
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FINANCIAL FRAMEWORK
ROYAL DUTCH SHELL PLC
24 Copyright of Royal Dutch Shell plc 30 November 2011
0%
25%
50%
75%
100%
2007-10 2011-14
Sustained growth investment Capital discipline
0%
25%
50%
75%
100%
2007-10 2011-14 0%
20%
40%
60%
80%
100%
2007-10 2011-14
EXPLORATION
INVESTMENT PROGRAMME
UPSTREAM
% Capital investment
HEAVY OIL & EOR
TIGHT GAS
INTEGRATED GAS
DEEPWATER
TRADITIONAL
SOUR
ASIA PACIFIC EUROPE
AMERICAS OTHERS
DOWNSTREAM
2012-14 CAPITAL INVESTMENT EXCLUDES IRAQ FULL FIELD DEVELOPMENTS
% Capital investment
REFINING CHEMICALS MARKETING
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0
10
20
30
40
50
CONVERTING INVESTMENT TO CASHFLOW
$ Bln
INVESTING FOR NEW GROWTH
DELIVERING CASHFLOW GROWTH
CASH FLOW FROM OPERATIONS EXCL. NET MOVEMENTS IN WORKING CAPITAL
NET CAPITAL INVESTMENT
(2009-12 average)
$/bbl BRENT
$80/bbl
$62/bbl
$105/bbl
$60/bbl
0
10
20
30
40
50
60
2007 2008 2009 2010 2011E 2012E
CAPITAL UNDER CONSTRUCTION EXPLORATION & EVALUATION
2009 2012 target
Q1-Q3 2011 (12 months rolling)
Rebalancing financial framework into surplus cashflow Maintaining growth investment and competitive payout
CASH FLOW TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009-2012
25
26 Copyright of Royal Dutch Shell plc 30 November 2011
2011-12 OUTLOOK
PERFORMANCE FOCUS
NEW WAVE OF PRODUCTION GROWTH
MATURING NEXT GENERATION OF PROJECT OPTIONS
PRIORITIES
>400kboe/d* new projects launched 2010-11
Upstream growth potential to ~2020
2011 start-ups: >400kboe/d*; $30bn investment
Selective Downstream growth
Cashflow and production targets
Continuous improvement embedded in Shell
Asset sales; capital efficiency
OUTLOOK
Competitive performance – Profitable growth – Sharper delivery * PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO
27 Copyright of Royal Dutch Shell plc 30 November 2011
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