balancing growth & returns · includes lng + gtl; earnings excluding identified items...

1 Copyright of Royal Dutch Shell plc 13 March, 2014

BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014

13 MARCH 2014 ROYAL DUTCH SHELL PLC


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 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, 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, 13 March, 2014. 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.


BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER

ROYAL DUTCH SHELL PLC


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

Shearwater platform North Sea, UK


FOCUS ON SAFETY 2013 UPDATE

Goal Zero on safety Injuries – TRCF/million working hours

Spills - operational Volume in thousand tonnes

Energy intensity - refineries Energy Intensity Index (EEITM)

million working hours

Working hours (RHS) TRCF

HSSE priority

Performance + transparency

Process safety trend Number of incidents

Tier 1 incidents Tier 2 incidents


Balancing risk and reward

Strict investment hurdles and price screens drive returns

ASPIRED PORTFOLIO

ATTRACTIVENESS

Growth & returns

Opportunity scale

RESILIENCE

Risk, performance &

uncertainty

PORTFOLIO MANAGEMENT

STRATEGIC INTENT

RESULTS & PAY-OUT


FUTURE OPPORTUNITIES

RESOURCES PLAYS

DEEP-WATER INTEGRATED GAS

UPSTREAM DOWNSTREAM

INVESTMENT PRIORITIES + STRATEGIC INTENT

1 Iraq, Nigeria onshore (SPDC), Kazakhstan, heavy oil, Arctic

Engines

Free cash flow businesses

Maintain competitiveness

Asset integrity + selective growth

Growth Priority

Global leadership established

High-grading our rich opportunity set

Longer Term

Major potential; managing non-technical risks

Slower pace + capital allocation

Credible, competitive, affordable Investment choices driven on a global thematic basis

1


FINANCIAL PERFORMANCE TRACK RECORD

Earnings $ billion CCS

Cash flow from operations $ billion

Total capital investment $ billion

Payout $ billion

Dividend declared Buyback Organic capital investment

Upstream Downstream Corporate Identified items

Acquisitions


FINANCIAL PERFORMANCE COMPETITIVE POSITION

EPS on reported CCS basis

Earnings per share growth – 3 years % growth 2010-2013

Cash flow per share growth – 3 years

Total shareholder return – 3 years 2013 ROACE

ROACE: earnings on reported local GAAP basis

Shell Competitors

% growth 2010-2013

% growth 2010-2013


Changing emphasis in 2014

2014 PRIORITIES

Returns and cash flow

Competitive returns for shareholders

Take hard choices on new options

Increase asset sales

Reduce pace of growth investment

Major deep-water start-ups in 2014

Integrate 2013 acquisitions

Deliver new projects

Enhance our capital efficiency

Improve our financial performance


IMPROVE FINANCIAL PERFORMANCE: RESPONDING TO NEW MARKET DYNAMICS

North America resources plays Oil Products

Geelong refinery, Australia Groundbirch, Canada

~$80 billion capital employed

Financial performance not acceptable

Multi-year turn-around Priorities: Portfolio restructuring + potential write-downs Cost reduction + margin improvement Invest for financial resilience + selective growth


IMPROVE FINANCIAL PERFORMANCE IN UPSTREAM ENGINE

Production decline halted

focus on up-time

reservoir development

sub-surface dynamics

Innovative EOR schemes

2012-13 impacted by high levels of maintenance

2013 maintenance downtime 50 kboe per day (vs. 35 kboe per day downtime in 2012)

Address late life assets: fix or divest

PDO Oman

UK North Sea kboe per day, Shell share kboe/day, Shell share

2012:117kboe/d

2013: 91kboe/d

Actual production assumed production with continued decline


IMPROVE FINANCIAL PERFORMANCE DRIVE TO FURTHER ENHANCE INTEGRATED GAS PROFITABILITY

Includes LNG + GTL; earnings excluding identified items

Increasing Shell’s managed sales Total LNG volumes in mtpa

Shell’s LNG portfolio

LNG Peru

Altamira

Baja

Nigeria

Hazira

NWS Pluto

QG-4

Elba

Spain

Prelude Gorgon

Atlantic LNG

Oman

Sakhalin

Malaysia

Brunei

Cove Point

LNG supply

Under construction

Regasification

Trading flows

2014

2013 >25 mtpa

>30 mtpa

2017 ~40 mtpa

$ billion

Integrated Gas financial performance

Earnings ~400%

Earnings CFFO ROACE (RHS) JV marketed Shell directly managed

QG4 Pearl GTL

Pluto LNG North Rankin

Repsol LNG Elba Gorgon T1-3 Prelude FLNG

North West Shelf Sakhalin


2014 PRIORITIES












DECONSTRUCTING OUR PORTFOLIO

2013 $ billion CCS earnings CFFO

Organic capital

investment

Capital employed ROACE

Engi

nes

5 8 5 64 7%

6 10 7 17 36%

Gro

wth

Prio

ritie

s 9 12 6 57 17%

3 5 9 23 15%

Long

er T

erm

(4) 0 6 25 (12)%

1 3 5 32 3% FUTURE

OPPORTUNITIES1

RESOURCES PLAYS

DEEP-WATER

INTEGRATED GAS

UPSTREAM ENGINE

DOWNSTREAM ENGINE 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


ENHANCE CAPITAL EFFICIENCY TAKE HARD CHOICES

FEED FID On stream

Explore

Feasibility study

Identify & Assess Select Define Execute On stream

12 billion boe 7 billion boe 11 billion boe

Hard choices on growth projects: US GTL Alaska LNG FID pause in Asia Pacific

AOSP debottlenecking Wheatstone Cove others

~$8 billion capital investment ~$27 billion capital investment

Low cost options + Early high-grading Increase predictability Flawless execution of major spend

2014


ENHANCE CAPITAL EFFICIENCY MAKING OUR PLANS CREDIBLE, COMPETITIVE, AFFORDABLE

~150 performance units implemented

Targeted growth spend

Address underperforming assets

Increase divestment of non-core positions

Sharpen our focus:

Asset sales

Wheatstone LNG

BC-10 dilution

UA resources plays

Nigeria onshore

Norway DS

Italy DS

Australia DS

Others

Resilience

Attr

activ

enes

s

Keep and grow

Fix or divest

Exit

$15 billion divestments 2014-15


IDENTIFY/ASSESS

US GTL - CANCELLED Gorgon LNG T4 - PAUSE Sunrise LNG - PAUSE

ENHANCE CAPITAL EFFICIENCY CAPITAL CEILINGS + OPTION SET DRIVE HARD CHOICES

Integrated Gas

EXECUTE

Gorgon LNG T1-3 Prelude FLNG Wheatstone - SOLD MMLS LNG (Elba)

SELECT

Arrow LNG - REDESIGN Browse LNG - REDESIGN Abadi LNG ph2 LNG Canada Sakhalin T3

DEFINE

Abadi LNG ph1

ON STREAM

Atlantic LNG Brunei LNG Malaysia LNG Nigeria LNG Northwest Shelf Oman LNG Peru LNG Pluto Qatargas 4 Sakhalin LNG

MTPA: 17.6 MTPA: 0.9 MTPA: 7.5 MTPA: 26.1 START

UP FID

Shell share equity liquefaction capacity in mtpa


Resilience

Attr

activ

enes

s

0%

20%

40%

60%

80%

100%

0 20 40 60 80 100

RESOURCES PLAYS MAJOR REVIEW OF PORTFOLIO UNDERWAY

Staff reduction

Drilling cost learning curve Drilling costs

-30%

2013 2014E

Shell employees

Contractor

Reduction in Shell + contractor staff

Field office closures

Supply chain + drilling performance

Portfolio

Exit: Eagle Ford Mississippi Lime Rockies LRS

Fix or Divest: Appalachia Deep Basin Pinedale Haynesville Foothills

Grow: Permian Kaybob Pembina Argentina – Vaca Muerta Groundbirch

LRS Plays Groundbirch Eagle Ford Duvernay (Kaybob) Haynesville

Number of wells drilled


ENHANCE CAPITAL EFFICIENCY 2013-14 CAPITAL SPENDING

Total capital investment $ billion

Future opportunities Resources plays

Downstream (incl. Corporate)

Europe Deep-water Africa/Middle East/CIS

Asia Pacific Americas

Upstream Integrated gas Upstream engine Downstream (incl. Corporate)

Strict capital ceilings

More competitive returns


2014 PRIORITIES












PROJECT MANAGEMENT + BENCHMARKING

IPA – Independent Project Analysis by Industry Benchmarking Consortium

IPA project benchmark Upstream project status Construction time elapsed %

1Q 2Q 3Q 4th Quartile

Upstream cost Downstream cost

Oversight and accountability

Track record

Construction time elapsed %


CONVENTIONAL EXPLORATION PORTFOLIO + THEMES

Increased focus in our exploration spending

Spend including deals

($ billion)

Resources/potential added1

(billion boe) Oil & gas split (%)

2011-2013 2011-2013 2013 performance

ARCTIC ~2 0 Alaska drilling pause

FRONTIER Under explored basins

~4 0.9

(95% oil, 5% gas) Albania: Shpirag-2 Brazil: Libra access

HEARTLANDS New plays in Shell producing basins

~8 2.6

(25% oil, 75% gas)

GOM: Vicksburg Australia: Kentish Knock Nigeria: Zabazaba appraisal

NEAR FIELD High value

~1 0.4

(35% oil, 65% gas)

19 near field discoveries Nigeria (SPDC), Oman, Egypt,

Netherlands, Brunei, Australia

Prospect size

(million boe)

Time to development

(years)

15+

10+

3+

<3 5-50

50-250

>250

>500

1 includes acquisitions


GLOBAL RESOURCES PLAYS BUILDING CAPABILITIES IN LONG TERM OPPORTUNITY

Total resources plays capital investment

E&A On stream

Gas Liquids Rich

2013 production 0.3 mboe/d

2014 exploration spend $3 billion

2013 exploration and appraisal success

$ billion

Resources + potential

Future potential

On stream

Execute (under construction)

Select/Define

14.4 billion boe

Americas International

Liquids rich shales (underlined)

ACCESS Tunisia

EXPLORATION Pembina Turkey Colombia Russia Sichuan Germany Ukraine

APPRAISAL/PILOT Argentina Kaybob Permian Appalachia Changbei 2 Oman

DEVELOPMENT Early Groundbirch

Mature Pinedale Haynesville Foothills Deep Basin Changbei

Western Canada

Colombia

Argentina Neuquen

Lower 48 USA

Germany Ukraine

Turkey

Oman Sichuan

Changbei

Arrow

Changbei 2

Russia

Future potential = discovered + prospective resources

Tunisia


SIMON HENRY CHIEF FINANCIAL OFFICER



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: buy-backs

CASH PERFORMANCE

CFFO drives investment + payout

INVESTMENT

Affordability, profitability, portfolio

PAY-OUT

Dividend linked to business results

BALANCE SHEET

0 – 30% gearing through cycle

Conservative balance sheet underpins financial framework


UP STREAM

DOWN STREAM

CASH FLOW AND PAY-OUT

Cash generation $ billion

Dividend track record $ billion

Strong balance sheet $ billion

Cash flow from operations Asset sales

Capex + equity acc. investments

$ billion 2011-13 2013

UP STREAM

DOWN STREAM

Acquisitions

Dividend and buy back

Gearing range

Net debt

Dividends declared

Gearing (RHS)

12 months rolling

Strong balance sheet

Generating surplus cash

Dividend track record


CASH FLOW + RETURNS

ROACE %, 4Q rolling

Cash flow from operations $ billion, 4Q rolling

Shell

peer group peer group Shell

ROACE: earnings on reported local GAAP basis


SEC PROVED RESERVES POSITION

1 Excludes acquisitions, divestments and price impacts 2 Reserves attributable to Royal Dutch Shell shareholders

2013 Reserves performance

2013 RRR 131%

2011-13 RRR 91%

Reserves life at end 2013 ~11.5 years

2011-13 Reserves average performance

Organic1 additions ~1.4 billion boe

Production ~1.2 billion boe

Organic reserves replacement 112%

Reserves Replacement

SEC proved reserves

Major reserves additions

2011-13 Reserves additions

2011-13 2013

Organic 112% 123%

Organic incl. price effects 95% 127%

Net Reserves2 91% 131%

(billion boe) 2011 2012 2013

Organic reserves additions 1.5 1.0 1.5

Production 1.2 1.2 1.2

Net Reserves2 14.2 13.6 13.9


Start-up 2013 start-up 2014-2015 2016-2018

Bukom ECC debottleneck Bukom cogeneration Jack St.Malo pipeline Singapore LOBP

Westward-Ho pipeline

Amal Steam Corrib

Clair ph2 Schiehallion Redevelopment Tempa Rossa Rabab Harweel integrated

project

North Rankin 2 Gorgon LNG T1-3 Prelude FLNG MMLS LNG (Elba)

BC-10 ph2 Mars-B Cardamom Gumusut Kakap Sabah Gas KBB Bonga North West Petai

BC-10 ph3 Malikai Stones Erha North ph2

North America tight gas + liquids rich shales

AOSP debottlenecking Kashagan ph1 Majnoon FCP Basrah Gas Company

Southern Swamp AG Gbaran-Ubie ph2 Trans Niger loopline Carmon Creek ph1+2 Forcados Yokri

Peak production (kboe/d)

200 335 560

NEW START-UPS 2013-2018

29 major projects

Strong project flow

Production @ $80 Brent scenario; Shell share at peak

Bonga North West

Gumusut-Kakap

Shell operated FUTURE

OPPORTUNITIES

RESOURCES PLAYS

DEEP-WATER

INTEGRATED GAS

UPSTREAM ENGINE

DOWNSTREAM ENGINE


Carmon Creek ph1&2 Rabab Harweel Erha North ph2 BC-10 ph3 Stones Groundbirch

billion boe

RESOURCES UPDATE

Longer-term upside

2009 2010 2011 2012 2013

On stream Execute (under construction)

Select/Define Production

NWS Gas NR2 BC-10 ph2 Amal Steam Majnoon FCP

Vito BMS-54 Zabazaba Appomattox Permian

Converting resources to production… 2013 resources by theme

Deep-water Integrated gas Upstream engine

Resources plays Future opportunities

Rebuilding on stream resources 2009-13


2014 PRIORITIES












BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER



QUESTIONS & ANSWERS MANAGEMENT DAY


BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014

13 MARCH 2014 ROYAL DUTCH SHELL PLC

balancing growth & returns · includes lng + gtl; earnings excluding identified items...

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