ben van beurden - barclays ceo energy-power conference 2016

Barclays CEO Energy-Power conference Royal Dutch Shell plc

Ben van Beurden Chief Executive Officer September 7, 2016

Ben van Beurden Chief Executive Officer Royal Dutch Shell plc

Royal Dutch Shell September 7, 2016

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 (SPE) 2P + 2C definitions. Resources and potential: Our use of the term “resources and potential” are consistent with SPE 2P + 2C + 2U 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. Shales: Our use of the term ‘shales’ 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 legal entities. In this release “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 release refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations” respectively. Entities 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 release 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’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘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 release, 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. There can be no assurance that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this release 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 risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2015 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expressly qualify all forward looking statements contained in this release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, September 7, 2016. Neither Royal Dutch Shell plc 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 release. With respect to operating costs synergies indicated, such savings and efficiencies in procurement spend include economies of scale, specification standardisation and operating efficiencies across operating, capital and raw material cost areas.

We may have used certain terms, such as resources, in this release 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.

Royal Dutch Shell September 7, 2016 4

Strategy “Let’s make the future”

Leader: value + influence

Reducing our carbon intensity

Shared value with society

World-class investment case

STRATEGIC

Focus portfolio on resilient positions

Invest in advantaged projects

Value chain integration

FCF/share + ROCE growth

Conservative financial

management

OPERATIONAL

Reset cost and capital spending

First class execution projects +

operations

Unrelenting focus on HSSE and

licence to operate


Industry context Substantial + long lasting shifts in energy landscape

2005 2010 Q1 2016

2000 2050

$

From 7 to 9 billion by 2050 75% will live in cities

Global energy demand to double between 2000 & 2050

World needs more energy; less CO2

New sources New energy carriers New business models

OPEC, shales, shorter price cycles Requires new value creation models

Global population Growth in oil & gas demand Energy system in transition

Customer choice Continued oil price volatility Changing resources access

5


Re-shape Shell Driving strategy in multiple time horizons

Relentless portfolio high-grading

Strong free cash flow and returns

Cash engines: today Growth priorities: 2016+ Future opportunities: 2020+

Competitive + resilient

Funds dividends + balance sheet

FCF + ROACE pathway

Affordable growth in advantaged positions

Material value + upside

Managed exposure

Path to profitability

Cash engines 2020+

CONVENTIONAL OIL + GAS

CHEMICALS

OIL PRODUCTS

DEEP WATER INTEGRATED GAS

OIL SANDS MINING

SHALES NEW ENERGIES

6


Stronger results from smaller portfolio

Earnings on CCS basis, excluding identified items

Cash engines Example: Oil Products

Advantaged feedstock + supply

Asset sales

Products + brand

2007 2015

Global weighted average refining margin (RHS)

Oil products earnings

Million barrels/day $ billion $ per barrel

-20% -30% +25%


0

25

50

2011 2013 2015

8

Cash engines Example: Integrated Gas

IOC leadership position

Global footprint

Value from optionality

Million tonnes per annum

LNG volumes

Capacity at year-end in million tonnes per annum

Liquefaction capacity

2015 Shell LNG liquefaction volumes Shell LNG sales volumes

LNG Peru

QG-4

Atlantic LNG

Oman

Sakhalin

Malaysia

Sabine Pass

Equatorial Guinea

Pluto NWS

Brunei

QCLNG Gorgon

Nigeria

Shell + BG

16H1 extrapolated

Equity capacity Long-term offtake agreement Spot offtake in 2015 Deliveries in 2015


Growth priorities Example: deep water Shell + BG deep water growth

Brazil Gulf of Mexico Other

Lowering capital intensity

$ per boe break-even cost (examples)

Reducing drilling costs

# drilling days

2014 baseline Current

-30%

-40%

Current 2013/14 baseline

Variable spread rate + drilling materials cost

$ thousand

Delivering world class development funnel

Reducing break-even: new projects ~$45/bbl

2009 BC-10

2014 Mars B

Gumusut-Kakap

2010 Perdido

2005 Bonga

2001 Brutus

1999 Ursa

1997 Ram Powell

1996 Mars

1994 Auger

Brazil Pre-salt Coulomb Appo Vito Kaikias

Current estimate - under construction Previous estimate Current estimate - pre-FID

Example Gulf of Mexico

Under construction Malikai

Coulomb Appomattox

Brazil pre-salt

Thousand boe per day

2016 Stones


Production excludes divested assets (2013-14) and BG Haynesville addition (2016H1)

Future opportunities Example: shales

$ million per well

0

4

8

12

2013 2014 2015 2016H1

Average drill and complete costs – LRS wells

$ billion

0

2

4

2013 2014 2015 2016E

Capital investment

~12 billion boe

Resources

Thousand boe per day

0

125

250

2013 2014 2015 2016H1

Production

Material resource + potential ~12 billion boe 25% liquids, 75% gas Reducing costs + improving capital efficiency

Western Canada Gas

Western Canada LRS

Appalachia

Permian Argentina Haynesville

-60% +35%

Liquids Gas

Reserves

Contingent resources - other

Contingent resources - development pending

Prospective resources

-50%


Manage down-cycle Financial performance

$ billion

Earnings + ROACE

$ billion

Dividend, buyback + gearing

$ billion

Cash flow

Priorities for cash: Debt reduction Dividends Buybacks + capital investment

%

-5

0

5

10

15

-10

0

10

20

30

2012 2013 2014 2015 16Q24Q rolling -15

0

15

30

45

-15

0

15

30

45

2012 2013 2014 2015 16Q24Q rolling

0

10

20

30

0

10

20

2012 2013 2014 2015 16Q24Q rolling

CFFO Cash investment Free cash flow (RHS)

Dividend declared Buyback

End period gearing (RHS)

Upstream Integrated gas

Downstream ROACE (RHS) Corporate/Other

% %


* $60 oil price scenario 2018 (2016 RT Brent)

Manage down-cycle Pulling levers to manage financial framework

2016-18 levers

Divestments Reduce capital

investment

Reduce operating

costs

Deliver new projects

Reducing our cash break-even

Further options available

+/- $10 Brent = ~5 billion CFFO

$ billion 2015 baseline:

Shell + BG 2016 2017-2018 potential

Operating costs 46 Trend to 40 (underlying) Multi-billion p.a.

Capital investment 36 ~29 25-30

Divestments 6 + 5 6-8 in progress

30 over 2016-18

Projects start-up post-2014 (CFFO) n/a ~$2 billion ~10 billion

by 2018*


Manage down-cycle Divestments

Integrated gas split out from Upstream from 2011 onwards

$ billion

Divestment program

$30 billion 2016-18 Progressing $6-8 billion 2016 5-10 countries; ~10% of production

0

10

20

30

2007-09 2010-12 2013-15 2016-18

Downstream/Corporate High grading ‘tail’ Infrastructure + mature positions Refocus portfolio

Upstream Integrated Gas

2016-2018 completed + announced $ billion

Completed – MLP 0.8

– Denmark marketing 0.3

– N.Z.: Maui pipeline 0.2

– MGL IPO 0.1

– Others 0.1

Total completed 1.5

Announced – Showa Shell ~1.4

– Brutus/Glider 0.4

– Malaysia refining

~0.2 – Anasuria cluster

– Maclure

Total announced ~2.0

TOTAL ~3.5

In progress – Motiva JV end

– N.Z.: upstream strategic review

– Thailand strategic review

– Selective North Sea strategic review

– Argentina Downstream strategic review

Divestments Reduce capital investment

Reduce operating costs



0

20

40

60

2013 2014 15Q24Q rolling

2015 16Q24Q rolling

2016E 2017 - 20 avg0

20

40

60

2013 2014 15Q24Q rolling

2015 16Q24Q rollingShell + BG

2016E 2017 - 20 avg

$25-30 billion

14

2016 excludes BG purchase price

$ billion

Capital investment

Manage down-cycle Lower & more predictable capital investment

Planning for $25-$30 billion range

$30 billion/year ceiling

Trending low in range today

Options to further reduce below $25 billion if warranted

Shell BG

-25%




Shell + BG C.I. on a cash basis

58

47 41

36

53

43 37

33 31 ~29 29 ~26


Manage down-cycle Reduce operating cost

Excluding identified items

$ billion

Operating cost

0

10

20

30

40

50

2014 15Q24Q rolling

2015 16Q24Q rollingShell + BG

end-2016run-rate

Shell BG




Substantial reductions delivered

“Lower for ever” mindset + BG synergies

Staff, supply chain + contractors

Divestments, growth, FX impacts

-$4 billion

~40

49 46

44 42


* BG organic growth from 1.1.2016 | LNG volume includes offtake

Significant oil & gas +

Downstream production under

construction

Capex to free cash flow

High margin / price upside

barrels

Manage down-cycle Deliver new projects

Cash operating cost <$15/boe Tax rate ~35%

16

Thousand boe per day*

2016-17 start-ups

2014-15 start-ups

LNG volume (RHS) 2018+ start-ups

Million tonnes per annum

Divestments Reduce capital

investment Reduce operating costs



Competitive financial data as published. Free cash flow: cash flow from operations less cash used in investing activities. $/ADR for European companies. ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items. Capital employed on gross debt basis.

Financial dashboard

%

Gearing

%

ROACE

$/share

Free cash flow per share

%

Total shareholder return

0

10

20

30

Q211 Q212 Q213 Q214 Q215 Q216-30

-15

0

-10

0

10

20

30

Q211 Q212 Q213 Q214 Q215 Q216 -10

-5

0

5

10

Q211 Q212 Q213 Q214 Q215 Q216

0

10

203 years to Q2 2016 12 months to Q2 2016

Shell Peer group


Transformation

CREATE A WORLD CLASS INVESTMENT CASE

Improved capital efficiency: reduced investment/FCF ratio

Energy transition: CO2 footprint & new energies strategy

Simpler company: Exit ~10% production; 5-10 countries

Less cost + fewer people with BG than Shell stand-alone: 12,500 fewer staff

Capital efficiency: 2013 spending halved & $45 billion mitigated

Improving our metrics: FCF/share; ROCE; net debt

$30bn divestments: Innovative deals like Motiva, Showa and MLP

Portfolio growth: 1 mboe/d adds $10 bln cash flow

2019-2021 average

2013-2015 average

Brent

ROACE

~$60

~10%

~$90

8%

Organic free cash flow $20-25 billion p.a. $5 billion p.a.

$60 oil price scenario (2016 RT Brent

Questions & Answers

Barclays CEO Energy-Power conference Royal Dutch Shell plc

Ben van Beurden Chief Executive Officer September 7, 2016

ben van beurden - barclays ceo energy-power conference 2016

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