paul goodfellow– haynesville operations and operating principles

ROYAL DUTCH SHELL PLCINVESTING FOR SUSTAINABLE GROWTH

1 Copyright of Royal Dutch Shell plc 29 November 2011

HOUSTON/SHREVEPORT

November 2011

PAUL GOODFELLOWVICE PRESIDENT DEVELOPMENTONSHORE GAS

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. 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


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, 29 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, such as resources and oil in place. 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.

HAYNESVILLE – SHELL ACREAGE

Tour

DeSotoRed River

Sabine

Bienville

AREA OF MUTUAL INTEREST (AMI) IN LOUISIANA

� AMI 50/50 with Encana

� Formed 2008


AMI ACREAGE POSITION >350,000 AC (~1300 SQ KM )

>350 WELLS DRILLED TO DATE

New Orleans

HAYNESVILLE DEVELOPMENT

Define

Select

Execute/Operate

PHASED DEVELOPMENT

� Shell development began in the north of the AMI

� Shell and industry development has migrated south over time

� Reservoir depth, temperature, and pressure increase from north to south,


MULTIPLE WELLS FROM SINGLE PAD

Select

Assess

Identify

pressure increase from north to south, increasing development difficulty

� Mitigation: improvements in technology and drill/completion techniques

� Majority of play is yet to be developed

HAYNESVILLE – TYPICAL WELL

WELL TRAJECTORY – LEASE DRIVEN WELL PERFORMANCE

4,600 ft

Lease Line

5,280 ft330 ft

Decline Curve

1

10

20

Mmscf/d

� Initial Rate: 15 mmcf/d

� Rate at 90 days: 9 mmcf/d

� Rate at 1 yr: 3 mmcf/dApprox 12,000 ft

TVD

30


� 4600+ ft. lateral length

� 17 stages per well, Slickwater frac system

� Typical job: 7 mln lbs sand proppant, 200k bblsfluid

� Applied technology

� Hydraulic fracture simulation, microseismic

� Proppant distribution modeling

5,280 ft

1 2 3YearsTYPICAL COMPLETIONS SETUP

Haynesville fraccing spread

4 5

HAYNESVILLE -PERFORMANCE

PRODUCTION

0

200

400

600

800

1000

1200

1400

Jan Jul Jan Jul Jan Jul Jan Jul

2008 2009 2010 2011

Mmscf/d

TOTAL GROSS

SHELL NET


MULTIPLE WELLS FROM SINGLE PAD

DRILLING COST REDUCTIONS

� Drilling costs lowered by ~50%

� Underbalanced and Hard Rock Drilling

� Pad drilling in 2011 + 20% longer laterals

� Drill days reduced from 98 days to 40 days

� Completion costs lowered by ~45%:

� Improved EURs; larger fracs, optimization

� Improved efficiency

� Cycle time reduced ~60%

Haynesville Drilling Rig

2008 2009 2010 2011

Well Drilling Cost ($millions)

0

6

12

2008 2009 2010 YTD 2011

HAYNESVILLE - SAFETY

SAFETY PERFORMANCE

0

2

4

6

8

10

12

0

2

4

6

8

10

12Rigs TRCF

Total recordable case frequency # Drilling Rigs operated

Group Days Since Last Recordable

Producing Operations 1488*

Drilling Rig 1 703*

Drilling Rig 2 669

Drilling Rig 3 587


00Jan May Sep Jan May Sep Jan May Sep2009 2010 2011

Drilling Rig 4 532

Drilling Rig 5 360

Drilling Rig 6 233

Drilling Rig 7 209

Drilling Rig 8 130

Drilling Rig 9 111

Completions 94

*No recordables since startupData as of 11/18/11

� Producing Operations: no recordablessince field startup, October 2007

HAYNESVILLE – STAKEHOLDER MANAGEMENT

NON TECHNICAL RISKS COMMUNITY INVOLVEMENT


� Road Transport

� Noise abatement

� Water

� Severance/Property taxes

� In the background

� C02

� Fraccing

� Highly engaged in local community

� Energy Camp Louisiana – Co-founding Sponsor

� Haynesville Expo

� Local Chambers of Commerce

� Louisiana Oil and Gas Association (LOGA)

� Active, regular involvement with state and local legislators and regulators

Haynesville operating environment Community initiatives

SHELL & TIGHT GAS: 5 CORE PRINCIPLES

Safety & Well IntegrityShell designs, constructs and operates wells and facilities in a safe and responsible way.

WaterShell conducts its operations to

FootprintShell works to reduce its operational footprint.

Community


Shell conducts its operations to protect groundwater and reduce water use as reasonably practicable.

AirShell conducts its operations in order to protect air quality and control its fugitive emissions.

Shell engages with local communities regarding socio-economic impacts that may arise from our operations.

WATER AND FLUIDS MANAGEMENT

PINEDALE: LIQUIDS GATHERING SYSTEM (LGS)TYPICAL OPERATION: SIGNIFICANT TRUCKING USE

Prod. Water Disp.Condensate Sales

Frac. Water Supply

HAYNESVILLE AREA: REDUCED TRUCKING USE


Rollover, 2007

� 90-miles of LGS for condensate and water.

� Condensate exported via pipeline. Increased yield & price.

� Excess water injected in disposal wells via pipeline.

� LGS provides water re-use distribution piping for fracjobs.

� LGS recovers flared tank gas for increased gas sales.

HAYNESVILLE AREA: REDUCED TRUCKING USE

Prod. Water Disp.Condensate Sales

Frac. Water Supply

No condensate production

Temporary surface piping for frac water supply

• Truck produced water only

• Maintain program near-term per ALARP study outcome

PINEDALE: SHELL OPERATED

PAD DRILLING: REDUCING SURFACE FOOTPRINT

JONAH: COMPETITOR


Adjacent gas fields, different development impactsShell setting new standards for surface footprint reduction

SQUARE MILE OVERVIEW SQUARE MILE OVERVIEW

Up to 4 pads each pad having up to 32 wells Up to 64 pads with each pad having a single well

FRAC FOCUS (www.fracfocus.org)

FRACCING CHEMICAL DISCLOSURE


� All Shell wells in the US report chemical use during Fraccing on the Fracfocus website

� 2 month lag time

� Shell discloses all chemicals used in fraccing to the extent allowed by our suppliers.

� Shell supports legislation requiring suppliers of chemicals to disclose this information

ROYAL DUTCH SHELL PLC

Q&A


HOUSTON/SHREVEPORT

NOVEMBER 2011

paul goodfellow– haynesville operations and operating principles

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