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Ben van Beurden, CEO of Royal Dutch Shell plc, presented the Royal Dutch Shell plc fourth quarter and full year 2013 results on January 30, 2014.
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FOURTH QUARTER 2013 RESULTS
30 JANUARY 2014 ROYAL DUTCH SHELL PLC
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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, 2012 (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 January, 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.
DEFINITIONS AND CAUTIONARY NOTE
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BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
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500
600
700
800
900
0
1
2
3
4
5
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
‘GOAL ZERO’ ON SAFETY
injuries – TRCF/million working hours million working hours
TRCF Working hours
UNRELENTING FOCUS ON HSSE
PERFORMANCE + TRANSPARENCY
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SHELL STRATEGY
Prelude, November 2013
Unrelenting focus on HSE
Technology, integration and scale
Disciplined capital investment by strategic theme
Growth in cash flow through-cycle
Executing a consistent, long term strategy
Competitive shareholder returns
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EARNINGS $ billion
-10
0
10
20
30
2011 2012 2013
CASH FLOW $ billion
0
20
40
60
Cash flow from operations Asset sales
Capex Acquisitions
2011-2013 DELIVERY
Upstream Downstream
Corporate Identified items
Dividend Buy-backs
PRIORITY TO IMPROVE FINANCIAL PERFORMANCE
2012 2013 2011
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0%
10%
20%
30%
-
10
20
30
40
50
60
2010 2011 2012 2013
Shell full year 2013, peer group 2013 12-month rolling to 2013Q3 ROACE: reported earnings local GAAP, 3 year rolling average. Shell 2011-2013, peer group as 2011-2013Q3 12 months rolling basis
CASH FLOW FROM OPERATIONS $ billion
Shell
peer group
ROACE %
COMPETITIVE CASH FLOW + RETURNS
peer group Shell
DISCIPLINED THROUGH CYCLE INVESTMENT DRIVES FINANCIAL GROWTH COMPETITIVE CFFO BUILDUP + FURTHER POTENTIAL
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Deliver new projects
Returns and cash flow
Competitive returns for shareholders
Hard choices on new projects
Increase divestment of non-core assets
Reduce pace of growth investment
Major deep water start-ups in 2014
Integrate 2013 acquisitions
Operational performance and project delivery
Improve our financial performance
Enhance our capital efficiency
2014 PRIORITIES
CHANGING EMPHASIS IN 2014
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RESOURCES PLAYS RESTRUCTURING OIL PRODUCTS RESTRUCTURING
50% reduction in operating theatres
Gas focussed on to integrated plays
Growth liquids
IMPROVE OUR FINANCIAL PERFORMANCE: RESPONDING TO MARKET DYNAMICS IN OIL PRODUCTS + NORTH AMERICA ONSHORE
Reorganising value chain accountability
Exit from non-core portfolio
Growth chemicals
PORTFOLIO RESTRUCTURING + POTENTIAL WRITE-DOWNS COST REDUCTION MORE SELECTIVE ON GROWTH OPPORTUNITIES
Regional refinery hubs Operating theatres
Elba LNG
Gas-to-Chemicals
LNG Canada
Announced divestment
Integration options
Portfolio reduction
Northeast BC
Deep Basin/Foxcreek
Foothills
US Rockies
Appalachia Mississippi Lime
Haynesville Permian
Eagle Ford
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Prelude dilution
Wheatstone Browse LNG onshore
IMPROVE OUR CAPITAL EFFICIENCY: SHARPENING OUR FOCUS
Option re-framing Downstream
0
5
10
2010 2011 2012 2013 '14-'15 avg
ASSET SALES
$ billion
Eagle Ford
Harburg refinery Czech refinery
Nigeria SPDC leases
Arrow LNG FID postponed
Exit
Niobrara Sandwash Basin
Mississippi Lime
Mongstad/Pernis swap
Italy downstream reduction
Fram Linnorm
HARD PORTFOLIO CHOICES $15 BILLION ASSET SALES 2014-15
Norway downstream reduction
Downstream Upstream
Upstream 2013+ divestments }
Ohio Utica
Completed
Gulf Coast GTL
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Engines
Free cash flow plays
Asset integrity + selective growth
Growth Priority
Global leadership
Strong project flow
Longer Term
Major potential with surface challenges
Slower pace + capital allocation
IMPROVE CAPITAL EFFICIENCY: 2014 INVESTMENT PRIORITIES
CREDIBLE, COMPETITIVE, AFFORDABLE INVESTMENT CHOICES DRIVEN ON A GLOBAL THEMATIC BASIS REDUCED PACE OF GROWTH INVESTMENT
1 Iraq, Nigeria, Kazakhstan, heavy oil, Arctic
FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER INTEGRATED GAS
UPSTREAM DOWNSTREAM
1
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DELIVER NEW PROJECTS: TOP 4 START-UPS 2014
Mars-B Preparing for start-up
Gumusut-Kakap Subsea systems tie-in
completed. H2 ‘14 start-up
Cardamom Auger facility upgrades
ongoing. H2 ’14 start-up
Repsol LNG Transaction completed
Jan’14, integration ongoing
Gumusut-Kakap FPS, 135 kboe/d, Shell 33% Cardamom, 50 kboe/d, Shell 100%
Mars-B, 100 kboe/d, Shell 72%
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100
140
180
220
260
2000 2005 2010 2013
Indexed 2000=100, dividends paid in year
Excludes $1.7 billion payout to former shareholders of Royal Dutch as part of the 2005 unification.
RDS dividend per share in USD Inflation (US CPI, Annual Average)
Q1 2014 DIVIDEND
$0.47/SHARE, > +4% SHARE BUY BACK
LEADING DIVIDEND TRACK RECORD
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SIMON HENRY CHIEF FINANCIAL OFFICER ROYAL DUTCH SHELL PLC
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2013 PERFORMANCE
Majnoon, July 2013
2013 delivery
CCS earnings $19 bln; CFFO $40 bln
7 new start-ups
Iraq oil & gas, BC-10 ph 2, North Rankin gas, others
Acquisitions to enhance portfolio
Repsol LNG, Libra, ‘engines’ bolt-ons
Decisive on portfolio
Non-core asset sales:
Oil Products
Nigeria onshore
North America LRS
US GTL cancelled
Earnings excluding identified items
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Earnings CCS basis, Earnings excluding identified items
EARNINGS 2012 TO 2013
2012 2013
$ billion UPSTREAM 20.1 15.1
DOWNSTREAM (CCS) 5.3 4.5
CORPORATE & MINORITIES (0.2) (0.1)
CCS NET EARNINGS 25.3 19.5
CCS EARNINGS, $ PER SHARE 4.03 3.10
CASH FROM OPERATIONS 46.1 40.4
SHARE BUY BACKS 1.5 5.0
DIVIDENDS 11.0 11.3
DIVIDEND, $ PER SHARE 1.72 1.80
2013 FINANCIAL HIGHLIGHTS
EARNINGS 2012 TO 2013 $ billion
25.3
19.5
0.1
5.0
~0.9
0
5
10
15
20
25
30
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EARNINGS 2012 TO 2013
$ billion
Earnings CCS basis, Earnings excluding identified items
25.3 19.5
0.8 0.7 0.8 0.2 0.7 1.6 1.6
2.4
0
10
20
EARNINGS Q4 2012 TO Q4 2013
$ billion
5.6
2.9
0.1 0.4 0.1
0.3 0.5
0.5
0.7
0
2
4
2013 FINANCIAL HIGHLIGHTS
Environment Choice Environment Choice
0.0
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5
7
75
80
85
90
95
100
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
0
2
4
6
0.000
2.000
4.000
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
UPSTREAM million boe/day million tonnes
Oil Gas
LNG Sales (RHS)
DOWNSTREAM % availability volume
Refinery availability Chemicals availability
Oil products sales (million b/d) Chemicals sales (million tonnes)
UPSTREAM Q4-Q4 underlying decline 3%1 Growth from NA LRS, Iraq, Malaysia 40 kboe/d Nigeria sabotage Q4-Q4 95 kboe/d maintenance Q4-Q4
DOWNSTREAM Q4-Q4 underlying OP volumes lower, Chemicals
volumes similar
Q1 – Q1 OUTLOOK Nigeria operating challenges Production impact:
ADCO licence expiry 155 kboe/d NAM curtailment 60 kboe/d Maintenance 50 kboe/d
Increased exploration charges Increased Upstream DD&A Reduced refinery availability
OPERATIONAL PERFORMANCE + OUTLOOK
1 Excludes Nigeria security , PSC price effect + asset sales
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20
40
60
CFFO Asset sales
0
10
20
30
40
-10
0
10
20
2009 2010 2011 2012 2013
GROUP 12 MONTHS CASH PERFORMANCE $ billion
Capex Dividend Buy-backs
CASH PERFORMANCE + PAYOUT
Sources Uses
GEARING AND PAY OUT
$ billion %
Free cash flow (FCF) Gearing (RHS)
Dividend Buyback
BUSINESS 12 MONTH CASH PERFORMANCE $ billion
Acquisitions
Upstream Downstream
Sources Uses
Sources Uses
30
15
0
2013 ACQUISITION IMPACTS
2014 FCF EXPANSION POTENTIAL
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50
100
2012 2013
$ billion cumulative
Previous outlook set in 2012 for 2012-15: CFFO $175-$200 billion; net capital investment $120-$130 billion @ $80-$100 oil prices
Cash flow from operations Net capital investment
FINANCIAL PERFORMANCE
2012-2013
CFFO impacted by macro, portfolio + choices + performance
Net capital investment lifted by acquisitions
Dividends distributed + buy-backs Previous target framework 2012-15
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FINANCIAL FRAMEWORK AND PRIORITIES
CASH PERFORMANCE
CFFO drives investment + payout
INVESTMENT
Affordability, profitability, portfolio
PAY-OUT
Dividend linked to business results
BALANCE SHEET
0 – 30% gearing through cycle
Priorities for cash
1. Debt service
2. Dividends: growth policy
3. Capital investment: disciplined through cycle growth
4. Return surplus cash: buy-backs
CONSERVATIVE BALANCE SHEET UNDERPINS FINANCIAL FRAMEWORK
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PORTFOLIO DEVELOPMENT 2013
Acquisition / entry
Exit Discovery Final Investment
Decision Start-up
Nigeria on-shore asset sales
G/U Phase 2 TNP loop-line Carmon Creek
AOSP debottlenecking Basrah Gas Company Majnoon Kashagan
North America asset sales
Coulomb North BC-10 pre-emption Libra entry
Vicksburg discovery Zabazaba-4 appraisal
Erha North Ph2 Stones BC-10 Massa Ph3
BC-10 Phase 2
Repsol LNG Elba LNG JV Abadi LNG
Prelude dilution Browse onshore Gulf Coast GTL Wheatstone LNG
Kentish Knock gas discovery
North Rankin Redevelopment
Beryl & Schiehallion Bab Sour gas Albania Shpiraq-2 Amal Steam
Poland: retail
Geelong Italy Harburg refinery Pernis/Mongstad
swap
Singapore Chemicals
Gulf Coast GTT Great Lakes GTT
Group delivery $8 billion $2 billion 4 discoveries 9 FIDs 7 start-ups
UPSTREAM ENGINE
INTEGRATED GAS
RESOURCES PLAYS
DEEP-WATER
FUTURE OPPORTUNITIES
DOWNSTREAM ENGINE
(completed)
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INCREASING SHELL’S MANAGED SALES + TRADING OPTIONS 0
10
20
30
Shell XOM CVX TOT BG BP
SHELL PORTFOLIO SHELL LNG LEADERSHIP
Year end equity liquefaction capacity in mtpa
REPSOL LNG ACQUISITION
QG-4
Altamira
Cove Point Elba
Baja Hazira
Spain
NWS Pluto
Sakhalin
Oman
Malaysia + Brunei
Nigeria
Peru LNG
Atlantic LNG
Gorgon
Repsol portfolio LNG supply
Prelude
Re-gasification Under construction
Shell:
Trading flows
2014
Shell directly managed Joint venture marketed
total LNG volumes in mtpa
2013
2017 Repsol acquisition (2014+)
2013
>25 mtpa >30 mtpa
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$ billion
0
10
20
30
40
2013 2014
INVESTING FOR LONG TERM GROWTH
FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM
DOWNSTREAM
LONGER TERM
GROWTH PRIORITY
ENGINES
1 Announced acquisitions (Repsol, Basrah Gas capital injection)
2013 -14 INVESTMENT LIFTED BY ACQUISITIONS
ORGANIC SPENDING REDUCTION 2014
TOTAL CAPITAL INVESTMENT FY
2012 FY
2013 FY
2014E
$ billion ORGANIC CAPEX 32 38 ~35
ACQUISITIONS 5 8 21
TOTAL CAPITAL INVESTMENT 37 46 37
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BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER ROYAL DUTCH SHELL PLC
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Deliver new projects
Returns and cash flow
Competitive returns for shareholders
Hard choices on new projects
Increase divestment of non-core assets
Reduce pace of growth investment
Major deep water start-ups in 2014
Integrate 2013 acquisitions
Operational performance and project delivery
Improve our financial performance
Enhance our capital efficiency
2014 PRIORITIES
CHANGING EMPHASIS IN 2014
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QUESTIONS & ANSWERS FOURTH QUARTER 2013 RESULTS
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FOURTH QUARTER 2013 RESULTS
30 JANUARY 2014 ROYAL DUTCH SHELL PLC
