Ben van Beurden – Barclays CEO Energy-Power Conference in New York, New York. September 3, 2014
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Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc presented at the Barclays CEO Energy-Power Conference in New York, New York.
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Ben van Beurden – Barclays CEO Energy-Power Conference in New York, New York. September 3, 2014
1. Copyright of Royal Dutch Shell plc 3 September 2014 1
BALANCING GROWTH & RETURNS
Barclays CEO Energy-Power Conference
SEPTEMBER 3, 2014
ROYAL DUTCH SHELL PLC
2. Copyright of Royal Dutch Shell plc 3 September 2014 2
BEN VAN BEURDEN
CHIEF EXECUTIVE OFFICER
ROYAL DUTCH SHELL PLC
3. Copyright of Royal Dutch Shell plc 3 September 2014 3
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 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, 3 September, 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.
4. Copyright of Royal Dutch Shell plc 3 September 2014 4
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
5. Copyright of Royal Dutch Shell plc 3 September 2014 5
Balancing risk and reward
Strict investment hurdles and price screens drive returns
ASPIRED
PORTFOLIO
ATTRACTIVENESS
Growth & returns
Opportunity scale
RESILIENCE
Risk, perfo rmance &
uncertainty
PORTFOLIO MANAGEMENT
STRATEGIC INTENT
RESULTS &
PAY-OUT
6. Copyright of Royal Dutch Shell plc 3 September 2014 6
FUTURE
OPPORTUNITIES
RESOURCES
PLAYS
INTEGRATED DEEP-WATER
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
7. Copyright of Royal Dutch Shell plc 3 September 2014 7
DRIVING PERFORMANCE IN SHELL
Policy from 1.1.2015
Performance units New shareholding requirements
Drive bottom line focus
Credible, competitive and affordable plans
Drives decisions on spending + divestment
Individual performance management
Stronger accountability for outcomes
New shareholding requirements for senior
executives
CEO 7 x base pay
CFO 4 x base pay
Top 200 executives below
Executive Committee:
1.5 x base pay
Senior
Executives
10. Copyright of Royal Dutch Shell plc 3 September 2014 10
-2
0
2
4
6
8
10
2010 2011 2012 2013 2014 H1* 2014E
NORTH AMERICA RESOURCES PLAYS
RESTRUCTURING SHELL PORTFOLIO
* 2014 H1: 12 month rolling
Elba LNG
LNG
Canada
Groundbirch
Deep Basin/Kaybob
Foothills/Pembina
Gas-to-chemicals
Appalachia
Liquids rich shales (LRS)
Gas monetization options
Permian
Dry gas
Gas/LRS
Resilience
Attractiveness
$ billion
LRS Dry gas Divestments Acquisitions
-50%
-20%
North Americas capital investment Dry gas:
Canada LNG supply
Appalachia appraisal
Liquid rich shales:
Appraisal in Western Canada + Permian
Profitability focus
Portfolio
Exit:
Eagle Ford
Mississippi Lime
Rockies LRS
Deep Basin (North)
Foothills (Burnt Timber)
Appalachia (Slippery
Rock)
Pinedale
Haynesville
Maintain / Grow:
W. Canada gas +
integration plays
Appalachia
W. Canada LRS
Permian LRS
LRS Plays
completed
Hold or Divest
11. Copyright of Royal Dutch Shell plc 3 September 2014 11
ENHANCE CAPITAL EFFICIENCY
Take hard choices on new options
More selectivity: FIDs >$500 million
require CEO approval at FEED
Maturing new projects: LNG, deep-water
Increase asset sales
~$10 billion completed year-to-date
US midstream MLP proposal
Reduce pace of growth investment
2014 organic spending ~$35 billion
Scrip cancellation reflects improving FCF
completed
2014+ Asset sales / license expiry
Wheatstone LNG
BC-10 dilution
North America non-core LRS
Italy Downstream
ADCO license expiry
Woodside
market sell down
Australia / Denmark /
Norway Downstream
Nigeria onshore
Mature UKCS + GOM assets
Pinedale + Haynesville dry gas
Others
340,000 boed upstream
180,000 b/d refining
300,000 b/d marketing
12. Copyright of Royal Dutch Shell plc 3 September 2014 12
0
20
40
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
DELIVER NEW PROJECTS
2014 START-UPS
Mars B – February 2014 start-up
Mars B production ramp-up progress
Cardamom: H2 2014 start-up
Gumusut-Kakap: H2 2014 start-up
Shell 72%, 100 kboe/d
Shell 100%, 50 kboe/d Shell 33%, 135 kboe/d
kboed
13. Copyright of Royal Dutch Shell plc 3 September 2014 13
CONVENTIONAL EXPLORATION PROGRESS
DELIVERY 2014
Rosmari & Marjoram gas
discoveries in Block SK318
New Deep-water gas potential
Shell 85%
4 near field gas discoveries in
2014 (100% success rate)
Adding gas to Malaysia
heartland
Shell 30%
Deep-water oil discovery 16 km
south of Appomattox
~100 million boe
Shell 57.2%
3rd Norphlet discovery
Malaysia Deep-water Gas Malaysia, Block SK408 GOM, Rydberg Deep
Doo Sung rig Gorek-1 3D Noble Globetrotter 1
14. Copyright of Royal Dutch Shell plc 3 September 2014 14
0
25
50
UP
STREAM
DOWN
STREAM
CASH FLOW AND PAY-OUT
Cash generation
$ billion, Q214 4Q rolling
Gearing + balance sheet
$ billion
Cash flow from
operations Net cash used in investing activities
Dividend and buy back
0%
10%
20%
30%
0
10
20
30
2010 2011 2012 2013 14Q2
Gearing
range
Net debt Gearing (RHS)
12 months
rolling
0
6
12
2006 2007 2008 2009 2010 2011 2012 2013 14Q2
Dividends declared 12 months
rolling
Dividend track record
$ billion
Scrip dividend cancelled from Q2 2014
Buy back $7-8 billion 2014-15 combined
~$1.6 billion H1 2014
15. Copyright of Royal Dutch Shell plc 3 September 2014 15
COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS
4Q ROLLING
Free cash flow: cash flow from operations less cash used in investing activities;
ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items.
Cash flow from operations
$ billion
Free cash flow
$ billion
ROACE – underlying
%
0
10
20
2010 2011 2012 2013 2014
Shell Peer group
Driving competitive performance
0
20
40
60
2010 2011 2012 2013 2014
-10
0
10
20
30
40
2010 2011 2012 2013 2014
16. Copyright of Royal Dutch Shell plc 3 September 2014 16
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
17. Copyright of Royal Dutch Shell plc 3 September 2014 17
QUESTIONS & ANSWERS