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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Webcast presentation Royal Dutch Shell plc fourth quarter and full year 2013 results
1. Copyright of Royal Dutch Shell plc 30 January, 2014 1
FOURTH QUARTER 2013 RESULTS
30 JANUARY 2014
ROYAL DUTCH SHELL PLC
2. Copyright of Royal Dutch Shell plc 30 January, 2014 2
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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‘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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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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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-WATERINTEGRATED
GAS
UPSTREAM DOWNSTREAM
1
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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
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EARNINGS 2012 TO 2013
$ billion
Earnings CCS basis, Earnings excluding identified items
EARNINGS Q4 2012 TO Q4 2013
$ billion
2013 FINANCIAL HIGHLIGHTS
Environment Choice Environment Choice
0.0
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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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$ 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 $2 billion 4 discoveries 9 FIDs 7 start-ups
UPSTREAM
ENGINE
INTEGRATED
GAS
RESOURCES
PLAYS
DEEP-WATER
FUTURE
OPPORTUNITIES
DOWNSTREAM
ENGINE
(completed)
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INCREASING SHELL’S MANAGED SALES + TRADING OPTIONS
SHELL PORTFOLIO SHELL LNG LEADERSHIP
Year end equity liquefaction capacity in mtpa
REPSOL LNG ACQUISITION
QG-4
Altamira
Cove Point
Elba
Baja Hazira
Spain
NWSPluto
Sakhalin
Oman
Malaysia
+ Brunei
Nigeria
Peru LNG
Atlantic LNG
Gorgon
Repsol portfolio
LNG supply
Prelude
Re-gasification
Under construction
Shell:
Trading flows
2014
Shell directly managed
Joint venture marketed
total LNG volumes in mtpa
2013
2017
Repsol acquisition (2014+)
2013
>25 mtpa >30 mtpa
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$ billion
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 2
1
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