1 Copyright of Royal Dutch Shell plc 13 March, 2014 BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014 13 MARCH 2014 ROYAL DUTCH SHELL PLC
1 Copyright of Royal Dutch Shell plc 13 March, 2014
BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014
13 MARCH 2014 ROYAL DUTCH SHELL PLC
2 Copyright of Royal Dutch Shell plc 13 March, 2014
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 (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, 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, 13 March, 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.
3 Copyright of Royal Dutch Shell plc 13 March, 2014
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER
ROYAL DUTCH SHELL PLC
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EXECUTING A CONSISTENT, LONG-TERM STRATEGY
Unrelenting focus on HSSE
Technology, integration and scale
Disciplined capital investment by strategic theme
Growth in cash flow through-cycle
Competitive shareholder returns
Shearwater platform North Sea, UK
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FOCUS ON SAFETY 2013 UPDATE
Goal Zero on safety Injuries – TRCF/million working hours
Spills - operational Volume in thousand tonnes
Energy intensity - refineries Energy Intensity Index (EEITM)
million working hours
Working hours (RHS) TRCF
HSSE priority
Performance + transparency
Process safety trend Number of incidents
Tier 1 incidents Tier 2 incidents
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Balancing risk and reward
Strict investment hurdles and price screens drive returns
ASPIRED PORTFOLIO
ATTRACTIVENESS
Growth & returns
Opportunity scale
RESILIENCE
Risk, performance &
uncertainty
PORTFOLIO MANAGEMENT
STRATEGIC INTENT
RESULTS & PAY-OUT
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FUTURE OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER INTEGRATED 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
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FINANCIAL PERFORMANCE TRACK RECORD
Earnings $ billion CCS
Cash flow from operations $ billion
Total capital investment $ billion
Payout $ billion
Dividend declared Buyback Organic capital investment
Upstream Downstream Corporate Identified items
Acquisitions
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FINANCIAL PERFORMANCE COMPETITIVE POSITION
EPS on reported CCS basis
Earnings per share growth – 3 years % growth 2010-2013
Cash flow per share growth – 3 years
Total shareholder return – 3 years 2013 ROACE
ROACE: earnings on reported local GAAP basis
Shell Competitors
% growth 2010-2013
% growth 2010-2013
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Changing emphasis in 2014
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
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IMPROVE FINANCIAL PERFORMANCE: RESPONDING TO NEW MARKET DYNAMICS
North America resources plays Oil Products
Geelong refinery, Australia Groundbirch, Canada
~$80 billion capital employed
Financial performance not acceptable
Multi-year turn-around Priorities: Portfolio restructuring + potential write-downs Cost reduction + margin improvement Invest for financial resilience + selective growth
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IMPROVE FINANCIAL PERFORMANCE IN UPSTREAM ENGINE
Production decline halted
focus on up-time
reservoir development
sub-surface dynamics
Innovative EOR schemes
2012-13 impacted by high levels of maintenance
2013 maintenance downtime 50 kboe per day (vs. 35 kboe per day downtime in 2012)
Address late life assets: fix or divest
PDO Oman
UK North Sea kboe per day, Shell share kboe/day, Shell share
2012:117kboe/d
2013: 91kboe/d
Actual production assumed production with continued decline
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IMPROVE FINANCIAL PERFORMANCE DRIVE TO FURTHER ENHANCE INTEGRATED GAS PROFITABILITY
Includes LNG + GTL; earnings excluding identified items
Increasing Shell’s managed sales Total LNG volumes in mtpa
Shell’s LNG portfolio
LNG Peru
Altamira
Baja
Nigeria
Hazira
NWS Pluto
QG-4
Elba
Spain
Prelude Gorgon
Atlantic LNG
Oman
Sakhalin
Malaysia
Brunei
Cove Point
LNG supply
Under construction
Regasification
Trading flows
2014
2013 >25 mtpa
>30 mtpa
2017 ~40 mtpa
$ billion
Integrated Gas financial performance
Earnings ~400%
Earnings CFFO ROACE (RHS) JV marketed Shell directly managed
QG4 Pearl GTL
Pluto LNG North Rankin
Repsol LNG Elba Gorgon T1-3 Prelude FLNG
North West Shelf Sakhalin
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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
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DECONSTRUCTING OUR PORTFOLIO
2013 $ billion CCS earnings CFFO
Organic capital
investment
Capital employed ROACE
Engi
nes
5 8 5 64 7%
6 10 7 17 36%
Gro
wth
Prio
ritie
s 9 12 6 57 17%
3 5 9 23 15%
Long
er T
erm
(4) 0 6 25 (12)%
1 3 5 32 3% FUTURE
OPPORTUNITIES1
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM ENGINE
DOWNSTREAM ENGINE Mature + drives free cash flow
Profitable + growing
Returns impacted by growth spend
CCS earnings excluding identified items; ROACE based on CCS earnings excluding identified items 1 Iraq, Nigeria onshore (SPDC), Kazakhstan, Arctic, heavy oil
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ENHANCE CAPITAL EFFICIENCY TAKE HARD CHOICES
FEED FID On stream
Explore
Feasibility study
Identify & Assess Select Define Execute On stream
12 billion boe 7 billion boe 11 billion boe
Hard choices on growth projects: US GTL Alaska LNG FID pause in Asia Pacific
AOSP debottlenecking Wheatstone Cove others
~$8 billion capital investment ~$27 billion capital investment
Low cost options + Early high-grading Increase predictability Flawless execution of major spend
2014
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ENHANCE CAPITAL EFFICIENCY MAKING OUR PLANS CREDIBLE, COMPETITIVE, AFFORDABLE
~150 performance units implemented
Targeted growth spend
Address underperforming assets
Increase divestment of non-core positions
Sharpen our focus:
Asset sales
Wheatstone LNG
BC-10 dilution
UA resources plays
Nigeria onshore
Norway DS
Italy DS
Australia DS
Others
Resilience
Attr
activ
enes
s
Keep and grow
Fix or divest
Exit
$15 billion divestments 2014-15
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IDENTIFY/ASSESS
US GTL - CANCELLED Gorgon LNG T4 - PAUSE Sunrise LNG - PAUSE
ENHANCE CAPITAL EFFICIENCY CAPITAL CEILINGS + OPTION SET DRIVE HARD CHOICES
Integrated Gas
EXECUTE
Gorgon LNG T1-3 Prelude FLNG Wheatstone - SOLD MMLS LNG (Elba)
SELECT
Arrow LNG - REDESIGN Browse LNG - REDESIGN Abadi LNG ph2 LNG Canada Sakhalin T3
DEFINE
Abadi LNG ph1
ON STREAM
Atlantic LNG Brunei LNG Malaysia LNG Nigeria LNG Northwest Shelf Oman LNG Peru LNG Pluto Qatargas 4 Sakhalin LNG
MTPA: 17.6 MTPA: 0.9 MTPA: 7.5 MTPA: 26.1 START
UP FID
Shell share equity liquefaction capacity in mtpa
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Resilience
Attr
activ
enes
s
0%
20%
40%
60%
80%
100%
0 20 40 60 80 100
RESOURCES PLAYS MAJOR REVIEW OF PORTFOLIO UNDERWAY
Staff reduction
Drilling cost learning curve Drilling costs
-30%
2013 2014E
Shell employees
Contractor
Reduction in Shell + contractor staff
Field office closures
Supply chain + drilling performance
Portfolio
Exit: Eagle Ford Mississippi Lime Rockies LRS
Fix or Divest: Appalachia Deep Basin Pinedale Haynesville Foothills
Grow: Permian Kaybob Pembina Argentina – Vaca Muerta Groundbirch
LRS Plays Groundbirch Eagle Ford Duvernay (Kaybob) Haynesville
Number of wells drilled
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ENHANCE CAPITAL EFFICIENCY 2013-14 CAPITAL SPENDING
Total capital investment $ billion
Future opportunities Resources plays
Downstream (incl. Corporate)
Europe Deep-water Africa/Middle East/CIS
Asia Pacific Americas
Upstream Integrated gas Upstream engine Downstream (incl. Corporate)
Strict capital ceilings
More competitive returns
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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
22 Copyright of Royal Dutch Shell plc 13 March, 2014
PROJECT MANAGEMENT + BENCHMARKING
IPA – Independent Project Analysis by Industry Benchmarking Consortium
IPA project benchmark Upstream project status Construction time elapsed %
1Q 2Q 3Q 4th Quartile
Upstream cost Downstream cost
Oversight and accountability
Track record
Construction time elapsed %
23 Copyright of Royal Dutch Shell plc 13 March, 2014
CONVENTIONAL EXPLORATION PORTFOLIO + THEMES
Increased focus in our exploration spending
Spend including deals
($ billion)
Resources/potential added1
(billion boe) Oil & gas split (%)
2011-2013 2011-2013 2013 performance
ARCTIC ~2 0 Alaska drilling pause
FRONTIER Under explored basins
~4 0.9
(95% oil, 5% gas) Albania: Shpirag-2 Brazil: Libra access
HEARTLANDS New plays in Shell producing basins
~8 2.6
(25% oil, 75% gas)
GOM: Vicksburg Australia: Kentish Knock Nigeria: Zabazaba appraisal
NEAR FIELD High value
~1 0.4
(35% oil, 65% gas)
19 near field discoveries Nigeria (SPDC), Oman, Egypt,
Netherlands, Brunei, Australia
Prospect size
(million boe)
Time to development
(years)
15+
10+
3+
<3 5-50
50-250
>250
>500
1 includes acquisitions
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GLOBAL RESOURCES PLAYS BUILDING CAPABILITIES IN LONG TERM OPPORTUNITY
Total resources plays capital investment
E&A On stream
Gas Liquids Rich
2013 production 0.3 mboe/d
2014 exploration spend $3 billion
2013 exploration and appraisal success
$ billion
Resources + potential
Future potential
On stream
Execute (under construction)
Select/Define
14.4 billion boe
Americas International
Liquids rich shales (underlined)
ACCESS Tunisia
EXPLORATION Pembina Turkey Colombia Russia Sichuan Germany Ukraine
APPRAISAL/PILOT Argentina Kaybob Permian Appalachia Changbei 2 Oman
DEVELOPMENT Early Groundbirch
Mature Pinedale Haynesville Foothills Deep Basin Changbei
Western Canada
Colombia
Argentina Neuquen
Lower 48 USA
Germany Ukraine
Turkey
Oman Sichuan
Changbei
Arrow
Changbei 2
Russia
Future potential = discovered + prospective resources
Tunisia
25 Copyright of Royal Dutch Shell plc 13 March, 2014
SIMON HENRY CHIEF FINANCIAL OFFICER
ROYAL DUTCH SHELL PLC
26 Copyright of Royal Dutch Shell plc 13 March, 2014
FINANCIAL FRAMEWORK AND PRIORITIES
Priorities for cash
1. Debt service
2. Dividends: growth policy
3. Capital investment: disciplined through cycle growth
4. Return surplus cash: buy-backs
CASH PERFORMANCE
CFFO drives investment + payout
INVESTMENT
Affordability, profitability, portfolio
PAY-OUT
Dividend linked to business results
BALANCE SHEET
0 – 30% gearing through cycle
Conservative balance sheet underpins financial framework
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UP STREAM
DOWN STREAM
CASH FLOW AND PAY-OUT
Cash generation $ billion
Dividend track record $ billion
Strong balance sheet $ billion
Cash flow from operations Asset sales
Capex + equity acc. investments
$ billion 2011-13 2013
UP STREAM
DOWN STREAM
Acquisitions
Dividend and buy back
Gearing range
Net debt
Dividends declared
Gearing (RHS)
12 months rolling
Strong balance sheet
Generating surplus cash
Dividend track record
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CASH FLOW + RETURNS
ROACE %, 4Q rolling
Cash flow from operations $ billion, 4Q rolling
Shell
peer group peer group Shell
ROACE: earnings on reported local GAAP basis
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SEC PROVED RESERVES POSITION
1 Excludes acquisitions, divestments and price impacts 2 Reserves attributable to Royal Dutch Shell shareholders
2013 Reserves performance
2013 RRR 131%
2011-13 RRR 91%
Reserves life at end 2013 ~11.5 years
2011-13 Reserves average performance
Organic1 additions ~1.4 billion boe
Production ~1.2 billion boe
Organic reserves replacement 112%
Reserves Replacement
SEC proved reserves
Major reserves additions
2011-13 Reserves additions
2011-13 2013
Organic 112% 123%
Organic incl. price effects 95% 127%
Net Reserves2 91% 131%
(billion boe) 2011 2012 2013
Organic reserves additions 1.5 1.0 1.5
Production 1.2 1.2 1.2
Net Reserves2 14.2 13.6 13.9
30 Copyright of Royal Dutch Shell plc 13 March, 2014
Start-up 2013 start-up 2014-2015 2016-2018
Bukom ECC debottleneck Bukom cogeneration Jack St.Malo pipeline Singapore LOBP
Westward-Ho pipeline
Amal Steam Corrib
Clair ph2 Schiehallion Redevelopment Tempa Rossa Rabab Harweel integrated
project
North Rankin 2 Gorgon LNG T1-3 Prelude FLNG MMLS LNG (Elba)
BC-10 ph2 Mars-B Cardamom Gumusut Kakap Sabah Gas KBB Bonga North West Petai
BC-10 ph3 Malikai Stones Erha North ph2
North America tight gas + liquids rich shales
AOSP debottlenecking Kashagan ph1 Majnoon FCP Basrah Gas Company
Southern Swamp AG Gbaran-Ubie ph2 Trans Niger loopline Carmon Creek ph1+2 Forcados Yokri
Peak production (kboe/d)
200 335 560
NEW START-UPS 2013-2018
29 major projects
Strong project flow
Production @ $80 Brent scenario; Shell share at peak
Bonga North West
Gumusut-Kakap
Shell operated FUTURE
OPPORTUNITIES
RESOURCES PLAYS
DEEP-WATER
INTEGRATED GAS
UPSTREAM ENGINE
DOWNSTREAM ENGINE
31 Copyright of Royal Dutch Shell plc 13 March, 2014
Carmon Creek ph1&2 Rabab Harweel Erha North ph2 BC-10 ph3 Stones Groundbirch
billion boe
RESOURCES UPDATE
Longer-term upside
2009 2010 2011 2012 2013
On stream Execute (under construction)
Select/Define Production
NWS Gas NR2 BC-10 ph2 Amal Steam Majnoon FCP
Vito BMS-54 Zabazaba Appomattox Permian
Converting resources to production… 2013 resources by theme
Deep-water Integrated gas Upstream engine
Resources plays Future opportunities
Rebuilding on stream resources 2009-13
32 Copyright of Royal Dutch Shell plc 13 March, 2014
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
33 Copyright of Royal Dutch Shell plc 13 March, 2014
BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER
ROYAL DUTCH SHELL PLC
34 Copyright of Royal Dutch Shell plc 13 March, 2014
QUESTIONS & ANSWERS MANAGEMENT DAY
35 Copyright of Royal Dutch Shell plc 13 March, 2014
BALANCING GROWTH & RETURNS MANAGEMENT DAY 2014
13 MARCH 2014 ROYAL DUTCH SHELL PLC