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Management Day – Royal Dutch Shell

Royal Dutch Shell · Jun 4, 2019 · 87 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Management Day – Royal Dutch Shell – slide 1
    Management Day Delivering a world-class investment case Royal Dutch Shell plc June 4 - 5, 2019 MakeTheFuture Royal Dutch Shell June 4-5, 2019
  2. Management Day – Royal Dutch Shell – slide 2
    Key messages Thrive in the energy Portfolio positioned for the future of energy transition Reduce the Net Carbon Footprint of our energy products Sustaining Upstream; growing market-facing businesses World-class Capital…
  3. Management Day – Royal Dutch Shell – slide 3
    2020 2025 2025 outlook DE-RISKED STRONG OUTLOOK Confidence in 2020 delivery, ORGANIC FREE catalyst to 28-33 billion CASH FLOW 35 billion growth in 2021-2025 25 billion SHAREHOLDER 125+ billion share buybacks DISTRIBUTIONS potential…
  4. Management Day – Royal Dutch Shell – slide 4
    Free cash flow 4 quarters rolling Clean CCS ROACE 4 quarters rolling Delivery billion % Strong 40 10 Thousands competitive 20 8 position 6 4 0 2 -20 0 16Q1 16Q3 17Q1 17Q3 18Q1 18Q3 19Q1 16Q1 16Q3 17Q1 17Q3 18Q1 18Q3…
  5. Management Day – Royal Dutch Shell – slide 5
    Trust Strong societal licence to operate Good Trusted No harm products company Royal Dutch Shell June 4-5, 2019 6
  6. Management Day – Royal Dutch Shell – slide 6
    Energy outlook Changes in consumer patterns drive a shift in the primary energy mix Global end-use energy consumption Exajoules 700 Solid 600 500 Gaseous 400 300 Liquid 200 100 Electricity 0 1960 1980 2000 2020 2040 2060…
  7. Management Day – Royal Dutch Shell – slide 7
    Strategic themes Competitively positioned for the future of energy Core Upstream themes Capital allocation 01 Strong cash generation Fully sustain through the coming decades Value- and returns-driven Diversify risk and…
  8. Management Day – Royal Dutch Shell – slide 8
    Strategic themes Shells strategy by theme Core Upstream themes Leading Transition themes Emerging Power theme Deep Water Integrated Gas Power Leading portfolio, strong growth funnel Extend market leadership New sources of value…
  9. Management Day – Royal Dutch Shell – slide 9
    2025 outlook Business milestones underpin cash flow growth through 2025 and beyond Upstream major projects Integrated Gas major projects 25+ 25+ 10+ 5+ FIDs Start-ups FIDs Start-ups Downstream major projects Marketing growth…
  10. Management Day – Royal Dutch Shell – slide 10
    2025 outlook Capital allocation to grow cash flow through 2025 and beyond 2021-25 2020 2021-25 2025 2025 Sustaining Organic FCF Total cash capex Organic FCF ROACE cash capex (IAS 17) (IFRS 16) (IFRS 16) % billion per annum (IFRS…
  11. Management Day – Royal Dutch Shell – slide 11
    Cumulative cash potential for shareholders 2025 outlook Increasing potential shareholder 202125 distributions 125+ bln 60/bbl RT16 Fully committed to current and growing dividend per share 201620 Resilient dividend per share 90+ bln…
  12. Management Day – Royal Dutch Shell – slide 12
    2025 outlook Key levers for delivery CFFO growth and delivery Opex competitiveness 10…
  13. Management Day – Royal Dutch Shell – slide 13
    Delivery Establishing a strong track record Delivery in 2016-2018 Delivery on track for 2019-2020 Post-IFRS 16 + Scrip dividend cancelled Financial + 28-33 billion organic free cash flow per year framework + 25 billion share…
  14. Management Day – Royal Dutch Shell – slide 14
    Organic free cash flow: growing trend Cash capex: capital discipline remains Delivery billion billion 2020 outlook 40 99 52 44 54 71 60 RT16 40 on track 30 30 20 20 10 10 0 0 2014 2015 2016 2017 2018 2020 2014 2015 2016 2017…
  15. Management Day – Royal Dutch Shell – slide 15
    Reshaping Shell to deliver a world-class Competitive People strategy Cost investment portfolio management case Royal Dutch Shell June 4-5, 2019 16
  16. Management Day – Royal Dutch Shell – slide 16
    Competitive portfolio Oil Sands Upstream Ireland UK North Sea package Thailand Bongkot Showa Shell JV Reshaping 7.3bln up to 1.3bln up to 3.8bln 0.8bln 1.4bln the portfolio MLP 1.8bln MOTIVA JV Top 20 divestments: 2.2bln Oil…
  17. Management Day – Royal Dutch Shell – slide 17
    CFFO excluding working capital Unit cash flow Upstream & Integrated Gas Competitive portfolio billion /boe Cash flow 60 99 52 44 54 71 30 high-graded 40 20 20 10 0 0 2014 2015 2016 2017 2018 2016 2017 2018 Upstream…
  18. Management Day – Royal Dutch Shell – slide 18
    Competitive portfolio Capital discipline culture Capital Investment Committee (CIC) Decision criteria Example: LNG Canada Strategic Fit Implemented as best practice from BG Upstream, LNG, Trading Fit with aspired portfolio and &…
  19. Management Day – Royal Dutch Shell – slide 19
    People strategy Highly engaged, diverse and productive workforce Shell workforce evolution Shell Business Operations growth Workforce distribution Thousand FTEs Index Thousand FTEs % % % 100 80 20 20 75 50 Thousands 75 75 15 15…
  20. Management Day – Royal Dutch Shell – slide 20
    Cost management Strategic shift translating into cost optimisation Global functions: simplification and standardisation Global programmes improving ways of working billion Fit for the Future Embed continuous improvement mindset in…
  21. Management Day – Royal Dutch Shell – slide 21
    World-class Sustain and grow value investment case Competitive and resilient delivery Thrive in the energy transition World-class investment case Strong licence to Financial resilience Increase shareholder operate…
  22. Management Day – Royal Dutch Shell – slide 22
    Sustain and grow value Diversified and competitive through the Energy Transition 56% 44% 56% 42% Core Upstream themes sustain strong CFFO generation in 2025 (40% of total) 2018 Cash flow from 2025 Growth in shales harvests almost…
  23. Management Day – Royal Dutch Shell – slide 23
    Cash priorities 2021-2025 Sustain and billion grow value 80 Strong cash generation provides 60 optionality 40 Thrive in the energy transition 20 World-class investment case 0 CFFO Interest Dividend Sustaining De-gearing…
  24. Management Day – Royal Dutch Shell – slide 24
    Financial resilience through the cycle Continued focus on robust balance sheet Maintain AA credit metrics Net debt and gearing through the cycle Target gearing on average 20% with a range of 15-25% through the cycle billion % 100 30…
  25. Management Day – Royal Dutch Shell – slide 25
    The scope of Shells Net Carbon Footprint ambition Net Carbon Footprint Our ambition Production Processing Distribution & sales Use of energy products by our customers Third-party crude Third-party products Third-party gas…
  26. Management Day – Royal Dutch Shell – slide 26
    Net Carbon Footprint Potential tools to achieve our ambition Baseline Operational Natural efficiency Renewable gas shift power Ambition to reduce the Biofuels Net Carbon Footprint Electric mobility of the energy products CCS…
  27. Management Day – Royal Dutch Shell – slide 27
    Projects and Technology Royal Dutch Shell June 4-5, 2019
  28. Management Day – Royal Dutch Shell – slide 28
    Projects & Technology Competitively differentiated capital efficiency World-class capital efficiency factory Differentiated capabilities Systematic and rigorous scope challenge UDC ( per boe) Efficient execution focus 50% Supply…
  29. Management Day – Royal Dutch Shell – slide 29
    Differentiated capabilities Projects & Global organisation, locally delivered Technology Unique company-wide oversight of over 40 billion third party spend Competitively One standard purchasing platform across Shell, creating…
  30. Management Day – Royal Dutch Shell – slide 30
    Innovation and digitalisation Differentiated results Projects & Business-owned, centrally delivered Technology Commercially savvy science Competitively Customer-centric product development differentiated Content-rich…
  31. Management Day – Royal Dutch Shell – slide 31
    Integrated Gas Royal Dutch Shell June 4-5, 2019
  32. Management Day – Royal Dutch Shell – slide 32
    Lead the market Run the engine Grow the engine Integrated Gas Overview Gallina, LNG Ship Oman LNG Pearl GTL - Qatar Expand and diversify a strong position Focus on operational excellence to Create new advantaged positions in in…
  33. Management Day – Royal Dutch Shell – slide 33
    Integrated Gas Thrive through the Energy Transition Carbon footprint reduction Gas-fired replacing coal-fired power plants with 45-55% lower greenhouse gas emissions LNG Canada designed to achieve lowest carbon intensity of any…
  34. Management Day – Royal Dutch Shell – slide 34
    Integrated Gas LNG market is expected to double in size by 2035 LNG demand outlook Growth in non-power sectors LNG complementing renewables BCM Global gas demand (BCM) LNG supply (GWh/d) Power generation (GWh/h) 1,000 3,600 1,200 20…
  35. Management Day – Royal Dutch Shell – slide 35
    Integrated Gas Develop demand Norway Canada Netherlands EU35 Belgium & Germany USA Spain Gibraltar China Japan Bahamas Pakistan Mexico India Panama Ivory Coast Singapore Peru Brazil Gas marketing and trading Power trading…
  36. Management Day – Royal Dutch Shell – slide 36
    Deliver value from Integrated Gas leading portfolio LNG supply & optimisation Leading position LNG available for sale in 2018 (mtpa) 75 50 Rotterdam LNGC Dragon 25 SEIC Cove Point 0 Lake Charles Elba Barcelona Shell QP Exxon…
  37. Management Day – Royal Dutch Shell – slide 37
    Improving LNG utilisation Operating at competitive cost Integrated Gas % Unit operating cost ( per ton) Run the engine 95 Integrated assets Midstream assets 120 120 90 80 80 85 80 40 40 75 0 0 2016 2017 2018 Ambition Shell…
  38. Management Day – Royal Dutch Shell – slide 38
    LNG liquefaction and sales Earnings and ROACE Integrated Gas Million tonnes billion % Financial 75 10 15 performance 50 10 5 25 5 0 0 0 2016 2017 2018 2016 2017 2018 LNG liquefaction LNG sales Clean earnings ROACE (RHS)…
  39. Management Day – Royal Dutch Shell – slide 39
    Integrated Gas Competitive growth funnel Resilient funnel of competitive growth options LNG delivered cost to Asia by project, per MMBtu Potential projects Development 10 Post FID New capacity: 8 mtpa New capacity: 17 mtpa New…
  40. Management Day – Royal Dutch Shell – slide 40
    Integrated Gas Gas to Liquids: Ambition to expand Leading competitive position Product margins above Brent Capture demand growth per boe % GTL base oils, thousand tonnes 25 40 2000 20 30 1500 15 20 1000 10 10 500 5 0 0 0…
  41. Management Day – Royal Dutch Shell – slide 41
    Upstream Royal Dutch Shell June 4-5, 2019
  42. Management Day – Royal Dutch Shell – slide 42
    Deep Water Shales Conventional Oil & Gas Upstream Appomattox USA Permian USA Ormen Lange Norway Leading portfolio Growing production and FCF High-graded portfolio High margin production Competitive delivery Portfolio…
  43. Management Day – Royal Dutch Shell – slide 43
    Cash flow from operations Organic free cash flow Upstream billion billion Improved 30 52 44 54 71 20 financial 20 10 delivery 10 0 0 -10 -10 -20 2015 2016 2017 2018 2015 2016 2017 2018 2020 2025 Conventional Oil & Gas Shales…
  44. Management Day – Royal Dutch Shell – slide 44
    Reserves and resources Developing at competitive cost Sustained production Upstream and Commercial resources, billion boe Unit development cost, per boe Thousand boe per day Integrated Gas 50 25 5,000 Thousands Portfolio 20…
  45. Management Day – Royal Dutch Shell – slide 45
    750 mmboe resource 2 billion annual Exploration addition ambition per annum investment to 2025 A value driven strategy Increasing value Unit finding costs, per boe Multiple Norway 8 3 Russia UK Albania USA Morocco Bulgaria 0…
  46. Management Day – Royal Dutch Shell – slide 46
    Leading deep-water portfolio with exciting development funnel and strong exploration acreage Deep Water Targeting 7-8 billion organic free cash flow in 2025 at 4-5 billion cash capex per year World class Sustained production 900…
  47. Management Day – Royal Dutch Shell – slide 47
    Significant sustainable Deep Water cost reductions realised Strong delivery Project break-even prices Replication Unit operating costs Pre-FID funnel break-even price per boe per boe 15 80 60 10 40 5 20 0 0 2015 2016 2017 2018…
  48. Management Day – Royal Dutch Shell – slide 48
    Deep Water Expanding our US Gulf of Mexico heartland Filling the hubs: Mars Corridor Appraisal and development Exploration Thousand boe per day 200 near Mars corridor +79% Powernap, King Embayment Appomattox Mars 100 Enchilada…
  49. Management Day – Royal Dutch Shell – slide 49
    Deep Water Continued delivery and growth in Brazil Production Development Exploration Thousand boe per day 400 Alto de Cabo Frio Oeste Mero 300 C-M-791 Berbigo Gato do Mato Sururu Libra 200 Sul de Gato do Mato Saturno 100 Sagitrio…
  50. Management Day – Royal Dutch Shell – slide 50
    Shales Focusing on high-margin tight oil positions and low cost gas assets A growth business Driving competitive cost structure and performance Western Canada Gas improvements across all Western Canada LTO operated positions…
  51. Management Day – Royal Dutch Shell – slide 51
    A leading operator driving Shales both cash and value Enhancing competitiveness in Permian Sustainable performance Long-term value creation Short-term cash delivery Well drilling and completion cost, normalized to Average cumulative oil…
  52. Management Day – Royal Dutch Shell – slide 52
    Simpler, more resilient portfolio Conventional Oil & Gas with higher cash returns per barrel High-graded portfolio delivers longevity High-grading the portfolio Resource life, years Norway USA (AERA) Russia UK Netherlands…
  53. Management Day – Royal Dutch Shell – slide 53
    Sustained FCF with 4-5 Conventional Oil & Gas billion cash capex until 2025 Capital efficiency enabling growth Capital efficiency Resilient portfolio Attractive returns Unit development cost, per boe Break-even price, per boe IRR, % 15…
  54. Management Day – Royal Dutch Shell – slide 54
    Upstream Robust development funnel Competitive options Exploration Pre FEED Pre-FID funnel break-even price, per boe 500 kboe/d FEED 240 kboe/d Under Coming 50 Mexico Mero 4 construction 470 kboe/d Onstream / Brazil Gato de Mato…
  55. Management Day – Royal Dutch Shell – slide 55
    Downstream Royal Dutch Shell June 4-5, 2019
  56. Management Day – Royal Dutch Shell – slide 56
    Oil Products Chemicals Downstream Most successful mobility retailer, 1 in lubricants Strong demand growth despite growing recycling Competitive/high- quality refining backbone Focus on base, derivative and performance chemicals…
  57. Management Day – Royal Dutch Shell – slide 57
    Organic free cash flow growth Balanced geographical exposure Oil Products billion Earnings, % Transformed 10 Oil Products is core to 5 2018 2025 world-class investment 0 case 2018 2020 2025 Organic FCF excl. working capital Working…
  58. Management Day – Royal Dutch Shell – slide 58
    Kilometres driven Absolute oil demand Marketing Oil Products expected to increase grows and shifts sectors show growth Multiple Index: 2020 = 100 Million boe per day 2017 2025 opportunities 60 150 drive Oil Products 100 +22%…
  59. Management Day – Royal Dutch Shell – slide 59
    Oil Products Competitive strengths of brand, scale and capabilities Retail Lubricants Trading and optimisation 0 0 0 42 Market share (%) 22 Brand value Brand share 5,290 ( billion) preference (%) 44 Finished 11 Physical crude…
  60. Management Day – Royal Dutch Shell – slide 60
    Retail gross margin contribution 150 Direct and indirect Oil Products markets globally % Creates value (2018) 100 by putting Main-grade Fuels customers at the heart of 1m B2B customers served in total (2018) 50 Convenience Retail…
  61. Management Day – Royal Dutch Shell – slide 61
    Oil Products Marketing business growth maintains momentum and remains competitive Earnings: Retail & Global Commercial Yield on cost and ROACE: competitive benchmark billion Opex yield (%) 8 ROACE 24% 20% 80 Retail & Global…
  62. Management Day – Royal Dutch Shell – slide 62
    2025 targets 2018 progress (vs. 2017) Oil Products New revenues Marketing Grow convenience retail 1000 55k business has 5,000 new stores New convenience stores Workshops in China New customer offers delivered Accelerate digital…
  63. Management Day – Royal Dutch Shell – slide 63
    Shell Fleet Hub Nature-based solutions Oil Products supporting 550,000 in the Netherlands Marketing active cards with more to come taking action Expanding our fast- to lead in charging network digital, mobility Developing E-Fluids…
  64. Management Day – Royal Dutch Shell – slide 64
    Oil Products Trading and Supply, the integrator and optimiser for Shell Sales volumes sourced from equity production Crude Products 22% of sales 42% of sales LNG Power 48% of sales 12% of sales Products Power Our advantage…
  65. Management Day – Royal Dutch Shell – slide 65
    Oil Products Reshaping our refining portfolio Refining non-energy cash costs million 4,500 4,000 2016 3,500 3,000 2,500 Performance improving 2,000 4th Quartile 3rd Quartile 2nd Quartile Top Quartile Refining capacity &…
  66. Management Day – Royal Dutch Shell – slide 66
    CFFO excluding working capital Organic free cash flow Oil Products billion billion Delivers on its 10 10 commitments 5 5 0 -5 0 -10 2016 2017 2018 2016 2017 2018 2020 2025 Organic FCF excl. working capital Working capital…
  67. Management Day – Royal Dutch Shell – slide 67
    Oil Products Transformed and core to the world-class investment case Brand Key component of world-class investment case 01 Iconic brand is valued significantly higher than any of our competitors Delivering transformational…
  68. Management Day – Royal Dutch Shell – slide 68
    Chemicals Petrochemicals and economic progress go hand-in-hand 01 Part of our 02 Linked to 03 Plays a role in Alpha Olefins Diphenyl Carbonate Phones, Low- tablets and everyday life GDP growth decarbonising temperature…
  69. Management Day – Royal Dutch Shell – slide 69
    Chemicals Demand growing, Shell plays a role in the solution Petrochemicals demand is growing even with projections on the circular economy Global polymer demand (virgin resin) Change in global GDP (real) and petrochemicals demand…
  70. Management Day – Royal Dutch Shell – slide 70
    WORLD-SCALE ASSETS Chemicals Proprietary technology Advantaged feedstocks Market access Competitively differentiated Geismar Alpha-Olefins 4 Pennsylvania Chemicals Nanhai phase II FUTURE Mono Ethylene Delivery on track;…
  71. Management Day – Royal Dutch Shell – slide 71
    Underlying costs Organic free cash flow Chemicals Index, real: 2016 = 100 billion Delivers on its 100 3 commitments 2 1 0 50 -1 2016 2017 2018 2020 2025 2016 2017 2018 2020 2025 Organic FCF excl. working capital Working…
  72. Management Day – Royal Dutch Shell – slide 72
    Chemicals Evolution to include higher-value performance products 2025 Differentiators Advantaged feedstocks Increase differentiation through: Process technology Product technology 2019 Market access Brand World-scale assets…
  73. Management Day – Royal Dutch Shell – slide 73
    New Energies Royal Dutch Shell June 4-5, 2019
  74. Management Day – Royal Dutch Shell – slide 74
    New Fuels Power New Energies Overview Razen, Brazil Mount Storm wind farm, USA Scalable investment contingent on technology, Trading, marketing and supply New energies and regulatory landscape and demand Lower-carbon…
  75. Management Day – Royal Dutch Shell – slide 75
    Power A macro look at power Why power Electricity generation growth Thousand TWh Global energy demand growing materially 50 Deep electrification required to help meet the goals of the Paris Agreement 45 Customers expect…
  76. Management Day – Royal Dutch Shell – slide 76
    Power Traditional power system Royal Dutch Shell June 4-5, 2019 77
  77. Management Day – Royal Dutch Shell – slide 77
    Power Evolution from the traditional power system INCREASING CAPITAL INTENSITY Royal Dutch Shell June 4-5, 2019 78
  78. Management Day – Royal Dutch Shell – slide 78
    Power Building blocks of a material and profitable integrated power business Royal Dutch Shell June 4-5, 2019 79
  79. Management Day – Royal Dutch Shell – slide 79
    Power Shells Leveraging the 15+ years Integrated competitive strongest energy of experience power system brand in the world in renewables & portfolio advantages Positive response from customers Generating and management following…
  80. Management Day – Royal Dutch Shell – slide 80
    Retail Trading Renewable generation Power Million customers Sales volumes (TWh) Operational capacity (GW) Renewable generation Aspirations 5 250 5 and investment criteria 4 4 3 3 200 2 2 1 1 Investment pace dependent on…
  81. Management Day – Royal Dutch Shell – slide 81
    Appendix Royal Dutch Shell June 4-5, 2019
  82. Management Day – Royal Dutch Shell – slide 82
    Commercial resources by theme Discovered Resources Valuable commercial resource base with significant Billion boe Robust 50 development options and a resource life that Thousands resource exceeds 20 years funnel 25 Total commercial…
  83. Management Day – Royal Dutch Shell – slide 83
    2019-20 Shell share: 250 kboe/d 2021+ Shell share: 250 kboe/d, 5.6 mtpa LNG Projects under construction 1.5 mtpa ethylene Shell share [A] Peak production LNG capacity Products Power output Shell Start-up Project Country Theme % 100%…
  84. Management Day – Royal Dutch Shell – slide 84
    Shell share potential: 1000 kboe/d 24 mtpa LNG Pre-FID options (1) 200 GW Shell share [A] Peak production LNG capacity Products Power output Shell Phase Project Country Theme % 100% kboe/d 100% Mtpa 100% capacity 100% MW operated…
  85. Management Day – Royal Dutch Shell – slide 85
    Shell share potential: 1000 kboe/d 24 mtpa LNG Pre-FID options (2) 200 GW Shell share [A] Peak production LNG capacity Products Power output Shell Phase Project Country Theme % 100% kboe/d 100% Mtpa 100% capacity 100% MW operated…
  86. Management Day – Royal Dutch Shell – slide 86
    Definitions Metric Abbreviation Definition Break-even price BEP The forward-looking break-even price for pre-FID projects is calculated based on all forward-looking costs associated with pre-FID projects in our development portfolio.…
  87. Management Day – Royal Dutch Shell – slide 87

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