simon henry- deutsche bank 11th annual global oil & gas conference

1 Copyright of Royal Dutch Shell plc 22 September 2011

ROYAL DUTCH SHELL PLC

DEUTSCHE BANK GLOBAL OIL & GAS CONFERENCE LONDON SEPTEMBER 22, 2011


SIMON HENRY CHIEF FINANCIAL OFFICER



DEFINITIONS AND CAUTIONARY NOTE

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 or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions. 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 24% 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‟‟, “scheduled”, „„estimate‟‟, „„expect‟‟, „„goals‟‟, „„intend‟‟, „„may‟‟, „„objectives‟‟, „„outlook‟‟, „„plan‟‟, „„probably‟‟, „„project‟‟, „„risks‟‟, „„seek‟‟, „„should‟‟, „„target‟‟, „„will‟‟ 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 regulatory measures addressing climate change; (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 Annual Presentation / Form 20-F for the year ended December 31, 2010 (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, 22 September 2011. 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. We may have used certain terms in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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 these forms from the SEC by calling 1-800-SEC-0330.

http://www.shell.com/investor

http://www.sec.gov/


Injuries – TRCF per million working hours Million working hours

‘GOAL ZERO’ ON SAFETY

EMPLOYEES AND CONTRACTORS PER MILLION WORKING HOURS; SHELL OPERATED FACILITIES

SHELL

Customer and partner focus

Profitability & performance

Sustainability & growth

Value added technology

Focus on personal and process safety

Industry leader in Sustainable Development

WORKING HOURS (RHS) TRCF


CURRENT COST OF SUPPLY EARNINGS

STRATEGY AND PRIORITIES

Growth Investment – Through Cycle Returns

UPSTREAM

DOWNSTREAM

PRIORITIES

PERFORMANCE FOCUS

NEW WAVE OF PRODUCTION GROWTH

MATURING NEXT GENERATION OF PROJECT OPTIONS

EARNINGS

$ Bln

UPSTREAM

DOWNSTREAM

CORPORATE

DIVESTMENTS/OTHER


ROYAL DUTCH SHELL PERFORMANCE FOCUS


CONTINUOUS IMPROVEMENT

PERFORMANCE FOCUS

EXAMPLE: CAPITAL EFFICIENCY

Asset sales - $ Bln (cumulative)

Continuous improvement

Cost focus

Operational excellence

Capital efficiency

Simplification EXAMPLE: WELLS MANUFACTURING JV WITH CNPC

DOWNSTREAM

UPSTREAM

CORPORATE

PERFORMANCE FOCUS




DOWNSTREAM VALUE CHAINS

3 keys to winning Operational excellence – Concentrating the portfolio – Selective growth

Refining

Chemicals

Supply & Distribution

Chemicals

Retail

Business-to- Business

Trading

Lubricants


0

1

2

3

4

5

2002 2009 2012

MARKETING REFOCUS

OIL PRODUCTS PERFORMANCE FOCUS

REFINING PORTFOLIO REDUCTION

Aviation markets

Lubricants markets

Retail sites

Bulk Fuels markets

DIRECT EXITS INDIRECT/PART EXIT

Refocused portfolio + business model

Selective growth • Brazil, Asia Pacific, others

Brand strength + product innovation

Refinery capacity Mln bbl/d (100%)

EUROPE & AFRICA ASIA PACIFIC AMERICAS

-30% 4.7

3.3 Focus on larger integrated sites

30% net reduction by 2012

Improve operating performance

PERFORMANCE FOCUS



0%

50%

100%

'09 '12 '09 '12 '09 '12 '09 '12


Evolution of USGC industry cash margins + feedstock slate

CHEMICALS PORTFOLIO + PERFORMANCE

USGC BASE CHEMICALS SHIFT TO GAS FEEDS

Base chemicals and derivatives portfolio

Plant integration with refineries

Growth potential through advantaged feedstock

Product innovation

Total feedslate

AL JUBAIL PLANT – SAUDI ARABIA

EARNINGS

CCS Earnings - $ Bln

CCS EARNINGS EXCLUDING IDENTIFIED ITEMS

INTEGRATED CHEMICALS

US Gulf Coast

Moerdijk/Pernis

Singapore

SADAF

Key site

Nanhai

Mossmoran Scotford

Options

US

Qatar China

PERFORMANCE FOCUS




GROWTH DELIVERY BIOFUELS GROWTH: BRAZIL GLOBAL BIOFUELS GROWTH POTENTIAL

RAìZEN: LARGEST IOC BIOFUELS PRODUCER

RAìZEN JOINT VENTURE 2011

Kboe/d production

2nd generation technology portfolio

lowest CO2

most sustainable

most cost competitive

of today‟s biofuels

Brazilian sugarcane ethanol

0

1,000

2,000

3,000

2005 2010 2015 2020

SOYBEAN RAPESEED PALM OIL OTHER CORN SUGARCANE

Marketing JV ~19% market share in Brazil

Rebranding and enhanced customer offering

Synergies + growth potential

Biofuels JV Leading Brazil and Top 5 global ethanol

player

World-wide trading opportunities

Potential to double volumes in ~5 years


ROYAL DUTCH SHELL GROWTH DELIVERY


Mln Boe/d

GAS DEMAND GROWTH

LEADER IN A GLOBAL GROWING GAS MARKET

0

5

10

15

20

25

30

North America

Europe

Asia Pacific

Middle East

+189%

+89%

+29%

+23%

Other

+86% 2008

2035

SHELL

SOURCE: INTERNATIONAL ENERGY AGENCY; WORLD ENERGY OUTLOOK 2011 GOLDEN AGE OF GAS

LNG

Tight gas

Gas-to-liquids

Traditional gas


GROWTH DELIVERY CONVERTING RESOURCES TO PRODUCTION Bln Boe resources

Longer-term upside

Gorgon NA tight gas

Sakhalin BC-10

Prelude Pearls (CMOC)

Prelude AOSP debottleneck

Schiehallion Malikai

NA tight gas Clair Ph2

Pearl GTL QG-4

Schoonebeek Oman EOR

Others

Maintaining Upstream momentum

Mars-B BC-10 Phase2

AOSP-Exp 1 Gjoa

Perdido Gbaran Ubie NA tight gas

NA tight gas Australia

Cardamom Deep Appomattox

Vito

PRODUCTION ON-STREAM STUDY UNDER CONSTRUCTION

2011 PROGRESS

PERFORMANCE FOCUS




* PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO

GROWTH DELIVERY 2011 START-UPS

Qatar – Qatargas 4 LNG shipment

Canada - Scotford upgrader

Qatar - Pearl

INNOVATIVE TECHNOLOGY, FULL VALUE CHAIN, LONG-LIFE RETURNS

~ $30 bln capital investment >400,000 boe/d* for Shell

Underpins target for 3.1 - 3.5 mln boe/d 2009-12

PERFORMANCE FOCUS




Prelude FLNG – Australia 110 kboe/d; 100% Shell

GROWTH DELIVERY LAUNCHING NEW UPSTREAM PROJECTS

Cardamom – USA 50 kboe/d; 100% Shell

Schiehallion

Sabah Gas KBB

AOSP Debottlenecking 1st FID

BC-10 Phase 2

Mars-B – USA 100 kboe/d; 72% Shell

14 FIDs taken ~400,000 boe/d* potential Driving 3.7 mln boe/d target 2014 and longer term growth

NA tight gas (various)

2010 + 2011 YEAR-TO-DATE INVESTMENT DECISIONS

Sabah Gas Kebabangan (KBB) - Malaysia 130 kboe/d; 30% Shell; PSC

Prelude FLNG

Mars-B Cardamom

* PEAK PRODUCTION; SHELL SHARE ENTITLEMENT AT $80/BBL; 2014 OUTLOOK ASSUMES LICENCE EXTENSIONS + 2010 ANNOUNCED ASSET SALES

PERFORMANCE FOCUS




ROYAL DUTCH SHELL MATURING NEXT GENERATION PROJECT OPTIONS


MATURING NEXT GENERATION OF PROJECT OPTIONS ADDING NEW RESOURCES EXPLORATION & BUSINESS DEVELOPMENT

2008

DISCOVERY

2009

2010 2011/12

GoM – Cardamom

GoM - Vito

Norway – Fram

Canada – Groundbirch

GoM – South Deimos

GoM – Appomattox

Brazil – Gato do Matto

Brazil – Massa

Brunei - Geronggong

Australia - Concerto

Alaska

China – Tight gas

USA - GoM

French Guyana

Brazil - DW

Canada - Duvernay

US - East Resources

US - Eagle Ford

Australia - Arrow

ACQUISITION

EXPLORATION PROSPECT

Kazahkstan - Auezov

Nigeria - Offshore

Brunei – ML-J206T1

Australia – Iago 2

Australia – Libra 1

Brunei

US - Haynesville

GoM – West Boreas

Australia - NWS

Portfolio can support profitable growth to ~2020

Long-term growth and investment

Options to flex annual spending with macro

Capex and growth outcomes

Investment decisions driven by

Portfolio fit

Affordability Profitability

PERFORMANCE FOCUS




ACREAGE

DRILLING TECHNOLOGY UNLOCKS NEW GROWTH

Haynesville JV

Pinedale

Groundbirch

Eagle Ford

Marcellus

Deep Basin Foothills

TIGHT GAS

CHINA + AUSTRALIA JVs WITH PETROCHINA

Arrow Energy LNG

COAL BED METHANE

NORTH AMERICA

China: Changbei drilling rig

Changbei tight gas

Daning CBM

North Shilou CBM

Jinqiu tight gas

Fushun tight gas


MATURING NEXT GENERATION OF PROJECT OPTIONS MATURING NEW PROJECTS INVESTMENT OPTIONS

Portfolio can support profitable growth to ~2020

Long-term growth and investment

Options to flex annual spending with macro

Capex and growth outcomes

Investment decisions driven by

Portfolio fit

Affordability Profitability

Tight Gas – N. America

Arrow - Australia Appomattox - USA

Qatar Chemicals

Vito - USA Gbaran Ubie Ph2 - Nigeria

PERFORMANCE FOCUS




FINANCIAL FRAMEWORK



Sustained growth investment $25 - $27 bln net capex 2011-2014

Capital discipline

EXPLORATION

INVESTMENT PROGRAMME

UPSTREAM

% Capital investment

HEAVY OIL & EOR

TIGHT GAS

INTEGRATED GAS

DEEPWATER

TRADITIONAL

SOUR

ASIA PACIFIC EUROPE

AMERICAS OTHERS

DOWNSTREAM

2012-14 CAPITAL INVESTMENT EXCLUDES IRAQ FULL FIELD DEVELOPMENTS

% Capital investment

REFINING CHEMICALS MARKETING


CONVERTING INVESTMENT TO CASHFLOW

$ Bln

INVESTING FOR NEW GROWTH

DELIVERING CASHFLOW GROWTH

CASH FLOW FROM OPERATIONS EXCL. NET MOVEMENTS IN WORKING CAPITAL

NET CAPITAL INVESTMENT

(2009-12 average)

$/bbl BRENT

$80/bbl

$62/bbl

$96/bbl

$60/bbl

CAPITAL UNDER CONSTRUCTION EXPLORATION & EVALUATION

2009 2012 target

H1‟11 (12 months rolling)

Rebalancing financial framework into surplus cash flow Maintaining growth investment and competitive payout

CASH FLOW TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009-2012


CASH PERFORMANCE 12 MONTHS TO H1 2011 GEARING

CASH FLOW AND BALANCE SHEET

Gearing range

$ Bln

PAY-OUT

CAPEX + EQUITY ACC. INVESTMENTS ACQUISITIONS

%

CASH FLOW FROM OPERATIONS EXCL. NET MOVEMENTS IN WORKING CAPITAL ASSET SALES

SOURCES USES


MAJORS DIVIDEND PAYOUT RATIOS

$ Bln

SHELL PAYOUT

COMPETITIVE PAYOUT

%

CLEAN EPS, 4 QUARTERS ROLLING TO H1 2011

COMPETITORS

DIVIDENDS DECLARED, of which: SCRIP

BUYBACKS


FINANCIAL FRAMEWORK

CFFO TARGETS ASSUME IMPROVED DOWNSTREAM AND NATURAL GAS ENVIRONMENT 2009-2012

CASH PERFORMANCE

~50-80% CFFO increase 2009-12 ($60-$80 oil price scenarios)

Surplus cash flow 2012 at $60/bbl

INVESTMENT

$25-27 bln net capex /year Up to $3 bln asset sales/year

2012+ Affordability, profitability,

portfolio

PAY-OUT

Dividend linked to results Scrip dividend option ~$10 billion expected 2011

BALANCE SHEET

0 – 30% gearing through cycle Balance sheet underpins

investment Capital employed grows

steadily

Competitive returns – cash generation – growth investment


2011-12 OUTLOOK

PERFORMANCE FOCUS



PRIORITIES

>400kboe/d* new projects launched 2010-11

Upstream growth potential to ~2020

2011 start-ups: >400kboe/d*; $30bn investment

Selective Downstream growth

On track for 2012 cashflow and production targets

Continuous improvement embedded in Shell

Up to $8 billion asset sales; capital efficiency

OUTLOOK

Competitive performance – Profitable growth – Sharper delivery * PEAK PRODUCTION; SHELL SHARE: $80 OIL PRICE SCENARIO


ROYAL DUTCH SHELL DEUTSCHE BANK GLOBAL OIL & GAS CONFERENCE

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simon henry- deutsche bank 11th annual global oil & gas conference

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