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Second quarter 2016 results
Re-shaping Shell,
to create a world-class investment case
Royal Dutch Shell plc
July 28, 2016
“Let’s make the future”
Ben van Beurden
Chief Executive Officer
Royal Dutch Shell
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 (SPE) 2P + 2C definitions.
Resources and potential: Our use of the term “resources and potential” are consistent with SPE 2P + 2C + 2U 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.
Shales: Our use of the term ‘shales’ 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 legal entities. In this release “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 release refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated
arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations” respectively. Entities over which Shell has significant influence but neither
control nor joint control are referred to as “associates”. 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 release 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’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘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 release, 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. There can be no assurance that future dividend payments will match or
exceed previous dividend payments. All forward-looking statements contained in this release 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 risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year
ended December 31, 2015 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expressly qualify all forward looking statements contained in this release and
should be considered by the reader. Each forward-looking statement speaks only as of the date of this release, July 28, 2016. Neither Royal Dutch Shell plc 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 release.
With respect to operating costs synergies indicated, such savings and efficiencies in procurement spend include economies of scale, specification standardisation and operating efficiencies
across operating, capital and raw material cost areas.
We may have used certain terms, such as resources, in this release 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.
Royal Dutch Shell
July 28, 2016
3
Strategy
“Let’s make the future”
STRATEGIC
 Focus portfolio on resilient positions
World-class
investment case
 Invest in advantaged projects
 Value chain integration
 FCF/share + ROCE growth
Leader: value +
influence
Reducing our
carbon intensity
 Conservative financial
Shared value
with society
management
OPERATIONAL
 Reset cost and capital spending
 First class execution projects +
operations
 Unrelenting focus on HSSE and
licence to operate
Royal Dutch Shell
July 28, 2016
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Re-shape Shell
Driving strategy in multiple time horizons
Cash engines: today
Growth priorities: 2016+
Funds dividends + balance sheet
Cash engines 2020+
Material value + upside
Affordable growth in
Competitive + resilient
Path to profitability
advantaged positions
Strong free cash flow and returns
CONVENTIONAL
OIL + GAS
INTEGRATED
GAS
OIL SANDS
MINING
OIL
PRODUCTS
FCF + ROACE pathway
DEEP WATER
Future opportunities: 2020+
Managed exposure
CHEMICALS
SHALES
NEW
ENERGIES
Relentless portfolio high-grading
Royal Dutch Shell
July 28, 2016
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Re-shape Shell
H1 2016 delivery
Cash engines: today
Growth priorities: 2016+
Future opportunities: 2020+
Conventional oil and gas
Deep water
Shales
Unit costs $/boe
Unit operating costs
Thousand boe/d
Unit costs $/boe
Thousand boe/d
Unit costs $/boe
Thousand boe/d
Production (RHS)
 Reducing costs + improving uptime
 Delivering growth projects
 HSSE priority
Operating costs exclude identified items; deep water excludes idle rig costs
Royal Dutch Shell
July 28, 2016
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Financial dashboard
Gearing
Free cash flow per share
%
$/share
ROACE
Total shareholder return
%
%
Shell
3 years to Q2 2016
12 months to Q2 2016
Peer group
Competitive financial data as published. Free cash flow: cash flow from operations less cash used in investing activities. $/ADR for European companies.
ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items. Capital employed on gross debt
basis.
Royal Dutch Shell
July 28, 2016
Simon Henry
Chief Financial Officer
Royal Dutch Shell
Q2 2016
Financial highlights
Q2 2015
Q2 2016
Upstream
(0.5)
(1.3)
Integrated Gas
1.4
0.9
Downstream (CCS)
3.0
1.8
Corporate & minorities
(0.1)
(0.3)
CCS net earnings
3.8
1.0
CCS earnings, $ per share
0.60
0.13
Cash flow from operations
6.1
2.3
ROACE (%)
7.6
2.5
Dividends
3.0
3.7
Dividend, $ per share
0.47
0.47
$ billion
Earnings Q2 2015 to Q2 2016
$ billion
Earnings and ROACE on CCS basis, excluding identified items
Royal Dutch Shell
July 28, 2016
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Q2 2016
Financial highlights
Earnings Q2 2015 to Q2 2016
$ billion
Environment
Choice
Earnings on CCS basis, excluding identified items
Royal Dutch Shell
July 28, 2016
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Cash performance + payout
Cash flow
Cash generation
$ billion
$ billion
$ billion, 2016 Q2 4Q rolling
43
~20
CFFO
CFFO
Cash investment
Downstream + Corporate
Integrated Gas
Upstream
Free cash flow (RHS)
Dividend, buyback + gearing
$ billion
%

BG acquisition – cash element
Dividend and buyback
Cash investment
Priorities for cash:



Dividend declared
Buyback
CFFI
Debt reduction
Dividends
Buybacks + capital investment
End period gearing (RHS)
Gearing range
Cash investment: Cash flow from investing activities
Royal Dutch Shell
July 28, 2016
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Integration with BG
BG performance
Queensland LNG
Thousand boe per day
Synergies: BG
T2 start up
Nov 2015
#
$ billion
4
1st LNG Train 1
Dec 2014
4.5
2.5
Costs
Production
Exploration
Number of cargoes delivered in the quarter (RHS)
Brazil pre-salt
Thousand boe per day
Cidade ItaguaíFPSO Cidade de Maricá
Q1 2016
Q3 2015

Actions taken for ~50% of synergies capture:




Royal Dutch Shell
July 28, 2016
Staff + contractors
Offices
Exploration
Procurement + others
12
Manage down-cycle
Pulling levers to manage financial framework
2016-18 levers
Divestments
Reduce
capital
investment
Reduce
operating
costs
Deliver new
projects
2015 baseline:
Shell + BG
2016
2017-2018
potential
Operating costs
46
Trend to 40
(underlying)
Multi-billion p.a.
Capital investment
36
~29
25-30
6+5
6-8 in
progress
30 over
2016-18
n/a
~$2 billion
~10 billion
by 2018*
$ billion
Divestments
Projects start-up post-2014
(CFFO)

Reducing our cash break-even

Further options available

+/- $10 Brent = ~5 billion CFFO
* $60 oil price scenario 2018 (2016 RT Brent)
Royal Dutch Shell
July 28, 2016
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Divestments
Reduce capital
investment
Reduce
operating costs
Deliver new
projects
Manage down-cycle
Divestments
Divestment program
$ billion
2016-2018 completed + announced
$ billion
Completed
– MLP
0.8
– Denmark marketing
0.3
– N.Z.: Maui pipeline
0.2
– MGL IPO
0.1
– Others
0.1
1.5
Total completed
Announced
– Showa Shell
~1.4
– Malaysia refining
– Anasuria cluster
~0.2
– Maclure
Integrated Gas
Upstream
Downstream/Corporate
Refocus portfolio
Infrastructure + mature positions
High grading ‘tail’
 $30 billion 2016-18
Total announced
~1.6
TOTAL
~3.1
In progress
– Motiva JV end
– N.Z.: upstream
strategic review
 Progressing $6-8 billion 2016
– Thailand strategic
review
 5-10 countries; ~10% of production
– Selective North Sea
strategic review
Integrated gas split out from Upstream from 2011 onwards
Royal Dutch Shell
July 28, 2016
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Divestments
Reduce capital
investment
Reduce
operating costs
Deliver new
projects
Manage down-cycle
Lower & more predictable capital investment
Capital investment
$ billion
58
53
47
Shell
BG
43
41
37
-25%
36
33
31
29
~29
~26
25-30
Shell + BG C.I. on a cash basis

Planning for $25-$30 billion range

$30 billion/year ceiling

Trending lower in range today

Options to further reduce below $25 billion if warranted
2016 excludes BG purchase price
Royal Dutch Shell
July 28, 2016
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Divestments
Reduce capital
investment
Reduce
operating costs
Deliver new
projects
Manage down-cycle
Reduce operating cost
Operating cost

Substantial reductions delivered

“Lower for ever” mindset + BG synergies

Staff, supply chain + contractors

Divestments, growth, FX impacts
$ billion
49
-$4 bn
46
Shell
44
42
~40
BG
Excluding identified items
Royal Dutch Shell
July 28, 2016
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Divestments
Reduce capital
investment
Reduce
operating costs
Deliver new
projects
Deliver new projects
2016 investment decisions and planned start-ups


LNG Canada delay of FID
 13 mtpa LNG
 Shell 50%
FID
Start-up
Lake Charles delay of FID
 ~15 mtpa LNG
 Shell capacity interest 100%
Stones
 50 kboe/d
 Shell 100%

Pennsylvania FID
 1.6 mtpa polyethylene plant
 Shell 100%
BC-10 Ph3
 Shell 50%

8th FPSO – ‘Saquarema’
 150 kboe/d
 Shell 25%

7th FPSO 1st oil – ‘Maricá’
 150 kboe/d
 Shell 25%

9th FPSO – ‘Caraguatauba’
 100 kboe/d
 Shell 30%
ML South start-up
 35 kboe/d
 Shell 35%
Gorgon start-up
 15.6 mtpa LNG
 Shell 25%
Kashagan
 300 kboe/d
 Shell 17%
Nanhai 2nd cracker FID
 1.2 mtpa ethylene plant
 Shell 50%


 2016 start-ups: >250 kboe/d ; 3.9 mtpa LNG
 New chemicals investment
 LNG FIDs postponed
Royal Dutch Shell
July 28, 2016

17
Divestments
Reduce capital
investment
Reduce
operating costs
Deliver new
projects
Deliver new projects
Conventional exploration: progress H1 2016
GoM: cumulative resources added (2010-2016)
Fort Sumter discovery
Million boe
Appomattox
future Appo TLP
Kepler North
Fort Sumter
Vicksburg
Vito appraisal
Vicksburg
Shell lease
Discovery
Rydberg
TLP
Kaikias appraisal
Powernap appraisal
Fort Sumter
Mississippi canyon Desoto canyon
Appomattox
Vito
Cardamom
South Deimos
Appomattox
appraisal
Rydberg
Kaikias
Powernap

Oil discovery in Gulf of Mexico heartland;
Norphlet play

>125 million boe resources added, with followup wells in 2016 and 2017

Shell 100 %
 Added ~1.3 billion boe in GoM 2010+
 Heartland + near field focus; vicinity to infrastructure; deep geological basin knowledge
Royal Dutch Shell
July 28, 2016
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Ben van Beurden
Chief Executive Officer
Royal Dutch Shell plc
Transformation
CREATE A
WORLD CLASS
INVESTMENT CASE
ROACE
Organic free cash flow
Brent
2013-2015
average
2019-2021
average
8%
~10%
$5 billion p.a.
$20-25 billion p.a.
~$90
~$60
Improved capital
efficiency: reduced
investment/FCF ratio
Capital efficiency:
2013 spending
halved & $45 billion
mitigated
Less cost + fewer
people with BG than
Shell stand-alone:
12,500 fewer staff
Portfolio growth:
1 mboe/d adds
$10 bln cash flow
Improving our
metrics:
FCF/share; ROCE;
net debt
Simpler company: Exit
~10% production;
5-10 countries
$30bn divestments:
Innovative deals like
Motiva, Showa
and MLP
Energy transition:
CO2 footprint & new
energies strategy
$60 oil price scenario (2016 RT Brent)
Royal Dutch Shell
July 28, 2016
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Questions & Answers
Q3 2016 Outlook
Q3 – Q3 OUTLOOK: Year-ago baseline reflects Shell’s earnings seasonality

Upstream


Integrated gas


Nigeria SPDC security impact: ~-35 kboe/d
Maintenance: ~-15 kboe/d
Downstream

Refinery availability marginally increase

Chemicals availability increase

Divestment impact Marketing volumes: ~-200 kboe/d

PPA - depreciation charge: up to $0.3 billion

Shell + BG earnings sensitivity (2016):


Brent: $10/bbl Brent +/- ~$5 billion earnings per annum, of which:

Upstream +/- ~$3 billion

Integrated Gas +/- ~$2 billion (4-6 month LNG price lag versus Brent)
Henry Hub: $1/mmbtu +/- ~$250 million earnings per annum
Royal Dutch Shell
July 28, 2016
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Q2 2016
Upstream results
Earnings Q2 2015 to Q2 2016
$ billion
Environment
Choice
Earnings on CCS basis, excluding identified items
Royal Dutch Shell
July 28, 2016
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Q2 2016
Integrated gas results
Earnings Q2 2015 to Q2 2016
$ billion
Environment
Choice
Earnings on CCS basis, excluding identified items
Royal Dutch Shell
July 28, 2016
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Q2 2016
Oil and gas production
Upstream + Integrated Gas – oil & gas
LNG liquefaction volumes
Million boe per day
Million tonnes
Choice: +30%
3.75
3.50
3.25
3.00
2.75
2.50
Royal Dutch Shell
July 28, 2016
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Q2 2016
Downstream results
Earnings Q2 2015 to Q2 2016
Earnings mix
$ billion
$ billion
Marketing
Refining & Trading
Chemicals
Earnings on CCS basis, excluding identified items
Royal Dutch Shell
July 28, 2016
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Q2 2016
Prices & margins
Shell oil & gas realisations
$/barrel
$/mmbtu
Industry chemicals margins
$/barrel
$/tonne
US West Coast
US Gulf Coast coking
Rotterdam complex
Singapore
Oil
Gas (RHS)
Royal Dutch Shell
Industry refining margins
July 28, 2016
27
US ethane
Western Europe naphtha
NE/SE Asia naphtha
Second quarter 2016 results
Re-shaping Shell,
to create a world-class investment case
Royal Dutch Shell plc
July 28, 2016
“Let’s make the future”
Royal Dutch Shell
July 28, 2016