BALANCING GROWTH & RETURNS - Shell

1 Copyright of Royal Dutch Shell plc 31 July, 2014

BALANCING GROWTH & RETURNS SECOND QUARTER 2014 RESULTS

31 JULY 2014 ROYAL DUTCH SHELL PLC


BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER

ROYAL DUTCH SHELL PLC


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 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, 31 July, 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.


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


DRIVING PERFORMANCE IN SHELL

Policy from 1.1.2015

New shareholding requirements Performance units

Drive bottom line focus

Credible, competitive and affordable plans

Drives decisions on spending + divestment

Individual performance management

Stronger accountability for outcomes

New shareholding requirements for senior executives

7 x base pay CEO

4 x base pay CFO

Top 200 executives below Executive Committee: 1.5 x base pay

Senior Executives


Cash flow

IMPROVE FINANCIAL PERFORMANCE H1 2014 OUTCOME

Earnings + ROACE $ billion $ billion

CCS earnings + ROACE excluding identified items

Upstream

Downstream

Corporate/Other

CFFO CFFI

%

ROACE (RHS)

$ billion

Free cash flow (RHS)

Dividend + buy-back $ billion

Dividend declared Buy-back

Balancing returns + growth

Competitive shareholder returns Expecting >$30 billion distributions to shareholders

2014-15


IMPROVE FINANCIAL PERFORMANCE OIL PRODUCTS

ROACE: CCS earnings excluding identified items

Resilience

Attr

activ

enes

s

Addressing underperforming portfolio Downstream CFFO + ROACE $ billion %

Exit: Italy Norway Australia Denmark others

Fix: Motiva Singapore fuels Pernis + Rheinland others

Selective Growth: Chemicals China LNG for transport Premium fuels + lubes Refinery crude flexibility others

: completed

Announced divestments 2014 year to date: 180,000 b/d refinery capacity

300,000 b/d marketing

US mid-stream MLP proposal

CFFO ROACE (RHS)


IMPROVE FINANCIAL PERFORMANCE NORTH AMERICA RESOURCES PLAYS

* 2014 H1: 12 month rolling

Haynesville

Elba LNG

LNG Canada

Groundbirch Deep Basin/Kaybob

Foothills/Pembina

Pinedale Gas-to-chemicals

Appalachia

Liquids rich shales (LRS)

Gas monetization options

Permian

Dry gas Gas/LRS

Resilience

Attr

activ

enes

s

$ billion

Dry gas Acquisitions LRS Divestments

-50%

-20%

North Americas capital investment Dry gas: LNG growth options in Canada Lower 48: low holding cost production +

appraisal drilling Liquid rich shales: Major divestments completed Appraisal in Western Canada + Permian

Q214 impairments $1.9 billion

Redefining growth + reducing cost

Exit: Eagle Ford Mississippi Lime Rockies LRS Deep Basin (North) Foothills (Burnt Timber)

Hold or Divest: Lower 48 gas

Maintain / Grow: W. Canada gas +

integration plays W. Canada LRS Permian LRS

LRS Plays completed


ENHANCE CAPITAL EFFICIENCY

Take hard choices on new options

More selectivity: FIDs > $500 million require CEO approval at FEED

Maturing new projects: LNG, deep-water

Increase asset sales

$8 billion completed H114

US midstream MLP proposal

Reduce pace of growth investment

2014 organic spending ~$35 billion

Scrip cancellation reflects improving FCF

: completed

2014+ Asset sales / license expiry

Wheatstone LNG

BC-10 dilution

North America LRS

Italy Downstream

ADCO license expiry

Woodside market sell down

Australia/Denmark/ Norway Downstream

Nigeria onshore

Late life UKCS

Others

270,000 boed upstream

180,000 b/d refining

300,000 b/d marketing


DELIVER NEW PROJECTS 2014 START-UPS

Mars B – February 2014 start-up

Mars B production ramp-up progress

Cardamom: H2 2014 start-up

Gumusut-Kakap: H2 2014 start-up

Shell 72%, 100 kboe/d

Shell 33%, 135 kboe/d Shell 100%, 50 kboe/d

kboed


Heartland

CONVENTIONAL EXPLORATION PORTFOLIO + THEMES

Prospect size: potential

Conventional Exploration spend 2014

Near field exploration Arctic/Frontier

Prospect Size

(million boe)

Time to development

(years)

15+

10+

3+

<3 5-50

50-250

>250

>500 Arctic

Frontier Under explored basins

Heartlands New plays in Shell producing basins

Near field High value

Balancing exploration risk

~ $ 4 billion


CONVENTIONAL EXPLORATION PROGRESS DELIVERY H1 2014: EXAMPLES

Rosmari gas discovery

~110 million boe

Shell 85%

4 near field gas discoveries in 2014 (100% success rate)

Adding gas to Malaysia heartland

Shell 30%

Deep-water oil discovery 16 km south of Appomattox

~100 million boe

Shell 57.2%

3rd Norphlet discovery

Malaysia, Block SK318 Malaysia, Block SK408 GOM, Rydberg Deep

Doo Sung rig Noble Globetrotter 1 Gorek-1 3D


SIMON HENRY CHIEF FINANCIAL OFFICER



Q2 2014 FINANCIAL HIGHLIGHTS

Earnings CCS basis, excluding identified items, ROACE excluding identified items

Earnings Q2 2013 to Q2 2014 $ billion

Earnings Q2 2013 to Q2 2014

Q2 2013

Q2 2014

$ billion UPSTREAM 3.5 4.7 DOWNSTREAM (CCS) 1.2 1.3

CORPORATE & MINORITIES -0.1 0.1

CCS NET EARNINGS 4.6 6.1

CCS EARNINGS, $ PER SHARE 0.73 0.97

CASH FROM OPERATIONS 12.4 8.6

ROACE (%) 11.8 9.4 SHARE BUY BACKS 1.9 0.3

DIVIDENDS 2.8 3.0

DIVIDEND, $ PER SHARE 0.45 0.47

Environment Choice


UPSTREAM PERFORMANCE Q2 2014

Earnings CCS basis, excluding identified items

Earnings + cash flow $ billion

Exploration expense

$ billion (pre-tax)

Oil and gas production

Million boe/day

Upstream International Upstream Americas Upstream International Upstream Americas

Gas Oil LNG Sales volumes (RHS)

Million tonnes

Cash flow from operations (RHS)

Q3 – Q3 OUTLOOK:

Production impact: Abu Dhabi license expiry ~170 kboe/d

Divestment impact ~75 kboe/d

Uplift from lower maintenance

Q214 LNG dividend phasing to Q314


DOWNSTREAM PERFORMANCE Q2 2014

Earnings CCS basis, excluding identified items

Earnings $ billion

Cash flow

Sales volume

Oil Products Chemicals

Refinery availability Chemicals availability Oil products (million bbls/d) (RHS)

Chemicals (million tonnes) (RHS)

Availability and sales volumes %

$ billion

CFFO excl w/c movements Working capital movements

CFFO

Q3 – Q3 OUTLOOK:

Similar refinery availability

Lower chemicals availability

Refining margin outlook remains bearish


UP STREAM

DOWN STREAM

CASH FLOW AND PAY-OUT

Cash generation $ billion, Q214 4Q rolling

Gearing + balance sheet $ billion

Cash flow from operations Net cash used in investing activities

Dividend and buy back

Gearing range

Net debt Gearing (RHS) 12 months

rolling

Dividends declared 12 months rolling

Dividend track record $ billion

Scrip dividend cancelled from Q2 2014

Buy back $7-8 billion 2014-15 combined

~$1.6 billion H1 2014


FINANCIAL FRAMEWORK – KEY DRIVERS

Organic free cash flow : cash flow from operations less cash used in investing activities adjusted for major acquisitions and divestments Dividend declared: weighted average outstanding shares x dividend per share ($)

A+D supports portfolio growth $ billion (cash basis)

Organic free cash flow drives dividend

$ billion (cash basis)

Divestments

Acquisitions

Cumulative cash surplus (deficit) of divestments over acquisitions

Organic free cash flow

Dividend declared

Cumulative organic FCF surplus (deficit) over dividend declared


FINANCIAL FRAMEWORK – TRACK RECORD

Free cash flow: cash flow from operations less cash used in investing activities

Balancing financial framework over time

$ billion

Free cash flow

Cash dividend and buybacks

Cumulative surplus (deficit) of free cash flow over dividend and buybacks


COMPETITIVE PERFORMANCE: BALANCING GROWTH AND RETURNS 4Q ROLLING Q2 2014

Free cash flow: cash flow from operations less cash used in investing activities; ROACE underlying: European companies: CCS basis excluding identified items. US companies: reported earnings excluding special non-operating items.

Cash flow from operations $ billion

Free cash flow $ billion

ROACE – underlying %

Shell Peer group

Tracking Shell’s competitive performance

Q2

2014

2014

2014


BEN VAN BEURDEN CHIEF EXECUTIVE OFFICER



2014 PRIORITIES Q2 2014 DELIVERY

Earnings excluding identified items

Deliver new projects

Enhance our capital efficiency

Improve our financial performance

Q214 CCS earnings $6.1 billion; CFFO 8.6 billion

Restructuring in Oil Products + North America resources plays

Expecting > $30 billion distributions to shareholders 2014-15

More selectivity on new projects

$8 billion asset sales delivered

US mid-stream MLP proposal

Continued Mars B growth

Gumusut-Kakap + Cardamom deep-water start-up H214

Exploration


QUESTIONS & ANSWERS SECOND QUARTER 2014 RESULTS


BALANCING GROWTH & RETURNS SECOND QUARTER 2014 RESULTS

31 JULY 2014 ROYAL DUTCH SHELL PLC

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