Full publication: PDF (92 pages), XLS (95 tables) - Reports - Shell

6 Shell Investors’ Handbook
Summary review
UPSTREAM
In Upstream we focus on exploration for
new liquids and natural gas reserves and
on developing major new projects where
our technology and know-how add value to
the resource holders. The implementation of
our strategy will see us actively managing
our portfolio around three themes in
Upstream:
� building our resource base through
global exploration, focused acquisitions
and exits from non-core portfolio positions;
� accelerating the extraction of value from
our resources, with profi table production
growth, top-quartile project delivery and
operational excellence; and
� differentiating ourselves from our
competition through integrated gas
leadership, technology and partnerships.
DOWNSTREAM
In our Downstream businesses, our emphasis
remains on sustained cash generation from
our existing assets and selective investments
in growth markets. The implementation of
our strategy will see us actively manage our
assets around three themes in Downstream:
��operational excellence and cost
effi ciency, to maximise the uptime and
operating performance of our asset base,
and to reduce costs and complexity;
� refocusing our refi ning portfolio on the
most effi cient facilities – those that best
integrate with crude supplies, marketing
outlets and local petrochemical plants; and
� selective growth in countries such as
China, India and Brazil, which have high
growth potential, while maintaining or
increasing our margins in our core countries.
This includes researching, developing and
marketing biofuels.
CONVERTING RESOURCES TO PRODUCTION
billion boe
35
30
25
20
15
10
5
0
-5
2008 2009
On-stream
Under construction
Study
Production
2010 2011
Long-term upside
PROJECTS & TECHNOLOGY
Our commitment to technology and
innovation continues to be at the core of
our strategy. As energy projects become
more complex and more technically
demanding, we believe our engineering
expertise will be a deciding factor in the
growth of our businesses. Our key strengths
include the development and application
of technology, the financial and projectmanagement
skills that allow us to deliver
large field development projects, and the
management of integrated value chains.
OUTLOOK
We have defined three distinct layers for
Shell’s strategy development: performance
focus and continuous improvement; growth
delivery; and maturing next-generation
project options for the longer term.
PERFORMANCE FOCUS AND
IMPROVEMENT
We will work on continuous improvements
in operating performance, with an
emphasis on health, safety and
environment, asset performance and
operating costs. Asset sales are a core
element of our strategy – improving our
capital efficiency by focusing investment
on the most attractive growth opportunities.
Shell has sold a substantial portion of its
non-core assets in the last years. Asset sales
of up to $3 billion are expected in 2012 as
Shell exits from further non-core positions.
We have initiatives underway that are
expected to improve Shell’s integrated
Downstream businesses, focusing on the
most profitable positions and growth
potential. Shell announced exits from
800 thousand b/d of non-core refining
capacity and from selected retail and other
marketing positions in 2009–2011, and
has taken steps to improve the quality of its
Chemicals assets.
DIVESTMENTS 2009–2011
Upstream
Downstream
Total $17 billion
ACQUISITIONS 2009–2011
GROWTH DELIVERY
We are planning a net capital investment
of some $30 billion in 2012 – an increase
from 2011 levels – as Shell invests for longterm
growth. This amount relates largely
to investments in some 17 new projects for
which final investment decisions were taken
in 2010–2011. They are part of a portfolio
of more than 60 new growth projects that
are under construction or being assessed
for future investment. Going forward,
annual spending will be driven by the
timing of investment decisions and the nearterm
macroeconomic outlook.
In early 2012, Shell defined a set of
ambitious financial and operating targets
for profitable growth. These targets are
driven by Shell’s performance in maturing
new projects for final investment decision
and by project start-ups.
Cash flow from operations (CFFO),
excluding working capital movements, was
$136 billion for 2008–2011. We expect
aggregate cash flow from operations,
excluding working capital movements,
for 2012–2015 to be 30-50% higher,
GROUP CAPITAL INVESTMENT
$ billion
35
30
25
20
15
10
5
0
Upstream
Downstream
Total $15 billion
2009–11 average
Downstream
Europe (Upstream)
Americas (Upstream)
Asia��aci�c (Upstream)
Africa, Middle East, CIS (Upstream)