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Royal Dutch Shell Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: RDS.A

These are all the seams [ph] where Shell adds a lot of value. Now Qatargas 4 energy achieved full production in 2011 and it has already delivered 9.8 million tonnes of LNG in 11 countries.

AOSP expansion one in oil sands Canada has been operating at all quality adjusted design rates in the second quarter. Pearl Gas-to-Liquids has already produced 4.5 million tonnes of NGLs and GTL products, and both trains have run at 90% to 100% of design rates. This is a great achievement and Pearl is one of a kind of an asset. And some of you, or most of you, have seen it as well.

Now we have already learned a lot about this facility, which gives us new opportunities for continuous improvements. Maintenance, started in the second quarter, will continue during the third quarter, impacting production with minor modifications as we get both GTL trains and the utilities running as a single integrated asset. This is all building up to the final slate and marketing the higher-value products of what I call the Downstream side of the project, essentially a gas-based refinery.

Now I want to change the emphasis here. The last 6 years have been all about the construction and ramp-up phase of these exciting projects. Going forward on these 3, it's all about safe and reliable production operations, getting more out of the assets from things like debottlenecking of oil sands for example, catalyst improvements, more product placed in high-value specialty markets and petrochemicals opportunities in Qatar and maximizing commercial returns in the integrated value chains on all of these projects.

So you might hear less about them in our presentations, but they are going to be important drivers of the results. First half 2012 production from these 3 was 360,000 BOE per day, compared to 184 per day in the first half of '11. They generated $2.7 billion or 12% of the first half of our CFFO, cash flow from operations, and $1.8 billion or 14% of first-half earnings.

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