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Shell Delivering A Competitive And Innovative Strategy

Key operational milestones in 2012:

  • We continued to focus on safe and reliable operations in all of our activities.
  • Cash flow from operations (CFFO) of $46 billion, net capital investment of $30 billion, dividends announced of $11 billion.
  • New start-ups in 2010-12 added $ 6 billion of cash flow and 600 thousand barrels of oil equivalent per day (boe/d) of production in 2012, around 10% and 20% of the company's totals. There is more growth to come from these assets.
  • Exploration, appraisal and commercial activities in 2012 added ~4 billion barrels of oil equivalent (boe) of potential new resources, comprising 1.5 billion boe in conventional basins, and 2.5 billion boe in resources plays, underpinning Shell's longer-term growth plans.
  • Rigorous portfolio management continues, with $7 billion of exits from non-core positions and strategic partnering, and $5 billion in acquisitions in 2012. Divestments in the last 3 years totalled $21 billion, or around 10% of capital employed, and acquisitions were $17 billion.


1. Cash Flow From Operations (CFFO) and net capital spending outlook at $80-$100/bbl Brent, and assumes improved US gas and downstream environment from 2012. CFFO excludes working capital movements.

Outlook for 2013 and beyond

Voser said Shell will continue the strategic drive to grow its upstream businesses, with ongoing selective investment in downstream.

At the end of 2012, the company had 12.4 billion boe of resources on stream, averaging 3.4 million boe/d of production, and 20 billion boe of resources potential in our active development funnel. Total resources in these two categories represent 26 years of current production.

Shell has ~30 new projects under construction, which should unlock 7 billion barrels of resources, and drive continued financial and production growth. Upstream start-ups in 2010-15 are expected to add some $15 billion of cash flow in 2015, in a $100 oil price scenario. Some 50% of our 2013 capital investment will contribute to cash flow by 2015.

Oil & gas production is expected to average ~4 million boe/d in 2017-2018 compared to 3.3 million boe/d in 2012. Shell's strategy in upstream is designed to drive financial growth, irrespective of production entitlement, with production growth regarded as a long term proxy for financial growth.

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