Royal Dutch Shell Chief Executive Officer Peter Voser commented:
“Our 2010 earnings increased substantially from 2009 levels, driven by improving industry fundamentals, and Shell’s production growth and cost performance. Our 2010 oil and natural gas production volumes were 3.3 million boe/d, an increase of 5%. LNG sales volumes increased by 25%, with continued growth in Downstream. Fourth quarter and full year 2010 earnings were supported by higher oil prices and chemicals margins. However, our earnings were impacted by weak refining margins, pressure on certain regional natural gas prices, and volatility in Downstream marketing margins as a result of rising oil prices.
In 2010 Shell made good progress on implementing strategy, improving near-term performance, delivering a new wave of production growth, and maturing the next generation of growth options for shareholders.
Shell has a strong focus on continuous improvement, reducing costs, enhancing Shell’s operating performance, and rebalancing the portfolio for profitable growth. Underlying costs declined by $2 billion in 2010 compared to 2009, bringing the total underlying cost reduction to some $4 billion for 2009 and 2010 combined, a reduction of some 10%.
Disposals of $7 billion of non-core assets in 2010 bring total asset sales in the last 5 years to some $30 billion. Year-end balance sheet gearing was 17.1%, comfortably within Shell’s 0-30% target range. We have delivered our 2010-11 asset sales targets ahead of schedule. For 2011, asset sales proceeds could reach some $5 billion, including some $2 billion of proceeds from transactions announced in 2010.”
Turning to growth delivery, Voser commented: “Shell’s industry-leading investment programme is laying down firm foundations for our shareholders and our customers in the future. In 2010 we started up 6 key projects in Upstream and Downstream. In Qatar, in early 2011, we achieved first offshore gas production at the Qatargas 4 LNG facility. Major construction is complete, on schedule, at the Pearl Gas-to-Liquids (GTL) plant, and commissioning for start-up is underway as planned.
These projects underpin Shell’s targets for an 11% increase from 2009 to 2012 oil and natural gas production, and enhancement of the Downstream portfolio. This growth will drive a 50-80% increase in cashflow from operations from 2009 to 2012, measured at $60-$80 oil prices. These are ambitious targets, but we are on track,” said Voser.
“Shell has made good progress on generating longer-term growth during 2010. Shell took two final investment decisions in 2010 for deepwater projects, the Mars B project in the Gulf of Mexico, USA and BC-10 Phase 2 project in Brazil.
Shell made $7 billion of acquisitions, and invested $3 billion in exploration activities in 2010. The acquisition of East Resources takes our resources potential in North America tight gas to some 40 tcfe. In partnership with PetroChina, we purchased Arrow Energy, an Australian coal bed methane and LNG player, and entered into new tight gas and coal bed methane acreage in China. Shell and its partners signed contracts to develop the giant Majnoon and West Qurna fields in Iraq. Shell’s explorers made 8 discoveries in 2010, in particular the Appomatox discovery in the Gulf of Mexico, with more than 250 million boe resources potential. In Downstream, we progressed a marketing and biofuels joint venture with Cosan in Brazil, and a new 2 million tonnes per year petrochemicals project in Qatar.”
Voser commented: “We continue to invest for medium-term growth to create value for our shareholders. I expect 2011 net capital investment of some $25-27 billion, including a $1.6 billion investment for the Cosan joint venture. Dividend will be $0.42 per share for the fourth quarter 2010 and is expected to be $0.42 per share for the first quarter 2011. In 2010 Shell declared dividends of $10.2 billion, the largest in our sector, underlining our commitment to shareholder returns.”
Voser concluded: “We are making good progress against our targets, and there is more to come from Shell.”
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