Shell Energy

Shell Energy North America

Experience

Commitment

2

Outline

Shell Energy Overview

• Committed to growth in key markets

• Capable of closing the deal

• Prepared to execute integration plan

Shell Energy

Overview

4

The Shell Trading Network

Shell Trading is the Largest Energy Trading Business in the World

Houston, Shell Energy

headquarters Barbados

London

Rotterdam

Moscow

Dubai

Singapore

Tokyo

5

Shell Trading Network

Facts about Shell Trading

• 8 million barrels crude oil per day

• 4 million barrels refined products per

day

• More than 3 million barrels (of oil

equivalent) in natural gas and power

• Operates/manages approximately 50

vessels

• Approximately 2,200 energy

professionals

6

Shell Energy Alignment Within Shell

Royal Dutch Shell (AA+/Aa1)

Shell Oil Company (AA+/Aa2)100% ownership through wholly-owned subsidiaries

Shell Energy (A1 Stable/A2 Stable)100% ownership through wholly-owned subsidiaries

An essential component of Shell’s value chain

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Spokane

Calgary

CAMBRIDGE

Syracuse

San Diego

Houston

Shell Energy Main Offices

Satellite Offices

Shell Energy Locations and Service Offerings

Our Service Offerings…• Marketing & Trading

Natural Gas

Power

Environmental Products

• Asset & Supply Portfolio Management

• Risk Products

• Producer Marketing Services

CHICAGO

OMAHA

OAKLAND

VANCOUVER

SALT LAKE

GREAT FALLS

CLEVELAND

Boston

ALBANY

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Shell Energy Facts

Facts about Shell Energy:

• 13.7 billion cubic feet of natural gas per day*

• 1.5 billion cubic feet per day of Shell equity natural gas

• 200 million megawatt hours of power annually

• 5,000 megawatts of power generation capacity under management

• We market 15.6 billion cubic feet equivalent per day in natural gas and power*

• More than 700 energy professionals

*Data for Q2 2008. Source: Platt's Gas Daily and Power Markets Week

Committedto Growth in Key Markets

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Shell Energy is mandated to operate and expand a sustainable gas

and power marketing and trading business in North America:

• Gain access to gas and power capacity that can

profitably optimized

• Trade around the flow of physical business

• Build sustainable end-user markets for Shell

through marketing and origination

• Serve generators, commercial and industrial

customers, aggregators, utilities and municipals

• Buy and market Shell’s equity natural gas and

LNG in North America

• Provide valued-added services to Shell affiliates

Shell Energy Charter

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Improved Capabilities & Processes

• Changed company name from “Coral Energy” to “Shell Energy.”

• Successful company acquisitions: Avista, Adobe, and Cascade

• Implemented a system for credit management (Energy Credit)

• Collateral management improvements

• “Single Entity” – merger of 4 subsidiaries into Shell Energy North America (US), L.P. creating a single entity for managing gas, power, and related financial transactions in the US.

• Agreed on dividend policy (dividends to be paid above total partners’ capital of $1 billion)

• Recognized as “best in class” by FERC

Shell Energy voted natural gas “House of the Year” by Energy Risk Magazine

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Shell Energy

A major player in natural gas and power

5.1

5.8

7.3

7.7

7.9

8.3

13.7

14.2

14.2

30.3

0 5 10 15 20 25 30 35

Bcf/d

29.7

31.5

35.0

38.9

41.1

46.4

49.5

52.2

77.7

81.7

0 20 40 60 80 100

Million MWh

US Wholesale Power Sales

2008 Q2 (Mln MWh)

Natural Gas Marketers

2008 Q2 (Bcf/d)

Top 10 Natural Gas & Power

2008 Q2 (Bcfe/d)

Source: Platts’ Gas Daily and Power Markets Week

5.2

6.1

7.3

7.9

8.3

9

14.4

15.6

17.2

30.5

0 5 10 15 20 25 30 35

Bcf/d

Q2 2008 – Top 10 Players Natural Gas and Power

Capable Of closing the deal

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Risk

Committee;

Deal Exception

Committee(Advisory)

Commercial ActivitiesShell Energy Activities

Shell

Shell Energy

Shell Trading Network*

Business

Assurance

Committee

Compliance

Oversight

Committee

IT/ Board Tender Board

Royal Dutch Shell (RDS)

Executive Committee(EC Linda Cook) (EC Peter Voser)

Trading

Committee(Advisory)

Shell Energy Governance Structure

SVP

FinanceRobert

Van Der Zalm

CEOMark

Quartermain

New governance model by Royal Dutch Shell provides tighter alignment and faster decision making

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SENA’s Dedicated M & A Team

Led by Senior Vice President Beth Bowman SVP

Seasoned team of energy professionals

Dedicated to mergers & acquisition evaluation

Recent deals include: Avista, Adobe, and Cascade

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Shell Energy Approach to Managing Risk

Regulatory• Industry Leading Compliance Program

• CFTC (Price Reporting/Exchange/Market Issues)

• Ethics & Compliance training for all employees

Credit

• Evaluation of prospective counterparties/ assignment of credit limits

• Ongoing monitoring of counterparty creditworthiness

• Daily reporting and monitoring of credit exposure

• Ensuring appropriate credit language in governing contracts

Market• Management oversight performed by Risk Control (Daily)

• Trade book level reports: daily exposure, MtM profitability and delegated limit compliance

• Shell Energy level reports: consolidated VaR, stop-loss and compliance against tenor and volume limits and others

• Review valuation modeling, VaR modeling, validate forward curves

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• “Continuous Improvement Compliance Model” ensures a “Best in

Class”risk-based approach to compliance

• Strict training requirements: annual goal of 100% training of all employees

• Face-to-Face training for highest degree of employee interaction

encompasses case studies of real world events

• Independent Audit function to perform risk assessments, audits, and

reviews

• Significant investment in transaction monitoring to minimize commercial

risks

• Legal staff to quickly translate new market information to assess impact on

Trading operations

• Advice & Assistance program allows for open dialogue and communication

with employees on all potential issues

Ethics & Compliance Program Highlights

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Integration Plan – Strategic Building Blocks

Four Key Touchstones of Shell Energy

HSSE• Small Changes. Big

Difference

• Embedding Intervention

• Goal: ZERO

• Comply, Intervene, Respect

COMPLIANCE

• Compliance Committee

• Seven Key Initiatives

• Proactive Regulatory

Footing

• Market Oversight (Soc. Gen)

ABILITY to DELIVER

CUSTOMER

SATISFACTION

• Sales Skills, Process,

Discipline

• Coaching

• Service Mindset - Resolving

• Single Entity

PROCESS EXCELLENCE

• Delivery Platform

• “Taking out the Drudge”

• Project Management

Discipline

• Cost Effectiveness

LICENSE to OPERATE

Preparedto execute and implement

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Integration Plan – Key Considerations

Legal Regulatory

IT & Systems

Office Space

People

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Shell Energy Highlights

North America Rankings

• #2 in combined wholesale natural

gas and power

• #2 in wholesale natural gas

• #4 in wholesale power

"Shell Energy stood out from strong competition for a variety of reasons, including offering physical energy supply combined with tailored financial risk management solutions.”

Stella Farrington, Editor Energy Risk magazine

Recognition of Capabilities

• Recognized by FERC as “Best in Class”

• Named 2008 natural gas “House of the Year” by Energy Risk Magazine

• New Brand & Logo – Shell Energy