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Royal Dutch Shell plc: 3rd Quarter Unaudited Results (*Shell prepared to pay $500 million to settle class action)

Thursday October 26, 2:00 am ET 
Delivery and Growth – Leveraging a Strong Portfolio

LONDON, October 26 /PRNewswire-FirstCall/ —
Royal Dutch Shell’s third quarter 2006 CCS earnings were $6.9 billion, compared to some $7.2 billion a year ago. CCS earnings per share increased by 1% versus a year ago. Third quarter 2005 earnings included divestment gains of some $1.7 billion related to the divestment of pipeline assets held through Gasunie NV in the Netherlands.

– Excluding the 2005 divestment gain of $1.7 billion related to Gasunie, CCS earnings per share increased by 33% versus a year ago.

– Royal Dutch Shell’s third quarter dividend has been announced at EUR0.25 per share, an increase of 9% from year-ago levels.

– $2.8 billion, or 1.2% of Royal Dutch Shell shares were bought back for cancellation during the quarter. Chief Executive Jeroen van der Veer commented “This is good performance by the Group. Our earnings have proven to be resilient in the face of rising industry costs and weakening refining margins. Operating performance has been satisfactory. LNG growth has been impressive in the quarter, and our upstream volumes have grown despite the shut-downs in Nigeria”.

Van der Veer added “Cost pressure remains a significant challenge for our industry. We remain focused on making the right portfolio choices to create long-term shareholder value”.
    Summary unaudited results

          THIRD                    $ million                      NINE
         QUARTER                                                 MONTHS
     2006    2005   %                                        2006    2005   %

    5,942   9,032 -34 Income attributable to shareholders  20,159  20,943  -4
                      Estimated current cost of supplies
                      (CCS) adjustment for Oil Products
                      and Chemicals

    1,006 (1,844)     (see note 2)                          (809) (3,653)
    6,948   7,188  -3 CCS earnings                         19,350  17,290 +12

     0.93    1.35     Basic earnings per share ($)           3.13    3.12
     0.16  (0.27)     Estimated CCS adjustment per share   (0.13)  (0.54)
                      ($)
     1.09    1.08     Basic CCS earnings per share ($)       3.00    2.58

     0.25    0.23     Dividend per ordinary share (Euro)(1)  0.75    0.69

    1. Q1 2005 based on dividend paid by Royal Dutch Petroleum Company,
    adjusted for the effects of the unification.
    Key features of the third quarter 2006
– Exploration & Production segment earnings were $3,743 million compared with $4,977 million a year ago. The third quarter 2005 included a gain of $1,699 million related to the divestment of pipeline assets held through Gasunie NV in the Netherlands. Earnings reflected higher production volumes and stronger oil and gas prices, partly offset by higher costs versus a year ago.

– Third quarter 2006 production was 3,251 thousand barrels of oil equivalent (boe) per day. Excluding the impact of hurricane damage in the Gulf of Mexico, security issues in Nigeria, and Production Sharing Contract (PSC) impacts from increased oil and gas prices, production increased by around 3% versus a year ago.

– Gas & Power segment earnings were $787 million, compared to $556 million in the same quarter last year. Earnings reflected substantially higher liquefied natural gas (LNG) volumes and continued strong marketing and trading earnings. LNG sales volumes increased by 19% compared to the same quarter last year.

– In Oil Products CCS earnings were $2,160 million compared to $1,726 million in the third quarter of 2005. CCS earnings reflected stronger marketing earnings, higher trading profits and improved refinery utilisation rates partly offset by lower refining margins. Chemicals CCS earnings were $335 million compared to $140 million for the third quarter of 2005, which included net charges of $184 million related to divested assets and various provisions. Operations in Chemicals reflected the start of a heavy planned maintenance programme, which is scheduled to extend into the fourth quarter 2006.

– Gearing (see note 6) was 13.4% at the end of the third quarter 2006 versus, on a comparable Royal Dutch Shell basis, 9.7% at the end of the third quarter 2005. Total cash returned to shareholders in the quarter was $4.9 billion in the form of dividends and share repurchases.

– Third quarter 2006 cash flow from operating activities was $10.1 billion compared to $6.6 billion a year ago. Excluding working capital movements and taxation effects, cash flow from operating activities was $9.6 billion compared to $10.5 billion a year ago.

– Capital investment for the third quarter 2006 was $5.5 billion, excluding the minority share of Sakhalin of $0.6 billion.

– Capital investment for the first nine months of 2006 was $16.0 billion excluding the minority share of Sakhalin of $1.4 billion. That investment includes $3.0 billion of acquisitions mainly related to the acquisition of BlackRock Ventures Inc. in Canada by Shell Canada in the second quarter 2006. Some $1.1 billion of proceeds were realised from divestments year to date, predominantly in Downstream. The industry continues to face significant cost pressures.

– Royal Dutch Shell plc has announced that it has approached the Board of Directors of Shell Canada Limited to indicate its intention to offer to acquire the minority interests in Shell Canada Limited (Toronto Stock Exchange, ticker symbol SHC), for a cash price of C$40 per share. This proposal would value Shell Canada Limited’s fully diluted minority share capital at approximately C$7.7 billion. The Group owns a 78% stake in Shell Canada Limited.


    Basic earnings per share (see notes 1, 2 and 9)

       QUARTERS                                NINE MONTHS
      Q3   Q2   Q3
    2006 2006 2005                             2006  2005

    0.93 1.13 1.35  Earnings per share ($)     3.13  3.12

    1.09 0.98 1.08  CCS earnings per share ($) 3.00  2.58
    Diluted earnings per share (see notes 1, 2 and 9)

       QUARTERS                                NINE MONTHS
      Q3   Q2   Q3
    2006 2006 2005                             2006  2005

    0.93 1.13 1.35  Earnings per share ($)     3.12  3.11

    1.09 0.97 1.07  CCS earnings per share ($) 2.99  2.57
    Summary segment earnings

              QUARTERS                $ million          NINE MONTHS
       Q3          Q2          Q3
     2006        2006        2005  %                    2006        2005    %

                                     Segment
                                     earnings
                3,999                Exploration
                                     &
    3,743                   4,977    Production       11,485      10,677
      787         516         556    Gas & Power       2,068       1,043
                2,065                Oil
                                     Products
    2,160                   1,726    (CCS basis)       5,558       5,634
                  348                Chemicals
      335                     140    (CCS basis)         822         774
                (451)                Other
                                     Industry
                                     and
      260                      97    Corporate            31       (246)
                (163)                Minority
    (337)                   (308)    interests         (614)       (592)
    _________ ___________ _______                   ________ ___________
    6,948       6,314       7,188 -3 CCS segment      19,350      17,290  +12
                                     earnings
    _________ ___________ _______                   ________ ___________
    Summary segment earnings – continued
Earnings in the third quarter 2006 reflected the following items, which in aggregate were a net charge of $77 million (compared to a net gain of $1,569 million mainly from divestments in the third quarter 2005) as summarised in the table below:

– Exploration & Production third quarter 2006 earnings included a net income of $147 million related to the mark-to-market valuation of certain UK gas contracts partly reversing earlier recorded mark-to-market losses.

– Also in Exploration and Production, charges of $310 million due to the UK tax increase that was effective from January 1, 2006, were included in the third quarter 2006. This amount includes deferred tax balance revaluations but excludes the normal effect on third quarter 2006 segment earnings.
    – Corporate included $86 million of tax credits.
    Summary table

                     QUARTERS           $ million              NINE MONTHS

             Q3          Q2          Q3
           2006        2006        2005                       2006       2005

                                        Segment
                                        earnings
                                        impact
          (163)         304       1,765 Exploration &          254      1,575
                                        Production(1)
              –           –          94 Gas & Power              –       (84)
              –        (65)           – Oil Products          (65)        427
                                        (CCS basis)
              –        (30)       (184) Chemicals (CCS        (30)      (481)
                                        basis)
             86       (400)        (60) Other Industry       (314)      (150)
                                        and Corporate
              –        (41)        (46) Minority              (41)       (46)
                                        interests
    ___________ ___________ ___________                ___________ __________
           (77)       (232)       1,569 CCS earnings         (196)      1,241
                                        impact
    ___________ ___________ ___________                ___________ __________
1. Q3 2006 and nine months 2006 include a charge of $310 million related to the UK tax increase.

These items generally relate to events with an impact of greater than $50 million on earnings and are shown to provide additional insight in the direction of the segment earnings, CCS earnings and income attributable to shareholders. Further additional comments are provided in the section ‘Earnings per industry segment’ on page 5 and onwards.
    Earnings per industry segment
    Upstream

         QUARTERS                                  NINE MONTHS

       Q3    Q2    Q3
     2006  2006  2005                              2006     2005

          $/bbl          Realised Oil Prices               $/bbl
    65.60 63.99 56.89    WOUSA                    62.35    49.79
    62.57 63.63 56.24    USA                      60.77    48.15
    65.13 63.95 56.83    Global                   62.15    49.56

     $/thousand scf      Realised Gas Prices       $/thousand scf
     6.43  6.54  4.24    Europe                    6.72     4.72
     4.05  4.18  3.70    WOUSA (including Europe)  4.35     3.61
     7.31  7.36  8.35    USA                       8.04     7.41
     4.77  4.82  4.59    Global                    5.09     4.43

                         Oil and gas marker
                         industry prices (period
                         average)
    69.63 69.51 61.55    Brent $/bbl              66.97    53.65
    70.44 70.45 63.20    WTI $/bbl                68.06    55.38
     6.05  6.59  9.50    Henry Hub $/thousand scf  6.80     7.62
                         UK National Balancing
    33.77 34.60 29.17    Point pence/therm        45.93    32.37
    Exploration & Production

           QUARTERS                   $ million                NINE MONTHS
       Q3    Q2    Q3
     2006  2006  2005    %                                    2006   2005   %

    3,743 3,999 4,977  -25 Segment earnings                 11,485 10,677  +8

                           Crude oil production (thousand
    2,054 1,897 2,077   -1 b/d)                              1,973  2,129  -7
    6,942 7,865 6,551   +6 Natural gas production available  8,365  8,088  +3
                           for sale (million scf/d)
                           Barrels of oil equivalent
    3,251 3,253 3,207   +1 (thousand boe/d)                  3,415  3,523  -3
Exploration & Production segment earnings were $3,743 million compared to $4,977 million a year ago.

Third quarter 2006 earnings included a net gain of $147 million related to the mark-to-market valuation of certain UK gas contracts and charges of $310 million due to the UK Upstream tax increase effective from January 1, 2006. This amount includes deferred tax balance revaluations but excludes the normal impact on third quarter 2006 segment earnings. The third quarter 2005 included a net gain of $1,765 million mainly from divestments. Excluding these effects earnings were 22% higher than a year ago.

Earnings reflected higher production volumes and stronger oil and gas prices partly offset by higher operating costs reflecting industry conditions and increased pre-development activity levels.

Liquids realisations were 15% higher than a year ago, in line with increases in marker crudes Brent of 13% and WTI of 11%. Outside the USA gas realisations increased by 9% and in the USA gas realisations decreased by 12%.

Third quarter 2006 production was 3,251 thousand boe per day compared to 3,207 thousand boe per day a year ago.

Production compared to the third quarter 2005 included new volumes of 257 thousand boe per day including Bonga (Shell share 55%) and Erha (Shell share 44%) in Nigeria, West Salym (Shell share 50%) in Russia, Champion West Phase III (Shell share 50%) in Brunei and the early start up of E8 in Malaysia (Shell share 50%). In the USA, production rates during the third quarter 2006 at the Mars platform in the Gulf of Mexico were 20% above those prior to the damage caused by hurricanes in 2005.

Excluding the impact of security concerns in Nigeria in 2006, PSC impacts from oil and gas prices, and hurricane damage in the Gulf of Mexico in 2005, production was around 3% higher than the equivalent period last year.

Production from Shell Petroleum Development Company’s Nigerian operations was 185 thousand boe per day (Shell share) lower than a year ago due to deferred production mainly in the Western Delta resulting from security concerns. Whilst efforts continue towards restoring safe operational conditions in the Niger Delta, it is unlikely that the shut-in facilities in Nigeria will be restored in 2006. No firm date can be given for the re-start of the production nor is it possible to predict the rate of ramp up to full production. Restricted access in the area continues to impact the drilling programme for the future, and the progress of new projects.

Portfolio developments:

In the USA, Shell and its joint venture partners announced the development of the Great White, Tobago and Silvertip fields (Shell share between 33% and 40%) via a Perdido regional development host (Shell share 35%), located in Alaminos Canyon, offshore Gulf of Mexico. The facility will be designed to handle 130 thousand boe per day.

In Malaysia, first gas was delivered from the offshore E8 field (Shell Share 50%), which is a key component of the E11 Hub integrated gas project which aims to rejuvenate existing E11 facilities and develop several offshore gas fields over the next years. The E11 hub will have a design capacity of 1.6 billion cubic feet (bcf ) of gas per day.

In New Zealand, first gas was delivered from the Pohokura field (Shell share 48%), which is expected to produce around 40 thousand boe a day at its peak.

In Russia, the Sakhalin 2 project (Shell share 55%) continues to progress in accordance with the PSA. The project is now more than 80% complete and on track for first LNG deliveries in 2008. Activities continue in line with the overall cost estimate advised in July 2005.
    Gas & Power

         QUARTERS                  $ million               NINE MONTHS
      Q3   Q2   Q3
    2006 2006 2005    %                                   2006  2005    %

     787  516  556  +42 Segment earnings                 2,068 1,043  +98

                        Equity LNG sales volume (million
    2.94 2.84 2.48  +19 tonnes)                           8.78  7.84  +12
Gas and Power segment earnings were $787 million, compared to $556 million in the same quarter last year, which included gains of $94 million mainly related to divestments. Excluding these items earnings were 70% higher and reflected substantially higher liquefied natural gas (LNG) volumes and continued strong marketing and trading earnings.

LNG volumes of 2.94 million tonnes were 19% higher than a year ago, driven by capacity growth at Nigeria LNG (Shell share 26%) and Qalhat LNG (Shell share 11%) and supported by strong operating performance across the LNG plants. Realised LNG prices reflected higher crude prices and continued opportunities for cargo optimisation.

Marketing and trading earnings reflected gas storage optimisation in the USA and overall strong marketing performance across North America and Europe.

Portfolio developments:

In Mexico, the Altamira re-gasification terminal was commissioned with the first ever LNG cargo to be delivered to the country. Shell owns 50% of the terminal and has rights to 75% of the initial capacity of 4.4 million tonnes of LNG per annum. The state power company in Mexico, Comision Federal de Electricidad (CFE), has contracted to purchase 5.2 billion cubic meters of re-gasified LNG per annum from the facility (equivalent to 3.9 million tonnes of LNG per year).

In Australia, Shell and Anglo American signed a joint development agreement to further advance the Monash Energy coal-to-liquids project. This potential development involves the gasification of Anglo American’s brown coal from Victoria’s Latrobe Valley for conversion into transportation fuels, including virtually sulphur-free synthetic diesel, using Shell’s proprietary coal gasification and gas-to-liquids technologies.
    Downstream

           QUARTERS                                           NINE MONTHS
       Q3    Q2    Q3
     2006  2006  2005                                         2006   2005

                           Refining marker industry gross
                           margins
          $/bbl            (period average)                         $/bbl
    13.25 22.20 17.75      ANS US West Coast coking margin   16.15  15.80
    14.70 20.85 18.00      WTS US Gulf Coast coking margin   16.00  12.15
     3.45  4.75  6.05      Rotterdam Brent complex            3.50   4.55
                           Singapore 80/20 Arab light/Tapis
     0.95  4.05  3.00      complex                            2.05   3.05
    Oil Products

                 QUARTERS                 $ million          NINE MONTHS
          Q3          Q2          Q3
        2006        2006        2005   %                   2006     2005   %

       1,214       3,017       3,439      Segment          6,334   9,154
                                          earnings

                                          CCS
                                          adjustment
                                          – see note
         946       (952)     (1,713)      2                (776) (3,520)
    ________ ___________ ___________                    ________  _______
       2,160       2,065       1,726 +25  Segment          5,558   5,634  -1
                                          CCS
                                          earnings

                                          Refinery
                                          intake
                                          (thousand
       3,907       3,789       3,910      b/d)             3,852   3,982  -3
                                          Total Oil
                                          products
                                          sales
                                     See  (thousand                      See
       6,521       6,426       6,625 (1) b/d)             6,491   7,180  (1)

    1. Certain contracts are held for trading purposes and reported net
    rather than gross with effect from Q3 2005. The effect in Q1 2006, Q2
    2006 and Q3 2006 is a reduction in Total Oil products sales of
    approximately 890 thousand b/d, 840 thousand b/d and 870 thousand b/d
    respectively. The effect in Q3 2005 was 850 thousand b/d.
Oil Products segment earnings were $1,214 million compared to $3,439 million for the same period last year.

Third quarter CCS earnings were $2,160 million compared to $1,726 million in the third quarter of 2005.

Higher CCS earnings reflected stronger marketing earnings, higher trading profits and improved refinery utilisation rates partly offset by lower refining margins.

In Manufacturing, Supply and Distribution, industry refining margins declined in all regions from the hurricane driven highs of the third quarter of 2005. Refinery utilisation on an Equivalent Distillation Capacity (EDC) basis increased to 81.6% compared to hurricane-impacted utilisation levels of 77.8% in the third quarter of 2005.

In Marketing including Lubricants and B2B, earnings increased compared to the same period a year ago. Increased earnings reflected increased margins for retail, commercial fuels, marine and bitumen. Marketing sales volumes declined 4.6% compared to volumes in the third quarter of 2005 including the impact from divested volumes (2.0%) and rationalised B2B volumes (0.9%). Trading continued to make a significant contribution to earnings in the third quarter of 2006.

Portfolio developments:

In China, Shell acquired a 75% share in Beijing Tongyi Petroleum Chemical Company Limited and Xianyang Tongyi Petroleum Chemical Company Limited, which produce and market China’s leading independent lubricant brand. The transaction makes Shell the leading international energy company marketing lubricants in China and increases Shell’s global finished lubricants volume by 8%.
    Sales of Shell’s retail and lubricants marketing assets in Puerto Rico
and distribution and marketing assets in Bermuda were completed. In the USA
the sale of a residential and small commercial natural gas marketing business
was completed in the third quarter. The agreed sales of various distribution
and marketing assets in the Pacific Islands, are expected to be completed by
the end of the year.
    Chemicals

                    QUARTERS                 $ million        NINE MONTHS
             Q3          Q2          Q3
           2006        2006        2005    %                2006      2005  %

            251         446         321      Segment         880     1,029
                                             earnings

                                             CCS
                                             adjustment
                                             – see note
             84        (98)       (181)      2              (58)     (255)
    ___________ ___________ ___________                 ________  ________
            335         348         140      Segment         822       774 +6
                                             CCS
                                        +139 earnings

                                             Sales
                                             volumes
                                             (thousand
          5,636       5,870       5,589   +1 tonnes)      17,447    17,097 +2
Chemicals segment earnings were $251 million compared to $321 million for the same period last year.

Third quarter 2006 CCS earnings were $335 million compared to $140 million for the third quarter of 2005, which included net charges of $184 million related to divested assets and various provisions.

Sales volumes and operating rates were unchanged compared to the same quarter a year ago. Operations in the third quarter 2006 reflected the start of a heavy planned maintenance programme in the USA and Europe, which impacted operating rates by some 6 percentage points. The programme is scheduled to extend into the fourth quarter 2006. Earnings reflected higher margins and improved earnings from equity-accounted investments partly offset by higher costs and lower trading earnings. In China, the Nanhai joint venture (Shell share 50%) continued to make good progress with production and sales volumes increasing progressively. The third quarter 2005 was impacted by hurricane-related downtime in the USA and supply constraints, which reduced operating rates by some 7 percentage points.
    Other Industry and Corporate segments

                   QUARTERS                $ million        NINE MONTHS
             Q3          Q2          Q3
           2006        2006        2005                     2006        2005

            (4)         (7)        (76)    Other            (19)        (92)
                                           Industry
                                           segment
                                           earnings
            264       (444)         173    Corporate          50       (154)
                                           segment
                                           earnings
                                           (see note
                                           10)
    ___________ ___________ ___________              ___________ ___________
                                           Other
                                           Industry
                                           and
                                           Corporate
                                           segments
            260       (451)          97    results            31       (246)
Third quarter Other Industry and Corporate segment results were a gain of $260 million, which included tax credits of $86 million in Corporate. This compared to a gain of $97 million in the third quarter 2005, which included impairment charges of $60 million in Other Industry segments.

In the third quarter 2006 in the Corporate segment, net income from insurance and taxation effects, was partly offset by a reduction in net interest gains (including higher interest expense related to equity accounted investments) and negative results from currency movements.

Note

All amounts shown throughout this report are unaudited.

Fourth quarter results for 2006 are expected to be announced on February 1, 2007. First quarter results for 2007 are expected to be announced on May 3, 2007, second quarter results for 2007 are expected to be announced on July 26, 2007 and third quarter results are expected to be announced on October 25, 2007.

In this Report “Group” is defined as Royal Dutch Shell together with all of its consolidated subsidiaries. The expressions “Shell”, “Group”, “Shell Group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to the Group or Group companies in general. Likewise, the words “we”, “us” and “our” are also used to refer to Group companies in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. The expression “Group companies” as used in this Report refers to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which the Group has significant influence but not control are referred to as “associated companies” or “associates” and companies in which the Group has joint control are referred to as “jointly controlled entities”. In this Report, associates and jointly controlled entities are also referred to as “equity accounted investments”.

This document contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ”anticipate”, ”believe”, ”could”, ”estimate”, ”expect”, ”intend”, ”may”, ”plan”, ”objectives”, ”outlook”, ”probably”, ”project”, ”will”, ”seek”, ”target”, ”risks”, ”goals”, ”should” and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this Report, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, project delay or advancement, approvals and cost estimates; and (m) changes in trading conditions. All forward-looking statements contained in this Report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this Report. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this Report.

Please refer to the Annual Report and Form 20-F for the year ended December 31, 2005 for a description of certain important factors, risks and uncertainties that may affect the Company’s businesses.

Cautionary Note to US Investors:

Disclaimer 

 

(*Be on your guard: Royal Dutch Shell senior management are masters of double talk and double dealing. Shell has a track record of engaging in fictitious trades, securities fraud, price fixing, theft of intellectual property, bribes, corruption, organising and arming a private army of police spies in Nigeria, conspiring with successive Nigerian governments to rob billions from a poverty stricken population and using a registered charity – The Shell Foundation, as a front for commercial objectives: in other words a bunch of evil con-artists)  

 

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this announcement, such as “barrels of oil equivalent in place” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575 and disclosure in our Forms 6-K file No 1-32575, available on the SEC’s website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
    October 26, 2006
    Appendix 1: Royal Dutch Shell financial report and tables
    Statement of income (see note 1)

               QUARTERS                    $ million          NINE MONTHS
         Q3          Q2          Q3
       2006        2006        2005   %                      2006     2005  %

     84,254      83,127      76,435 +10 Revenue(1)        243,345  231,235 +5
     70,383      67,838      60,704     Cost of sales     200,143  188,733
    _______ ___________ ___________                       _______  _______
     13,871      15,289      15,731 -12 Gross profit       43,202   42,502 +2

                                        Selling,
                                        distribution and
                                        administrative
      4,126       4,429       3,763     expenses           11,968   11,219
        401         250         275     Exploration           932      784
                                        Share of profit
                                        of equity
                                        accounted
      1,358       1,829       3,081     investments         5,010    5,734
                                        Net finance
                                        costs and other
       (60)          47       (268)     (income)/expense    (168)    (159)
    _______ ___________ ___________                       ________ ________
                                        Income before                      -3
     10,762      12,392      15,042 -28 taxation           35,480   36,392

      4,507       4,865       5,558     Taxation           14,682   14,427
    _______ ___________ ___________                       ________ ________
      6,255       7,527       9,484     Income from
                                        continuing
                                        operations         20,798   21,965

          –           –        (93)     Income/(loss)
                                        from
                                        discontinued
                                        operations              –    (307)
    _______ ___________ ___________                       ________ ________
                                        Income for the
      6,255       7,527       9,391 -33 period             20,798   21,658 -4
    =======  ==========  ==========                        ======= ========

                                        Income
                                        attributable to
                                        minority
        313         203         359     interests             639      715
    _______ ___________ ___________                       ________ ________
                                        Income
                                        attributable to
      5,942       7,324       9,032 -34 shareholders       20,159   20,943 -4
    _______ ___________ ___________                       ________ ________

    1. Revenue is stated after deducting sales taxes, excise duties and
    similar levies of $18,472 million in Q3 2006, $17,984 million in Q2 2006,
    $16,709 million in Q1 2006, $18,282 million in Q3 2005, $18,739 million
    in Q2 2005 and $17,912 million in Q1 2005.
    Earnings by industry segment (see notes 2 and 5)

              QUARTERS             $ million               NINE MONTHS
       Q3       Q2       Q3
     2006     2006     2005 %                            2006        2005   %
                                 Exploration &
                                 Production:
    2,650    3,014    4,051  -35 World outside          8,459       7,705 +10
                                 USA
    1,093      985      926  +18 USA                    3,026       2,972  +2
    _____ ________ ________                            ______ ___________
    3,743    3,999    4,977  -25                       11,485      10,677  +8
    _____ ________ ________                            ______ ___________
                                 Gas & Power:
      621      468      469  +32 World outside          1,812       1,061 +71
                                 USA
      166       48       87  +91 USA                      256        (18)
    _____ ________ ________                       ___________ ___________
      787      516      556  +42                        2,068       1,043 +98
    _____ ________ ________                       ___________ ___________
                                 Oil Products
                                 (CCS basis):
    1,665    1,332    1,229  +35 World outside          4,068       4,204  -3
                                 USA
      495      733      497      USA                    1,490       1,430  +4
    _____ ________ ________                       ___________ ___________
    2,160    2,065    1,726  +25                        5,558       5,634  -1
    _____ ________ ________                       ___________ ___________
                                 Chemicals (CCS
                                 basis):
      348      309      227  +53 World outside            830         713 +16
                                 USA
     (13)       39     (87)      USA                      (8)          61
    _____ ________ ________                       ___________ ___________
      335      348      140 +139                          822         774  +6
    _____ ________ ________                       ___________ ___________

      (4)      (7)     (76)      Other industry          (19)        (92)
                                 segments
    _____ ________ ________                       ___________ ___________
    7,021    6,921    7,323   -4 TOTAL OPERATING       19,914      18,036 +10
                                 SEGMENTS
    _____ ________ ________                       ___________ ___________
                                 Corporate:
       35       39       71      Interest                  74        (73)
                                 income/(expense)
     (19)     (73)      126      Currency                  20          80
                                 exchange
                                 gains/(losses)
      248    (410)     (24)      Other –                 (44)       (161)
                                 including
                                 taxation
    _____ ________ ________                       ___________ ___________
      264    (444)      173                                50       (154)
    _____ ________ ________                       ___________ ___________

    (337)    (163)    (308)      Minority               (614)       (592)
                                 interests
    _____ ________ ________                       ___________ ___________
    6,948    6,314    7,188   -3 CCS EARNINGS          19,350      17,290 +12
    _____ ________ ________                       ___________ ___________

                                 CCS adjustment
                                 for Oil Products
    (1,006)  1,010    1,844      and Chemicals            809       3,653
    ______ _______ ________                       ___________ ___________
                                 Income
                                 attributable to
                                 shareholders of
                                 Royal Dutch
    5,942    7,324    9,032  -34 Shell plc             20,159      20,943  -4
    _____ ________ ________                       ___________ ___________
    Summarised balance sheet (see notes 1 and 7)

               $ million

                                          Sep 30      Jun 30      Sep 30
    ASSETS                                  2006        2006        2005

    Non-current assets:
    Intangible assets                      4,697       4,721       4,361
    Property, plant and equipment         96,133      94,102      85,601
    Investments:
    equity accounted investments          19,453      19,083      17,138
    financial assets                       3,914       3,912       3,236
    Deferred tax                           2,664       2,259       3,039
    Prepaid pension costs                  3,459       3,143       2,453
    Other                                  4,598       4,569       4,102
                                     ___________ ___________ ___________
                                         134,918     131,789     119,930
                                     ___________ ___________ ___________
    Current assets:
    Inventories                           23,391      24,660      21,490
    Accounts receivable                   63,895      62,327      83,812
    Cash and cash equivalents             11,240      11,774      15,998
                                     ___________ ___________ ___________
                                          98,526      98,761     121,300
                                     ___________ ___________ ___________
                                     ___________ ___________ ___________
    TOTAL ASSETS                         233,444     230,550     241,230
                                     ___________ ___________ ___________
    LIABILITIES
    Non-current liabilities:
    Debt                                   7,665       8,472       7,795
    Deferred tax                          12,485      12,007      12,411
    Retirement benefit obligations         6,298       6,271       6,018
    Other provisions                       8,793       8,682       7,114
    Other                                  4,346       4,650       4,395
                                     ___________ ___________ ___________
                                          39,587      40,082      37,733
                                     ___________ ___________ ___________
    Current liabilities:
    Debt                                   6,395       6,112       6,714
    Accounts payable and accrued          64,445      63,701      82,912
    liabilities
    Taxes payable                         10,679      10,525      12,510
    Retirement benefit obligations           284         285         302
    Other provisions                       1,763       1,612       1,254
                                     ___________ ___________ ___________
                                          83,566      82,235     103,692
                                     ___________ ___________ ___________
                                     ___________ ___________ ___________
    TOTAL LIABILITIES                    123,153     122,317     141,425
                                     ___________ ___________ ___________

    Equity attributable to               101,604     100,213      92,353
    shareholders of Royal Dutch
    Shell plc

    Minority interests                     8,687       8,020       7,452
                                     ___________ ___________ ___________
    TOTAL EQUITY                         110,291     108,233      99,805
                                     ___________ ___________ ___________
    TOTAL LIABILITIES AND EQUITY         233,444     230,550     241,230
                                     ___________ ___________ ___________
    Summarised statement of cash flows (see notes 1 and 8)

               QUARTERS                     $ million             NINE MONTHS
        Q3          Q2          Q3
      2006        2006        2005                              2006    2005

                                      CASH FLOW FROM
                                      OPERATING ACTIVITIES:
                                      Income for the
     6,255       7,527       9,391    period                  20,798   21,658
                                      Adjustment for:
     4,403       4,763       5,548    Current taxation        14,181   14,945
                                      Interest
       145         121         120    (income)/expense           498      484
                                      Depreciation,
                                      depletion and
     3,365       3,132       2,903    amortisation             9,309    9,194
                                      (Profit)/loss on
      (86)         (8)       (352)    sale of assets           (279)  (1,103)
                                      Decrease/(increase)
                                      in net working
       560     (3,276)     (5,490)    capital                (4,695)  (8,959)
                                      Share of profit of
                                      equity accounted
    (1,358)    (1,829)     (3,073)    investments            (5,010)  (5,512)
                                      Dividends received
                                      from equity
                                      accounted
     1,450       1,556       2,761    investments              4,066    5,268
                                      Deferred taxation
                                      and other
       133         903       (112)    provisions               1,614    (646)
     (299)         489     (1,159)    Other                    (317)  (1,102)
    _______ ___________ ___________                          ________ _______
                                      Cash flow from
                                      operating
                                      activities
    14,568      13,378      10,537    (pre-tax)               40,165   34,227
    _______ ___________ ___________                          ________ _______
    (4,489)     (5,544)     (3,891)   Taxation paid         (14,428) (12,579)
    _______ ___________ ___________                          ________ _______
                                      Cash flow from
                                      operating
    10,079       7,834       6,646    activities              25,737   21,648
    _______ ___________ ___________                          ________ _______
                                      CASH FLOW FROM
                                      INVESTING ACTIVITIES:
    (5,408)     (6,630)     (3,787)   Capital expenditure   (15,857) (10,457)
                                      Investments in
                                      equity accounted
     (126)       (177)       (135)    investments              (534)    (566)
                                      Proceeds from sale
       289         211         416    of assets                1,006    1,914
                                      Proceeds from sale
                                      of equity accounted
        37          36       3,869    investments                 81    4,101
                                      Proceeds from sale
                                      of / (additions to)
      (22)          29         113    financial assets          (33)      363
       285         240         251    Interest received          759      618
    ________ ___________ ___________                         ________ _______
                                      Cash flow from
                                      investing
    (4,945)    (6,291)         727    activities            (14,578)  (4,027)
    ________ ___________ ___________                         ________ _______
                                      CASH FLOW FROM
                                      FINANCING ACTIVITIES:
                                      Net
                                      increase/(decrease)
     (843)       1,852       1,087    in debt                    664      291
     (330)       (261)       (284)    Interest paid            (952)    (813)
                                      Change in minority
       287         423          90    interests                1,070      893
                                      Net
                                      issue/(repurchase)
    (2,801)    (2,512)     (1,938)    of shares              (6,657)  (2,438)
                                      Dividends paid to:
                                      Shareholders of
                                      Royal Dutch Shell
    (2,083)    (2,091)     (1,902)    plc                    (6,012)  (8,687)
      (53)       (161)       (130)    Minority interest        (258)    (235)
                                      Treasury shares:
                                      Net
                                      sales/(purchases)
                                      and dividends
       149         135         169    received                   375      415
    _______ ___________ ___________                          ________ _______
                                      Cash flow from
                                      financing
    (5,674)    (2,615)     (2,908)    activities            (11,770) (10,574)
    _______ ___________ ___________                          ________ _______

                                      Currency
                                      translation
                                      differences
                                      relating to cash
                                      and cash
         6          79          13    equivalents                121    (250)
    _______ ___________ ___________                          ________ _______
                                      INCREASE/(DECREASE)
                                      IN CASH AND CASH
     (534)       (993)       4,478    EQUIVALENTS              (490)    6,797
    _______ ___________ ___________                          ________ _______

                                      Cash and cash
                                      equivalents at
    11,774      12,767      11,520    beginning of period     11,730    9,201

                                      Cash and cash
                                      equivalents at end
    11,240      11,774      15,998    of period               11,240   15,998
    Operational data – Upstream

                   QUARTERS                                NINE MONTHS
             Q3          Q2          Q3
           2006        2006        2005  %                2006      2005    %

                                           CRUDE OIL
               thousand b/d                PRODUCTION      thousand b/d

            433         488         516    Europe          484       551
            346         321         370    Africa          335       374
                                           Asia
            254         232         222    Pacific         239       229
                                           Middle
                                           East,
            489         439         512    Russia, CIS     446       439
            353         295         289    USA             313       364
                                           Other
                                           Western
             81          76          70    Hemisphere       82        81
    ___________ ___________ ___________                _______ _________
                                           Total crude
                                           oil
                                           production
                                           excluding
          1,956       1,851       1,979    oil sands     1,899     2,038
             98          46          98    Oil sands        74        91
    ___________ ___________ ___________                _______ _________
                                           Total crude
                                           oil
                                           production
                                           including
          2,054       1,897       2,077 -1 oil sands     1,973     2,129   -7
    ___________ ___________ ___________                _______ _________

                                           NATURAL GAS
              million scf/d(1)             PRODUCTION    million scf/d(1)
                                           AVAILABLE
                                           FOR SALE

          2,125       3,027       2,268    Europe        3,521     3,455
            475         481         341    Africa          467       370
                                           Asia
          2,356       2,381       2,267    Pacific       2,408     2,287
                                           Middle
                                           East,
            273         304         231    Russia, CIS     299       253
          1,186       1,175         948    USA           1,160     1,228
                                           Other
                                           Western
            527         497         496    Hemisphere      510       495
    ___________ ___________ ___________                _______ _________
          6,942       7,865       6,551 +6               8,365     8,088   +3
    ___________ ___________ ___________                _______ _________

                                           BARRELS OF
                                           OIL
             thousand boe/d(2)             EQUIVALENT    thousand boe/d(2)

            800       1,010         907    Europe        1,091     1,147
            428         404         429    Africa          416       438
                                           Asia
            660         642         613    Pacific         654       623
                                           Middle
                                           East,
            536         491         552    Russia, CIS     497       483
            557         498         453    USA             513       575
                                           Other
                                           Western
            172         162         155    Hemisphere      170       166
    ___________ ___________ ___________                _______ _________
                                           Total
                                           production
                                           excluding
          3,153       3,207       3,109    oil sands     3,341     3,432
             98          46          98    Oil sands        74        91
    ___________ ___________ ___________                _______ _________
                                           Total
                                           production
                                           including
          3,251       3,253       3,207 +1 oil sands     3,415     3,523   -3
    ___________ ___________ ___________                _______ _________

    1. scf/d = standard cubic feet per day; 1
    standard cubic foot = 0.0283 cubic metre

    2. Natural gas converted to oil equivalent at
    5.8 million scf/d = thousand boe/d

    Operational data – Downstream

                 QUARTERS                                  NINE MONTHS
             Q3        Q2        Q3
           2006      2006      2005   %                   2006      2005    %

             thousand b/d                                  thousand b/d
                                        REFINERY
                                        PROCESSING
                                        INTAKE
          1,758     1,627     1,774     Europe           1,708     1,785
                                        Other Eastern
            797       832       853     Hemisphere         814       850
            965       978       909     USA                964       965
                                        Other Western
            387       352       374     Hemisphere         366       382
      _________ _________ _________                    _______ _________
          3,907     3,789     3,910                      3,852     3,982   -3
      _________ _________ _________                    _______ _________

                                        OIL SALES
          2,256     2,186     2,230     Gasolines        2,198     2,449
            750       780       770     Kerosenes          754       818
                                        Gas/Diesel
          2,074     2,071     2,142     oils             2,113     2,344
            729       735       783     Fuel oil           757       854
            712       654       700     Other products     669       715
      _________ _________ _________                    _______ _________
                                    See Total oil                         See
          6,521     6,426     6,625 (1) products (1) *   6,491     7,180  (1)
          2,442     2,513     2,864     Crude oil (1)    2,482     4,130
      _________ _________ _________                    _______ _________
                                    See Total oil                         See
          8,963     8,939     9,489 (1) sales (1)        8,973    11,310  (1)
      _________ _________ _________                    _______ _________
                                        *comprising
          1,948     1,948     2,094     Europe             1,973     2,086
                                        Other Eastern
          1,215     1,229     1,236     Hemisphere         1,220     1,236
          1,506     1,502     1,558     USA                1,495     2,168
                                        Other Western
            658       652       722     Hemisphere           658       706
          1,194     1,095     1,015     Export sales       1,145       984

                                        CHEMICAL SALES
                                        VOLUMES BY
                                        MAIN PRODUCT
            thousand tones              CATEGORY (2) **  thousand tonnes
          3,430     3,504     3,324     Base chemicals  10,648    10,255
                                        First line
          2,200     2,361     2,238     derivatives      6,776     6,737
              6         5        27     Other               23       105
      _________ _________ _________                    _______ _________
          5,636     5,870     5,589  +1                 17,447    17,097   +2
      _________ _________ _________                    _______ _________
                                        **comprising
          2,232     2,433     2,495     Europe           7,128     7,512
                                        Other Eastern
          1,385     1,370     1,305     Hemisphere       4,199     3,890
          1,851     1,908     1,630     USA              5,639     5,200
                                        Other Western
            168       159       159     Hemisphere         481       495

    1. Certain contracts are held for trading purposes and reported net
    rather than gross with effect from Q3 2005. The effect in Q1 2006 is
    a reduction in Total Oil products sales of approximately 890
    thousand b/d and a reduction in crude oil sales of approximately
    1,720 thousand b/d, in Q2 2006 840 thousand b/d and 1,940 thousand
    b/d respectively and in Q3 2006 870 thousand b/d and 2,130 thousand
    b/d respectively.

    2. Excluding volumes sold by equity accounted investments, chemical
    feedstock trading and by-products.

    Capital investment

                   QUARTERS                 $ million           NINE MONTHS
             Q3          Q2          Q3
           2006        2006        2005                        2006      2005
                                           Capital
                                           expenditure:
                                           Exploration
                                           &
                                           Production:
                                           World
          3,425       5,095       2,276    outside USA       11,020     6,362
            519         481         318    USA                1,312       775
    ___________ ___________ ___________                 ___________ _________
          3,944       5,576       2,594                      12,332     7,137
    ___________ ___________ ___________                 ___________ _________
                                           Gas & Power:
                                           World
            599         252         334    outside USA        1,243     1,124
              2           1           0    USA                    4         2
    ___________ ___________ ___________                 ___________ _________
            601         253         334                       1,247     1,126
    ___________ ___________ ___________                 ___________ _________
                                           Oil
                                           Products:
                                           Refining:
                                           World
            251         373         290    outside USA          866       748
             75          57          56    USA                  193       153
    ___________ ___________ ___________                 ___________ _________
            326         430         346                       1,059       901
    ___________ ___________ ___________                 ___________ _________
                                           Marketing:
                                           World
            569         314         317    outside USA        1,072       700
             36          26          34    USA                   80       100
    ___________ ___________ ___________                 ___________ _________
            605         340         351                       1,152       800
    ___________ ___________ ___________                 ___________ _________
                                           Chemicals:
                                           World
            166          63          52    outside USA          265       122
             53          47          46    USA                  150       173
    ___________ ___________ ___________                 ___________ _________
            219         110          98                         415       295
    ___________ ___________ ___________                 ___________ _________

                                           Other
              1           6          64    segments              28       198
    ___________ ___________ ___________                 ___________ _________
                                           TOTAL
                                           CAPITAL
          5,696       6,715       3,787    EXPENDITURE       16,233    10,457
    ___________ ___________ ___________                 ___________ _________
                                           Exploration
                                           expense:
                                           World
            161         139         127    outside USA          414       340
             67          64          56    USA                  194       117
    ___________ ___________ ___________                 ___________ _________
            228         203         183                         608       457
    ___________ ___________ ___________                 ___________ _________

                                           New equity in equity
                                           accounted investments
                                           World
            112         135          85    outside USA          311       278
              3           4          12    USA                   12        15
    ___________ ___________ ___________                 ___________ _________
            115         139          97                         323       293
    ___________ ___________ ___________                 ___________ _________

                                           New loans to
                                           equity
                                           accounted
             11          38          38    investments          211       273
    ___________ ___________ ___________                 ___________ _________
                                           TOTAL
                                           CAPITAL
          6,050       7,095       4,105    INVESTMENT*       17,375    11,480
    ___________ ___________ ___________                 ___________ _________
                                           *comprising
                                           Exploration
          4,214       5,823       2,839    & Production      13,204     7,902
            645         332         342    Gas & Power        1,373     1,145
            962         799         707    Oil Products       2,279     1,717
            219         118         152    Chemicals            465       481
                                           Other
             10          23          65    segments              54       235
    ___________ ___________ ___________                 ___________ _________
          6,050       7,095       4,105                      17,375    11,480
    ___________ ___________ ___________                 ___________ _________
    Notes
    NOTE 1. Accounting policies and basis of presentation
The quarterly financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the financial statements are also in accordance with IFRS as adopted by the European Union.

The Group’s accounting policies are unchanged from those set out in Note 3 to the Consolidated Financial Statements of Royal Dutch Shell plc in the Annual Report and Form 20-F for the year ended December 31, 2005 on pages 110 to 113.

In the third quarter 2005 Royal Dutch Shell plc became the Parent Company of Royal Dutch Petroleum Company (Royal Dutch) and The ”Shell” Transport and Trading Company, p.l.c. (Shell Transport) by acquiring all outstanding shares of Shell Transport and approximately 98.5% of the outstanding shares of Royal Dutch.

The comparative periods represent information for Royal Dutch Shell as if it had acquired 100% of Royal Dutch and Shell Transport. For financial reporting purposes, the 1.5% minority holders in Royal Dutch were shown in the Royal Dutch Shell consolidated financial statements as a minority interest in Royal Dutch Shell from August 10, 2005, as prior to that time those holders had a right to participate in the Exchange Offer and receive Royal Dutch Shell shares.

The minority in Royal Dutch ceased to exist as of December 21, 2005 as a result of the merger of Royal Dutch and Shell Petroleum NV.

These financial statements give retroactive effect for all periods presented prior to the Unification Transaction, which has been accounted for using a carry-over basis of the historical costs of the assets and liabilities of Royal Dutch, Shell Transport and other companies comprising the Royal Dutch/Shell Group of Companies. The interest of the minority shareholders in Royal Dutch was accounted for using a carry-over basis of the historical costs of its consolidated assets and liabilities.

Royal Dutch Shell will discontinue the publication of the Annual Report and Form 20-F in Dutch. This document will now only be published in English. The Annual Review and Summary Financial Statements, a summary of the Annual Report and Form 20-F, will continue to be published in both English and Dutch.

NOTE 2. Earnings on an estimated current cost of supplies (CCS) basis

To facilitate a better understanding of underlying business performance, the financial results are also analysed on an estimated current cost of supplies (CCS) basis as applied for the Oil Products and Chemicals segment earnings. Earnings on an estimated current cost of supplies basis provide useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell’s results of operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS.

On this basis, Oil Products and Chemicals segment cost of sales of the volumes sold during the period is based on the cost of supplies during the same period after making allowance for the estimated tax effect, instead of use of the first-in, first-out (FIFO) method of inventory accounting. Earnings calculated on this basis do not represent an application of the last-in, first-out (LIFO) inventory basis and do not reflect any inventory draw down effects. The adjustment for the Chemicals segment was implemented in Q1 2006, historic periods have been restated accordingly.

NOTE 3. Discontinued operations

Income/(loss) from discontinued operations, which comprises gains and losses on disposals and results of operations for the period, is provided in the statement of income in accordance with IFRS for separate major lines of business or geographical area of operations.

Earnings by industry segment relating to discontinued operations, included within the segment earnings on page 13, are as follows:
       QUARTERS                    $ million              NINE MONTHS
      Q3   Q2   Q3
    2006 2006 2005                                       2006  2005

       –    – (93)     Chemicals segment earnings           – (307)
       –    – (93)     Income/(loss) from discontinued      – (307)
                       operations
Basic earnings per share for the third quarter 2006 for discontinued operations were nil.

NOTE 4. Return on average capital employed (ROACE)

ROACE on an income basis is the sum of the current and previous three quarters’ income attributable to shareholders plus interest, less tax and minority interest as a percentage of the average of Royal Dutch Shell’s share of closing capital employed and the opening capital employed a year earlier. The tax rate and the minority interest components are derived from calculations at the published segment level.
    Components of the calculation ($ million):

                                                           Q3 2006   Q3 2005
    Income attributable to shareholders (four quarters)     24,527    25,520
    Royal Dutch Shell share of interest expense after tax      627       688
    ROACE numerator                                         25,154    26,208
    Royal Dutch Shell share of capital employed – opening  105,779    93,660
    Royal Dutch Shell share of capital employed – closing  114,556   105,779
    Royal Dutch Shell share of capital employed – average  110,168    99,720

    ROACE                                                    22.8%     26.3%
    NOTE 5. Earnings by industry segment
Operating segment results are before deduction of minority interest and also exclude interest and other income of a non-operational nature, interest expense, non-trading currency exchange effects and tax on these items, which are included in the results of the Corporate segment. Operating segment results are after tax and include equity accounted investments. Segment results in accordance with International Accounting Standard 14 “Segment Reporting” will be disclosed in Royal Dutch Shell’s 2006 Annual Report and Form 20-F, with a reconciliation to the basis as presented here.

NOTE 6. Gearing

The Group aims to maintain an efficient balance sheet with an average gearing ratio over time of between 20% and 25%. The numerator and denominator in the gearing calculation used by the Group is calculated by adding to reported debt and equity certain off-balance sheet obligations such as operating lease commitments and unfunded retirement benefits which it believes to be in the nature of incremental debt, and deducting cash and cash equivalents held in excess of amounts required for operational purposes.
    Components of the calculation ($ million):

                                                           30 Sep      30 Sep
                                                             2006        2005
    Non current debt                                        7,665       7,795
    Current debt                                            6,395       6,714
                                                      ___________ ___________
    Total Debt                                             14,060      14,509

    Add: Net present value of operating lease               9,442       6,283
    obligations (as per year end 2005)
    Unfunded pension benefit obligations (as per year       2,919       4,045
    end 2005)
    Less: Cash and cash equivalents in excess of            9,340      14,098
    operational requirements
                                                      ___________ ___________
    Adjusted Debt                                          17,081      10,739
                                                      ___________ ___________
    Total Equity                                          110,291      99,805
                                                      ___________ ___________
    Total Capital                                         127,372     110,544
                                                      ___________ ___________
    Gearing ratio (adjusted debt as a percentage of         13.4%        9.7%
    total capital)
    NOTE 7. Equity
Total equity comprises equity attributable to shareholders of Royal Dutch Shell and to the minority interests. Other reserves comprises the capital redemption reserve, share premium reserve, merger reserve, share-based compensation reserve, cumulative currency translation differences, unrealised gains/(losses) on securities and unrealised gains/(losses) on cash flow hedges.
      $ million    Ordinary Treasury Other   Retained  Total Minority  Total
                    share   shares  reserves earnings        interests equity
                    capital

    At January 1,      571  (3,809)  3,584    90,578  90,924   7,000  97,924
    2006

    Income for the                            20,159  20,159     639  20,798
    period

    Income/(expense)                 2,528             2,528      73   2,601
    recognised
    directly in
    equity

    Capital                                                –   1,233   1,233
    contributions
    from minority
    shareholders

    Dividends paid                           (6,012) (6,012)   (258) (6,270)

    Treasury shares:            375                      375             375
    net
    sales/(purchases)
    and dividends
    received

    Effect of                          154               154             154
    Unification

    Shares            (22)              22   (6,811) (6,811)         (6,811)
    repurchased for
    cancellation

    Share-based                        287               287             287
    compensation

    At September 30,   549  (3,434)  6,575    97,914 101,604   8,687 110,291
    2006
      $ million    Ordinary Treasury Other   Retained  Total Minority  Total
                     share  shares  reserves earnings        interests equity
                    capital
    At January 1,      584  (4,187)  9,688    80,781  86,866   5,313  92,179
    2005

    Income for the                            20,943  20,943     715  21,658
    period

    Income/(expense)               (4,039)         4 (4,035)      92 (3,943)
    recognised
    directly in
    equity

    Capital                                                –     732     732
    contributions
    from minority
    shareholders

    Dividends paid                           (8,687) (8,687)   (235) (8,922)

    Effects of                                 (835)   (835)     835       –
    Unification

    Treasury shares:            415                      415             415
    net
    sales/(purchases)
    and dividends
    received

    Shares             (6)               5   (2,437) (2,438)         (2,438)
    repurchased for
    cancellation

    Share-based                        124               124             124
    compensation

    At September 30,   578  (3,772)  5,778    89,769  92,353   7,452  99,805
    2005

    NOTE 8. Statement of cash flows
This statement reflects cash flows of Royal Dutch Shell and its subsidiaries as measured in their own currencies, which are translated into US dollars at average rates of exchange for the periods and therefore exclude currency translation differences except for those arising on cash and cash equivalents.

Cash from operating activities excluding net working capital movements, current taxation and taxation paid is calculated using the following line items from the cash flow statement:
               QUARTERS                   $ million             NINE MONTHS
         Q3          Q2          Q3
       2006        2006        2005                          2006        2005

                                       Cash flow from
                                       operating
     10,079       7,834       6,646    activities          25,737      21,648
      4,403       4,763       5,548    Current taxation    14,181      14,945
                                       Decrease/(increase)
                                       in net working
        560     (3,276)     (5,490)    capital            (4,695)     (8,959)
    (4,489)     (5,544)     (3,891)    Taxation paid     (14,428)    (12,579)
    _______ ___________ ___________                       _______ ___________
      9,605      11,891      10,479                        30,679      28,241
    _______ ___________ ___________                       _______ ___________
    NOTE 9. Earnings per Royal Dutch Shell share
The total number of Royal Dutch Shell shares in issue at the end of the period was 6,497.2 million. Royal Dutch Shell reports earnings per share on a basic and on a diluted basis, based on the weighted average number of Royal Dutch Shell (combined A and B) shares outstanding. Shares held in respect of share options and other incentive compensation plans are excluded in determining basic earnings per share.

Basic earnings per share calculations are based on the following weighted average number of shares (millions):
                                                                Nine     Nine
                                       Q3       Q2       Q3   Months   Months
                                     2006     2006     2005     2006     2005
    Royal Dutch Shell shares of
    EUR 0.07                      6,373.9  6,457.6  6,676.5  6,446.6  6,711.4

Diluted earnings per share calculations are based on the following weighted average number of shares (millions). This adjusts the basic number of shares for all share options currently in-the-money.
                                                                Nine     Nine
                                       Q3       Q2       Q3   Months   Months
                                     2006     2006     2005     2006     2005
    Royal Dutch Shell shares of
    EUR 0.07                      6,399.8  6,483.1  6,703.5  6,470.9  6,732.5

    Basic shares at the end of the following periods are (millions):

                                                Q3        Q2       Q3
                                              2006      2006     2005
    Royal Dutch Shell shares of EUR 0.07   6,336.3   6,414.0  6,608.2
One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares.

NOTE 10. Contingencies and litigation

The litigation relating to the 2004 recategorisation of certain hydrocarbon reserves is still at an early stage and subject to substantial uncertainties concerning the outcome of material factual and legal issues. Potential damages, if any, in a fully litigated securities class action would depend on the losses caused by the alleged wrongful conduct that would be demonstrated by individual class members in their purchases and sales of Royal Dutch and Shell Transport shares during the relevant class period. Based on the current status of the litigation, however, management of the Shell Group established a $500 million provision in the second quarter 2006. This amount reflects what Shell is prepared to pay to the plaintiffs to resolve this litigation. No settlement has been reached in the matter. Management of the Shell Group will review this determination as the litigation progresses.

A report by Royal Dutch Shell plc (‘Royal Dutch Shell’). The information in these quarterly results reflects the consolidated financial position and results of Royal Dutch Shell. All amounts shown throughout this report are unaudited.

*Comment added by ShellNews.net

 

 

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