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STATEMENT BY ROYAL DUTCH SHELL PLC: LEGAL PROCEEDINGS: Recategorisation of hydrocarbon reserves

(Source pages 157 & 159 of Royal Dutch Shell 2007 Annual Report)

Recategorisation of hydrocarbon reserves

A consolidated shareholder class action pending in the US District Court in New Jersey alleges losses related to the 2004 recategorisations of certain hydrocarbon reserves. Lead plaintiffs are the Pennsylvania State Employees’ Retirement System and the Pennsylvania Public School Employees’ Retirement System. In addition, certain Dutch pension funds, and German and Luxembourg institutional shareholders filed two related actions that were consolidated with the existing class action for pre-trial purposes.

Following dismissal of a number of original defendants in the class action, the remaining defendants are: Royal Dutch Petroleum Company (now merged into Shell Petroleum N.V.), The “Shell” Transport and Trading Company, plc (referred to collectively as Shell), PricewaterhouseCoopers LLP and KPMG Accountants N.V. Although the class action complaint was pled on behalf of a worldwide class of purchasers who purchased Shell shares during the period of April 8, 1999 through March 18, 2004 (the “Relevant Period”), the US District Court determined that it did not have jurisdiction over the claims of non-US purchasers and that decision became final on January 7, 2008.

On April 11, 2007, Shell reached a settlement of asserted and unasserted claims arising out of the recategorisation with representatives of purchasers who both resided and purchased Shell shares outside of the USA during the Relevant Period (Non-US Settlement). The parties to the Non-US Settlement include a shareholders’ foundation, certain of Shell’s institutional investors, and other shareholders’ rights organisations. The terms of the Non-US Settlement agreement principally include settlement relief of $352.6 million to be distributed to the non-US purchasers pursuant to a plan of distribution proposed in the Non-US Settlement, along with certain other relief. The Non-US Settlement agreement (and an amendment to it executed on February 27, 2008) was filed with the Amsterdam Court of Appeals, which has exclusive jurisdiction under Dutch law to determine whether the agreement should be declared binding to the non-US purchasers included within its terms.

The Non-US Settlement is subject to (i) a determination by the Amsterdam Court of Appeals whether to declare the settlement binding for all shareholders that it covers and (ii) agreed opt-out provisions. The Dutch Court has notified the parties to the Non-US Settlement that it currently plans to hold a hearing to address whether to issue a binding declaration regarding the Non-US Settlement either late in 2008 or early in 2009, but no hearing has yet been scheduled. Shell cannot predict how the Dutch court will rule on the request that it declare the settlement agreement to be binding on all stock purchasers covered by its terms. Nor can Shell predict how many covered purchasers will file defenses to the Non-US Settlement or exercise their opt-out right and ask to be excluded from the agreement should the Dutch court declare the agreement binding.

On March 4, 2008, Shell reached an agreement in principle to settle the class action brought by the US purchasers (US Settlement), which complements the Non-US Settlement. The US Settlement is subject to specified conditions, including the execution of a definitive settlement agreement and securing the approvals of the Boards of Directors of the relevant Shell companies, the relevant governmental authorities of the State of Pennsylvania, and the US District Court in New Jersey. Among other things, the US Settlement provides to all persons and entities who purchased Shell shares on US markets and all US persons and entities who purchased Shell shares on non-US markets during the Relevant Period, the following relief: (i) settlement relief of $82.8 million to be distributed to US purchasers pursuant to the plan of distribution that plaintiffs in the US Settlement will prepare, (ii) interest on settlement amounts from April 1, 2008 (and providing the same relief to participants in the Non-US Settlement), and (iii) the US purchasers and participants in the Non-US Settlement collectively would receive an additional payment of $35 million, divided in accordance with proportions determined in the two proposed settlements. Shell would also pay (i) US class counsel’s fees and expenses (subject to certain caps) upon application to and approval by the US District Court in New Jersey and (ii) the costs of administering the US Settlement. As with the Non-US Settlement, stock purchasers covered by the US Settlement will be allowed to opt-out of it.

Shell cannot predict whether the parties will be able to negotiate and execute a definitive settlement agreement. Nor can it predict – assuming a settlement agreement is executed – how (or when) the US District Court will rule on whether the settlement agreement should be approved or how many covered purchasers will object to the settlement or exercise their opt-out rights and ask to be excluded from the settlement.

http://www.shell.com/static/investor-en/downloads/financial_information/reports/2007/2007_annual_report.pdf

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