29th Apr 2008 06:30
1ST QUARTER 2008 UNAUDITED RESULTS
* Royal Dutch Shell's first quarter 2008 earnings, on a current cost of supplies (CCS) basis, were $7.8 billion compared to $6.9 billion a year ago. Basic CCS earnings per share increased by 15% versus the same quarter a year ago. * A first quarter 2008 dividend has been announced of $0.40 per share, an increase of 11% over the US dollar dividend for the same period in 2007. * $1.1 billion or 0.5% of Royal Dutch Shell issued ordinary shares were bought back for cancellation during the quarter.Royal Dutch Shell Chief Executive Jeroen van der Veer commented:"Good operatingperformance, combined with increased oil and gas prices, offset the impact ofdownstream conditions in the first quarter 2008. We have delivered anothercompetitive set of earnings for Shell's shareholders. Shell has the largestcapital spending programme in our industry today, to grow the company and playour part in ensuring that energy markets remain well supplied. Our strategy ison track."SUMMARY UNAUDITED RESULTS $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1
Income attributable to shareholders 9,083 8,467 7,281 +25
Less: Estimated CCS adjustment for Oil Products and Chemicals (see note 2) 1,307 1,783 349 CCS earnings 7,776 6,684 6,932 +12 Basic earnings per share ($) 1.47 1.36 1.16 +27 Less: Estimated CCS adjustment per share ($) 0.21 0.29 0.06 Basic CCS earnings per share ($) 1.26 1.07 1.10 +15 Dividend per ordinary share ($) 0.40 0.36 0.36 +11 1 Q1 on Q1 change
KEY FEATURES OF THE FIRST QUARTER 2008
* First quarter 2008 CCS earnings were $7,776 million or 12% higher than in the same quarter a year ago. * First quarter 2008 reported income was $9,083 million or 25% higher than in the same quarter a year ago. * Basic CCS earnings per share increased by 15% versus the same quarter a year ago. * Total cash returned to shareholders in the form of dividends and share repurchases in the first quarter 2008 was $3.4 billion. * Cash flow from operating activities was $16.9 billion compared to $11.2 billion in the first quarter 2007. Excluding net working capital movements, cash flow from operating activities was $14.1 billion compared to $11.6 billion a year ago. * Capital investment for the first quarter 2008 was $8.1 billion. Net capital investment (capital investment, less divestment proceeds) for the first quarter 2008 was $7.6 billion. * Return on average capital employed (ROACE), on a reported income basis (see note 3), was 24.5%. * Gearing (see note 5) was 12.7% at the end of the first quarter 2008 versus 14.6% at the end of the first quarter 2007. * Oil and gas production, including oil sands production, for the first quarter 2008 was 3,522 thousand barrels of oil equivalent per day (boe/d), compared to 3,509 thousand boe/d in the same quarter last year. Excluding the impact of divestments, Canadian royalty changes and production sharing contracts (PSC) pricing effects, first quarter 2008 production increased by 1% compared to the same quarter last year. * Liquefied Natural Gas (LNG) equity sales volumes of 3.51 million tonnes were a record and 6% higher than in the same quarter a year ago. * Oil Products refinery availability increased to 92% compared to 85% in the first quarter of 2007. Chemicals manufacturing plant availability was 95% compared to 91% in the first quarter 2007. Oil Sands upgrader availability was 94%, compared to 93% in the same quarter last year. * Oil Products sales volumes in the first quarter 2008 increased by 7% compared to the same quarter last year. Chemical product sales volumes decreased by 2% compared to the first quarter 2007.SUMMARY UNAUDITED RESULTS $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Exploration & Production2 5,143 4,867 3,393 Gas & Power 948 631 803 Oil Sands2 249 82 115 Oil Products (CCS basis) 1,194 876 1,488 Chemicals (CCS basis) 201 348 480 Corporate 146 (4) 801 Minority interest (105) (116) (148) CCS earnings 7,776 6,684 6,932 +12 1 Q1 on Q1 change
2 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production earnings up to the third quarter 2007 have been reclassified by the amounts reported under the Oil Sands segment.
SUMMARY OF IDENTIFIED ITEMS
Earnings in the first quarter 2008 reflected the following items, which in aggregate amounted to a net charge of $77 million (compared to a net gain of $371 million in the first quarter 2007), as summarised in the table below:
* Exploration & Production earnings included a net charge of $66 million, reflecting a gain from divestments of $84 million, which was offset by a charge of $150 million related to the mark-to-market valuation of certain UK gas contracts. Earnings for the first quarter 2007 included a net gain of $104 million reflecting both a gain from divestments of $126 million and a charge of $22 million related to the mark-to-market valuation of certain UK gas contracts. * Gas & Power earnings included a charge of $11 million related to the mark-to-market valuation impact of certain gas contracts. Earnings for the first quarter 2007 included a net gain of $39 million, reflecting gains of $110 million related to divestments and a charge of $71 million related to the mark-to-market valuation of certain gas contracts. * Oil Products earnings for the first quarter 2007 included a charge of $176 million related to impairment of certain assets. * Corporate earnings for the first quarter 2007 included a gain of $404 million related to the realisation of gains on the sale of the equity portfolio held by Shell insurance companies.SUMMARY OF IDENTIFIED ITEMS $ million Quarters Q1 2008 Q4 2007 Q1 2007 Segment earnings impact of identified items: Exploration & Production (66) 715 104 Gas & Power (11) (7) 39 Oil Sands - 94 - Oil Products (CCS basis) - 177 (176) Chemicals (CCS basis) - (46) - Corporate - 30 404 Minority interest - - - CCS earnings impact (77) 963 371
These items generally relate to events with an impact of greater than $50 million on Shell earnings and are shown to provide additional insight into the segment earnings, CCS earnings and income attributable to shareholders. Further additional comments on the business segments are provided in the section 'Earnings by business segment' on page 4 and onwards.
EARNINGS BY BUSINESS SEGMENTEXPLORATION & PRODUCTION $ million Quarters Q1 2008 Q4 2007 Q1 2007 %2 Segment earnings 3 5,143 4,867 3,393 +52
Crude oil production (thousand b/d) 1 1,756 1,798 1,865 -6
Natural gas production available for sale (million scf/d) 9,755 9,185 8,981 +9 Barrels of oil equivalent (thousand boe/d) 1 3,438 3,381 3,413 +1 1 Excludes oil sands bitumen production 2 Q1 on Q1 change
3 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production earnings up to the third quarter 2007 have been reclassified by the amounts reported under the Oil Sands segment.
First quarter Exploration & Production segment earnings were $5,143 million compared to $3,393 million a year ago. Earnings included a net charge of $66 million related to identified items, compared to a net gain of $104 million in the first quarter 2007 (see page 3 for details).
Earnings, when compared to the first quarter 2007, reflected higher gas production volumes and the benefit of higher oil and gas prices on revenues, which were partly offset by lower oil production volumes mainly in the USA and Europe and by higher exploration expenses.
Global liquids realisations were 66% higher than in the first quarter 2007, following marker crudes Brent and WTI increases of 67% and 69% respectively. Global gas realisations were 25% higher than a year ago. Outside the USA gas realisations increased by 24% whereas in the USA gas realisations increased by 32%.
First quarter 2008 production (excluding oil sands bitumen production) was 3,438 thousand barrels of oil equivalent per day (boe/d) compared to 3,413 thousand boe/d a year ago. Crude oil production was down 6% and natural gas production was up 9% compared to the first quarter 2007.
Production compared to the first quarter 2007 included additional volumes principally from Ormen Lange (Shell share 17%) in Norway, West Salym (Shell share 50%) in Russia, Changbei (Shell share 50%) in China, Deimos (Shell share 71.5%) in the USA, Stybarrow (indirect Shell share 17.1%) in Australia, Chipmunk, Cliffdale and Orion (Shell share 100%) in Canada and Starling (Shell share 28%) in the United Kingdom.
First quarter portfolio developments
In Australia, Shell reached an agreement with Woodside for the sale of various interests in North West Shelf assets, with current production of approximately 8 thousand boe/d, for some $0.3 billion.
In the USA, Shell was awarded 141 blocks and was the apparent high bidder on another 134 blocks, with high bids totalling $2.1 billion, offshore Alaska in the Chukchi Sea.
In Kazakhstan, the international members of the Kashagan consortium agreed to sell their participating interests proportionally, allowing KazMunaiGas's stake to increase to match that of the four major shareholders. Assuming conclusion of the deal, Shell's interest will change from 18.5% to 16.8%.
In Nigeria, Shell reached an agreement, amounting to some $0.6 billion, for the sale of offshore deepwater blocks OML 134 and OML 125, with current production of approximately 7 thousand boe/d.
GAS & POWER $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Segment earnings 948 631 803 +18
Equity LNG sales volume (million tonnes) 3.51 3.34 3.30 +6
1 Q1 on Q1 change
First quarter Gas & Power segment earnings were $948 million compared to $803 million a year ago. First quarter 2008 earnings included a charge of $11 million related to an identified item, compared to a net gain of $39 million in the first quarter 2007 (see page 3 for details).
Earnings, when compared to the first quarter 2007, reflected strong LNG and gas to liquids (GTL) product prices, increased LNG volumes, higher income from LNG cargo diversion opportunities and continued strong operational performance.
LNG equity sales volumes of 3.51 million tonnes were 6% higher than in the same quarter a year ago. Sales were higher in all five operating LNG ventures, with the largest increase coming from Nigeria LNG (Shell interest 26%).
Marketing and trading earnings, non-LNG related, were similar to the same quarter a year ago.
First quarter portfolio developments
In China, during the first quarter, binding sales and purchase agreements were progressed with Qatargas 4 and PetroChina, leading to the long-term supply of LNG from Qatar to China, totalling 3 million tonnes per annum over 25 years. Agreements were signed on April 10, 2008.
OIL SANDS $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Segment earnings 249 82 115 +117 Bitumen production (thousand b/d) 84 55 96 -13 Sales volumes (thousand b/d) 144 97 142 +1 Upgrader availability (%) 94 79 93 1 Q1 on Q1 change
First quarter Oil Sands segment earnings were $249 million compared to $115 million in the same quarter last year.
Earnings, when compared to the first quarter 2007, reflected the impact of higher oil prices on revenues and a refund of royalty charges, which were partly offset by lower production volumes and higher costs.
The royalty calculation methodology applicable to the Athabasca Oil Sands Project (AOSP) was revised during the quarter, allowing the inclusion of additional eligible costs to the project. Due to this revision the project cost payout timeframe for royalty calculation purposes was extended beyond July 2007 when payout of the project was initially achieved. The royalty rate for the project was revised back to 1% (from 25% since July 2007) until achievement of the project cost payout. As a consequence, the adjustment related to prior quarters' bitumen production had an impact of 12 thousand barrels per day on the first quarter 2008.
Bitumen production decreased by 13% compared to the same quarter last year. Excluding the effect of the royalty revision, net production decreased by 25% due to operational issues at the mine related to extreme cold weather conditions and unplanned maintenance at the Scotford Upgrader. Upgrader availability increased to 94% compared to 93% in the first quarter 2007.
OIL PRODUCTS $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Segment earnings 2,367 2,556 1,802 Less: Estimated CCS adjustment (see note 2) 1,173 1,680 314 Segment CCS earnings 1,194 876 1,488 -20 Refinery intake (thousand b/d) 3,694 3,812 3,608 +2
Total Oil Products sales (thousand b/d) 6,831 6,842 6,406 +7
Refinery availability (%) 92 94 85 1 Q1 on Q1 change
First quarter Oil Products segment earnings were $2,367 million compared to $1,802 million for the same period last year.
First quarter Oil Products CCS segment earnings were $1,194 million compared to $1,488 million in the first quarter 2007. Earnings for the first quarter 2007 included a charge of $176 million related to identified items (see page 3 for details).
CCS earnings, when compared to the first quarter 2007, were mainly impacted by lower realised refining margins and higher operating costs, which were partly offset by higher marketing margins. In addition, trading contributions increased compared to those in the first quarter 2007.
Industry refining margins declined worldwide compared to the same period a year ago. Refinery availability increased to 92% compared to 85% in the first quarter of 2007 mainly due to lower planned maintenance activities.
Marketing earnings, compared to the same period a year ago, increased mainly due to higher retail, B2B and finished lubricants margins, which were partly offset by lower lubricants base oil margins.
Oil Products (marketing and trading) sales volumes increased by 7% compared to the same quarter last year. Marketing sales volumes were 1% higher than in the first quarter 2007 and excluding the impact of divestments 2% higher mainly because of increased aviation and retail sales.
First quarter portfolio developments
In France, on March 31, 2008, Shell concluded the sale of the Petit Couronne and Reichstett Vendenheim refineries, with a combined capacity of some 220 thousand barrels per day.
Also in France, on April 1, 2008, Shell concluded the sale of the Berre-l'Etang refining and petrochemical complex, with a refining capacity of 80 thousand barrels per day.
The combined cash proceeds expected from the above-mentioned sales amount toapproximately $1.8 billion, which will be received after the end of the firstquarter 2008.CHEMICALS $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Segment earnings 348 501 527 Less: Estimated CCS adjustment (see note 2) 147 153 47 Segment CCS earnings 201 348 480 -58 Sales volumes (thousand tonnes) 5,459 5,633 5,567 -2 Manufacturing plant availability (%) 95 93 91 1 Q1 on Q1 change
First quarter Chemicals segment earnings were $348 million compared to $527 million for the same period last year.
First quarter Chemicals CCS segment earnings were $201 million compared to $480 million in the same quarter last year.
CCS earnings, when compared to the first quarter 2007, reflected lower margins, higher operating costs and lower income from equity-accounted investments. In addition, earnings were impacted by reduced trading contributions.
Chemicals manufacturing plant availability increased to 95%, some 4 percent-points higher than in the first quarter 2007.
CORPORATE $ million Quarters Q1 2008 Q4 2007 Q1 2007 Segment earnings 146 (4) 801
First quarter Corporate segment earnings were $146 million compared to $801 million for the same period last year. Earnings for the first quarter 2007 included a gain of $404 million related to an identified item (see page 3 for details).
Earnings, when compared to the first quarter 2007, reflected lower interestincome and currency exchange rate results, reduced tax credits and highershareholder costs. PRICE AND MARGIN INFORMATION OIL & GAS Quarters Q4 Q1 Q1 2008 2007 2007 Realised oil prices - Exploration & Production1 (period average) $/bbl WOUSA 90.40 82.11 55.27 USA 92.55 88.92 51.91 Global 90.72 82.96 54.73 Realised oil prices - Oil Sands (period average) $/bbl Canada 85.08 71.45 51.02 Realised gas prices (period average) $/thousand scf Europe 9.00 8.15 7.84 WOUSA (including Europe) 5.85 5.64 4.71 USA 9.52 7.45 7.20 Global 6.52 6.00 5.21 Oil and gas marker industry prices (period average) Brent ($/bbl) 96.66 88.35 57.76 WTI ($/bbl) 97.86 90.47 58.05 Edmonton Par ($/bbl) 97.91 89.00 57.84 Henry Hub ($/MMBtu) 8.55 6.93 7.15 UK National Balancing Point (pence/therm) 53.05 46.86 22.31 Japanese Crude Cocktail - JCC ($/bbl)2 91.15 82.80 57.56 REFINING & CRACKER INDUSTRY MARGINS3 Quarters Q4 Q1 Q1 2008 2007 2007 Refining marker industry gross margins (period average) $/bbl ANS US West Coast coking margin 8.75 10.60 22.16 WTS US Gulf Coast coking margin 8.70 9.65 12.87 Rotterdam Brent complex 3.55 4.35 3.70 Singapore 80/20 Arab light/Tapis complex 1.80 1.95 3.06 Cracker industry margins (period average) $/tonne US Ethane 261.00 334.00 332.00 Western Europe naphtha 411.00 279.00 525.00 North East Asia naphtha 117.00 14.00 518.00 1 As from the fourth quarter 2007, the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production realised oil prices up to the third quarter 2007 have been reclassified. 2 JCC prices for the first quarter are based on available market data up to the end of January 2008. Prices for this period will be updated when full market data is available. 3 The refining and cracker industry margins shown above do not represent actual Shell realised margins for the periods. These are estimated industry margins based on available market information at the end of the quarter.
OIL & GAS - OPERATIONAL DATA Quarters Q1 2008 Q4 2007 Q1 2007 %1 Crude oil production thousand b/d Europe 416 395 447 Africa 322 352 339 Asia Pacific 208 227 231 Middle East, Russia, CIS 428 438 422 USA 301 310 343 Other Western Hemisphere 81 76 83 Total crude oil production excluding oil sands 1,756 1,798 1,865 -6 Bitumen production - oil sands 84 55 96 Total crude oil production including oil sands 1,840 1,853 1,961 -6 Natural gas production available for sale million scf/d2 Europe 4,894 4,569 4,110 Africa 619 594 519 Asia Pacific 2,438 2,166 2,455 Middle East, Russia, CIS 232 239 260 USA 1,105 1,138 1,162 Other Western Hemisphere 467 479 475 9,755 9,185 8,981 +9 Total production in barrels of oil equivalent thousand boe/d3 Europe 1,260 1,183 1,156 Africa 429 454 428 Asia Pacific 628 600 654 Middle East, Russia, CIS 468 479 467 USA 492 506 543 Other Western Hemisphere 161 159 165
Total production excluding oil sands 3,438 3,381 3,413 +1
Bitumen production - oil sands 84 55 96
Total production including oil sands 3,522 3,436 3,509 0
1 Q1 on Q1 change
2 scf/d = standard cubic feet per day; 1 standard cubic foot = 0.0283 cubic metre
3 Natural gas converted to oil equivalent at 5.8 million scf/d = thousand boe/d
OIL PRODUCTS AND CHEMICALS - OPERATIONAL DATA Quarters Q1 2008 Q4 2007 Q1 2007 %1 Refinery processing intake thousand b/d Europe 1,741 1,803 1,590 Other Eastern Hemisphere 756 821 759 USA 845 869 893 Other Western Hemisphere 352 319 366 3,694 3,812 3,608 +2 Oil sales Gasolines 2,083 2,051 2,263 Kerosenes 814 802 720 Gas/diesel oils 2,337 2,429 2,114 Fuel oil 839 769 679 Other products 758 791 630 Total oil products * 6,831 6,842 6,406 +7 *Comprising: Europe 1,959 1,983 1,832 Other Eastern Hemisphere 1,245 1,369 1,245 USA 1,396 1,485 1,401 Other Western Hemisphere 755 678 653 Export sales 1,476 1,327 1,275 Chemical sales volumes by main product category 2** thousand tonnes Base chemicals 3,119 3,164 3,280 First-line derivatives 2,338 2,467 2,282 Other 2 2 5 5,459 5,633 5,567 -2 **Comprising: Europe 2,289 2,190 2,273 Other Eastern Hemisphere 1,228 1,457 1,253 USA 1,784 1,802 1,871 Other Western Hemisphere 158 184 170 1 Q1 on Q1 change 2 Excluding volumes sold by equity-accounted investments, chemical feedstock trading and by-products. NOTE
All amounts shown throughout this Report are unaudited.
Second quarter results are expected to be announced on July 31, 2008 and third quarter results are expected to be announced on October 30, 2008.
In this document "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries 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. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this document refer 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 Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this document, 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 document, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell'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, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this document 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 document, April 29, 2008. 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 document.
Please refer to the Annual Report and Form 20-F for the year ended December 31, 2007 for a description of certain important factors, risks and uncertainties that may affect Shell's businesses.
Cautionary Note to US Investors:
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 may use certain terms in this announcement that the SEC's guidelines strictly prohibit us from including in filings with the SEC. US Investors are urged to consider closely the disclosure in our Form 20-F, File No 001-32575 and disclosure in our Forms 6-K, File No 001-32575, available on the SEC's website www.sec.gov . You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
April 29, 2008
APPENDIX: ROYAL DUTCH SHELL FINANCIAL REPORT AND TABLES
SUMMARISED STATEMENT OF INCOME (SEE NOTE 1) $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Revenue2 114,302 106,703 73,480 Cost of sales 96,780 90,603 60,666 Gross profit 17,522 16,100 12,814 +37 Selling, distribution and administrative expenses 3,969 4,880 3,778 Exploration 325 382 272 Share of profit of equity-accounted investments 2,425 2,376 1,808
Net finance costs and other (income)/expense (53) (174) (901)
Income before taxation 15,706 13,388 11,473 +37 Taxation 6,505 4,755 4,032 Income for the period 9,201 8,633 7,441 +24 Income attributable to minority interest 118 166 160
Income attributable to shareholders 9,083 8,467 7,281 +25
1 Q1 on Q1 change
2 Revenue is stated after deducting sales taxes, excise duties and similar levies of $22,920 million in Q1 2008, $21,552 million in Q4 2007, and $17,305 million in Q1 2007.
BASIC EARNINGS PER SHARE (SEE NOTES 1, 2 AND 7) Quarters Q1 2008 Q4 2007 Q1 2007 Earnings per share ($) 1.47 1.36 1.16 CCS earnings per share ($) 1.26 1.07 1.10 DILUTED EARNINGS PER SHARE (SEE NOTES 1, 2 AND 7) Quarters Q1 2008 Q4 2007 Q1 2007 Earnings per share ($) 1.46 1.36 1.15 CCS earnings per share ($) 1.25 1.07 1.10 EARNINGS BY BUSINESS SEGMENT (SEE NOTES 2 AND 4) $ million Quarters Q1 2008 Q4 2007 Q1 2007 %1 Exploration & Production2: - World outside USA 3,540 3,763 2,541 +39 - USA 1,603 1,104 852 +88 5,143 4,867 3,393 +52 Gas & Power: - World outside USA 933 639 682 +37 - USA 15 (8) 121 -88 948 631 803 +18 Oil Sands2: 249 82 115 +117 Oil Products (CCS basis): - World outside USA 978 789 1,158 -16 - USA 216 87 330 -35 1,194 876 1,488 -20 Chemicals (CCS basis): - World outside USA 304 370 469 -35 - USA (103) (22) 11 201 348 480 -58 Total operating segments 7,735 6,804 6,279 +23 Corporate: - Interest and investment income/(expense) 110 12 583 - Currency exchange gains/(losses) (62) 82 46 - Other - including taxation 98 (98) 172 146 (4) 801 Minority interest (105) (116) (148) CCS earnings 7,776 6,684 6,932 +12 Estimated CCS adjustment for Oil Products and Chemicals 1,307 1,783 349 Income attributable to shareholders of Royal Dutch Shell plc 9,083 8,467 7,281 +25 1 Q1 on Q1 change
2 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production earnings up to the third quarter 2007 have been reclassified by the amounts reported under the Oil Sands segment.
SUMMARISED BALANCE SHEET (SEE NOTES 1 AND 6) $ million Mar 31, 2008 Dec 31, 2007 Mar 31, 2007 Assets Non-current assets: Intangible assets 5,282 5,366 5,117 Property, plant and equipment 105,806 101,521 103,624 Investments: - equity-accounted investments 31,198 29,153 22,001 - financial assets 3,333 3,461 3,538 Deferred tax 3,409 3,253 3,135 Pre-paid pension costs 5,878 5,559 4,289 Other 6,406 5,760 5,285 161,312 154,073 146,989 Current assets: Inventories 32,184 31,503 23,960 Accounts receivable 87,507 74,238 58,998 Cash and cash equivalents 14,417 9,656 11,184 134,108 115,397 94,142 Total assets 295,420 269,470 241,131 Liabilities Non-current liabilities: Debt 11,378 12,363 11,978 Deferred tax 13,473 13,039 13,114 Retirement benefit obligations 6,304 6,165 6,219 Other provisions 14,016 13,658 10,514 Other 4,189 3,893 4,154 49,360 49,118 45,979 Current liabilities: Debt 5,684 5,736 5,393
Accounts payable and accrued liabilities 89,531 75,697 64,156
Taxes payable 14,412 9,733 9,835 Retirement benefit obligations 455 426 326 Other provisions 2,815 2,792 1,932 112,897 94,384 81,642 Total liabilities 162,257 143,502 127,621 Equity attributable to shareholders of Royal Dutch Shell plc 131,130 123,960 105,105 Minority interest 2,033 2,008 8,405 Total equity 133,163 125,968 113,510 Total liabilities and equity 295,420 269,470 241,131 SUMMARISED STATEMENT OF CASH FLOWS (SEE NOTE 1) $ million Quarters Q1 2008 Q4 2007 Q1 2007 Cash flow from operating activities: Income for the period 9,201 8,633 7,441 Adjustment for: - Current taxation 6,405 5,551 4,267 - Interest (income)/expense 178 96 198
- Depreciation, depletion and amortisation 3,146 3,840 3,260
- (Profit)/loss on sale of assets (281) (1,799) (362) - Decrease/(increase) in net working capital 2,784 (3,375) (399) - Share of profit of equity-accounted investments (2,425) (2,376) (1,808) - Dividends received from equity-accounted investments 1,752 2,282 1,587
- Deferred taxation and other provisions 322 (726) (152)
- Other 94 (24) (447) Cash flow from operating activities (pre-tax) 21,176 12,102 13,585 Taxation paid (4,314) (6,809) (2,404)
Cash flow from operating activities 16,862 5,293 11,181
Cash flow from investing activities: Capital expenditure (7,429) (8,013) (5,361)
Investments in equity-accounted investments (616) (519) (370)
Proceeds from sale of assets 445 1,742 380 Proceeds from sale of equity-accounted investments 61 561 115 Proceeds from sale of /(additions to) financial assets 10 (120) 555 Interest received 285 353 285
Cash flow from investing activities (7,244) (5,996) (4,396)
Cash flow from financing activities: Net increase/(decrease) in debt with
maturity period within three months (863) 317 341
Other debt: New borrowings 185 195 2,762 Repayments (664) (182) (1,613) Interest paid (298) (312) (351) Change in minority interest (7) (52) (3,110) Net issue/(repurchase) of shares (1,073) (1,538) (486) Dividends paid to:
- Shareholders of Royal Dutch Shell plc (2,329) (2,318) (2,100)
- Minority interest (51) (17) (42) Treasury shares: - Net sales/(purchases) and dividends received 200 124 (16)
Cash flow from financing activities (4,900) (3,783) (4,615)
Currency translation differences relating to cash and cash equivalents 43 50 12 Increase/(decrease) in cash and cash equivalents 4,761 (4,436) 2,182 Cash and cash equivalents at beginning of period 9,656 14,092 9,002
Cash and cash equivalents at end of period 14,417 9,656 11,184
CAPITAL INVESTMENT $ million Quarters Q1 2008 Q4 2007 Q1 2007 Capital expenditure: Exploration & Production1: - World outside USA 2,202 2,704 2,872 - USA 2,530 1,321 587 4,732 4,025 3,459 Gas & Power: - World outside USA 823 862 657 - USA 1 11 1 824 873 658 Oil Sands1 711 649 368 Oil Products: - World outside USA 456 1,257 474 - USA 61 123 195 517 1,380 669 Chemicals: - World outside USA 374 419 153 - USA 34 103 83 408 522 236 Corporate 37 193 45 Total capital expenditure 7,229 7,642 5,435 Exploration expense - World outside USA 135 193 127 - USA 80 170 42 215 363 169 New equity in equity-accounted investments - World outside USA 365 237 247 - USA 5 40 17 370 277 264
New loans to equity-accounted investments 246 242 106
Total capital investment* 8,060 8,524 5,974 *Comprising: - Exploration & Production1 5,439 4,630 3,892 - Gas & Power 925 1,091 732 - Oil Sands1 711 649 368 - Oil Products 536 1,438 699 - Chemicals 412 523 238 - Corporate 37 193 45 8,060 8,524 5,974
1 As from the fourth quarter 2007, the results of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production results up to the third quarter 2007 have been reclassified by the amounts reported under the Oil Sands segment.
ADDITIONAL SEGMENTAL INFORMATION1 $ million Quarters Q1 2008 Q4 2007 Q1 2007 Exploration & Production3 Segment earnings 5,143 4,867 3,393 Including: - Exploration 325 382 272
- Depreciation, depletion & amortisation 2,165 2,848 2,288
- Share of profit of equity-accounted investments 1,212 1,278 913 Cash flow from operations 10,329 5,135 6,110
Less: Net working capital movements2 923 829 (1,086)
Cash flow from operations excluding net working capital movements 9,406 4,306 7,196 Capital employed 47,927 47,682 52,088 Gas & Power Segment earnings 948 631 803 Including:
- Depreciation, depletion & amortisation 81 85 74
- Share of profit of equity-accounted investments 584 533 420 Cash flow from operations 1,917 295 587
Less: Net working capital movements2 902 (379) (169)
Cash flow from operations excluding net working capital movements 1,015 674 756 Capital employed 19,305 19,383 18,453 Oil Sands3 Segment earnings 249 82 115 Including:
- Depreciation, depletion & amortisation 44 42 39
Cash flow from operations 298 208 486
Less: Net working capital movements2 (102) 145 411
Cash flow from operations excluding net working capital movements 400 63 75 Capital employed 5,292 4,603 3,175
1 Corporate segment information has not been included in the above table. Please refer to the 'Earnings by business segment' section for additional information. The above data does not consider Minority interest impacts on the segments.
2 Excluding working capital movements related to taxation.
3 As from the fourth quarter 2007, the results of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production results up to the third quarter 2007 have been reclassified by the amounts reported under the Oil Sands segment.
ADDITIONAL SEGMENTAL INFORMATION1 (continued) $ million Quarters Q1 2008 Q4 2007 Q1 2007 Oil Products Segment CCS earnings 1,194 876 1,488 Including:
- Depreciation, depletion & amortisation 608 607 656
- Share of profit of equity-accounted investments 267 328 280 Cash flow from operations 2,362 (1,605) 2,123
Less: Net working capital movements2 (435) (3,929) (319)
Cash flow from operations excluding net working capital movements 2,797 2,324 2,442 Capital employed 55,768 54,515 43,716 Chemicals Segment CCS earnings 201 348 480 Including:
- Depreciation, depletion & amortisation 162 207 155
- Share of profit of equity-accounted investments 158 165 188 Cash flow from operations 386 688 116
Less: Net working capital movements2 (9) (123) (514)
Cash flow from operations excluding net working capital movements 395 811 630 Capital employed 11,233 10,571 9,187
1 Corporate segment information has not been included in the above table. Please refer to the 'Earnings by business segment' section for additional information. The above data does not consider Minority interest impacts on the segments.
2 Excluding working capital movements related to taxation. NOTES
1. Accounting policies and basis of presentation
The quarterly financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are also in accordance with IFRS as adopted by the European Union.
The Oil Sands operations, which were previously reported within the Exploration & Production segment, are reported as a separate segment with effect from the fourth quarter 2007. Prior period financial statements have been reclassified accordingly.
The accounting policies are unchanged from those set out in Note 2 to the Consolidated Financial Statements of Royal Dutch Shell plc in the Annual Report and Form 20-F for the year ended December 31, 2007 on pages 117 to 121.
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 provides 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 are based on the cost of supplies during the same period after making allowance for the estimated tax effect, instead 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 drawdown effects.
3. Return on average capital employed (ROACE)
ROACE is defined as the sum of the current and previous three quarters' income adjusted for interest expense, after tax, as a percentage of the average capital employed for the period.
Components of the calculation are:
$ million Q1 2008 Q1 2007 Income (four quarters) 33,686 26,736 Interest expense after tax 726 664 ROACE numerator 34,412 27,400 Capital employed - opening 130,881 115,503 Capital employed - closing 150,225 130,881 Capital employed - average 140,553 123,192 ROACE 24.5% 22.2%
ROACE in previous quarters has been shown on a Shell share basis. As a consequence of the significant reduction of minority interest during 2007, ROACE calculations are now presented on a 100%-basis. Prior period ROACE calculations have been adjusted for comparison purposes.
4. Earnings by business segment
Operating segment results are presented 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 Corporate results. Operating segment results are after tax and include equity-accounted investments.
5. Gearing
The numerator and denominator in the gearing calculation, as demonstratedbelow, used by Shell are calculated by adding to reported debt and equitycertain off-balance sheet obligations as at the beginning of the year such asoperating lease commitments and unfunded retirement benefits (if applicable)which Shell believes to be in the nature of incremental debt, and deductingcash and cash equivalents judged to be in excess of amounts required foroperational purposes.$ million Mar 31, 2008 Mar 31, 2007 Non-current debt 11,378 11,978 Current debt 5,684 5,393 Total debt 17,062 17,371 Add: Net present value of operating lease obligations 14,387 11,319 Unfunded retirement benefit obligations (after tax) - - Less: Cash and cash equivalents in excess of operational requirements 12,117 9,284 Adjusted debt 19,332 19,406 Total equity 133,163 113,510 Total capital 152,495 132,916 Gearing ratio (adjusted debt as a percentage of total capital) 12.7% 14.6% 6. Equity
Total equity comprises equity attributable to shareholders of Royal Dutch Shell and to the minority interest. Other reserves comprise 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.
Ordinary share Treasury Other Retained Minority Total $ million capital shares reserves earnings Total interest equity At December 31, 2007 536 (2,392) 14,148 111,668 123,960 2,008 125,968 Income for the period - - - 9,083 9,083 118 9,201 Income/(expense) recognised directly in equity - - 1,656 - 1,656 (35) 1,621 Capital contributions/ (repayments) from/ to minority shareholders - - - - - (7) (7) Dividends paid - - - (2,329) (2,329) (51) (2,380) Treasury shares: net sales/ (purchases) and dividends received - 200 - - 200 - 200 Shares repurchased for cancellation (2) - 2 (1,327) (1,327) - (1,327) Share-based compensation - - (113) - (113) - (113) At March 31, 2008 534 (2,192) 15,693 117,095 131,130 2,033 133,163 Ordinary share Treasury Other Retained Minority Total $ million capital shares reserves earnings Total interest equity At December 31, 2006 545 (3,316) 8,820 99,677 105,726 9,219 114,945 Income for the period - - - 7,281 7,281 160 7,441 Income/(expense) recognised directly in equity - - 50 - 50 (128) (78) Capital contributions/ (repayments) from/ to minority shareholders - - - - - 869 869 Acquisition of Shell Canada - - - (5,445) (5,445) (1,656) (7,101) Other changes in minority interest - - - 22 22 (34) (12) Dividends paid - - - (2,100) (2,100) (25) (2,125) Treasury shares: net sales/ (purchases) and dividends received - (16) - - (16) - (16) Shares repurchased for cancellation (1) - 1 (486) (486) - (486) Share-based compensation - - 73 - 73 - 73 At March 31, 2007 544 (3,332) 8,944 98,949 105,105 8,405 113,510
7. Basis for Royal Dutch Shell earnings per share
The total number of Royal Dutch Shell ordinary shares in issue at the end of the period was 6,313.8 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 weightedaverage number of shares:millions Q1 2008 Q4 2007 Q1 2007
Royal Dutch Shell shares of euro 0.07 6,195.5 6,225.3 6,287.0
Diluted earnings per share calculations are based on the following weighted average number of shares. This adjusts the basic number of shares for all share options currently in-the-money.
millions Q1 2008 Q4 2007 Q1 2007
Royal Dutch Shell shares of euro 0.07 6,211.4 6,248.8 6,306.5
Basic shares outstanding at the end of the following periods are:
millions Q1 2008 Q4 2007 Q1 2007
Royal Dutch Shell shares of euro 0.07 6,187.0 6,210.4 6,282.9
One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares.
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