4th May 2006 07:00
Summary unaudited results FIRST QUARTER $ million 2006 2005 % Income attributable to shareholders 1 6,893 6,675 +3 Estimated current cost of supplies (CCS) adjustment for Oil Products and Chemicals - see note 2 805 1,220 CCS earnings 1 6,088 5,455 +12 Cash from operating activities 7,824 8,680 Cash from operating activities excluding net working capital movements and taxation paid/accrued - see note 7 9,183 9,107 Capital investment 4,230 3,240 Upstream production (thousand boe/d) 2 3,746 3,847 -3 1 including discontinued operations - see note 3 2100% of Shell companies production plus Shell share of production of equity accounted investments Delivering good results; building the future * CCS earnings of $6,088 million, up 12% * First quarter results of $0.94 basic CCS earnings per share, up 15% versus first quarter 2005 * Upstream performance satisfactory, underpinned by oil and gas price increases, LNG earnings and production of 3,746 thousand barrels of oil equivalent (boe) per day, up 1% excluding hurricane and pricing effects * Downstream earnings robust against moderated market conditions versus first quarter 2005; Chemicals earnings impacted by lower margins * First quarter dividend of euro 0.25 per share increased by 9% * $1.5 billion or 0.7% of Royal Dutch Shell shares bought back for cancellation during the first quarterChief Executive Jeroen van der Veer said: "Our overall performance wassatisfactory despite a series of operational challenges in the quarter, createdby external factors in Nigeria and the Gulf of Mexico. Smooth start-ups inupstream and chemicals, combined with our strengthening portfolio and projectprogress, underscore our confidence for the future.We continue to focus on delivery through operational excellence in today'sportfolio, and a disciplined approach to investments in new assets for thecoming years.We are committed to delivering long-term competitive performance, both in termsof profitability, and payout. We have increased our dividend to euro 0.25 pershare, and transacted $1.5 billion of share buy-backs in the quarter."Segment earningsFIRST QUARTER $ million 2006 2005 % Segment earnings Exploration & Production 3,743 2,955 Gas & Power 765 476 Oil Products (CCS basis) 1,333 1,880 Chemicals (CCS basis) 139 354 Other segments/Corporate 222 (125) Minority Interest (114) (85) CCS earnings 6,088 5,455 +12 Earnings in the first quarter 2006 reflected the following items, which inaggregate were net gains of $113 million (compared to net gains of $220 millionin the first quarter 2005): * Exploration & Production first quarter 2006 earnings included net gains of $113 million (mainly related to the resolution of contractual issues, partly offset by a $34 million charge related to the mark-to-market valuation of certain UK gas contracts).First quarter 2005 earnings for Exploration & Production included charges of$41 million; for Gas & Power included net gains of $48 million; for OilProducts included net gains of $427 million and for Chemicals included a $214million charge. These mainly related to divestments and mark-to-marketvaluation.Key features of the first quarter 2006 * First quarter 2006 basic earnings per share for Royal Dutch Shell (see note 8) were $1.06. First quarter basic CCS earnings per share were $0.94 an increase of 15% compared to the first quarter in 2005. * First quarter 2006 dividends have been announced of euro 0.25 per share, an increase of 9% compared to the first quarter of 2005. * First quarter reported income of $6,893 million was 3% higher than a year ago. The effective tax rate increased and included a higher proportion of Upstream earnings. * First quarter CCS earnings (i.e. on an estimated current cost of supplies basis for the Oil Products and Chemicals segment earnings) were $6,088 million or 12% higher compared to the first quarter 2005. * Return on average capital employed (ROACE) on a reported income basis (see note 4) was 25.3% on a rolling four quarter basis in the first quarter 2006 compared to 22.2% in the first quarter 2005. * Exploration & Production segment earnings of $3,743 million were 27% higher than a year ago ($2,955 million), mainly reflecting strong oil and gas price realisations, partly offset by lower volumes and higher costs. * First quarter 2006 production was 3,746 thousand boe per day, reflecting the partial shut-in of production in Nigeria due to civil disturbances and production deferred in the Gulf of Mexico as a result of the 2005 hurricanes. Excluding the impacts of the deferred hurricane production and lower entitlements due to higher hydrocarbon prices, production was 1% higher than a year ago. In Nigeria, some 455 thousand boe per day on a 100% basis (Shell share 165 thousand boe per day) remains shut in at the end of the first quarter 2006. * Gas & Power segment earnings were $765 million compared to $476 million a year ago, and reflected strong LNG results and higher marketing and trading earnings. LNG results benefited from strong prices, LNG marketing activities, increased dividends received and record sales volumes. * Upstream Exploration & Production plus Gas & Power segment unit earnings, calculated as segment earnings divided by production for the quarter, are $13.37 per boe, 35% higher than in the same quarter a year ago and higher than the increase in marker crude oil and gas prices. * Oil Products CCS earnings were $1,333 million compared to $1,880 million a year ago which included net gains of $427 million. Lower refining earnings due to lower margins and reduced utilisation were partly offset by higher income from a positive trading environment and higher marketing earnings. * Chemicals CCS earnings were $139 million compared to $354 million for the first quarter of 2005, which included $214 million charges related to divested assets. Earnings reflected significantly lower margin realisations. * Cash flow from operating activities, excluding net working capital movements, taxation and taxation paid, was $9,183 million, compared to $9,107 million a year ago. The share of profit of equity accounted investments was $763 million higher than the dividends received in the first quarter 2006 and impacted this quarter's cash flow from operating activities. * Gearing, including other commitments such as operating leases and retirement benefits, and net of cash holdings minus operational cash requirements, was 12.0% versus, on a comparable Royal Dutch Shell basis, 14.7% at the end of the first quarter in 2005. Total cash returned to shareholders was $3.4 billion. * Capital investment for the first quarter 2006 was $3.8 billion (excluding the minority share of Sakhalin of $0.4 billion). * Share purchases for cancellation amounted to $1.5 billion or 0.7% of shares outstanding in the first quarter of 2006.First quarter 2006 investments and portfolio developmentsUpstream portfolio developments during the quarter: In Brunei, oil production started from the first well from Phase III ofthe Champion West field (Shell Share 50%) using Smart Field Technology. CurrentBrunei Shell Petroleum (BSP) production is around 370 thousand boe per day, andover time, almost a quarter of BSP's production is expected to come fromChampion West. In Nigeria, the first phase of the deepwater Erha field (Shell shareapproximately 44%) started up in April 2006, with production to ramp up to 150thousand boe per day over time. In Canada, Shell acquired heavy oil acreage with an estimated 30 billionbarrels of oil equivalent in place. Shell will evaluate and assess enhanced andnew heavy oil technologies to potentially develop these resources. In Australia, Shell acquired acreage in the Carnarvon Basin throughoffshore block (WA-374-P) in the Greater Gorgon Area (Shell Share 25%) and inthe Browse Basin through the permit area WA-371-P in the Caswell Sub-basin(Shell Share 100%). In Norway, Shell and Statoil have signed an agreement to work towardsdeveloping the world's largest project using carbon dioxide (CO2) for enhancedoil recovery offshore. The concept involves capturing CO2 from power generationand utilising it to enhance oil recovery, resulting in increased energyproduction. In India, Shell signed a Memorandum of Understanding (MoU) with Oil andNatural Gas Corporation Ltd (ONGC) covering possible areas of cooperation ofupstream and downstream activities in India and internationally. Also in India, a new technology centre will be opened by Shell in Bangalorein 2006, to be staffed over time by more than 1,000 technical professionals.This centre complements the main existing centres in the USA and Europe andwill deliver high-end technical studies, projects and technical services forShell globally, as well as supporting Shell's interests in India.Downstream portfolio developments during the quarter: Shell completed the sale of its Oil Products businesses in Jamaica,Bahamas, Paraguay and Rwanda. An agreement was signed to acquire Koch Materials China (Hong Kong)Limited, a bitumen manufacturing and marketing business in China. The dealincreases Shell's bitumen production more than doubling the size of Shell'sBitumen business in China to 6,600 tons per day, representing around 20% ofShell Bitumen global volume. Also in China, the CNOOC and Shell Petrochemicals Company Limited jointventure (Shell share 50%) started operation of its Nanhai petrochemicalscomplex in Guangdong. By the end of the first quarter all plants weremanufacturing product as per specification and commercial operations began. Earnings by industry segmentExploration & ProductionFIRST QUARTER $ million 2006 2005 % Segment earnings 3,743 2,955 +27 Crude oil production (thousand b/d)1 1,966 2,144 -8 Natural gas production available for sale (million scf/d) 1 10,324 9,875 +5 Total including oil sands (thousand boe per day) 1 3,746 3,847 -3 1100% of Shell companies production plus Shell share of equity accounted investments. First quarter segment earnings of $3,743 million were 27% higher than ayear ago ($2,955 million), mainly reflecting strong oil and gas pricerealisations partly offset by lower volumes and higher costs. Exploration & Production first quarter 2006 earnings included net gains of$113 million versus charges of $41 million a year ago. The net gain in thefirst quarter of 2006 mainly related to the resolution of contractual issues,partly offset by a $34 million charge related to the mark-to-market valuationof certain UK gas contracts. Liquids realisations were 31% higher than a year ago, exceeding increasesin marker crudes Brent of 30% and WTI of 27%. Outside the USA gas realisationsincreased by 30% and in the USA gas realisations increased by 40%. First quarter 2006 production was 3,746 thousand boe per day, reflectingthe partial shut-in production in Nigeria due to civil disturbances (areduction of 110 thousand boe per day Shell share compared to last year) andproduction deferred in the Gulf of Mexico as a result of the 2005 hurricanes (areduction of 97 thousand boe per day Shell share compared to last year).Excluding the impacts of the deferred Gulf of Mexico production and lowerentitlements due to higher hydrocarbon prices, production was 1% higher than ayear ago. Production included new volumes of 109 thousand boe per day mainly fromBonga (Shell Share 55%) in Nigeria and also from West Salym (Shell Share 50%)in Russia and acquired production Onshore Texas (Shell share 100%) compared tolast year. In Nigeria some 455 thousand boe per day operated production on a 100%basis (Shell share 165 thousand boe per day) remains shut in at the end of thefirst quarter 2006. The Mars platform in the Gulf of Mexico is expected tostart production in May 2006, and reach pre-Katrina rates by the end of June2006 and ahead of earlier expectations. As a result some 4 million barrels(Shell share) are now expected to be deferred in the Gulf of Mexico in thesecond quarter 2006. Gas & PowerFIRST QUARTER $ million 2006 2005 % Segment earnings 765 476 +61 Equity LNG sales volume (million tonnes) 3.00 2.88 +4 First quarter segment earnings were $765 million compared to $476 million ayear ago. Earnings in 2005 included net gains of $48 million mainly related toasset divestments. Excluding these effects, earnings were up 79%, a quarterlyrecord and reflected strong LNG and marketing and trading results. LNG earnings increased mainly as a result of strong LNG prices, LNGmarketing activities and dividends received and also from record LNG salesvolumes. LNG volumes of 3 million tonnes were up 4% compared to the firstquarter in 2005 due to the start of Trains 4 and 5 at Nigeria LNG (Shell share26%) and the new Qalhat LNG project in Oman (Shell indirect share 11%),supported by strong demand in Asia Pacific. Marketing and trading earnings were driven by favourable conditions inContinental European markets and also in the USA, including gas storageoptimization and higher prices and volumes. Oil ProductsFIRST QUARTER $ million 2006 2005 % Segment earnings 2,103 3,051 -31 CCS adjustment - see note 2 (770) (1,171) Segment CCS earnings 1,333 1,880 -29 Refinery intake (thousand b/d) 3,862 4,057 -5 Oil product sales (thousand b/d) 1 6,525 7,464 See 1 1Certain contracts are classified as held for trading purposes and reported netrather 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. First quarter segment earnings were $2,103 million compared to $3,051million for the same period last year. First quarter CCS earnings were $1,333 million compared to $1,880 million ayear ago which included net gains of $427 million mainly related todivestments. Lower refining earnings due to lower margins and reducedutilisation, were partly offset by higher income from a positive tradingenvironment and higher marketing earnings. In Manufacturing, Supply and Distribution, refining margins declined inAsia Pacific, Europe and the US West Coast partly offset by higher US GulfCoast margins. Refinery utilisation on an Equivalent Distillation Capacitybasis declined to 77.1% compared to 81.4% in the first quarter of 2005, mainlydue to higher levels of planned and unplanned downtime in 2006. Refinery intakedeclined 4.8% compared to the first quarter of 2005. In Marketing includingLubricants and B2B, earnings increased compared to the same period a year ago.The increase is mainly due to higher margins in Retail, Commercial Fuels andLubricants. Marketing sales volumes declined 3.6% compared to volumes in thefirst quarter of 2005 including the impact from divested volumes of 1.4%. ChemicalsFIRST QUARTER $ million 2006 2005 % Segment earnings 183 449 -59 CCS adjustment - see note 2 (44) (95) Segment CCS earnings 139 354 -61 Sales volumes (thousand tonnes) 5,941 5,861 +1 First quarter segment earnings were $183 million compared to $449 millionfor the same period last year. First quarter CCS earnings were $139 million compared to $354 million forthe first quarter of 2005, which included a charge of $214 million related todivested assets. Earnings declined compared to a year ago mainly due tosignificantly lower margins as a result of high feedstock cost and start-upcost related to the Nanhai complex in China, partly offset by higher tradingearnings. Operating rates were unchanged at 85% reflecting a reduction in unplanneddowntime and higher levels of planned outages. Fixed costs were also in linewith last year. Overall sales volumes were 1% higher reflecting lower margintrading volume increases, which more than offset lower sales of first linederivatives. In the USA ethylene margin realisations for Shell's oil based feedstockcrackers were negatively impacted by market conditions. Other Industry&Corporate segmentsFIRST QUARTER $ million 2006 2005 Other Industry segment earnings (8) (8) Corporate segment earnings 230 (117) Other Industry and Corporate segment earnings 222 (125) First quarter Other Industry and Corporate segment results were a gain of$222 million compared to a loss of $125 million a year ago and included animproved net interest result from lower debt levels and capitalised interestand favourable results from currency movements. Note All amounts shown throughout this report are unaudited. Second quarter results for 2006 are expected to be announced on July 27,2006 and third quarter results for 2006 are expected to be announced on October26, 2006. In this Report "Group" is defined as Royal Dutch Shell together with all ofits consolidated subsidiaries. The expressions "Shell", "Group", "Shell Group"and "Royal Dutch Shell" are sometimes used for convenience where references aremade 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 whowork for them. These expressions are also used where no useful purpose isserved by identifying the particular company or companies. The expression"Group companies" as used in this Report refers to companies in which RoyalDutch Shell either directly or indirectly has control, by having either amajority of the voting rights or the right to exercise a controlling influence.The companies in which the Group has significant influence but not control arereferred to as "associated companies" or "associates" and companies in whichthe Group has joint control are referred to as "jointly controlled entities".In this Report, associates and jointly controlled entities are also referred toas "equity accounted investments". This document contains forward-looking statements concerning the financialcondition, results of operations and businesses of Royal Dutch Shell. Allstatements other than statements of historical fact are, or may be deemed tobe, forward-looking statements. Forward-looking statements are statements offuture expectations that are based on management's current expectations andassumptions and involve known and unknown risks and uncertainties that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in these statements. Forward-looking statements include,among other things, statements concerning the potential exposure of Royal DutchShell to market risks and statements expressing management's expectations,beliefs, estimates, forecasts, projections and assumptions. Theseforward-looking statements are identified by their use of terms and phrasessuch 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 affectthe future operations of Royal Dutch Shell and could cause those results todiffer materially from those expressed in the forward-looking statementsincluded in this Report, including (without limitation): (a) price fluctuationsin crude oil and natural gas; (b) changes in demand for the Group's products;(c) currency fluctuations; (d) drilling and production results; (e) reserveestimates; (f) loss of market and industry competition; (g) environmental andphysical risks; (h) risks associated with the identification of suitablepotential acquisition properties and targets, and successful negotiation andcompletion of such transactions; (i) the risk of doing business in developingcountries and countries subject to international sanctions; (j) legislative,fiscal and regulatory developments including potential litigation andregulatory effects arising from recategorisation of reserves; (k) economic andfinancial market conditions in various countries and regions; (l) politicalrisks, project delay or advancement, approvals and cost estimates; and (m)changes in trading conditions. All forward-looking statements contained in thisReport are expressly qualified in their entirety by the cautionary statementscontained or referred to in this section. Readers should not place unduereliance on forward-looking statements. Each forward-looking statement speaksonly as of the date of this Report. Neither Royal Dutch Shell nor any of itssubsidiaries undertake any obligation to publicly update or revise anyforward-looking statement as a result of new information, future events orother information. In light of these risks, results could differ materiallyfrom those stated, implied or inferred from the forward-looking statementscontained in this Report. Please refer to the Annual Report on Form 20-F for the year ended December31, 2005 for a description of certain important factors, risks anduncertainties that may affect the Company's businesses. Cautionary Note to US Investors: The United States Securities and Exchange Commission (SEC) permits oil andgas companies, in their filings with the SEC, to disclose only proved reservesthat a company has demonstrated by actual production or conclusive formationtests to be economically and legally producible under existing economic andoperating conditions. We use certain terms in this announcement, such as"barrels of oil equivalent in place" that the SEC's guidelines strictlyprohibit us from including in filings with the SEC. U.S. Investors are urged toconsider closely the disclosure in our Form 20-F, File No 1-32575 anddisclosure 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 calling1-800-SEC-0330. May 4, 2006Appendix 1: Royal Dutch Shell financial report and tablesStatement of income (see note 1) $ million Q1 Q4 Q1 2006 2005 2005 % 1 Revenue2 75,964 75,496 72,156 +5 Cost of sales 61,922 63,889 58,565 ______ ______ ______ Gross profit 14,042 11,607 13,591 +3 Selling, distribution and administrative expenses 3,413 4,263 3,539 Exploration expenses 281 502 261 Share of profit of equity accounted investments 1,823 1,389 1,573 Net finance costs and other (income)/expense (155) 56 70 ______ ______ ______ Income before taxation 12,326 8,175 11,294 +9 Taxation 5,310 3,572 4,274 ______ ______ ______ Income from continuing operations 7,016 4,603 7,020 Income/(loss) from discontinued operations - - (214) ______ ______ ______ Income for the period 7,016 4,603 6,806 +3 ______ ______ ______ Attributable to minority interest 123 235 131 ______ ______ ______ Income attributable to shareholders 6,893 4,368 6,675 +3 ______ ______ ______ 1 Q1 on Q1 change 2 Revenue is stated after deducting sales taxes, excise duties and similar levies of $16,709 million in Q1 2006, $17,344 million in Q4 2005 and $17,912 million in Q1 2005. Basic earnings per share (see notes 1 and 8) Q1 Q4 Q1 2006 2005 2005 Earnings per share ($) 1.06 0.67 0.99 CCS earnings per share ($) 0.94 0.82 0.82 Diluted earnings per share (see notes 1 and 8) Q1 Q4 Q1 2006 2005 2005 Earnings per share ($) 1.05 0.66 0.99 CCS earnings per share ($) 0.93 0.82 0.82 Earnings by industry segment (see notes 2 and 5) $ million Q1 Q4 Q1 2006 2005 2005 % 1 Exploration & Production: World outside USA 2,795 2,836 2,010 +39 USA 948 725 945 - ______ ______ ______ 3,743 3,561 2,955 +27 ______ ______ ______ Gas & Power: World outside USA 723 465 518 +40 USA 42 65 (42) ______ ______ ______ 765 530 476 +61 ______ ______ ______ Oil Products: World outside USA 1,071 1,583 1,475 -27 USA 262 315 405 -35 ______ ______ ______ 1,333 1,898 1,880 -29 ______ ______ ______ Chemicals: World outside USA 173 155 249 -31 USA (34) (147) 105 ______ ______ ______ 139 8 354 -61 ______ ______ ______ Other industry segments (8) (110) (8) ______ ______ ______ TOTAL OPERATING SEGMENTS 5,972 5,887 5,657 +6 ______ ______ ______ Corporate: Interest income/(expense) 0 51 (70) Currency exchange gains/(losses) 112 (145) (40) Other - including taxation 118 (73) (7) ______ ______ ______ 230 (167) (117) ______ ______ ______ Minority interest (114) (279) (85) ______ ______ ______ CCS EARNINGS 6,088 5,441 5,455 +12 ______ ______ ______ CCS adjustment for Oil Products and Chemicals 805 (1,073) 1,220 ______ ______ ______ Income attributable to shareholders 6,893 4,368 6,675 +3 ______ ______ ______ 1 Q1 on Q1 change Summarised balance sheet (see notes 1 and 6) $ million Mar 31 Dec 31 Mar 31 2006 2005 2005 ASSETS Non-current assets: Intangible assets 4,444 4,350 4,428 Property, plant and equipment 88,537 87,558 85,779 Investments: equity accounted investments 18,153 16,905 18,763 financial assets 3,929 3,672 3,704 Deferred tax 2,393 2,562 2,775 Prepaid pension costs 2,742 2,486 2,250 Other 4,667 4,091 6,206 ______ ______ ______ 124,865 121,624 123,905 ______ ______ ______ Current assets: Inventories 21,600 19,776 17,517 Accounts receivable 60,801 66,386 45,153 Cash and cash equivalents 12,767 11,730 10,082 ______ ______ ______ 95,168 97,892 72,752 ______ ______ ______ ______ ______ ______ TOTAL ASSETS 220,033 219,516 196,657 ______ ______ ______ LIABILITIES Non-current liabilities: Debt 7,347 7,578 8,000 Deferred tax 11,061 10,763 12,625 Retirement benefit obligations 5,926 5,807 6,358 Other provisions 7,708 7,385 6,821 Other 4,550 5,095 5,788 ______ ______ ______ 36,592 36,628 39,592 ______ ______ ______ Current liabilities: Debt 5,185 5,338 5,718 Accounts payable and accrued liabilities 62,350 69,013 45,820 Taxes payable 11,047 8,782 11,228 Retirement benefit obligations 289 282 308 Other provisions 1,599 1,549 1,576 ______ ______ ______ 80,470 84,964 64,650 ______ ______ ______ ______ ______ ______ TOTAL LIABILITIES 117,062 121,592 104,242 ______ ______ ______ Equity attributable to Shareholders 95,501 90,924 86,738 Minority interest 7,470 7,000 5,677 ______ ______ ______ TOTAL EQUITY 102,971 97,924 92,415 ______ ______ ______ ______ ______ ______ TOTAL LIABILITIES AND EQUITY 220,033 219,516 196,657 ______ ______ ______ Summarised statement of cash flows (see notes 1 and 7) $ million Q1 Q4 Q1 2006 2005 2005 CASH FLOW FROM OPERATING ACTIVITIES: Income for the period 7,016 4,603 6,806 Adjustment for: Current taxation 5,015 4,490 4,311 Interest (income)/expense 232 148 160 Depreciation, depletion and amortisation 2,812 2,787 3,155 (Profit)/loss on sale of assets (185) (210) (558) Decrease/(increase) in net working capital (1,979) 3,295 (1,551) Share of profit of equity accounted investments (1,823) (1,389) (1,359) Dividends received from equity accounted investments 1,060 1,441 992 Deferred taxation and other provisions 578 (869) (392) Other (507) 833 303 ______ ______ ______ Cash flow from operating activities (pre-tax) 12,219 15,129 11,867 ______ ______ ______ Taxation paid (4,395) (6,664) (3,187) ______ ______ ______ Cash flow from operating activities 7,824 8,465 8,680 ______ ______ ______ CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditure (3,819) (5,447) (2,934) Investments in equity accounted investments (231) (138) (188) Proceeds from sale of assets 506 396 1,008 Proceeds from sale of equity accounted investments 8 211 50 Proceeds from sale of / Additions to financial assets (40) (1) (24) Interest received 234 245 190 ______ ______ ______ Cash flow from investing activities (3,342) (4,734) (1,898) ______ ______ ______ CASH FLOW FROM FINANCING ACTIVITIES: Net increase/(decrease) in debt (345) (1,861) (725) Interest paid (361) (311) (254) Change in minority interest 360 250 351 Net issue/(repurchase) of shares (1,344) (2,551) (500) Dividends paid to: Shareholders of Royal Dutch Shell plc (1,838) (1,869) (4,776) Minority interest (44) (58) (47) Payments to former Royal Dutch shareholders - (1,651) - Treasury shares: net sales/(purchases) and dividends received 91 52 143 ______ ______ ______ Cash flow from financing activities (3,481) (7,999) (5,808) ______ ______ ______ Currency translation differences relating to cash and cash equivalents 36 - (93) ______ ______ ______ INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,037 (4,268) 881 ______ ______ ______ Cash and cash equivalents at beginning of period 11,730 15,998 9,201 Cash and cash equivalents at end of period 12,767 11,730 10,082 Operational data - Upstream Q1 Q4 Q1 2006 2005 2005 %1 CRUDE OIL PRODUCTION thousand b/d Europe 531 510 571 Africa 336 370 379 Asia Pacific 232 227 232 Middle East, Russia, CIS 408 455 392 USA 291 243 400 Other Western Hemisphere 91 75 92 ______ ______ ______ Total crude oil production excluding oil sands 1,889 1,880 2,066 Production from oil sands 77 106 78 ______ ______ ______ Total crude oil production including oil sands 1,966 1,986 2,144 -8 ______ ______ ______ NATURAL GAS PRODUCTION AVAILABLE FOR SALE million scf/d 2 Europe 5,447 4,266 4,951 Africa 444 397 387 Asia Pacific 2,488 2,436 2,369 Middle East, Russia, CIS 320 255 272 USA 1,117 919 1,385 Other Western Hemisphere 508 511 511 ______ ______ ______ 10,324 8,784 9,875 +5 ______ ______ ______ TOTAL PRODUCTION IN BARRELS OF OIL EQUIVALENT thousand boe/d 3 Europe 1,470 1,246 1,425 Africa 413 438 446 Asia Pacific 660 647 640 Middle East, Russia, CIS 463 499 439 USA 484 401 639 Other Western Hemisphere 179 163 180 ______ ______ ______ Total barrels of oil equivalent excluding oil sands 3,669 3,394 3,769 Oil sands 77 106 78 ______ ______ ______ Total barrels of oil equivalent including oil sands 3,746 3,500 3,847 -3 ______ ______ ______ 1 Q1 on Q1 change 2 scf/d = standard cubic feet per day; 1 standard cubic feet = 0.0283 m3 3 Natural gas converted to oil equivalent at 5.8 million scf/d = thousand boe/d Operational data - Upstream (continued) Q1 Q4 Q1 2006 2005 2005 %1 LIQUEFIED NATURAL GAS (LNG) million tonnes Equity LNG sales volume 3.00 2.81 2.88 +4 Realised Oil Prices $/bbl World outside USA 57.67 52.74 43.85 USA 55.16 53.10 43.78 Global 57.39 52.77 43.84 Realised Gas Prices $/thousand scf Europe 7.08 5.73 5.12 World outside USA (including Europe) 4.76 4.47 3.65 USA 9.56 12.40 6.83 Global 5.64 5.78 4.33 1 Q1 on Q1 change Operational data - Downstream Q1 Q4 Q1 2006 2005 2005 %1 REFINERY PROCESSING INTAKE thousand b/d Europe 1,742 1,861 1,805 Other Eastern Hemisphere 813 847 868 USA 948 916 1,000 Other Western Hemisphere 359 354 384 ______ ______ ______ 3,862 3,978 4,057 -5 ______ ______ ______ OIL SALES Gasolines 2,148 2,271 2,532 Kerosines 732 791 842 Gas/Diesel oils 2,196 2,154 2,443 Fuel oil 808 814 906 Other products 641 665 741 ______ ______ ______ Total oil products*2 6,525 6,695 7,464 See 2 Crude oil2 2,493 2,404 4,427 ______ ______ ______ Total oil sales2 9,018 9,099 11,891 See 2 ______ ______ ______ *comprising Europe 2,021 2,119 2,127 Other Eastern Hemisphere 1,216 1,219 1,229 USA 1,477 1,551 2,416 Other Western Hemisphere 666 714 698 Export sales 1,145 1,092 994 CHEMICAL SALES VOLUMES BY MAIN PRODUCT CATEGORY3** thousand tonnes Base chemicals 3,714 3,455 3,513 First line derivatives 2,215 2,154 2,307 Other 12 120 41 ______ ______ ______ 5,941 5,729 5,861 +1 ______ ______ ______ **comprising Europe 2,463 2,506 2,577 Other Eastern Hemisphere 1,444 1,362 1,321 USA 1,880 1,693 1,786 Other Western Hemisphere 154 168 177 CHEMICAL REVENUES4 $ million Europe 2,312 2,271 2,388 Other Eastern Hemisphere 1,241 1,177 1,236 USA 1,761 1,703 1,719 Other Western Hemisphere 178 192 189 ______ ______ ______ 5,492 5,343 5,532 -1 By-products 857 730 751 ______ ______ ______ 6,349 6,073 6,283 +1 ______ ______ ______ 1 Q1 on Q1 change 2 Certain contracts are classified as held for trading purposes and reported net rather than gross with effect from Q3 2005. The effect in Q3 2005 is a reduction in total oil products sales of approximately 850 thousand b/d and a reduction on Crude oil sales of 2,000 thousand b/d; in Q4 2005 820 thousand b/dand 1,490 thousand b/d respectively and in Q1 2006 890 thousand b/d and 1,720 thousand b/d respectively. 3 Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products. 4 Excluding revenues from equity accounted investments and chemical feedstock trading. Capital investment $ million Q1 Q4 Q1 2006 2005 2005 Capital expenditure: Exploration & Production: World outside USA 2,500 3,271 1,882 USA 312 450 230 ______ ______ ______ 2,812 3,721 2,112 ______ ______ ______ Gas & Power: World outside USA 392 440 330 USA 1 2 1 ______ ______ ______ 393 442 331 ______ ______ ______ Oil Products: Refining: World outside USA 242 359 148 USA 61 119 42 ______ ______ ______ 303 478 190 ______ ______ ______ Marketing: World outside USA 189 554 133 USA 18 77 32 ______ ______ ______ 207 631 165 ______ ______ ______ Chemicals: World outside USA 36 48 23 USA 50 44 57 ______ ______ ______ 86 92 80 ______ ______ ______ Other segments 21 95 56 ______ ______ ______ TOTAL CAPITAL EXPENDITURE 3,822 5,459 2,934 ______ ______ ______ Exploration expense: World outside USA 114 215 92 USA 63 143 26 ______ ______ ______ 177 358 118 ______ ______ ______ New equity in equity accounted investments: World outside USA 64 95 58 USA 5 2 1 ______ ______ ______ 69 97 59 ______ ______ ______ New loans to equity accounted investments 162 42 129 ______ ______ ______ TOTAL CAPITAL INVESTMENT* 4,230 5,956 3,240 ______ ______ ______ *comprising Exploration & Production 3,167 4,144 2,355 Gas & Power 396 457 336 Oil Products 518 1,127 354 Chemicals 128 118 138 Other segments 21 110 57 ______ ______ ______ 4,230 5,956 3,240 ______ ______ ______ NotesNOTE 1. Accounting policies and basis of presentation The quarterly financial statements, including comparative data, areprepared in accordance with International Financial Reporting Standards (IFRS)and the financial statements are also in accordance with IFRS as adopted by theEuropean Union. The Group's accounting policies are unchanged from those set out in Note 3to the Consolidated Financial Statements of Royal Dutch Shell plc in the AnnualReport and Form 20-F for the year ended December 31, 2005 on pages 110 to 113. In the third quarter 2005, under the Unification Transaction, Royal DutchShell plc became the Parent Company of Royal Dutch Petroleum Company (RoyalDutch) and The ''Shell'' Transport and Trading Company, p.l.c. (ShellTransport) by acquiring all outstanding shares of Shell Transport andapproximately 98.5% of the outstanding shares of Royal Dutch. The comparative periods represent information for Royal Dutch Shell as ifit acquired 100% of Royal Dutch and Shell Transport. For financial reportingpurposes, the 1.5% minority holders in Royal Dutch were shown in the RoyalDutch Shell consolidated financial statements as a minority interest in RoyalDutch Shell from August 10, 2005, as prior to that time those holders had aright to participate in the Exchange Offer and receive Royal Dutch Shellshares. The minority in Royal Dutch ceased to exist as of December 21, 2005 as aresult of the merger of Royal Dutch and Shell Petroleum NV. These Financial Statements give retroactive effect for all periodspresented prior to the Unification Transaction, which has been accounted forusing a carry-over basis of the historical costs of the assets and liabilitiesof Royal Dutch, Shell Transport and other companies comprising the Royal Dutch/Shell Group of Companies. The interest of the minority shareholders in RoyalDutch was accounted for using a carry-over basis of the historical costs of itsconsolidated assets and liabilities.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 ofsupplies (CCS) basis as applied for the Oil Products and Chemicals segmentearnings. Earnings on an estimated current cost of supplies basis provideuseful information concerning the effect of changes in the cost of supplies onRoyal Dutch Shell's results of operations and is a measure to manage theperformance of the Oil Products and Chemicals segments but is not a measure offinancial performance under IFRS. On this basis, Oil Products and Chemicals segment cost of sales of thevolumes sold during the period is based on the cost of supplies during the sameperiod after making allowance for the estimated tax effect, instead of use ofthe first-in, first-out (FIFO) method of inventory accounting. Earningscalculated on this basis do not represent an application of the last-in,first-out (LIFO) inventory basis and do not reflect any inventory draw downeffects.NOTE 3. Discontinued operations Income/(loss) from discontinued operations, which comprises gains andlosses on disposals and results of operations for the period, is provided inthe statement of income in accordance with IFRS for separate major lines ofbusiness or geographical area of operations. Earnings by industry segment relating to discontinued operations, includedwithin the segment earnings on page 10, are as follows:$ million QUARTER Q1 Q4 Q1 2006 2005 2005 Chemicals - - (214) Income/(loss) from discontinued operations - - (214) Basic earnings per share for the first quarter 2006 for discontinuedoperations were nil.NOTE 4. Return on average capital employed (ROACE) ROACE on an income basis is the sum of the current and previous threequarters' income attributable to shareholders plus interest, less tax andminority interest as a percentage of the average of Royal Dutch Shell's shareof closing capital employed and the opening capital employed a year earlier.The tax rate and the minority interest components are derived from calculationsat the published segment level. Components of the calculation ($ million): Q1 2005 Q1 2006 2005 Income attributable to shareholders (four quarters) 25,529 20,515 Royal Dutch Shell share of interest expense after tax 576 751 ROACE numerator 26,105 21,266 Royal Dutch Shell share of capital employed - opening 99,613 92,140 Royal Dutch Shell share of capital employed - closing 107,124 99,613 Royal Dutch Shell share of capital employed - average 103,369 95,877 ROACE 25.3% 22.2% NOTE 5. Earnings by industry segment Operating segment results are before deduction of minority interest andalso exclude interest and other income of a non-operational nature, interestexpense, non-trading currency exchange effects and tax on these items, whichare included in the results of the Corporate segment. Operating segment resultsare after tax and include equity accounted investments. Segment results inaccordance with International Accounting Standard 14 "Segment Reporting" willbe disclosed in Royal Dutch Shell's 2006 Annual Report and Form 20-F, with areconciliation to the basis as presented here.NOTE 6. Equity Total equity comprises equity attributable to shareholders of Royal DutchShell and to the minority interest. Other reserves comprises capital redemptionreserve, share premium reserve, merger reserve, share-based compensationreserve, cumulative currency translation differences, unrealised gains/(losses)on securities and unrealised gains/(losses) on cash flow hedges. Ordinary share Treasury Other Retained Minority Total capital shares reserves earnings Total interest equity At January 1, 2006 571 (3,809) 3,584 90,578 90,924 7,000 97,924 Income for the period - - - 6,893 6,893 123 7,016 Income/(expense) recognised directly in equity - - 703 - 703 26 729 Capital contributions from minority shareholders - - - - - 365 365 Dividends paid - - - (1,838) (1,838) (44) (1,882) Treasury shares: net sales/(purchases) and dividends received - 91 - - 91 - 91 Effect of Unification - - 154 - 154 - 154 Shares repurchased for cancellation (9) - 9 (1,498) (1,498) - (1,498) Share-based compensation - - 72 - 72 - 72 At March 31, 2006 562 (3,718) 4,522 94,135 95,501 7,470 102,971 Ordinary share Preference share Treasury Other Retained Minority Total capital capital shares reserves earnings Total interest equity At January 1, 2005 584 20 (4,187) 8,865 80,788 86,070 5,313 91,383 IAS 32/39 transition - (20) - 823 (7) 796 - 796 Income for the period - - - - 6,675 6,675 131 6,806 Income/(expense) recognised directly in equity - - - (1,712) - (1,712) 74 (1,638) Capital contributions from minority shareholders - - - - - - 206 206 Dividends paid - - - - (4,776) (4,776) (47) (4,823) Treasury shares: net sales/(purchases) and dividends received - - 143 - - 143 - 143 Shares repurchased for cancellation (1) - - - (500) (501) - (501) Share-based compensation - - - 43 - 43 - 43 At March 31, 2005 583 - (4,044) 8,019 82,180 86,738 5,677 92,415 NOTE 7. Statement of cash flows This statement reflects cash flows of Royal Dutch Shell and itssubsidiaries as measured in their own currencies, which are translated into USdollars at average rates of exchange for the periods and therefore excludecurrency translation differences except for those arising on cash and cashequivalents. Cash from operating activities excluding net working capital movements,current taxation and taxation paid is calculated using the following line itemsfrom the cash flow statement:$ million QUARTER Q1 Q4 Q1 2006 2005 2005 Cash flow from operating activities 7,824 8,465 8,680 Current taxation (5,015) (4,490) (4,311) Increase/(decrease) in net working capital 1,979 (3,295) 1,551 Taxation paid 4,395 6,664 3,187 ______ ______ ______ 9,183 7,344 9,107 ______ ______ ______ NOTE 8. Earnings per Royal Dutch Shell share The total number of Royal Dutch Shell shares in issue at the end of theperiod was 6,652.6 million. Royal Dutch Shell reports earnings per share on abasic and on a diluted basis, based on the weighted average number of RoyalDutch Shell (combined A and B) shares outstanding. Shares held in respect ofshare options and other incentive compensation plans are deducted indetermining basic earnings per share. Basic earnings per share calculations arebased on the following weighted average number of shares (millions): Q1 Q4 Q1 2006 2005 2005 Royal Dutch Shell shares of euro 0.07 6,509.8 6,563.7 6,733.9 Diluted earnings per share calculations are based on the followingweighted average number of shares (millions). This adjusts the basic number ofshares for all stock options currently in-the-money. Q1 Q4 Q1 2006 2005 2005 Royal Dutch Shell shares of euro 0.07 6,535.3 6,586.4 6,751.7 Basic shares at the end of the following periods are (millions): Q1 Q4 Q1 2006 2005 2005 Royal Dutch Shell shares of euro 0.07 6,485.4 6,525.1 6,724.7 One (1) American Depository Receipt (ADR) is equal to two (2) Royal Dutch Shellshares.Appendix 2: Market Commentary The average of Brent crude prices in the first quarter was $61.80 perbarrel compared with $47.70 in the same quarter a year ago. WTI prices averaged$63.30 per barrel compared with $49.90 a year ago. In the first quarter of 2006, industry refining margins averaged $12.50,$13.00, $2.35 and $1.20 per barrel in US Gulf Coast, US West Coast, Rotterdam,and Singapore, compared to $8.05, $14.25, $2.50 and $2.55 per barrel in thesame period last year. The margin differential between heavy and light crude inthe USGC narrowed in the first quarter with a smaller heavy crude pricediscount. Petrochemicals trading conditions in the first quarter were dominated bycontinuing high and volatile feedstock prices. Chemicals product prices alsocame under pressure as a result of the market anticipation of significant newcapacity coming onstream, mainly in China and in the Middle East. Industry cracker margins in Europe decreased from last quarter and weresubstantially lower relative to last year. Margins came under pressure fromhigher feedstock cost. In the USA, industry ethane cracker margins improvedfrom last quarter despite the decline in ethylene prices mainly due to asubstantial decrease in ethane feedstock cost as natural gas prices declinedand traded at an average of some $20 per barrel discount to oil on anequivalent basis.ENDROYAL DUTCH SHELL PLCRelated Shares:
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