26th Oct 2006 07:00
Royal Dutch ShellThird quarter 2006 unaudited resultsDelivery and growth - leveraging a strong portfolio * Royal Dutch Shell's third quarter 2006 CCS earnings were $6.9 billion, compared to some $7.2 billion a year ago. CCS earnings per share increased by 1% versus a year ago. Third quarter 2005 earnings included divestment gains of some $1.7 billion related to the divestment of pipeline assets held through Gasunie NV in the Netherlands. * Excluding the 2005 divestment gain of $1.7 billion related to Gasunie, CCS earnings per share increased by 33% versus a year ago. * Royal Dutch Shell's third quarter dividend has been announced at euro 0.25 per share, an increase of 9% from year-ago levels. * $2.8 billion, or 1.2% of Royal Dutch Shell shares were bought back for cancellation during the quarter.Chief Executive Jeroen van der Veer commented "This is good performance by theGroup. Our earnings have proven to be resilient in the face of rising industrycosts and weakening refining margins. Operating performance has beensatisfactory. LNG growth has been impressive in the quarter, and our upstreamvolumes have grown despite the shut-downs in Nigeria".Van der Veer added "Cost pressure remains a significant challenge for ourindustry. We remain focused on making the right portfolio choices to createlong-term shareholder value".Summary unaudited resultsTHIRDQUARTER $ million NINEMONTHS 2006 2005 % 2006 2005 % 5,942 9,032 -34 Income attributable to shareholders 20,159 20,943 -4 Estimated current cost of supplies (CCS) adjustment for Oil Products and Chemicals 1,006 (1,844) (see note 2) (809) (3,653) 6,948 7,188 -3 CCS earnings 19,350 17,290 +12 0.93 1.35 Basic earnings per share ($) 3.13 3.12 0.16 (0.27) Estimated CCS adjustment per share ($) (0.13) (0.54) 1.09 1.08 Basic CCS earnings per share ($) 3.00 2.58 0.25 0.23 Dividend per ordinary share (Euro) 1 0.75 0.69 1. Q1 2005 based on dividend paid by Royal Dutch Petroleum Company, adjusted for the effects of the unification. Key features of the third quarter 2006 * Exploration & Production segment earnings were $3,743 million compared with $4,977 million a year ago. The third quarter 2005 included a gain of $1,699 million related to the divestment of pipeline assets held through Gasunie NV in the Netherlands. Earnings reflected higher production volumes and stronger oil and gas prices, partly offset by higher costs versus a year ago. * Third quarter 2006 production was 3,251 thousand barrels of oil equivalent (boe) per day. Excluding the impact of hurricane damage in the Gulf of Mexico, security issues in Nigeria, and Production Sharing Contract (PSC) impacts from increased oil and gas prices, production increased by around 3% versus a year ago. * Gas & Power segment earnings were $787 million, compared to $556 million in the same quarter last year. Earnings reflected substantially higher liquefied natural gas (LNG) volumes and continued strong marketing and trading earnings. LNG sales volumes increased by 19% compared to the same quarter last year. * In Oil Products CCS earnings were $2,160 million compared to $1,726 million in the third quarter of 2005. CCS earnings reflected stronger marketing earnings, higher trading profits and improved refinery utilisation rates partly offset by lower refining margins. Chemicals CCS earnings were $335 million compared to $140 million for the third quarter of 2005, which included net charges of $184 million related to divested assets and various provisions. Operations in Chemicals reflected the start of a heavy planned maintenance programme, which is scheduled to extend into the fourth quarter 2006. * Gearing (see note 6) was 13.4% at the end of the third quarter 2006 versus, on a comparable Royal Dutch Shell basis, 9.7% at the end of the third quarter 2005. Total cash returned to shareholders in the quarter was $4.9 billion in the form of dividends and share repurchases. * Third quarter 2006 cash flow from operating activities was $10.1 billion compared to $6.6 billion a year ago. Excluding working capital movements and taxation effects, cash flow from operating activities was $9.6 billion compared to $10.5 billion a year ago. * Capital investment for the third quarter 2006 was $5.5 billion, excluding the minority share of Sakhalin of $0.6 billion. * Capital investment for the first nine months of 2006 was $16.0 billion excluding the minority share of Sakhalin of $1.4 billion. That investment includes $3.0 billion of acquisitions mainly related to the acquisition of BlackRock Ventures Inc. in Canada by Shell Canada in the second quarter 2006. Some $1.1 billion of proceeds were realised from divestments year to date, predominantly in Downstream. The industry continues to face significant cost pressures. * Royal Dutch Shell plc has announced that it has approached the Board of Directors of Shell Canada Limited to indicate its intention to offer to acquire the minority interests in Shell Canada Limited (Toronto Stock Exchange, ticker symbol SHC), for a cash price of C$40 per share. This proposal would value Shell Canada Limited's fully diluted minority share capital at approximately C$7.7 billion. The Group owns a 78% stake in Shell Canada Limited.Basic earnings per share (see notes 1, 2 and 9)QUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 0.93 1.13 1.35 Earnings per share ($) 3.13 3.12 1.09 0.98 1.08 CCS earnings per share ($) 3.00 2.58 Diluted earnings per share (see notes 1, 2 and 9)QUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 0.93 1.13 1.35 Earnings per share ($) 3.12 3.11 1.09 0.97 1.07 CCS earnings per share ($) 2.99 2.57 Summary segment earningsQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % Segment earnings 3,743 3,999 4,977 Exploration & Production 11,485 10,677 787 516 556 Gas & Power 2,068 1,043 2,160 2,065 1,726 Oil Products (CCS basis) 5,558 5,634 335 348 140 Chemicals (CCS basis) 822 774 260 (451) 97 Other Industry and Corporate 31 (246) (337) (163) (308) Minority interests (614) (592) ______ ______ ______ ______ ______ 6,948 6,314 7,188 -3 CCS segment earnings 19,350 17,290 +12 ______ ______ ______ ______ ______ Summary segment earnings - continuedEarnings in the third quarter 2006 reflected the following items, which inaggregate were a net charge of $77 million (compared to a net gain of $1,569million mainly from divestments in the third quarter 2005) as summarised in thetable below: * Exploration & Production third quarter 2006 earnings included a net income of $147 million related to the mark-to-market valuation of certain UK gas contracts partly reversing earlier recorded mark-to-market losses. * Also in Exploration and Production, charges of $310 million due to the UK tax increase that was effective from January 1, 2006, were included in the third quarter 2006. This amount includes deferred tax balance revaluations but excludes the normal effect on third quarter 2006 segment earnings. * Corporate included $86 million of tax credits.Summary tableQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 Segment earnings impact (163) 304 1,765 Exploration & Production1 254 1,575 - - 94 Gas & Power - (84) - (65) - Oil Products (CCS basis) (65) 427 - (30) (184) Chemicals (CCS basis) (30) (481) 86 (400) (60) Other Industry and Corporate (314) (150) - (41) (46) Minority interests (41) (46) ______ ______ ______ ______ ______ (77) (232) 1,569 CCS earnings impact (196) 1,241 ______ ______ ______ ______ ______ 1. Q3 2006 and nine months 2006 include a charge of $310 million related to theUK tax increase. These items generally relate to events with an impact of greater than $50million on earnings and are shown to provide additional insight in thedirection of the segment earnings, CCS earnings and income attributable toshareholders. Further additional comments are provided in the section 'Earningsper industry segment' on page 5 and onwards. Earnings per industry segmentUpstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 $/bbl Realised Oil Prices $/bbl 65.60 63.99 56.89 WOUSA 62.35 49.79 62.57 63.63 56.24 USA 60.77 48.15 65.13 63.95 56.83 Global 62.15 49.56 $/thousand scf Realised Gas Prices $/thousand scf 6.43 6.54 4.24 Europe 6.72 4.72 4.05 4.18 3.70 WOUSA (including Europe) 4.35 3.61 7.31 7.36 8.35 USA 8.04 7.41 4.77 4.82 4.59 Global 5.09 4.43 Oil and gas marker industry prices (period average) 69.63 69.51 61.55 Brent $/bbl 66.97 53.65 70.44 70.45 63.20 WTI $/bbl 68.06 55.38 6.05 6.59 9.50 Henry Hub $/thousand scf 6.80 7.62 UK National Balancing Point 33.77 34.60 29.17 pence/therm 45.93 32.37 Exploration & ProductionQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % 3,743 3,999 4,977 -25 Segment earnings 11,485 10,677 +8 Crude oil production (thousand 2,054 1,897 2,077 -1 b/d) 1,973 2,129 -7 Natural gas production available for sale (million scf 6,942 7,865 6,551 +6 /d) 8,365 8,088 +3 Barrels of oil equivalent 3,251 3,253 3,207 +1 (thousand boe/d) 3,415 3,523 -3 Exploration & Production segment earnings were $3,743 million compared to$4,977 million a year ago.Third quarter 2006 earnings included a net gain of $147 million related to themark-to-market valuation of certain UK gas contracts and charges of $310million due to the UK Upstream tax increase effective from January 1, 2006.This amount includes deferred tax balance revaluations but excludes the normalimpact on third quarter 2006 segment earnings. The third quarter 2005 includeda net gain of $1,765 million mainly from divestments. Excluding these effectsearnings were 22% higher than a year ago.Earnings reflected higher production volumes and stronger oil and gas pricespartly offset by higher operating costs reflecting industry conditions andincreased pre-development activity levels.Liquids realisations were 15% higher than a year ago, in line with increases inmarker crudes Brent of 13% and WTI of 11%. Outside the USA gas realisationsincreased by 9% and in the USA gas realisations decreased by 12%.Third quarter 2006 production was 3,251 thousand boe per day compared to 3,207thousand boe per day a year ago.Production compared to the third quarter 2005 included new volumes of 257thousand boe per day including Bonga (Shell share 55%) and Erha (Shell share44%) in Nigeria, West Salym (Shell share 50%) in Russia, Champion West PhaseIII (Shell share 50%) in Brunei and the early start up of E8 in Malaysia (Shellshare 50%). In the USA, production rates during the third quarter 2006 at theMars platform in the Gulf of Mexico were 20% above those prior to the damagecaused by hurricanes in 2005.Excluding the impact of security concerns in Nigeria in 2006, PSC impacts fromoil and gas prices, and hurricane damage in the Gulf of Mexico in 2005,production was around 3% higher than the equivalent period last year.Production from Shell Petroleum Development Company's Nigerian operations was185 thousand boe per day (Shell share) lower than a year ago due to deferredproduction mainly in the Western Delta resulting from security concerns. Whilstefforts continue towards restoring safe operational conditions in the NigerDelta, it is unlikely that the shut-in facilities in Nigeria will be restoredin 2006. No firm date can be given for the re-start of the production nor is itpossible to predict the rate of ramp up to full production. Restricted accessin the area continues to impact the drilling programme for the future, and theprogress of new projects.Portfolio developments:In the USA, Shell and its joint venture partners announced the development ofthe Great White, Tobago and Silvertip fields (Shell share between 33% and 40%)via a Perdido regional development host (Shell share 35%), located in AlaminosCanyon, offshore Gulf of Mexico. The facility will be designed to handle 130thousand boe per day.In Malaysia, first gas was delivered from the offshore E8 field (Shell Share50%), which is a key component of the E11 Hub integrated gas project which aimsto rejuvenate existing E11 facilities and develop several offshore gas fieldsover the next years. The E11 hub will have a design capacity of 1.6 billioncubic feet (bcf ) of gas per day.In New Zealand, first gas was delivered from the Pohokura field (Shell share48%), which is expected to produce around 40 thousand boe a day at its peak.In Russia, the Sakhalin 2 project (Shell share 55%) continues to progress inaccordance with the PSA. The project is now more than 80% complete and on trackfor first LNG deliveries in 2008. Activities continue in line with the overallcost estimate advised in July 2005.Gas & PowerQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % 787 516 556 +42 Segment earnings 2,068 1,043 +98 Equity LNG sales volume 2.94 2.84 2.48 +19 (million tonnes) 8.78 7.84 +12 Gas and Power segment earnings were $787 million, compared to $556 million inthe same quarter last year, which included gains of $94 million mainly relatedto divestments. Excluding these items earnings were 70% higher and reflectedsubstantially higher liquefied natural gas (LNG) volumes and continued strongmarketing and trading earnings.LNG volumes of 2.94 million tonnes were 19% higher than a year ago, driven bycapacity growth at Nigeria LNG (Shell share 26%) and Qalhat LNG (Shell share11%) and supported by strong operating performance across the LNG plants.Realised LNG prices reflected higher crude prices and continued opportunitiesfor cargo optimisation.Marketing and trading earnings reflected gas storage optimisation in the USAand overall strong marketing performance across North America and Europe.Portfolio developments:In Mexico, the Altamira re-gasification terminal was commissioned with thefirst ever LNG cargo to be delivered to the country. Shell owns 50% of theterminal and has rights to 75% of the initial capacity of 4.4 million tonnes ofLNG per annum. The state power company in Mexico, Comisiƒ³n Federal deElectricidad (CFE), has contracted to purchase 5.2 billion cubic meters ofre-gasified LNG per annum from the facility (equivalent to 3.9 million tonnesof LNG per year).In Australia, Shell and Anglo American signed a joint development agreement tofurther advance the Monash Energy coal-to-liquids project. This potentialdevelopment involves the gasification of Anglo American's brown coal fromVictoria's Latrobe Valley for conversion into transportation fuels, includingvirtually sulphur-free synthetic diesel, using Shell's proprietary coalgasification and gas-to-liquids technologies.DownstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 Refining marker industry gross $/bbl margins(period average) $/bbl 13.25 22.20 17.75 ANS US West Coast coking margin 16.15 15.80 14.70 20.85 18.00 WTS US Gulf Coast coking margin 16.00 12.15 3.45 4.75 6.05 Rotterdam Brent complex 3.50 4.55 Singapore 80/20 Arab light/ 0.95 4.05 3.00 Tapis complex 2.05 3.05 Oil ProductsQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % 1,214 3,017 3,439 Segment earnings 6,334 9,154 946 (952) (1,713) CCS adjustment - see note 2 (776) (3,520) ______ ______ ______ ______ ______ 2,160 2,065 1,726 +25 Segment CCS earnings 5,558 5,634 -1 3,907 3,789 3,910 Refinery intake (thousand b/d) 3,852 3,982 -3 Total Oil products sales 6,521 6,426 6,625 See 1 (thousand b/d) 6,491 7,180 See 1 1. Certain contracts are held for trading purposes and reported net rather than gross with effect from Q3 2005. The effect in Q1 2006, Q2 2006 and Q3 2006 is a reduction in Total Oil products sales of approximately 890 thousand b/d, 840 thousand b/d and 870 thousand b/d respectively. The effect in Q3 2005 was 850 thousand b/d. Oil Products segment earnings were $1,214 million compared to $3,439 millionfor the same period last year.Third quarter CCS earnings were $2,160 million compared to $1,726 million inthe third quarter of 2005.Higher CCS earnings reflected stronger marketing earnings, higher tradingprofits and improved refinery utilisation rates partly offset by lower refiningmargins.In Manufacturing, Supply and Distribution, industry refining margins declinedin all regions from the hurricane driven highs of the third quarter of 2005.Refinery utilisation on an Equivalent Distillation Capacity (EDC) basisincreased to 81.6% compared to hurricane-impacted utilisation levels of 77.8%in the third quarter of 2005.In Marketing including Lubricants and B2B, earnings increased compared to thesame period a year ago. Increased earnings reflected increased margins forretail, commercial fuels, marine and bitumen. Marketing sales volumes declined4.6% compared to volumes in the third quarter of 2005 including the impact fromdivested volumes (2.0%) and rationalised B2B volumes (0.9%). Trading continuedto make a significant contribution to earnings in the third quarter of 2006.Portfolio developments:In China, Shell acquired a 75% share in Beijing Tongyi Petroleum ChemicalCompany Limited and Xianyang Tongyi Petroleum Chemical Company Limited, whichproduce and market China's leading independent lubricant brand. The transactionmakes Shell the leading international energy company marketing lubricants inChina and increases Shell's global finished lubricants volume by 8%.Sales of Shell's retail and lubricants marketing assets in Puerto Rico anddistribution and marketing assets in Bermuda were completed. In the USA thesale of a residential and small commercial natural gas marketing business wascompleted in the third quarter. The agreed sales of various distribution andmarketing assets in the Pacific Islands, are expected to be completed by theend of the year.ChemicalsQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % 251 446 321 Segment earnings 880 1,029 84 (98) (181) CCS adjustment - see note 2 (58) (255) ______ ______ ______ ______ ______ 335 348 140 +139 Segment CCS earnings 822 774 +6 5,636 5,870 5,589 +1 Sales volumes (thousand tonnes) 17,447 17,097 +2 Chemicals segment earnings were $251 million compared to $321 million for thesame period last year.Third quarter 2006 CCS earnings were $335 million compared to $140 million forthe third quarter of 2005, which included net charges of $184 million relatedto divested assets and various provisions.Sales volumes and operating rates were unchanged compared to the same quarter ayear ago. Operations in the third quarter 2006 reflected the start of a heavyplanned maintenance programme in the USA and Europe, which impacted operatingrates by some 6 percentage points. The programme is scheduled to extend intothe fourth quarter 2006. Earnings reflected higher margins and improvedearnings from equity-accounted investments partly offset by higher costs andlower trading earnings. In China, the Nanhai joint venture (Shell share 50%)continued to make good progress with production and sales volumes increasingprogressively. The third quarter 2005 was impacted by hurricane-relateddowntime in the USA and supply constraints, which reduced operating rates bysome 7 percentage points. Other Industry and Corporate segmentsQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 (4) (7) (76) Other Industry segment earnings (19) (92) Corporate segment earnings (see 264 (444) 173 note 10) 50 (154) ______ ______ ______ ______ ______ Other Industry and Corporate 260 (451) 97 segments results 31 (246) Third quarter Other Industry and Corporate segment results were a gain of $260million, which included tax credits of $86 million in Corporate. This comparedto a gain of $97 million in the third quarter 2005, which included impairmentcharges of $60 million in Other Industry segments.In the third quarter 2006 in the Corporate segment, net income from insuranceand taxation effects, was partly offset by a reduction in net interest gains(including higher interest expense related to equity accounted investments) andnegative results from currency movements. NoteAll amounts shown throughout this report are unaudited.Fourth quarter results for 2006 are expected to be announced on February 1,2007. First quarter results for 2007 are expected to be announced on May 3,2007, second quarter results for 2007 are expected to be announced on July 26,2007 and third quarter results are expected to be announced on October 25,2007.In this Report "Group" is defined as Royal Dutch Shell together with all of itsconsolidated 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 and Form 20-F for the year ended December 31,2005 for a description of certain important factors, risks and uncertaintiesthat may affect the Company's businesses.Cautionary Note to US Investors:The United States Securities and Exchange Commission (SEC) permits oil and gascompanies, in their filings with the SEC, to disclose only proved reserves thata company has demonstrated by actual production or conclusive formation teststo be economically and legally producible under existing economic and operatingconditions. We use certain terms in this announcement, such as "barrels of oilequivalent in place" that the SEC's guidelines strictly prohibit us fromincluding in filings with the SEC. U.S. Investors are urged to consider closelythe disclosure in our Form 20-F, File No 1-32575 and disclosure in our Forms6-K file No 1-32575, available on the SEC's website www.sec.gov . You can alsoobtain these forms from the SEC by calling 1-800-SEC-0330. October 26, 2006Appendix 1: Royal Dutch Shell financial report and tablesStatement of income (see note 1)QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % 84,254 83,127 76,435 +10 Revenue 1 243,345 231,235 +5 70,383 67,838 60,704 Cost of sales 200,143 188,733 ______ ______ ______ ______ ______ 13,871 15,289 15,731 -12 Gross profit 43,202 42,502 +2 Selling, distribution and 4,126 4,429 3,763 administrative expenses 11,968 11,219 401 250 275 Exploration 932 784 Share of profit of equity 1,358 1,829 3,081 accounted investments 5,010 5,734 Net finance costs and other (60) 47 (268) (income)/expense (168) (159) ______ ______ ______ ______ ______ 10,762 12,392 15,042 -28 Income before taxation 35,480 36,392 -3 4,507 4,865 5,558 Taxation 14,682 14,427 ______ ______ ______ ______ ______ 6,255 7,527 9,484 Income from continuing operations 20,798 21,965 Income/(loss) from discontinued - - (93) operations - (307) ______ ______ ______ ______ ______ 6,255 7,527 9,391 -33 Income for the period 20,798 21,658 -4 ====== ====== ====== ======= ======= ==== ==== ==== === === Income attributable to minority 313 203 359 interests 639 715 ______ ______ ______ ______ ______ Income attributable to 5,942 7,324 9,032 -34 shareholders 20,159 20,943 -4 ______ ______ ______ ______ ______ 1. Revenue is stated after deducting sales taxes, excise duties and similar levies of $18,472 million in Q3 2006, $17,984 million in Q2 2006, $16,709 million in Q1 2006, $18,282 million in Q3 2005, $18,739 million in Q2 2005 and $17,912 million in Q1 2005. Earnings by industry segment (see notes 2 and 5)QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % Exploration & Production: 2,650 3,014 4,051 -35 World outside USA 8,459 7,705 +10 1,093 985 926 +18 USA 3,026 2,972 +2 ______ ______ ______ ______ ______ 3,743 3,999 4,977 -25 11,485 10,677 +8 ______ ______ ______ ______ ______ Gas & Power: 621 468 469 +32 World outside USA 1,812 1,061 +71 166 48 87 +91 USA 256 (18) ______ ______ ______ ______ ______ 787 516 556 +42 2,068 1,043 +98 ______ ______ ______ ______ ______ Oil Products (CCS basis): 1,665 1,332 1,229 +35 World outside USA 4,068 4,204 -3 495 733 497 USA 1,490 1,430 +4 ______ ______ ______ ______ ______ 2,160 2,065 1,726 +25 5,558 5,634 -1 ______ ______ ______ ______ ______ Chemicals (CCS basis): 348 309 227 +53 World outside USA 830 713 +16 (13) 39 (87) USA (8) 61 ______ ______ ______ ______ ______ 335 348 140 +139 822 774 +6 ______ ______ ______ ______ ______ (4) (7) (76) Other industry segments (19) (92) ______ ______ ______ ______ ______ 7,021 6,921 7,323 -4 TOTAL OPERATING SEGMENTS 19,914 18,036 +10 ______ ______ ______ ______ ______ Corporate: 35 39 71 Interest income/(expense) 74 (73) Currency exchange gains/ (19) (73) 126 (losses) 20 80 248 (410) (24) Other - including taxation (44) (161) ______ ______ ______ ______ ______ 264 (444) 173 50 (154) ______ ______ ______ ______ ______ (337) (163) (308) Minority interests (614) (592) ______ ______ ______ ______ ______ 6,948 6,314 7,188 -3 CCS EARNINGS 19,350 17,290 +12 ______ ______ ______ ______ ______ CCS adjustment for Oil Products (1,006) 1,010 1,844 and Chemicals 809 3,653 ______ ______ ______ ______ ______ Income attributable to shareholders of Royal Dutch 5,942 7,324 9,032 -34 Shell plc 20,159 20,943 -4 ______ ______ ______ ______ ______ Summarised balance sheet (see notes 1 and 7) $ million Sep 30 Jun 30 Sep 30 ASSETS 2006 2006 2005 Non-current assets: Intangible assets 4,697 4,721 4,361 Property, plant and equipment 96,133 94,102 85,601 Investments: equity accounted investments 19,453 19,083 17,138 financial assets 3,914 3,912 3,236 Deferred tax 2,664 2,259 3,039 Prepaid pension costs 3,459 3,143 2,453 Other 4,598 4,569 4,102 ______ ______ ______ 134,918 131,789 119,930 ______ ______ ______ Current assets: Inventories 23,391 24,660 21,490 Accounts receivable 63,895 62,327 83,812 Cash and cash equivalents 11,240 11,774 15,998 ______ ______ ______ 98,526 98,761 121,300 ______ ______ ______ ______ ______ ______ TOTAL ASSETS 233,444 230,550 241,230 ______ ______ ______ LIABILITIES Non-current liabilities: Debt 7,665 8,472 7,795 Deferred tax 12,485 12,007 12,411 Retirement benefit obligations 6,298 6,271 6,018 Other provisions 8,793 8,682 7,114 Other 4,346 4,650 4,395 ______ ______ ______ 39,587 40,082 37,733 ______ ______ ______ Current liabilities: Debt 6,395 6,112 6,714 Accounts payable and accrued liabilities 64,445 63,701 82,912 Taxes payable 10,679 10,525 12,510 Retirement benefit obligations 284 285 302 Other provisions 1,763 1,612 1,254 ______ ______ ______ 83,566 82,235 103,692 ______ ______ ______ ______ ______ ______ TOTAL LIABILITIES 123,153 122,317 141,425 ______ ______ ______ Equity attributable to shareholders of Royal Dutch Shell plc 101,604 100,213 92,353 Minority interests 8,687 8,020 7,452 ______ ______ ______ TOTAL EQUITY 110,291 108,233 99,805 ______ ______ ______ TOTAL LIABILITIES AND EQUITY 233,444 230,550 241,230 ______ ______ ______ Summarised statement of cash flows (see notes 1 and 8)QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 CASH FLOW FROM OPERATING ACTIVITIES: 6,255 7,527 9,391 Income for the period 20,798 21,658 Adjustment for: 4,403 4,763 5,548 Current taxation 14,181 14,945 145 121 120 Interest (income)/expense 498 484 Depreciation, depletion and 3,365 3,132 2,903 amortisation 9,309 9,194 (86) (8) (352) (Profit)/loss on sale of assets (279) (1,103) Decrease/(increase) in net working 560 (3,276) (5,490) capital (4,695) (8,959) Share of profit of equity accounted (1,358) (1,829) (3,073) investments (5,010) (5,512) Dividends received from equity 1,450 1,556 2,761 accounted investments 4,066 5,268 Deferred taxation and other 133 903 (112) provisions 1,614 (646) (299) 489 (1,159) Other (317) (1,102) ______ ______ ______ ______ ______ Cash flow from operating activities 14,568 13,378 10,537 (pre-tax) 40,165 34,227 ______ ______ ______ ______ ______ (4,489) (5,544) (3,891) Taxation paid (14,428) (12,579) ______ ______ ______ ______ ______ 10,079 7,834 6,646 Cash flow from operating activities 25,737 21,648 ______ ______ ______ ______ ______ CASH FLOW FROM INVESTING ACTIVITIES: (5,408) (6,630) (3,787) Capital expenditure (15,857) (10,457) Investments in equity accounted (126) (177) (135) investments (534) (566) 289 211 416 Proceeds from sale of assets 1,006 1,914 Proceeds from sale of equity 37 36 3,869 accounted investments 81 4,101 Proceeds from sale of / (additions (22) 29 113 to) financial assets (33) 363 285 240 251 Interest received 759 618 ______ ______ ______ ______ ______ (4,945) (6,291) 727 Cash flow from investing activities (14,578) (4,027) ______ ______ ______ ______ ______ CASH FLOW FROM FINANCING ACTIVITIES: (843) 1,852 1,087 Net increase/(decrease) in debt 664 291 (330) (261) (284) Interest paid (952) (813) 287 423 90 Change in minority interests 1,070 893 (2,801) (2,512) (1,938) Net issue/(repurchase) of shares (6,657) (2,438) Dividends paid to: Shareholders of Royal Dutch Shell (2,083) (2,091) (1,902) plc (6,012) (8,687) (53) (161) (130) Minority interest (258) (235) Treasury shares: Net sales/(purchases) and dividends 149 135 169 received 375 415 ______ ______ ______ ______ ______ (5,674) (2,615) (2,908) Cash flow from financing activities (11,770) (10,574) ______ ______ ______ ______ ______ Currency translation differences relating to cash and cash 6 79 13 equivalents 121 (250) ______ ______ ______ ______ ______ INCREASE/(DECREASE) IN CASH AND CASH (534) (993) 4,478 EQUIVALENTS (490) 6,797 ______ ______ ______ ______ ______ Cash and cash equivalents at 11,774 12,767 11,520 beginning of period 11,730 9,201 Cash and cash equivalents at end of 11,240 11,774 15,998 period 11,240 15,998 Operational data - UpstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % thousand b/d CRUDE OIL PRODUCTION thousand b/d 433 488 516 Europe 484 551 346 321 370 Africa 335 374 254 232 222 Asia Pacific 239 229 489 439 512 Middle East, Russia, CIS 446 439 353 295 289 USA 313 364 81 76 70 Other Western Hemisphere 82 81 ______ ______ ______ ______ ______ Total crude oil production 1,956 1,851 1,979 excluding oil sands 1,899 2,038 98 46 98 Oil sands 74 91 ______ ______ ______ ______ ______ Total crude oil production 2,054 1,897 2,077 -1 including oil sands 1,973 2,129 -7 ______ ______ ______ ______ ______ million scf/d 1 NATURAL GAS PRODUCTION million scf/d 1 AVAILABLE FOR SALE 2,125 3,027 2,268 Europe 3,521 3,455 475 481 341 Africa 467 370 2,356 2,381 2,267 Asia Pacific 2,408 2,287 273 304 231 Middle East, Russia, CIS 299 253 1,186 1,175 948 USA 1,160 1,228 527 497 496 Other Western Hemisphere 510 495 ______ ______ ______ ______ ______ 6,942 7,865 6,551 +6 8,365 8,088 +3 ______ ______ ______ ______ ______ thousand boe/d 2 BARRELS OF OIL EQUIVALENT thousand boe/d 2 800 1,010 907 Europe 1,091 1,147 428 404 429 Africa 416 438 660 642 613 Asia Pacific 654 623 536 491 552 Middle East, Russia, CIS 497 483 557 498 453 USA 513 575 172 162 155 Other Western Hemisphere 170 166 ______ ______ ______ ______ ______ Total production excluding oil 3,153 3,207 3,109 sands 3,341 3,432 98 46 98 Oil sands 74 91 ______ ______ ______ ______ ______ Total production including oil 3,251 3,253 3,207 +1 sands 3,415 3,523 -3 ______ ______ ______ ______ ______ 1. scf/d = standard cubic feet per day; 1 standard cubic foot = 0.0283 cubic metre 2. Natural gas converted to oil equivalent at 5.8 million scf/d = thousand boe/d Operational data - DownstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2006 2006 2005 % 2006 2005 % thousand b/d thousand b/d REFINERY PROCESSING INTAKE 1,758 1,627 1,774 Europe 1,708 1,785 797 832 853 Other Eastern Hemisphere 814 850 965 978 909 USA 964 965 387 352 374 Other Western Hemisphere 366 382 ______ ______ ______ ______ ______ 3,907 3,789 3,910 3,852 3,982 -3 ______ ______ ______ ______ ______ OIL SALES 2,256 2,186 2,230 Gasolines 2,198 2,449 750 780 770 Kerosenes 754 818 2,074 2,071 2,142 Gas/Diesel oils 2,113 2,344 729 735 783 Fuel oil 757 854 712 654 700 Other products 669 715 ______ ______ ______ ______ ______ 6,521 6,426 6,625 See 1 Total oil products 1 * 6,491 7,180 See 1 2,442 2,513 2,864 Crude oil 1 2,482 4,130 ______ ______ ______ ______ ______ 8,963 8,939 9,489 See 1 Total oil sales 1 8,973 11,310 See 1 ______ ______ ______ ______ ______ *comprising 1,948 1,948 2,094 Europe 1,973 2,086 1,215 1,229 1,236 Other Eastern Hemisphere 1,220 1,236 1,506 1,502 1,558 USA 1,495 2,168 658 652 722 Other Western Hemisphere 658 706 1,194 1,095 1,015 Export sales 1,145 984 CHEMICAL SALES VOLUMES BY MAIN thousand tones PRODUCT CATEGORY 2 ** thousand tonnes 3,430 3,504 3,324 Base chemicals 10,648 10,255 2,200 2,361 2,238 First line derivatives 6,776 6,737 6 5 27 Other 23 105 ______ ______ ______ ______ ______ 5,636 5,870 5,589 +1 17,447 17,097 +2 ______ ______ ______ ______ ______ **comprising 2,232 2,433 2,495 Europe 7,128 7,512 1,385 1,370 1,305 Other Eastern Hemisphere 4,199 3,890 1,851 1,908 1,630 USA 5,639 5,200 168 159 159 Other Western Hemisphere 481 495 1. Certain contracts are held for trading purposes and reported net rather thangross with effect from Q3 2005. The effect in Q1 2006 is a reduction in Total Oil products sales of approximately 890 thousand b/d and a reduction in crude oil sales of approximately 1,720 thousand b/d, in Q2 2006 840 thousand b/d and 1,940 thousand b/d respectively and in Q3 2006 870 thousand b/d and 2,130 thousand b/d respectively. 2. Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products. Capital investmentQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 Capital expenditure: Exploration & Production: 3,425 5,095 2,276 World outside USA 11,020 6,362 519 481 318 USA 1,312 775 ______ ______ ______ ______ ______ 3,944 5,576 2,594 12,332 7,137 ______ ______ ______ ______ ______ Gas & Power: 599 252 334 World outside USA 1,243 1,124 2 1 0 USA 4 2 ______ ______ ______ ______ ______ 601 253 334 1,247 1,126 ______ ______ ______ ______ ______ Oil Products: Refining: 251 373 290 World outside USA 866 748 75 57 56 USA 193 153 ______ ______ ______ ______ ______ 326 430 346 1,059 901 ______ ______ ______ ______ ______ Marketing: 569 314 317 World outside USA 1,072 700 36 26 34 USA 80 100 ______ ______ ______ ______ ______ 605 340 351 1,152 800 ______ ______ ______ ______ ______ Chemicals: 166 63 52 World outside USA 265 122 53 47 46 USA 150 173 ______ ______ ______ ______ ______ 219 110 98 415 295 ______ ______ ______ ______ ______ 1 6 64 Other segments 28 198 ______ ______ ______ ______ ______ 5,696 6,715 3,787 TOTAL CAPITAL EXPENDITURE 16,233 10,457 ______ ______ ______ ______ ______ Exploration expense: 161 139 127 World outside USA 414 340 67 64 56 USA 194 117 ______ ______ ______ ______ ______ 228 203 183 608 457 ______ ______ ______ ______ ______ New equity in equity accounted investments 112 135 85 World outside USA 311 278 3 4 12 USA 12 15 ______ ______ ______ ______ ______ 115 139 97 323 293 ______ ______ ______ ______ ______ New loans to equity accounted 11 38 38 investments 211 273 ______ ______ ______ ______ ______ 6,050 7,095 4,105 TOTAL CAPITAL INVESTMENT* 17,375 11,480 ______ ______ ______ ______ ______ *comprising 4,214 5,823 2,839 Exploration & Production 13,204 7,902 645 332 342 Gas & Power 1,373 1,145 962 799 707 Oil Products 2,279 1,717 219 118 152 Chemicals 465 481 10 23 65 Other segments 54 235 ______ ______ ______ ______ ______ 6,050 7,095 4,105 17,375 11,480 ______ ______ ______ ______ ______ NotesNOTE 1. Accounting policies and basis of presentationThe quarterly financial statements are prepared in accordance withInternational Financial Reporting Standards (IFRS) and the financial statementsare also in accordance with IFRS as adopted by the European Union.The Group's accounting policies are unchanged from those set out in Note 3 tothe 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 Royal Dutch Shell plc became the Parent Company ofRoyal Dutch Petroleum Company (Royal Dutch) and The ''Shell'' Transport andTrading Company, p.l.c. (Shell Transport) by acquiring all outstanding sharesof Shell Transport and approximately 98.5% of the outstanding shares of RoyalDutch.The comparative periods represent information for Royal Dutch Shell as if ithad 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 a resultof the merger of Royal Dutch and Shell Petroleum NV.These financial statements give retroactive effect for all periods presentedprior to the Unification Transaction, which has been accounted for using acarry-over basis of the historical costs of the assets and liabilities of RoyalDutch, Shell Transport and other companies comprising the Royal Dutch/ShellGroup of Companies. The interest of the minority shareholders in Royal Dutchwas accounted for using a carry-over basis of the historical costs of itsconsolidated assets and liabilities.Royal Dutch Shell will discontinue the publication of the Annual Report andForm 20-F in Dutch. This document will now only be published in English. TheAnnual Review and Summary Financial Statements, a summary of the Annual Reportand Form 20-F, will continue to be published in both English and Dutch.NOTE 2. Earnings on an estimated current cost of supplies (CCS) basisTo facilitate a better understanding of underlying business performance, thefinancial results are also analysed on an estimated current cost of supplies(CCS) basis as applied for the Oil Products and Chemicals segment earnings.Earnings on an estimated current cost of supplies basis provide usefulinformation concerning the effect of changes in the cost of supplies on RoyalDutch Shell's results of operations and is a measure to manage the performanceof the Oil Products and Chemicals segments but is not a measure of financialperformance under IFRS.On this basis, Oil Products and Chemicals segment cost of sales of the volumessold during the period is based on the cost of supplies during the same periodafter making allowance for the estimated tax effect, instead of use of thefirst-in, first-out (FIFO) method of inventory accounting. Earnings calculatedon this basis do not represent an application of the last-in, first-out (LIFO)inventory basis and do not reflect any inventory draw down effects. Theadjustment for the Chemicals segment was implemented in Q1 2006, historicperiods have been restated accordingly.NOTE 3. Discontinued operationsIncome/(loss) from discontinued operations, which comprises gains and losses ondisposals and results of operations for the period, is provided in thestatement 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 13, are as follows:QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 - - (93) Chemicals segment earnings - (307) Income/(loss) from discontinued - - (93) operations - (307) Basic earnings per share for the third quarter 2006 for discontinued operationswere nil.NOTE 4. Return on average capital employed (ROACE)ROACE on an income basis is the sum of the current and previous three quarters'income attributable to shareholders plus interest, less tax and minorityinterest as a percentage of the average of Royal Dutch Shell's share of closingcapital employed and the opening capital employed a year earlier. The tax rateand the minority interest components are derived from calculations at thepublished segment level.Components of the calculation ($ million): Q3 2006 Q3 2005 Income attributable to shareholders (four quarters) 24,527 25,520 Royal Dutch Shell share of interest expense after tax 627 688 ROACE numerator 25,154 26,208 Royal Dutch Shell share of capital employed - opening 105,779 93,660 Royal Dutch Shell share of capital employed - closing 114,556 105,779 Royal Dutch Shell share of capital employed - average 110,168 99,720 ROACE 22.8% 26.3% NOTE 5. Earnings by industry segmentOperating segment results are before deduction of minority interest and alsoexclude 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. GearingThe Group aims to maintain an efficient balance sheet with an average gearingratio over time of between 20% and 25%. The numerator and denominator in thegearing calculation used by the Group is calculated by adding to reported debtand equity certain off-balance sheet obligations such as operating leasecommitments and unfunded retirement benefits which it believes to be in thenature of incremental debt, and deducting cash and cash equivalents held inexcess of amounts required for operational purposes.Components of the calculation ($ million): 30 Sep 30 Sep 2006 2005 Non current debt 7,665 7,795 Current debt 6,395 6,714 ______ ______ Total Debt 14,060 14,509 Add: Net present value of operating lease obligations (as per year end 2005) 9,442 6,283 Unfunded pension benefit obligations (as per year end 2005) 2,919 4,045 Less: Cash and cash equivalents in excess of operational requirements 9,340 14,098 ______ ______ Adjusted Debt 17,081 10,739 ______ ______ Total Equity 110,291 99,805 ______ ______ Total Capital 127,372 110,544 ______ ______ Gearing ratio (adjusted debt as a percentage of total capital) 13.4% 9.7% NOTE 7. EquityTotal equity comprises equity attributable to shareholders of Royal Dutch Shelland to the minority interests. Other reserves comprises the 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 $ million capital shares reserves earnings Total interests equity At January 1, 2006 571 (3,809) 3,584 90,578 90,924 7,000 97,924 Income for the period 20,159 20,159 639 20,798 Income/(expense) recognised directly in equity 2,528 2,528 73 2,601 Capital contributions from minority shareholders - 1,233 1,233 Dividends paid (6,012) (6,012) (258) (6,270) Treasury shares: net sales/(purchases) and dividends received 375 375 375 Effect of Unification 154 154 154 Shares repurchased for cancellation (22) 22 (6,811) (6,811) (6,811) Share-based compensation 287 287 287 At September 30, 2006 549 (3,434) 6,575 97,914 101,604 8,687 110,291 Ordinary share Treasury Other Retained Minority Total $ million capital shares reserves earnings Total interests equity At January 1, 2005 584 (4,187) 9,688 80,781 86,866 5,313 92,179 Income for the period 20,943 20,943 715 21,658 Income/(expense) recognised directly in equity (4,039) 4 (4,035) 92 (3,943) Capital contributions from minority shareholders - 732 732 Dividends paid (8,687) (8,687) (235) (8,922) Effects of Unification (835) (835) 835 - Treasury shares: net sales/ (purchases) and dividends received 415 415 415 Shares repurchased for cancellation (6) 5 (2,437) (2,438) (2,438) Share-based compensation 124 124 124 At September 30, 2005 578 (3,772) 5,778 89,769 92,353 7,452 99,805 NOTE 8. Statement of cash flowsThis statement reflects cash flows of Royal Dutch Shell and its subsidiaries asmeasured in their own currencies, which are translated into US dollars ataverage rates of exchange for the periods and therefore exclude currencytranslation differences except for those arising on cash and cash equivalents.Cash from operating activities excluding net working capital movements, currenttaxation and taxation paid is calculated using the following line items fromthe cash flow statement:QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2006 2006 2005 2006 2005 10,079 7,834 6,646 Cash flow from operating activities 25,737 21,648 4,403 4,763 5,548 Current taxation 14,181 14,945 Decrease/(increase) in net working 560 (3,276) (5,490) capital (4,695) (8,959) (4,489) (5,544) (3,891) Taxation paid (14,428) (12,579) ______ ______ ______ ______ ______ 9,605 11,891 10,479 30,679 28,241 ______ ______ ______ ______ ______ NOTE 9. Earnings per Royal Dutch Shell shareThe total number of Royal Dutch Shell shares in issue at the end of the periodwas 6,497.2 million. Royal Dutch Shell reports earnings per share on a basicand on a diluted basis, based on the weighted average number of Royal DutchShell (combined A and B) shares outstanding. Shares held in respect of shareoptions and other incentive compensation plans are excluded in determiningbasic earnings per share.Basic earnings per share calculations are based on the following weightedaverage number of shares (millions): Nine Nine Q3 Q2 Q3 Months Months 2006 2006 2005 2006 2005 Royal Dutch Shell shares of euro 0.07 6,373.9 6,457.6 6,676.5 6,446.6 6,711.4 Diluted earnings per share calculations are based on the following weightedaverage number of shares (millions). This adjusts the basic number of sharesfor all share options currently in-the-money. Nine Nine Q3 Q2 Q3 Months Months 2006 2006 2005 2006 2005 Royal Dutch Shell shares of euro 0.07 6,399.8 6,483.1 6,703.5 6,470.9 6,732.5 Basic shares at the end of the following periods are (millions): Q3 Q2 Q3 2006 2006 2005 Royal Dutch Shell shares of euro 0.07 6,336.3 6,414.0 6,608.2 One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares.NOTE 10. Contingencies and litigationThe litigation relating to the 2004 recategorisation of certain hydrocarbonreserves is still at an early stage and subject to substantial uncertaintiesconcerning the outcome of material factual and legal issues. Potential damages,if any, in a fully litigated securities class action would depend on the lossescaused by the alleged wrongful conduct that would be demonstrated by individualclass members in their purchases and sales of Royal Dutch and Shell Transportshares during the relevant class period. Based on the current status of thelitigation, however, management of the Shell Group established a $500 millionprovision in the second quarter 2006. This amount reflects what Shell isprepared to pay to the plaintiffs to resolve this litigation. No settlement hasbeen reached in the matter. Management of the Shell Group will review thisdetermination as the litigation progresses.A report by Royal Dutch Shell plc ('Royal Dutch Shell'). The information inthese quarterly results reflects the consolidated financial position andresults of Royal Dutch Shell. All amounts shown throughout this report areunaudited.ENDROYAL DUTCH SHELL PLCRelated Shares:
RDSA.LRDSB.L