27th Oct 2005 06:30
Royal Dutch ShellSummary resultsTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % Income attributable to shareholders 9,032 5,371 +68 1, 2 20,943 13,969 +50 Estimated current cost of supplies (CCS) adjustment for Oil Products 1,663 990 segment - see note 2 3,398 1,594 7,369 4,381 +68 CCS earnings 1, 2 17,545 12,375 +42 6,646 6,878 Cash from operating activities 21,648 20,188 Cash from operating activities excluding net working capital movements and taxation paid/accrued 10,479 7,849 - see note 7 28,241 21,627 4,105 3,548 Capital investment 11,480 10,090 3,207 3,608 Upstream production (thousand boe/d) 3,523 3,749 including discontinued operations - see note 3 excluding minority income attributable to Royal Dutch shareholders of $46 million in the third quarter 2005 - see note 1 A report by Royal Dutch Shell plc ('Royal Dutch Shell'). The informationin these quarterly results reflects the consolidated financial position andresults of Royal Dutch Shell. All amounts shown throughout this report areunaudited.Good performance across the business * Record financial results with basic earnings per share of $1.35 * $6.6 billion cash from operations * Upstream earnings capture oil price increases; Downstream earnings very strong * 3,523 thousand barrels of oil equivalent (boe) per day production for 9 months to end September * Including hurricane impacts, the production outlook for 2005 is around 3.5 million boe per day and for 2006 is in the lower half of the 3.5 to 3.8 million boe per day range * 2004-2006 divestment programme at $13.7 billion, ahead of schedule * Third quarterly dividend declared equivalent to some $1.9 billion (subject to exchange rates) * 0.9% of Royal Dutch Shell shares bought back for cancellation in the quarter Chief Executive Jeroen van der Veer said, "Our operational performance ispaying off with good results. We continue to build our portfolio of integratedgas, unconventional resources and material oil projects and the focusedexploration strategy is working. We are attracting the key people to executeour projects and have already recruited around 1,000 technical professionals sofar this year. Project management, operations, customers and technology arecentral to our success and to meet the challenges. We are very grateful to ouremployees for their great efforts during and after the hurricanes in the USA.Despite the impact of the hurricanes, the production outlook for 2005 is around3.5 million boe per day. LNG growth continues at pace. Downstream performance,profitability and cash generation remain very satisfactory". * Basic earnings per share for Royal Dutch Shell (see note 9) in the third quarter 2005 were $1.35, an increase of 69% compared to a year ago. Basic CCS earnings per share for Royal Dutch Shell were $1.10, an increase of 69% compared to a year ago. * Third quarter 2005 interim dividends have been announced of euro 0.23 per A and B share for Royal Dutch Shell.Segment earningsTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % Segment earnings 4,977 2,343 Exploration & Production 10,677 6,905 556 354 Gas & Power 1,043 1,210 1,726 1,525 Oil Products (CCS basis) 5,634 4,254 321 572 Chemicals 1,029 1,168 Other segments/Corporate/Minority (211) (413) interest (838) (1,162) ______ 7,369 4,381 +68 CCS earnings 17,545 12,375 +42 Earnings in the third quarter 2005 reflect the following items, which inaggregate were a net gain of $1,569 million (compared to a net charge of $28million in the third quarter 2004): * Exploration & Production earnings included a net gain of $1,765 million, mainly from the divestment of pipeline assets held through Gasunie NV in the Netherlands and a gain related to the mark-to-market valuation of certain UK gas contracts ($104 million). * Gas & Power earnings included a net gain of $94 million, mainly related to divestments. * Chemicals included net charges of $184 million for legal charges and from the sale of the polyolefins joint venture Basell mainly from exchange rate movements on the final settlement. * Other Industry and Corporate segments included impairment charges of $60 million. * Income attributable to shareholders and CCS earnings include a deduction of minority income attributable to the Royal Dutch shareholders of $46 million.Key features of the third quarter 2005 * Basic earnings per share for Royal Dutch Shell (see note 9) in the third quarter 2005 were $1.35, an increase of 69% compared to a year ago. Basic CCS earnings per share for Royal Dutch Shell were $1.10, an increase of 69% compared to a year ago. * Third quarter 2005 interim dividends have been announced of euro 0.23 per share for Royal Dutch Shell. * Third quarter 2005 reported income of $9,032 million was 68% higher than a year ago. * CCS earnings (i.e. on an estimated current cost of supplies basis for the Oil Products segment earnings) were $7,369 million, 68% higher than a year ago. Income in the third quarter 2005 included a net gain of $1,569 million mainly from divestments and mark-to-market valuations in Exploration & Production, versus a net charge of $28 million in the same quarter a year ago. * Return on average capital employed (ROACE) on a reported income basis (see note 4) was 26.3%. * Exploration & Production segment earnings of $4,977 million were 112% higher than a year ago ($2,343 million), mainly reflecting strong oil and gas price realisations and divestment gains partly offset by lower volumes and higher costs. The earnings included a net gain of $1,765 million versus a charge of $183 million a year ago. The net gain in the third quarter 2005 is mainly from the divestment of pipeline assets held through Gasunie NV in the Netherlands and a gain related to the mark-to-market valuation of certain UK gas contracts ($104 million). Excluding the effects earnings increased by 27% compared to a year ago. * Hydrocarbon production was 3,207 thousand boe per day including the loss of some 160 thousand boe per day (averaged over the quarter) due to hurricanes in the Gulf of Mexico. Compared to a year ago, excluding the hurricane effect, the end of a production sharing contract in the Middle East of some 100 thousand boe per day, lower entitlements due to higher hydrocarbon prices and the impact of divestments of 30 thousand boe per day, production was 4% lower. New volumes were more than offset by field declines and production downtime in the North Sea. * Gas & Power segment earnings were $556 million compared to $354 million a year ago, reflecting strong LNG prices and favourable Marketing and Trading conditions. Earnings included gains of $94 million mainly related to asset divestments versus net gains of $103 million a year ago. Excluding the effects earnings were up 84%. LNG volumes increased by 2%. * Oil Products CCS earnings were $1,726 million compared to $1,525 million for the third quarter 2004, which included a net gain of $52 million mainly related to divestments. Higher earnings due to strong refining margins and improved trading results were partially offset by lower marketing earnings. * Chemicals segment earnings of $321 million for the quarter compared to earnings of $572 million in the same quarter last year. The third quarter 2005 included net charges of $184 million for legal charges and from the sale of the polyolefins joint venture Basell mainly from exchange rate movements on the final settlement. Excluding these effects earnings were down 12%. * Cash flow from operating activities, excluding net working capital movements and taxation paid/accrued, was $10.5 billion, compared to $7.8 billion a year ago. * Gearing, including other commitments such as operating leases and retirement benefits, and net of cash holdings minus operational cash requirements, was 9.7% versus 13.0% at the end of the second quarter 2005. Cash and cash equivalents increased by $4.5 billion to $16.0 billion and debt increased by $1.1 billion. * Capital investment for the quarter was $4.1 billion (including the minority share of Sakhalin) of which $3.2 billion was invested in the Upstream segments. * Gross proceeds from divestments for the third quarter 2005 were $4.3 billion. * Share purchases for cancellation amounted to $2.4 billion for the year to date including $1.9 billion or 0.9% of Royal Dutch Shell shares in the third quarter.Royal Dutch Shell outlook * Royal Dutch Shell expects to return $5 billion to shareholders via buy back of shares for cancellation in 2005, with any incremental purchase of remaining shares in Royal Dutch to be additional to this target. * The 2004-2006 divestment target of $12 to $15 billion has been achieved early with the Gasunie transportation assets, Basell and InterGen divestments, raising proceeds from the divestments programme to date to $13.7 billion. * Including the hurricane impact the production outlook for 2005 is around 3.5 million boe per day and for 2006 in the lower half of the range of 3.5 to 3.8 million boe per day. The outlook for 2009 of 3.8 to 4.0 million boe per day is unchanged. * In the Upstream, Shell has restored Gulf of Mexico production to more than 200 thousand boe per day (Shell share) of the approximately 450 thousand boe per day (Shell share) prior to Hurricane Katrina (operated and non-operated). Good progress continues to be made on key assets including Ursa, Mensa, and the Auger pipeline and an additional 150 thousand boe per day (Shell share) is expected to return to production during the fourth quarter 2005, some 80 thousand boe per day above earlier guidance. Approximately 15 million barrels (Shell share) were deferred in the third quarter 2005 and approximately 18 million is expected to be deferred in the fourth quarter 2005. Production from the Mars platform is expected to resume in the second half of 2006. * Upstream cost after tax (Shell share) associated with hurricane evacuation, people displacement, and repairs to assets and facilities is expected to be around $300 million, prior to insurance recovery. In the third quarter 2005, costs after tax were $27 million and approximately $100 million (after tax) will be spent in the fourth quarter 2005, with the remainder in 2006. * In the Downstream, following Hurricane Katrina the Convent and Norco refineries were back on line within two weeks after a full shutdown. Following Hurricane Rita, the Deer Park refinery was out of operation for 10 days and the Port Arthur refinery is expected to be back on line shortly. Overall, lost refinery intake was some 4.9 million barrels (Shell share) in the third quarter 2005 and some 4.5 million barrels (Shell share) is expected to be lost in the fourth quarter 2005. Chemicals overall asset utilisation was impacted by 7% in the third quarter with fourth quarter 2005 impact estimated at some 2% to 3%. Downstream costs after tax and prior to insurance recovery associated with the hurricanes are approximately $20 million (Shell share) for the third quarter 2005 and are expected to be around $30 million (Shell share) in the fourth quarter 2005. * Total Upstream and Downstream costs after tax for hurricane related items are expected to be around $350 million (Shell share) over the period 2005 to 2006. Insurance recovery from external insurers will be available for a significant portion of these costs. However it is too early in the process to provide an estimate for how much that recovery will be. * The outlook for Shell's 2005 total capital investment, across all its businesses and activities remains at approximately $15 billion (excluding the minority share of Sakhalin). Guidance for 2006 capital expenditure is expected in December 2005. The capital investment programme will reflect new project opportunities under development as well as an overall update taking into account project progress and market conditions on revenue and cost. * As stated on 20 September, Royal Dutch Shell's proposed internal restructuring and merger to achieve governance, management and fiscal efficiencies by unwinding the 60:40 cross holdings below Parent Company level, is expected to be completed during the fourth quarter 2005. As a result of the proposed merger, Royal Dutch Shell is expected to own all the interests in the merged company and the holders of the existing 1.5% public minority in Royal Dutch will receive financial consideration.Third quarter 2005 investments and portfolio developmentsUpstream portfolio developments during the quarter: Shell in Ireland acquired an exploration licence, located in deepwater ofthe Irish Rockall Trough, some 150 kilometres off the coast. In the 23rdoffshore licensing round in the UK Continental Shelf, Shell was awarded a newexploration licence. In Alaska, Shell acquired 19 leases in the westernBeaufort Sea adding to the Beaufort leases acquired earlier in Lease Sale 195. In Malaysia, Shell logged a significant hydrocarbon column in high qualityreservoir rock in the deepwater Ubah 2 big cat exploration prospect (Shellshare 35%). In the third quarter 2005, 15 successful exploration and exploratoryappraisal wells were drilled in Australia, Brunei, Malaysia, Netherlands,Nigeria, UK, USA, Kazakhstan and Oman, with a success rate year to date of 72%. The Train 4 and 5 expansion at Nigeria LNG Ltd (Shell share 26%) is in linewith expectation. First production from Train 4 expected in the fourth quarter2005 and construction of Train 5 is more than 90% complete. These two trainswill bring Nigeria LNG's overall production capacity to over 17 million tonnesper annum (mtpa) of LNG. Train 6 (4 mtpa) is on schedule for start up in late2007. In addition, the 3.7 mtpa Qalhat LNG project (Shell indirect share 11%) inOman is on schedule. Commissioning is in progress with first productionexpected to commence around year-end 2005. The divestment of the majority of the assets of the InterGen joint venturecontributed proceeds exceeding $1 billion. The divestment of the two remainingInterGen assets (in Turkey and Colombia) is progressing to schedule.Downstream portfolio developments during the quarter: The sale of Shell's marketing and distribution businesses in the Republicof Ireland and Northern Ireland was announced. Completion of the sale isexpected by the end of the year. The divestment of Oil Products refining, marketing and distributionbusinesses in the French Antilles and French Guyana was announced. The sale isto take place by the end of 2005. Shell and Turcas Petrol A.S. signed an agreement relating to a jointventure to combine their marketing and distribution activities in Turkey.Furthermore Koc and Shell participated in the privatization bid for 51% ofTurkiye Petrol Rafinerileri A.S. ("Tupras") a Turkish refining company; Shellwill be a minority shareholder in Tupras. The purchase is subject to approvalby the Turkish government. An agreement was signed for the exchange of Shell's 20% interest in itsRome refinery for Total's 18% interest in the Reichstett refinery in France.The transaction is subject to regulatory approval and pre-emptive rights byexisting partners. The exchange increases Shell's ownership interest in theReichstett refinery to 83%. Shell and BASF completed the sale of their 50:50 polyolefins joint ventureBasell, with net after debt proceeds to Shell of over $1 billion. Earnings by industry segmentExploration & ProductionTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % 4,977 2,343 +112 Segment earnings 10,677 6,905 +55 2,077 2,279 -9 Crude oil production (thousand b/d) 2,129 2,283 -7 Natural gas production available for 6,551 7,706 -15 sale (million scf/d) 8,088 8,505 -5 Third quarter segment earnings of $4,977 million were 112% higher than ayear ago ($2,343 million), mainly reflecting strong oil and gas pricerealisations and divestment gains partly offset by volumes and higher costs. The earnings included a net gain of $1,765 million versus a charge of $183million a year ago. The net gain in the third quarter 2005 is mainly from thedivestment of pipeline assets held through Gasunie NV in the Netherlands and again related to the mark-to-market valuation of certain UK gas contracts ($104million). Excluding these effects earnings increased by 27% compared to a yearago. Segment unit earnings, calculated as segment earnings divided by productionfor the quarter are $16.87 per boe. Excluding the effects described above, unitearnings were $10.89 per boe and increased by 43% compared to a year ago. Liquids realisations were 49% higher than a year ago exceeding increases inmarker crudes Brent of 48% and WTI of 44%. Outside the USA, gas realisationsincreased by 37% and in the USA, gas realisations increased by 35%. Hydrocarbon production in the third quarter 2005 was 3,207 thousand boe perday, reflecting the loss of production from hurricanes in the Gulf of Mexico.Excluding the hurricane loss of production of some 100 thousand boe per dayhigher than the same quarter last year, the end of a production sharingcontract in the Middle East of some 100 thousand boe per day, lowerentitlements due to higher hydrocarbon prices and the impact of divestments of30 thousand boe per day, production was 4% lower than a year ago. New field production, totalling some 90 thousand boe per day versus a yearago, benefited from Goldeneye (Shell share 49%) in the UK and Holstein (Shellshare 50%) in the USA. Field declines were 179 thousand boe per day, mainly inthe USA, Norway and the UK. Operational downtime, excluding the Gulf of Mexico,exceeded some 100 thousand boe per day, mainly in the North Sea. Cost increases reflect increased market rates and commodity prices, thebuild up of new production and the development of future projects. Capital investment in the third quarter of $2.5 billion, excluding theminority share of Sakhalin and including exploration expense of $0.2 billion,was 21% higher than in the corresponding period last year. Gas & PowerTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % 556 354 +57 Segment earnings 1,043 1,210 -14 Equity LNG sales volume (million 2.48 2.44 +2 tonnes) 7.84 7.39 +6 Gas & Power segment earnings were $556 million compared to $354 million ayear ago, reflecting strong LNG prices and favourable Marketing and Tradingconditions. Earnings include gains of $94 million mainly related to assetdivestments versus net gains of $103 million a year ago. Excluding the effectsearnings were up 84%. LNG volumes of 2.48 million tonnes were 2% higher due tosales increases in Malaysia, Oman and Australia partly offset by unscheduledoperational downtime in Nigeria and Australia. Ongoing LNG project developmentprogress is consistent with the expected 14% average annual capacity increaseto 2009. Oil ProductsTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % 3,439 2,557 +34 Segment earnings 9,154 5,924 +55 1,713 1,032 CCS adjustment - see note 2 3,520 1,670 1,726 1,525 +13 Segment CCS earnings 5,634 4,254 +32 3,910 4,205 -7 Refinery intake (thousand b/d) 3,982 4,174 -5 6,6251 7,690 -14 Oil product sales (thousand b/d) 7,180 7,566 -5 1Certain 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. Oil Products third quarter segment earnings were $3,439 million compared to$2,557 million for the same period last year. Third quarter CCS earnings were $1,726 million up from $1,525 million ayear ago and in 2004 included a net gain of $52 million. Higher earnings due tostrong refining margins and trading results were partially offset by lowerretail marketing margins. Unit earnings were 15% higher than a year ago on acomparable volume definition. In Manufacturing, Supply and Distribution, third quarter 2005 averageindustry refining margins increased in Europe and the USA. Refinery intakedeclined 7% mainly due to refinery divestments. Lost intake from the divestedrefineries amounted to about 5% of global intake in the third quarter 2004whereas lower intake due to hurricanes in the Gulf of Mexico amounted to 1%.Refinery utilisation on an Equivalent Distillation Capacity (EDC) basisdeclined 5.3% to 77.8% mainly due to hurricane related downtime and the Pernisrefinery unscheduled downtime in the Netherlands (Shell share 90%). In Marketing, including Lubricants and B2B (business to business), earningsdeclined in the third quarter 2005 compared to the same period a year ago. Inthe USA, gross retail margins came under severe pressure due to higher crudefeedstock costs. Retail margins in Asia Pacific and Europe were also downcompared to the third quarter 2004. Higher wholesale fuels earnings in Europepartially offset the decline in retail. Marketing sales volumes declined 4%compared to volumes in the third quarter 2004 and increased about 1% relativeto the second quarter 2005. ChemicalsTHIRDQUARTER $ million NINE MONTHS 2005 2004 % 2005 2004 % 321 572 -44 Segment earnings 1,029 1,168 -12 5,589 6,080 -8 Sales volumes (thousand tonnes) 17,097 18,196 -6 Chemicals segment earnings of $321 million for the quarter compared toearnings of $572 million in the same quarter last year. The third quarter 2005included net charges of $184 million for legal charges and from the sale of thepolyolefins joint venture Basell mainly from exchange rate movements on thefinal settlement. Excluding these effects earnings were down 12%. Operating rates declined by 10 percentage points relative to a year ago andsales volumes were lower, reflecting primarily hurricane-related downtime, andsupply constraints. Feedstock and energy costs increased significantly fromlast year impacting margins. Other Industry & Corporate segmentsTHIRDQUARTER $ million NINE MONTHS 2005 2004 2005 2004 (76) (39) Other Industry segment earnings (92) (63) 173 (167) Corporate segment earnings (154) (629) Other Industry and Corporate segments 97 (206) earnings (246) (692) In the third quarter, Other Industry and Corporate segments earnings were$97 million compared to a loss of $206 million a year ago as a result of gainsfrom exchange rate movements and lower interest charges. The third quarter 2005included impairment charges of $60 million in Other Industry Segments and costsrelated to the Unification of Royal Dutch and Shell Transport and Trading inCorporate.Note All amounts shown throughout this report are unaudited. Fourth quarter results for 2005 are expected to be announced on 2 February2006. First quarter results for 2006 are expected to be announced on 4 May2006, second quarter results for 2006 are expected to be announced on 27 July2006 and third quarter results for 2006 are expected to be announced on 26October 2006. This announcement contains forward-looking statements that are subject torisk factors associated with the oil, gas, power, chemicals and renewablesbusinesses. It is believed that the expectations reflected in these statementsare reasonable, but may be affected by a variety of variables which could causeactual results, trends or reserves replacement to differ materially, including,but not limited to: price fluctuations in crude oil, natural gas and refinedproducts, changes in demand for the Shell Group's products, currencyfluctuations, drilling and production results, reserve estimates, loss ofmarket, industry competition, environmental risks, physical risks, risksassociated with the identification of suitable potential acquisition propertiesand targets and the successful negotiation and consummation of transactions,the risk of doing business in developing countries and countries subject tointernational sanctions, legislative, fiscal and regulatory developmentsincluding potential litigation and regulatory effects arising fromrecategorisation of reserves, economic and financial market conditions invarious countries and regions, political risks, project delay or advancement,approvals and cost estimates. Please refer to the Royal Dutch and Shell Transport Annual Reports on Form20-F for the year ended 31 December 2004 (as amended) for a description ofcertain important factors, risks and uncertainties that may affect Royal DutchShell businesses. Royal Dutch Shell does not undertake any obligation topublicly update or revise any of these forward-looking statements, whether toreflect new information, future events or otherwise. 27 October 2005Appendix 1: Royal Dutch Shell financial report and tablesStatement of income (see note 1)QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 % 1 2005 2004 % 94,717 101,383 89,006 +6 Sales proceeds 286,168 243,634 +17 Less: Sales taxes, excise duties 18,282 18,739 18,321 and similar levies 54,933 53,549 ______ ______ ______ ______ ______ 76,435 82,644 70,685 +8 Revenue 231,235 190,085 +22 60,704 69,464 58,604 Cost of sales 188,733 157,901 ______ ______ ______ ______ ______ 15,731 13,180 12,081 +30 Gross profit 42,502 32,184 +32 3,150 3,148 3,110 Selling and distribution expenses 9,462 9,046 613 769 533 Administrative expenses 1,757 1,646 275 248 294 Exploration 784 1,294 Share of profit of equity 3,081 1,080 1,254 accounted investments 5,734 3,496 Net finance costs and other (268) 39 11 (income)/expense (159) (32) ______ ______ ______ ______ ______ 15,042 10,056 9,387 +60 Income before taxation 36,392 23,726 +53 5,558 4,595 3,790 Taxation 14,427 9,276 ______ ______ ______ ______ ______ 9,484 5,461 5,597 Income from continuing operations 21,965 14,450 Income from discontinued (93) - 23 operations (307) 65 ______ ______ ______ ______ ______ 9,391 5,461 5,620 +67 Income for the period 21,658 14,515 +49 ====== ======= ====== ======= ======= ==== === ==== === === Income attributable to minority 359 225 249 interests 715 546 ______ ______ ______ ______ ______ Income attributable to 9,032 5,236 5,371 +68 shareholders 20,943 13,969 +50 ______ ______ ______ ______ ______ 1 Q3 on Q3 change Basic earnings per share (see note 1 and 9)QUARTERS NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 1.35 0.78 0.80 Income per share ($) 3.12 2.06 1.10 0.69 0.65 CCS earnings per share ($) 2.61 1.82 Diluted earnings per share (see note 1 and 9)QUARTERS NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 1.35 0.78 0.79 Income per share ($) 3.11 2.06 1.10 0.69 0.65 CCS earnings per share ($) 2.61 1.82 Earnings by industry segment 1QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 % 2 2005 2004 % Exploration & Production: 4,051 1,644 1,556 +160 World outside USA 7,705 4,679 +65 926 1,101 787 +18 USA 2,972 2,226 +34 ______ ______ ______ ______ ______ 4,977 2,745 2,343 +112 10,677 6,905 +55 ______ ______ ______ ______ ______ Gas & Power: 469 74 345 +36 World outside USA 1,061 1,164 -9 87 (63) 9 USA (18) 46 ______ ______ ______ ______ ______ 556 11 354 +57 1,043 1,210 -14 ______ ______ ______ ______ ______ Oil Products: 1,229 1,500 1,176 +5 World outside USA 4,204 3,243 +30 497 528 349 +42 USA 1,430 1,011 +41 ______ ______ ______ ______ ______ 1,726 2,028 1,525 +13 5,634 4,254 +32 ______ ______ ______ ______ ______ Chemicals: 291 221 432 -33 World outside USA 792 973 -19 30 38 140 -79 USA 237 195 +22 ______ ______ ______ ______ ______ 321 259 572 -44 1,029 1,168 -12 ______ ______ ______ ______ ______ (76) (8) (39) Other industry segments (92) (63) ______ ______ ______ ______ ______ 7,504 5,035 4,755 +58 TOTAL OPERATING SEGMENTS 18,291 13,474 +36 ______ ______ ______ ______ ______ Corporate: 71 (74) (143) Interest income/(expense) (73) (513) Currency exchange gains/ 126 (6) 35 (losses) 80 26 (24) (130) (59) Other - including taxation (161) (142) ______ ______ ______ ______ ______ 173 (210) (167) (154) (629) ______ ______ ______ ______ ______ (308) (199) (207) Minority interests (592) (470) ______ ______ ______ ______ ______ 7,369 4,626 4,381 +68 CCS EARNINGS 17,545 12,375 +42 ______ ______ ______ ______ ______ 1,663 610 990 CCS adjustment for Oil Products 3,398 1,594 ______ ______ ______ ______ ______ Income attributable to 9,032 5,236 5,371 +68 shareholders 20,943 13,969 +50 ______ ______ ______ ______ ______ 1 Operating segment results will continue to be presented and discussed in quarterly results announcements (including the CCS adjustment) and in the Annual Report and Accounts on the same basis as used internally by management, therefore before net finance costs, including equity accounted investments and after tax. Segment results in accordance with International Accounting Standard14 "Segment Reporting" will be disclosed in the Annual Report and Accounts, with a reconciliation to the management basis as presented above. 2 Q3 on Q3 change Summarised balance sheet (see note 1 and 6) $ million Sep 30 Jun 30 Sep 30 ASSETS 2005 2005 2004 Non-current assets: Property, plant and equipment 85,601 84,816 85,357 Intangible assets 4,361 4,403 4,338 Investments: Equity accounted investments 17,138 18,679 20,709 Financial assets 3,236 3,401 2,435 Deferred tax 3,039 2,961 3,015 Employee benefit assets 2,453 2,320 1,975 Other 4,102 4,411 4,648 ______ ______ ______ 119,930 120,991 122,477 ______ ______ ______ Current assets: Inventories 21,490 18,566 16,866 Accounts receivable 83,812 51,420 37,898 Cash and cash equivalents 15,998 11,520 3,948 ______ ______ ______ 121,300 81,506 58,712 ______ ______ ______ ______ ______ ______ TOTAL ASSETS 241,230 202,497 181,189 ______ ______ ______ LIABILITIES Non-current liabilities: Debt 7,795 7,905 9,638 Deferred tax 12,411 12,807 13,459 Employee benefit obligations 6,018 6,239 6,873 Other provisions 7,114 6,781 5,525 Other 4,395 4,020 5,675 ______ ______ ______ 37,733 37,752 41,170 ______ ______ ______ Current liabilities: Debt 6,714 5,479 7,173 Accounts payable and accrued liabilities 82,912 52,678 38,399 Taxes payable 12,510 10,789 10,471 Employee benefit obligations 302 300 301 Other provisions 1,254 1,430 1,128 ______ ______ ______ 103,692 70,676 57,472 ______ ______ ______ ______ ______ ______ TOTAL LIABILITIES 141,425 108,428 98,642 ______ ______ ______ Equity attributable to shareholders 92,353 87,829 77,813 Minority interests 7,452 6,240 4,734 ______ ______ ______ TOTAL EQUITY 99,805 94,069 82,547 ______ ______ ______ TOTAL LIABILITIES AND EQUITY 241,230 202,497 181,189 ______ ______ ______ Summarised statement of cash flows (see note 1 and 7)QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 CASH FLOW FROM OPERATING ACTIVITIES: 9,391 5,461 5,620 Income for the period 21,658 14,515 Adjustment for: 5,548 5,086 3,457 Taxation accrued 14,945 9,544 120 204 111 Interest accrued 484 645 Depreciation, depletion and 2,903 3,136 2,708 amortisation 9,194 8,655 (352) (193) (184) (Profit)/loss on sale of assets (1,103) (859) Decrease/(increase) in net working (5,490) (1,918) (2,234) capital (8,959) (4,237) Share of profit of equity accounted (3,073) (1,080) (1,278) investments (5,512) (3,562) Dividends received from equity 2,761 1,515 859 accounted investments 5,268 2,731 Deferred taxation and other (112) (142) 147 provisions (646) (142) (1,159) (246) (134) Other (1,102) (356) ______ ______ ______ ______ ______ Cash flow from operating activities 10,537 11,823 9,072 (pre-tax) 34,227 26,934 ______ ______ ______ ______ ______ (3,891) (5,501) (2,194) Taxation paid (12,579) (6,746) ______ ______ ______ ______ ______ 6,646 6,322 6,878 Cash flow from operating activities 21,648 20,188 ______ ______ ______ ______ ______ CASH FLOW FROM INVESTING ACTIVITIES: (3,787) (3,736) (3,192) Capital expenditure (10,457) (8,911) 416 490 447 Proceeds from sale of assets 1,914 1,300 Proceeds from sales and (additions): 3,734 (61) 116 Equity accounted investments 3,535 (380) 113 274 121 Investments: financial assets 363 1,069 251 177 147 Interest received 618 332 ______ ______ ______ ______ ______ 727 (2,856) (2,361) Cash flow from investing activities (4,027) (6,590) ______ ______ ______ ______ ______ CASH FLOW FROM FINANCING ACTIVITIES: 1,138 (22) 144 Net increase/(decrease) in debt 439 (2,963) (284) (275) (245) Interest paid (813) (671) 90 452 272 Change in minority interests 893 860 (1,937) - (698) Net issue/(repurchase) of shares (2,433) (698) Dividends paid to: (1,910) (2,086) (2,895) Shareholders of Royal Dutch Shell (8,824) (7,309) (130) (58) (84) Minority interests (235) (202) Treasury shares: Net sales/(purchases) and dividends 125 131 (313) received 399 (738) ______ ______ ______ ______ ______ (2,908) (1,858) (3,819) Cash flow from financing activities (10,574) (11,721) ______ ______ ______ ______ ______ Currency translation differences relating to cash and cash 13 (170) 6 equivalents (250) (37) ______ ______ ______ ______ ______ INCREASE/(DECREASE) IN CASH AND CASH 4,478 1,438 704 EQUIVALENTS 6,797 1,840 ______ ______ ______ ______ ______ Cash and cash equivalents at 11,520 10,082 3,244 beginning of period 9,201 2,108 Cash and cash equivalents at end of 15,998 11,520 3,948 period 15,998 3,948 Operational data - UpstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2005 2005 2004 %1 2005 2004 % thousand b/d CRUDE OIL PRODUCTION thousand b/d 516 566 547 Europe 551 585 370 375 398 Africa 374 408 222 233 246 Asia Pacific 229 249 512 413 507 Middle East, Russia, CIS 439 473 289 403 378 USA 364 373 70 80 110 Other Western Hemisphere 81 109 ______ ______ ______ ______ ______ Total crude oil production 1,979 2,070 2,186 excluding oil sands 2,038 2,197 98 98 93 Oil sands 91 86 ______ ______ ______ ______ ______ Total crude oil production 2,077 2,168 2,279 -9 including oil sands 2,129 2,283 -7 ______ ______ ______ ______ ______ million scf/d 2 NATURAL GAS PRODUCTION million scf/d 2 AVAILABLE FOR SALE 2,268 3,175 2,673 Europe 3,455 3,463 341 383 392 Africa 370 373 2,267 2,225 2,131 Asia Pacific 2,287 2,091 231 256 671 Middle East, Russia, CIS 253 695 948 1,357 1,294 USA 1,228 1,342 496 479 545 Other Western Hemisphere 495 541 ______ ______ ______ ______ ______ 6,551 7,875 7,706 -15 8,088 8,505 -5 ______ ______ ______ ______ ______ thousand b/d3 BARRELS OF OIL EQUIVALENT thousand b/d3 907 1,113 1,008 Europe 1,147 1,182 429 441 466 Africa 438 472 613 617 613 Asia Pacific 623 610 552 457 623 Middle East, Russia, CIS 483 593 453 637 601 USA 575 604 155 163 204 Other Western Hemisphere 166 202 ______ ______ ______ ______ ______ 3,109 3,428 3,515 Total production excl oil sands 3,432 3,663 98 98 93 Oil sands 91 86 ______ ______ ______ ______ ______ 3,207 3,526 3,608 -11 Total production incl oil sands 3,523 3,749 -6 ______ ______ ______ ______ ______ 1 Q3 on Q3 change 2 scf/d = standard cubic feet per day; 1 standard cubic feet = 0.0283 cubic metre 3 Natural gas converted to oil equivalent at 5.8 million scf/d = thousand b/d Operational data - Upstream (continued)QUARTERS NINE MONTHS Q3 Q2 Q3 2005 2005 2004 %1 2005 2004 % million tonnes LIQUEFIED NATURAL GAS (LNG) million tonnes 2.48 2.48 2.44 +2 Equity LNG sales volume 7.84 7.39 +6 $/bbl Realised Oil Prices $/bbl 56.89 48.22 38.16 WOUSA 49.79 34.07 56.24 47.08 38.68 USA 48.15 34.52 56.83 48.05 38.23 Global 49.56 34.13 $/thousand scf Realised Gas Prices $/thousand scf 4.24 4.61 3.58 Europe 4.72 3.63 3.70 3.48 2.70 WOUSA (including Europe) 3.61 2.72 8.35 7.31 6.18 USA 7.41 6.02 4.59 4.39 3.50 Global 4.43 3.47 1 Q3 on Q3 change Operational data - DownstreamQUARTERS NINE MONTHS Q3 Q2 Q3 2005 2005 2004 %1 2005 2004 % thousand b/d thousand b/d REFINERY PROCESSING INTAKE 1,774 1,775 1,784 Europe 1,785 1,771 853 829 1,019 Other Eastern Hemisphere 850 969 909 988 1,009 USA 965 1,063 374 389 393 Other Western Hemisphere 382 371 ______ ______ ______ ______ ______ 3,910 3,981 4,205 -7 3,982 4,174 -5 ______ ______ ______ ______ ______ OIL SALES 2,230 2,587 2,799 Gasolines 2,449 2,757 770 844 898 Kerosines 818 829 2,142 2,449 2,469 Gas/Diesel oils 2,344 2,351 783 875 777 Fuel oil 854 865 700 703 747 Other products 715 764 ______ ______ ______ ______ ______ 6,6252 7,458 7,690 -14 Total oil products* 7,180 7,566 -5 2,8642 5,116 5,580 Crude oil 4,130 5,268 ______ ______ ______ ______ ______ 9,4892 12,574 13,270 -28 Total oil sales 11,310 12,834 -12 ______ ______ ______ ______ ______ *comprising 2,094 2,037 2,179 Europe 2,086 2,109 1,236 1,243 1,312 Other Eastern Hemisphere 1,236 1,325 1,5582 2,540 2,550 USA 2,168 2,522 722 697 757 Other Western Hemisphere 706 744 1,015 941 892 Export sales 984 866 CHEMICAL SALES VOLUMES BY MAIN thousand tonnes PRODUCT CATEGORY3** thousand tonnes 3,324 3,418 3,532 Base chemicals 10,255 10,609 2,238 2,192 2,433 First line derivatives 6,737 7,247 27 37 115 Other 105 340 ______ ______ ______ ______ ______ 5,589 5,647 6,080 -8 17,097 18,196 -6 ______ ______ ______ ______ ______ **comprising 2,495 2,440 2,586 Europe 7,512 7,783 1,305 1,264 1,389 Other Eastern Hemisphere 3,890 4,178 1,630 1,784 1,937 USA 5,200 5,740 159 159 168 Other Western Hemisphere 495 495 $ million CHEMICAL SALES - NET PROCEEDS4 $ million 2,092 2,230 2,134 Europe 6,710 5,629 1,123 1,104 1,234 Other Eastern Hemisphere 3,463 3,203 1,512 1,630 1,587 USA 4,861 4,296 174 180 170 Other Western Hemisphere 543 434 ______ ______ ______ ______ ______ 4,901 5,144 5,125 -4 15,577 13,562 +15 709 808 617 By-products 2,268 1,720 ______ ______ ______ ______ ______ 5,610 5,952 5,742 -2 17,845 15,282 +17 ______ ______ ______ ______ ______ 1 Q3 on Q3 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. 3 Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products 4 Excluding proceeds from equity accounted investments and chemical feedstock trading Capital investmentQUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 Capital expenditure: Exploration & Production: 2,276 2,204 1,896 World outside USA 6,362 5,144 318 227 217 USA 775 788 ______ ______ ______ ______ ______ 2,594 2,431 2,113 7,137 5,932 ______ ______ ______ ______ ______ Gas & Power: 334 460 360 World outside USA 1,124 1,027 - 1 5 USA 2 28 ______ ______ ______ ______ ______ 334 461 365 1,126 1,055 ______ ______ ______ ______ ______ Oil Products: Refining: 290 310 215 World outside USA 748 593 56 55 61 USA 153 229 ______ ______ ______ ______ ______ 346 365 276 901 822 ______ ______ ______ ______ ______ Marketing: 317 250 232 World outside USA 700 577 34 34 45 USA 100 66 ______ ______ ______ ______ ______ 351 284 277 800 643 ______ ______ ______ ______ ______ Chemicals: 52 47 59 World outside USA 122 136 46 70 48 USA 173 190 ______ ______ ______ ______ ______ 98 117 107 295 326 ______ ______ ______ ______ ______ 64 78 54 Other segments 198 133 ______ ______ ______ ______ ______ 3,787 3,736 3,192 TOTAL CAPITAL EXPENDITURE 10,457 8,911 ______ ______ ______ ______ ______ Exploration expense: 127 121 103 World outside USA 340 249 56 35 65 USA 117 119 ______ ______ ______ ______ ______ 183 156 168 457 368 ______ ______ ______ ______ ______ New equity in equity accounted investments 85 135 94 World outside USA 278 283 12 2 4 USA 15 244 ______ ______ ______ ______ ______ 97 137 98 293 527 ______ ______ ______ ______ ______ New loans to equity accounted 38 106 90 investments 273 284 ______ ______ ______ ______ ______ 4,105 4,135 3,548 TOTAL CAPITAL INVESTMENT* 11,480 10,090 ______ ______ ______ ______ ______ *comprising 2,839 2,708 2,356 Exploration & Production 7,902 6,577 342 467 387 Gas & Power 1,145 1,329 707 656 561 Oil Products 1,717 1,486 152 191 188 Chemicals 481 546 65 113 56 Other segments 235 152 ______ ______ ______ ______ ______ 4,105 4,135 3,548 11,480 10,090 ______ ______ ______ ______ ______ NotesNOTE 1. Accounting policies and basis of presentation 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, plc (Shell Transport)by acquiring all outstanding shares of Shell Transport and approximately 98.5%of the outstanding shares of Royal Dutch. The comparative periods represent information for Royal Dutch Shell as ifit acquired 100% of Royal Dutch and Shell Transport. For financial reportingpurposes, the existing 1.5% minority holders in Royal Dutch will be shown inthe Royal Dutch Shell consolidated financial statements as a minority interestin Royal Dutch Shell from 10 August 2005, as prior to that time those holdershad a right to participate in the Exchange Offer and receive Royal Dutch Shellshares. As a result, the average quarterly net income attributable to theminority will be prorated for the period from 10 August 2005 through 30September 2005. This presentation for accounting purposes does not affect theentitlement of the Royal Dutch minority to the third quarter dividend declaredby Royal Dutch, payable on 15 December 2005, or reflect a change in theirunderlying economic interest in the Group companies. Included in Incomeattributable to Minority Interests in the Statement of Income for the thirdquarter 2005 and in Minority Interests in the Summarised Balance Sheet are $46million and $842 million attributable to minority holders in Royal Dutch. Thereare no comparatives for prior quarters. These Financial Statements are considered historical and give retroactiveeffect for all periods presented to the Unification Transaction, which has beenaccounted for using a carry-over basis of the historical costs of the assetsand liabilities of Royal Dutch, Shell Transport and other companies comprisingthe Royal Dutch/Shell Group of Companies. The interest of the minorityshareholders in Royal Dutch has also been accounted for using a carry-overbasis of the historical costs of its consolidated assets and liabilities. With effect from 2005, the quarterly financial statements, includingcomparative data, have been prepared in accordance with International FinancialReporting Standards (IFRS). The full details of the accounting policies underIFRS, are available under www.shell.com/investor.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 segment earnings. Earningson an estimated current cost of supplies basis provide useful informationconcerning the effect of changes in the cost of supplies on Royal Dutch Shell'sresults of operations but are not a measure of financial performance underIFRS. On this basis, Oil Products segment cost of sales of the volumes soldduring the period is based on the cost of supplies during the same period aftermaking allowance for the estimated tax effect, instead of use of thefirst-in-first-out (FIFO) method of inventory accounting. The adjustment fromIncome to an estimated current cost of supplies basis has no related balancesheet entry. Earnings calculated on this basis do not represent an applicationof the last-in, first-out (LIFO) inventory basis and do not reflect anyinventory draw down effects.NOTE 3. Discontinued operations Income from discontinued operations, comprising 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 areas of operations. Earnings by segment relating to discontinued operations, included withinthe segment earnings on page 12, are as follows:QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 (93) - 32 Chemicals segment earnings (307) 94 - - (9) Corporate segment earnings - (29) - Income from discontinued (93) - 23 operations (307) 65 Basic earnings per share for the third quarter 2005 for discontinuedoperations were $(0.01). Basic earnings per share for the second quarter 2005for discontinued operations were nil. NOTE 4. Return on average capital employed (ROACE) ROACE on an income basis is the sum of the current and previous threequarters' income attributable to shareholders plus interest, less tax andminority interest as a percentage of the average of Royal Dutch Shell's shareof closing capital employed and the opening capital employed a year earlier.The tax rate and the minority interest components are derived from calculationsat the published segment level. Components of the calculation ($ million):Income attributable to shareholders (four quarters) 25,520 Royal Dutch Shell share of interest expense after tax 688 ROACE numerator 26,208 Royal Dutch Shell share of capital employed - opening 93,660 Royal Dutch Shell share of capital employed - closing 105,779 Royal Dutch Shell share of capital employed - average 99,720 ROACE 26.3% 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 Annual Report and Accounts, with areconciliation to the basis as presented here.NOTE 6. EquityTotal equity comprises equity attributable to the shareholders of Royal DutchShell (share capital and additional paid-in capital, treasury shares, retainedearnings and other reserves, cumulative currency translation differences,unrealised gains/(losses) on securities, unrealised gains/(losses) on cash flowhedges) and, disclosed separately, the minority interest in equity. Theminority interest in equity includes any non-Shell Group share of these items. Sep 30 Jun 30 Sep 30 2005 2005 2004 Share capital 578 583 584 Non-equity share capital - - 20 Additional paid in capital 5,675 5,638 5,523 Treasury shares (3,772) (3,941) (4,168) Other reserves 103 142 (345) Retained earnings 89,769 85,407 76,199 Total 92,353 87,829 77,813 Minority interests 7,452 6,240 4,734 Total equity 99,805 94,069 82,547 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. Under IFRS, income for the periods in these statements is before deductionof minority interests, unlike previous practice where it was added back in'other'. This change has no impact on total cash from operating activities. Write offs of previously capitalised exploratory well costs are now addedback within 'cash flow from operating activities' under 'other' and are notdeducted from capital expenditure. This is also reflected in the capitalinvestment table with no change in total capital investment. Cash from operating activities excluding net working capital movements andtaxation paid/accrued is calculated using the following line items from thecash flow statement:QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2005 2005 2004 2005 2004 6,646 6,322 6,878 Cash flow from operating activities 21,648 20,188 5,548 5,086 3,457 Taxation accrued 14,945 9,544 Decrease/(increase) in net working (5,490) (1,918) (2,234) capital (8,959) (4,237) (3,891) (5,501) (2,194) Taxation paid (12,579) (6,746) ______ ______ ______ ______ ______ 10,479 8,655 7,849 28,241 21,627 ______ ______ ______ ______ ______ NOTE 8. Contingencies and litigation - Reserves recategorisationThe US Department of Justice investigation and proceedings by the US Securitiesand Exchange Commission (SEC) and the UK Financial Services Authority (FSA)with respect to Shell in regards of the recategorisation of Shell's proved oiland gas reserves for periods prior to 2004, have all been settled. The DutchAuthority for the Financial Markets (AFM) have announced that their findings donot give rise to any further actions at this time. The class action againstcertain Shell companies on behalf of employees participating in US savingsplans under the US Employee Retirement Income Security Act (ERISA) has beensettled. Shell also has reached a settlement, subject to court approval in theDerivative action case. Pending in relation to the recategorisation issues are investigations byEuronext Amsterdam and the California Department of Corporations, and asecurities class action in United States courts. With respect to these pendingactions and investigations, the management cannot currently predict the mannerand timing of the resolution of these pending matters, is currently unable toestimate the range of possible losses from such matters and does not currentlybelieve the resolution of these pending matters will have a material impact onRoyal Dutch Shell's financial condition, although such resolutions could have asignificant effect on periodic results for the period in which they arerecognised.NOTE 9. Earnings per Royal Dutch Shell share The total number of Royal Dutch Shell shares in issue at the end of theperiod was 6,780.2 million. Royal Dutch Shell reports earnings per share on a basic and on a dilutedbasis, based on the weighted average number of Royal Dutch Shell (combined Aand B) shares outstanding. Shares held in respect of share options and otherincentive compensation plans are deducted in determining basic earnings pershare. Basic earnings per share calculations are based on the followingweighted average number of shares (millions): Nine Nine Q3 Q2 Q3 Months Months 2005 2005 2004 2005 2004 Royal Dutch Shell shares of euro 0.07 6,676.5 6,724.5 6,754.8 6,711.4 6,781.6 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. Nine Nine Q3 Q2 Q3 Months Months 2005 2005 2004 2005 2004 Royal Dutch Shell shares of euro 0.07 6,703.5 6,744.1 6,761.4 6,732.5 6,786.2 Basic shares at the end of the following periods are (millions): Q3 Q2 Q3 2005 2005 2004 Royal Dutch Shell shares of euro 0.07 6,608.2 6,726.7 6,736.8 One (1) American Depository Receipt (ADR) is equal to two (2) Royal Dutch Shellshares. Appendix 2: Market Commentary The average Brent crude price in the third quarter was $61.55 a barrelcompared with $41.55 a barrel in the same quarter last year. WTI pricesaveraged $63.20 a barrel compared with $43.90 a year earlier. Crude prices areexpected to remain robust for the balance of this year against ongoing supplyconcerns amid rising seasonal demand and limited OPEC capacities. Crude priceswill be influenced by the pace of crude production and refinery facilitiesrecovery in the Gulf of Mexico. In the third quarter of 2005, average cash market prices for natural gas atHenry Hub rose to $9.50 per million BTU, compared to $6.94 in the secondquarter and $5.47 in the third quarter of 2004. Over the past couple of monthswith rising prices and supply interruptions, bid week pricing levels have beensignificantly lower than daily spot averages. Other regions of North Americaalso experienced higher prices in the third quarter, but not to the same extentas Henry Hub, which is located adjacent to the affected Gulf of Mexico supplyregion. Regional differentials relative to Henry Hub generally widened in thethird quarter 2005. Rotterdam and Singapore complex margins benefited from product arbitrageopportunities to the US, but were mitigated by tanker freights. Singaporemargins were influenced by weak Chinese gasoil import requirement as regulateddomestic prices continued to lag behind international prices. Over the thirdquarter of 2005, industry refining margins averaged $18.00, $17.75, $6.05 and$3.00 per barrel in US Gulf Coast, US West Coast, Rotterdam, and Singapore,compared to $8.30, $10.85, $4.95, and $2.85 per barrel in the same period lastyear. Petrochemicals trading conditions in the third quarter were dominated bythe high feedstock prices along with limited chemicals products supply.Near-term shortages in the USA of petrochemicals products resulted in higherproduct prices more than offset by production cost increases. In Europe industry cracker margins were lower than a year ago and thesecond quarter 2005, as a result of lower petrochemicals product prices andhigh naphtha feedstock costs. In the USA, industry ethane cracker margins werehigher than a year ago but declined from the second quarter 2005.ENDROYAL DUTCH SHELL PLCRelated Shares:
RDSA.LRDSB.L