27th Jul 2006 07:00
Royal Dutch Shell - Second quarter 2006 unaudited resultsDelivery and growth - leveraging a strong portfolio * Royal Dutch Shell's second quarter 2006 CCS earnings were $6.3 billion, an increase of 36% versus a year ago and an increase of 42% on a basic CCS earnings per share basis versus a year ago. * Second quarter 2006 cashflow from operating activities was $7.8 billion compared to $6.3 billion a year ago. Excluding working capital movements and taxation effects, cashflow from operating activities was $11.9 billion compared to $8.7 billion a year ago. * Royal Dutch Shell's second quarter dividend has been announced at euro 0.25 per share, an increase of 9% from year-ago levels. * $2.5 billion, or 1.1% of Royal Dutch Shell shares were bought back for cancellation during the quarter.Chief Executive Jeroen van der Veer commented: "These results are underpinnedby overall good operational performance and not simply high energy prices"."We are delivering our strategy, with ambitious growth plans upstream, andselective investment downstream. We plan to open up some 20 billion barrels ofoil equivalent resources by the end of this decade. We are making steadyprogress on our projects, and building our portfolio for the future".Summary unaudited resultsSECONDQUARTER $ million SIXMONTHS 2006 2005 % 2006 2005 % 7,324 5,236 +40 Income attributable to shareholders 14,217 11,911 +19 Estimated current cost of supplies (CCS) adjustment for Oil Products and Chemicals 1,010 589 (see note 2) 1,815 1,809 6,314 4,647 +36 CCS earnings 12,402 10,102 +23 1.13 0.78 Basic earnings per share ($) 2.19 1.77 0.15 0.09 Estimated CCS adjustment per share ($) 0.28 0.26 0.98 0.69 Basic CCS earnings per share ($) 1.91 1.51 0.25 0.23 Dividend per ordinary share (Euro) 1 0.50 0.46 1. Q1 2005 based on dividend paid by Royal Dutch Petroleum Company, adjusted for the effects of the unification. Key features of the quarter * Exploration & Production segment earnings were 46% higher than a year ago, mainly reflecting strong oil and gas price realisations and income tax credits, partly offset by lower volumes and higher costs. Production for second quarter 2006 was 3,253 thousand barrels 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 prices, production was unchanged versus a year ago. * Gas & Power segment earnings increased substantially versus a year ago, driven by LNG prices and marketing and a 15% increase in LNG volumes from new train start-ups in Nigeria and Oman. Second quarter 2005 earnings included $226 million of charges mainly related to divestments. * In Oil Products, higher earnings, due to stronger refining margins and increased trading profits, were partially offset by the impact of reduced refinery utilisation mainly in Europe and lower retail marketing margins. In Chemicals, margin realisations were unchanged compared to a year ago despite rising feedstock costs. * Gearing (see note 6) was 13.6% versus, on a comparable Royal Dutch Shell basis, 13.0% at the end of the second quarter 2005. Total cash returned to shareholders in the quarter was $4.6 billion. * Capital investment for the second quarter 2006 was $6.7 billion, excluding the minority share of Sakhalin of $0.4 billion and including the $2.2 billion oil sands acquisition of BlackRock Ventures Inc. in Canada by Shell Canada. * The industry continues to face significant cost pressures. Capital spending plans for 2006 and 2007 are unchanged at respectively around $19 billion, and some $21 billion (excluding the minority share of Sakhalin). An additional $2.9 billion has been spent year to date on portfolio opportunities including the BlackRock Ventures Inc. acquisition. Some $0.7 billion of proceeds were realised from divestments, predominantly in Downstream.Van der Veer commented "We are making good progress on our projects inDownstream. We have taken the final investment decision on the expansion of ourpetrochemicals capacity at Bukom in Singapore, which is Shell's largestrefinery. The Motiva joint venture continues to study the opportunity to expandour refining capacity at Port Arthur, to create one of the largest refineriesin the United States"."In Upstream, we are making progress on two important unconventional projects.These will become major industrial complexes, in gas-to-liquids in Qatar and inCanada's oil sands.""We have taken the final investment decision on the Pearl GTL project whichwill produce 1.6 billion cubic feet of gas per day to deliver approximately 120thousand barrels of oil equivalent per day of condensate and generate 140thousand barrels per day of clean liquid hydrocarbon products. We continue tostudy the opportunity to expand the oil sands activities at the Athabasca OilSands Project and expect Shell Canada to make a decision shortly. With over 20years of production capacity, these are true long-life assets, which willunderpin the group for decades to come".Van der Veer concluded "We are making major investments, which are measured inthe tens of billions, to create new energy capacity for our customers, and tocreate long-term value for our shareholders."Summary segment earningsQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 % Segment earnings 3,999 3,743 2,745 Exploration & Production 7,742 5,700 516 765 11 Gas & Power 1,281 487 2,065 1,333 2,028 Oil Products (CCS basis) 3,398 3,908 348 139 280 Chemicals (CCS basis) 487 634 (451) 222 (218) Other Industry and Corporate (229) (343) (163) (114) (199) Minority interests (277) (284) ______ ______ ______ ______ ______ 6,314 6,088 4,647 +36 CCS segment earnings 12,402 10,102 +23 ______ ______ ______ ______ ______ Basic earnings per share (see notes 1 and 9)QUARTERS SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 1.13 1.06 0.78 Earnings per share ($) 2.19 1.77 0.98 0.94 0.69 CCS earnings per share ($) 1.91 1.51 Diluted earnings per share (see notes 1 and 9)QUARTERS SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 1.13 1.05 0.78 Earnings per share ($) 2.18 1.77 0.97 0.93 0.69 CCS earnings per share ($) 1.91 1.51 Summary segment earnings - continuedEarnings in the second quarter 2006 reflected the following items, which inaggregate were a net charge of $232 million (compared to net charges of $545million in the second quarter 2005).These included charges in Corporate and in other segments including minorityinterests, the effects of Canadian tax rate changes on deferred tax and therestructuring of employee retirement plans in France as detailed below and assummarised in the table: * Exploration & Production second quarter 2006 earnings included a combined net income of $304 million including Canadian tax revisions and income related to the mark-to-market valuation of certain UK gas contracts ($147 million). * Oil Products second quarter 2006 earnings included net charges of $65 million related to French employee retirement plans and the Canadian tax rate change. * Chemicals second quarter 2006 earnings included net charges of $30 million related to French employee retirement plans and the Canadian tax rate change. * In connection with the putative shareholder class actions filed in the United States District Court for the District of New Jersey relating to the 2004 recategorisation of certain hydrocarbon reserves, Shell has determined that it would be prepared to resolve that litigation for, among other terms, a payment by Shell of $500 million. Accordingly, management of the Shell Group has established a $500 million provision in respect of this litigation. No settlement has been reached in the matter (see note 10). The provision is included in the Corporate segment. * The Canadian tax revisions also resulted in an additional income attributable to Minority interests in the second quarter 2006 of $41 million.Summary tableQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 Segment earnings impact 304 113 (149) Exploration & Production 417 (190) - - (226) Gas & Power - (178) (65) - - Oil Products (CCS basis) (65) 427 (30) - (80) Chemicals (CCS basis) (30) (294) (400) - (90) Other Industry and Corporate (400) (90) (41) - - Minority interests (41) - ______ ______ ______ ______ ______ (232) 113 (545) CCS earnings impact (119) (325) ______ ______ ______ ______ ______ 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 SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 $/bbl Realised Oil Prices $/bbl 63.99 57.67 48.22 WOUSA 60.75 46.11 63.63 55.16 47.08 USA 59.56 45.44 63.95 57.39 48.05 Global 60.61 46.01 $/thousand scf Realised Gas Prices $/thousand scf 6.54 7.08 4.61 Europe 6.83 4.89 4.18 4.76 3.48 WOUSA (including Europe) 4.48 3.57 7.36 9.56 7.31 USA 8.43 7.07 4.82 5.64 4.39 Global 5.24 4.36 Oil and gas marker industry prices (period average) 69.51 61.80 51.65 Brent $/bbl 65.65 49.70 70.45 63.30 53.10 WTI $/bbl 66.88 51.50 6.59 7.75 6.94 Henry Hub $/thousand scf 7.17 6.68 UK National Balancing Point 34.60 69.42 30.25 pence/therm 52.42 33.92 Exploration & ProductionQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % 3,999 3,743 2,745 +46 Segment earnings 7,742 5,700 +36 Crude oil production (thousand 1,897 1,966 2,168 -13 b/d) 1,931 2,156 -10 Natural gas production available for sale (million scf 7,865 10,324 7,875 /d) 9,088 8,869 +2 Barrels of oil equivalent 3,253 3,746 3,526 -8 (thousand boe/d) 3,498 3,684 -5 Exploration & Production segment earnings of $3,999 million were 46% higherthan a year ago ($2,745 million), mainly reflecting strong oil and gas pricerealisations and income tax credits, partly offset by lower volumes and highercosts.Second quarter 2006 earnings included a combined net income of $304 millionincluding Canadian tax revisions and income related to the mark-to-marketvaluation of certain UK gas contracts ($147 million). The second quarter 2005included net charges of $149 million.Liquids realisations were 33% higher than a year ago, in line with increases inmarker crudes Brent of 35% and WTI of 33%. Outside the USA gas realisationsincreased by 20% and in the USA gas realisations increased by 1%.Second quarter 2006 production was 3,253 thousand barrels of oil equivalent(boe) per day.Production included new volumes of 190 thousand boe per day mainly from Bonga(Shell share 55%) and Erha (Shell share 44%) in Nigeria, West Salym (Shellshare 50%) in Russia, Champion West Phase III (Shell share 50%) in Brunei andacquired production onshore Texas (Shell share 100%) compared to last year. Inthe USA production restarted from the Mars platform (Shell share 72%).Production was impacted by the continued partial shut-in of production inNigeria, mainly in the Western Niger Delta due to the security situation, andproduction deferred in the Gulf of Mexico as a result of the 2005 hurricanes.Excluding the impact of security concerns in Nigeria, hurricane damage in theGulf of Mexico, and PSC impacts from increased oil prices, production wasunchanged versus a year ago.Production from Shell Petroleum Development Company's Nigerian operations was177 thousand boe per day (Shell share) lower than a year ago due to shut-inproduction resulting from security concerns. A similar volume remains shut-in.Also in Nigeria, deepwater production from the two new offshore FloatingProduction Storage and Offloading (FPSO) vessels Bonga and Erha has beenramping up and by the end of the second quarter 2006 had reached over 150thousand boe per day (Shell share).Following the continued security-related deferral of production in Nigeria theproduction outlook for the year would be around 3.4 million boe per day basedon $50 per barrel oil prices and in the possible event that Nigerian volumeswere deferred for the rest of 2006. At present Shell is in the early stages ofthe return to operations process. No firm date can be given for re-start ofproduction nor is it possible to predict the rate of ramp up to fullproduction.In the UK, enactment of the announced UK tax increases that take effect fromJanuary 1, 2006, has been delayed to the third quarter 2006. The change willresult in an expected one-time charge of some $300 million (including deferredtax revaluations) in the third quarter 2006. Additionally some $100 million to$150 million earnings impact (subject to oil price and operations) is expectedfor the third quarter 2006 and on an ongoing basis.Portfolio developments:In the Gulf of Mexico, the Mars platform resumed production during the quarterahead of schedule and was almost 10% ahead of prior production rates by the endof the quarter at 145 thousand bbl of oil per day and 155 million cubic feet ofgas per day (Shell share 82 thousand bbl of oil per day and 88 million cubicfeet of gas per day). During the Mars recovery operation topside modificationswere made to accommodate future wells and to minimise future planned shut-ins.In Canada, Shell Canada acquired control of BlackRock Ventures Inc. (BlackRock)on June 21, 2006 and as at July 11, 2006 holds 100% of the BlackRock shares.This had no material impact on second quarter 2006 earnings. BlackRock has insitu and conventional oil activities in the Peace River, Cold Lake andLloydminster areas of Athabasca, with oil in place estimated to be at least 18billion barrels. In the first quarter of 2006, Royal Dutch Shell purchased insitu leases in Northern Alberta, in SURE Northern Energy. These twoacquisitions together have added in excess of 48 billion barrels of oil inplace, at a combined cost of some $2.6 billion. Our total oil in place in thesein situ plays is now estimated to be at least 55 billion barrels. A variety ofexisting recovery techniques and new technologies will be assessed to maximiserecovery from this in situ portfolio, as well as potential investments indedicated upgrading capacity. In addition, we continue to study the opportunityto expand the production capacity at the Athabasca Oil Sands Project's miningfacilities, and expect the operator, Shell Canada, to make their investmentdecision shortly.In Russia, the installation of the Lunskoye-A gas production platform topsidewas completed offshore Sakhalin. The Sakhalin 2 project is progressing in linewith the 2005 schedule and budget.In Ukraine, a Joint Activity Agreement was signed with Ukrgazvydobuvannya, asubsidiary of Naftogaz Ukrainy. Shell has farmed into eight licences in theDniepr Donets Basin and exploration work is planned to commence this year. Gas & PowerQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % 516 765 11 Segment earnings 1,281 487 +163 Equity LNG sales volume 2.84 3.00 2.48 +15 (million tonnes) 5.84 5.36 +9 Gas and Power segment earnings were $516 million compared with $11 million ayear ago. Second quarter 2005 earnings included $226 million of charges mainlyrelated to divestments. Excluding these charges, second quarter 2006 earningswere 118% higher than second quarter 2005, reflecting strong LNG results andmarketing and trading earnings.LNG results benefited from strong prices and continued volume growth. LNG salesvolume was up 15% from a year ago, reflecting additional LNG capacity throughTrains 4 and 5 in Nigeria LNG (Shell share 26%) and Qalhat LNG in Oman (Shellindirect share 11%). Marketing and trading earnings continue to be driven bygood performance and favourable conditions in European and North Americanmarkets.Portfolio developments:Shell and Qatar Petroleum launched the integrated Pearl Gas to Liquids (GTL)project in Qatar. The Pearl GTL project includes the development of offshorenatural gas resources, transporting and processing the gas onshore to extractliquids, and the conversion of gas into clean liquid hydrocarbon products forexport. The integrated project cost is expected to be around $4 to $6 perbarrel of oil equivalent of resources.The North West Shelf Venture in Australia (Shell share, direct and indirect,22%) delivered the first LNG cargo to China at the Guangdong LNG importterminal under a 25 year, 3.3 million tonnes per annum sales and purchaseagreement.Hubei Shuanghuan Ltd started production of synthesis gas from the first plantin China to use Shell's coal gasification technology. Also in China, in JulyShell and Shenhua Ningxia Coal Industry Ltd announced an agreement for amulti-year study on the feasibility of developing a plant to convert coal intoliquids using Shell technology.DownstreamQUARTERS SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 Refining marker industry gross $/bbl margins(period average) $/bbl 22.20 13.00 15.35 ANS US West Coast coking margin 17.60 14.80 20.85 12.50 10.30 WTS US Gulf Coast coking margin 16.65 9.20 4.75 2.35 5.00 Rotterdam Brent complex 3.55 3.75 Singapore 80/20 Arab light/ 4.05 1.20 3.70 Tapis complex 2.60 3.10 Oil ProductsQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % 3,017 2,103 2,664 +13 Segment earnings 5,120 5,715 -10 (952) (770) (636) CCS adjustment - see note 2 (1,722) (1,807) ______ ______ ______ ______ ______ 2,065 1,333 2,028 +2 Segment CCS earnings 3,398 3,908 -13 3,789 3,862 3,981 -5 Refinery intake (thousand b/d) 3,825 4,019 -5 Total Oil products sales 6,426 6,525 7,458 See 1 (thousand b/d) 6,475 7,461 See 1 1. Certain contracts are classified as held for trading purposes and reported net rather than gross with effect from Q3 2005. The effect in Q1 2006 and Q2 2006 is a reduction in Total Oil products sales of approximately 890 thousand b /d and 840 thousand b/d respectively. Second quarter 2006 segment earnings were $3,017 million compared to $2,664million for the same period last year.Second quarter 2006 CCS earnings were $2,065 million including net charges of$65 million related to restructuring of employee retirement plans in France,partially offset by the impact of a reduction in deferred taxes in Canadaarising from reduced tax rates. Earnings in the second quarter of 2005 were$2,028 million. Higher earnings due to stronger refining margins particularlyin the United States, and increased trading profits from a positive tradingenvironment were partially offset by the impact of lower retail marketingmargins and reduced refinery utilisation mainly in Europe.Compared to the second quarter 2005, Manufacturing, Supply and Distribution,industry refining margins were significantly higher on the US Gulf coast andthe US West coast. Margins were also higher in Asia Pacific while in Europemargins declined. Refinery utilisation on an Equivalent Distillation Capacity(EDC) basis was 77.3% compared to 80.4% in the second quarter of 2005, mainlydue to higher levels of downtime in Europe in the second quarter of 2006.Refinery intake declined 4.8% compared to the second quarter of 2005.In Marketing, earnings declined compared to the same period a year ago. Retailearnings declined due to margin compression as a result of higher product cost.B2B earnings increased mainly due to increased margins for marine, aviationfuels and bitumen. Lubricants earnings improved due to higher base oil margins.Marketing sales volumes declined 3.6% compared to volumes in the second quarterof 2005, reflecting supply constraints and including the impact of divestments(1.3%) and rationalised B2B volumes (0.5%).Portfolio developments:Motiva Enterprises (Shell share 50%) continued progress towards a considerationto expand the Port Arthur Refinery in the USA which would add up to 325thousand barrels per day crude throughput bringing total throughput to up toapproximately 600 thousand barrels per day. Subject to commercial conditionsfor an investment decision and regulatory approvals, Motiva expects to beginconstruction in 2007 with the brownfield expansion to come on line post 2009.In Turkey the joint venture between Shell and Turcas Petrol A.S. comprisingover 1,200 retail stations (Shell share 70%) commenced operations on July 1,2006. The divestments of marketing and distribution assets in Colombia, Uruguayand Cameroon were completed in the second quarter 2006. In July 2006, thedivestments of marketing and distribution business in Puerto Rico, Bermuda andvarious Pacific Islands were announced with an expected completion later thisyear.ChemicalsQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % 446 183 259 Segment earnings 629 708 (98) (44) 21 CCS adjustment - see note 2 (142) (74) ______ ______ ______ ______ ______ 348 139 280 +24 Segment CCS earnings 487 634 -23 5,870 5,941 5,647 +4 Sales volumes (thousand tonnes) 11,811 11,508 +3 Second quarter 2006 segment earnings were $446 million compared to $259 millionfor the same period last year.Second quarter CCS earnings were $348 million including net charges of $30million mainly related to restructuring of employee retirement plans in Francepartially offset by the impact of a reduction in deferred taxes in Canadaarising from reduced tax rates. This compares to $280 million for the secondquarter of 2005, which included some $80 million charges related to divestedassets.Sales volumes were 4% higher reflecting trading volume increases as well ashigher sales of first line derivatives, mainly in Asia Pacific. Operating rateswere 2 percentage points above those a year ago reflecting lower planneddowntime as well as inventory building in preparation for a heavy plannedmaintenance programme in the third quarter 2006 in Europe and the USA. Earningsincluded a positive contribution from the Nanhai joint venture (Shell share50%) in China reflecting the ramping up of operating rates to 90% at the end ofthe second quarter 2006.Margin realisations were similar to a year ago despite rising feedstock costsfor all regions.Portfolio developments:Shell has taken a final investment decision for the construction of aworld-scale ethylene cracker and Mono-Ethylene Glycol (MEG) plant in Singapore.Construction of the 800 thousand tonnes per annum (tpa) ethylene cracker is dueto begin later this year with start-up anticipated towards 2009/2010. Thecracker and the new MEG plant will create an advantaged site through fullintegration with the 464 thousand barrels per day Bukom refinery (Shell share100%) enabling feedstock and operating benefits. Currently Shell has more than1 million tonnes per annum ethylene cracking capacity (Shell share 50%) inSingapore equal to some 10% of Shell's global ethylene cracking capacity. Other Industry and Corporate segmentsQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % (7) (8) (8) Other Industry segment earnings (15) (16) (444) 230 (210) Corporate segment earnings (214) (327) ______ ______ ______ ______ ______ Other Industry and Corporate (451) 222 (218) segments results (229) (343) Second quarter Other Industry and Corporate segment results were a loss of $451million compared to a loss of $218 million a year ago.In Corporate a provision in respect of litigation was taken of $500 million(see note 10).Improved net interest resulted from higher average cash levels and capitalisedinterest, partly offset by negative results from currency movements. NoteAll amounts shown throughout this report are unaudited.Third quarter results for 2006 are expected to be announced on October 26,2006.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 on 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. July 27, 2006Appendix 1: Royal Dutch Shell financial report and tablesStatement of income (see note 1)QUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % 83,127 75,964 82,644 +1 Revenue 1 159,091 154,800 +3 67,838 61,922 69,464 Cost of sales 129,760 128,029 ______ ______ ______ ______ ______ 15,289 14,042 13,180 +16 Gross profit 29,331 26,771 +10 Selling, distribution and 4,429 3,413 3,917 administrative expenses 7,842 7,456 250 281 248 Exploration 531 509 Share of profit of equity 1,829 1,823 1,080 accounted investments 3,652 2,653 Net finance costs and other 47 (155) 39 (income)/expense (108) 109 ______ ______ ______ ______ ______ 12,392 12,326 10,056 +23 Income before taxation 24,718 21,350 +16 4,865 5,310 4,595 Taxation 10,175 8,869 ______ ______ ______ ______ ______ 7,527 7,016 5,461 Income from continuing operations 14,543 12,481 Income/(loss) from discontinued - - - operations - (214) ______ ______ ______ ______ ______ 7,527 7,016 5,461 +38 Income for the period 14,543 12,267 +19 ====== ====== ====== ======= ======= ==== ==== ==== === === Income attributable to minority 203 123 225 interests 326 356 ______ ______ ______ ______ ______ Income attributable to 7,324 6,893 5,236 +40 shareholders 14,217 11,911 +19 ______ ______ ______ ______ ______ 1. Revenue is stated after deducting sales taxes, excise duties and similar levies of $17,984 million in Q2 2006, $16,709 million in Q1 2006, $18,739 million in Q2 2005 and $17,912 million in Q1 2005. Earnings by industry segment (see notes 2 and 5)QUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % Exploration & Production: 3,014 2,795 1,644 +83 World outside USA 5,809 3,654 +59 985 948 1,101 -11 USA 1,933 2,046 -6 ______ ______ ______ ______ ______ 3,999 3,743 2,745 +46 7,742 5,700 +36 ______ ______ ______ ______ ______ Gas & Power: 468 723 74 +532 World outside USA 1,191 592 +101 48 42 (63) USA 90 (105) ______ ______ ______ ______ ______ 516 765 11 1,281 487 +163 ______ ______ ______ ______ ______ Oil Products (CCS basis): 1,332 1,071 1,500 -11 World outside USA 2,403 2,975 -19 733 262 528 +39 USA 995 933 +7 ______ ______ ______ ______ ______ 2,065 1,333 2,028 +2 3,398 3,908 -13 ______ ______ ______ ______ ______ Chemicals (CCS basis): 309 173 237 +30 World outside USA 482 486 -1 39 (34) 43 -9 USA 5 148 -97 ______ ______ ______ ______ ______ 348 139 280 +24 487 634 -23 ______ ______ ______ ______ ______ (7) (8) (8) Other industry segments (15) (16) ______ ______ ______ ______ ______ 6,921 5,972 5,056 +37 TOTAL OPERATING SEGMENTS 12,893 10,713 +20 ______ ______ ______ ______ ______ Corporate: 39 - (74) Interest income/(expense) 39 (144) Currency exchange gains/ (73) 112 (6) (losses) 39 (46) (410) 118 (130) Other - including taxation (292) (137) ______ ______ ______ ______ ______ (444) 230 (210) (214) (327) ______ ______ ______ ______ ______ (163) (114) (199) Minority interests (277) (284) ______ ______ ______ ______ ______ 6,314 6,088 4,647 +36 CCS EARNINGS 12,402 10,102 +23 ______ ______ ______ ______ ______ CCS adjustment for Oil Products 1,010 805 589 and Chemicals 1,815 1,809 ______ ______ ______ ______ ______ Income attributable to shareholders of Royal Dutch 7,324 6,893 5,236 +40 Shell plc 14,217 11,911 +19 ______ ______ ______ ______ ______ Summarised balance sheet (see notes 1 and 7) $ million Jun 30 Mar 31 Jun 30 ASSETS 2006 2006 2005 Non-current assets: Intangible assets 4,721 4,444 4,403 Property, plant and equipment 94,102 88,537 84,816 Investments: equity accounted investments 19,083 18,153 18,679 financial assets 3,912 3,929 3,401 Deferred tax 2,259 2,393 2,961 Prepaid pension costs 3,143 2,742 2,320 Other 4,569 4,667 4,411 ______ ______ ______ 131,789 124,865 120,991 ______ ______ ______ Current assets: Inventories 24,660 21,600 18,566 Accounts receivable 62,327 60,801 51,420 Cash and cash equivalents 11,774 12,767 11,520 ______ ______ ______ 98,761 95,168 81,506 ______ ______ ______ ______ ______ ______ TOTAL ASSETS 230,550 220,033 202,497 ______ ______ ______ LIABILITIES Non-current liabilities: Debt 8,472 7,347 7,905 Deferred tax 12,007 11,061 12,807 Retirement benefit obligations 6,271 5,926 6,239 Other provisions 8,682 7,708 6,781 Other 4,650 4,550 4,020 ______ ______ ______ 40,082 36,592 37,752 ______ ______ ______ Current liabilities: Debt 6,112 5,185 5,479 Accounts payable and accrued liabilities 63,701 62,350 52,678 Taxes payable 10,525 11,047 10,789 Retirement benefit obligations 285 289 300 Other provisions 1,612 1,599 1,430 ______ ______ ______ 82,235 80,470 70,676 ______ ______ ______ ______ ______ ______ TOTAL LIABILITIES 122,317 117,062 108,428 ______ ______ ______ Equity attributable to shareholders of Royal Dutch Shell plc 100,213 95,501 87,829 Minority interests 8,020 7,470 6,240 ______ ______ ______ TOTAL EQUITY 108,233 102,971 94,069 ______ ______ ______ TOTAL LIABILITIES AND EQUITY 230,550 220,033 202,497 ______ ______ ______ Summarised statement of cash flows (see notes 1 and 8)QUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 CASH FLOW FROM OPERATING ACTIVITIES: 7,527 7,016 5,461 Income for the period 14,543 12,267 Adjustment for: 4,763 5,015 5,086 Current taxation 9,778 9,397 121 232 204 Interest (income)/expense 353 364 Depreciation, depletion and 3,132 2,812 3,136 amortisation 5,944 6,291 (8) (185) (193) (Profit)/loss on sale of assets (193) (751) Decrease/(increase) in net working (3,276) (1,979) (1,918) capital (5,255) (3,469) Share of profit of equity accounted (1,829) (1,823) (1,080) investments (3,652) (2,439) Dividends received from equity 1,556 1,060 1,515 accounted investments 2,616 2,507 Deferred taxation and other 903 578 (142) provisions 1,481 (534) 489 (507) (246) Other (18) 57 ______ ______ ______ ______ ______ Cash flow from operating activities 13,378 12,219 11,823 (pre-tax) 25,597 23,690 ______ ______ ______ ______ ______ (5,544) (4,395) (5,501) Taxation paid (9,939) (8,688) ______ ______ ______ ______ ______ 7,834 7,824 6,322 Cash flow from operating activities 15,658 15,002 ______ ______ ______ ______ ______ CASH FLOW FROM INVESTING ACTIVITIES: (6,630) (3,819) (3,736) Capital expenditure (10,449) (6,670) Investments in equity accounted (177) (231) (243) investments (408) (431) 211 506 490 Proceeds from sale of assets 717 1,498 Proceeds from sale of equity 36 8 182 accounted investments 44 232 Proceeds from sale of / additions to 29 (40) 274 financial assets (11) 250 240 234 177 Interest received 474 367 ______ ______ ______ ______ ______ (6,291) (3,342) (2,856) Cash flow from investing activities (9,633) (4,754) ______ ______ ______ ______ ______ CASH FLOW FROM FINANCING ACTIVITIES: 1,852 (345) (71) Net increase/(decrease) in debt 1,507 (796) (261) (361) (275) Interest paid (622) (529) 423 360 452 Change in minority interests 783 803 (2,512) (1,344) - Net issue/(repurchase) of shares (3,856) (500) Dividends paid to: Shareholders of Royal Dutch Shell (2,091) (1,838) (2,009) plc (3,929) (6,785) (161) (44) (58) Minority interest (205) (105) Treasury shares: Net sales/(purchases) and dividends 135 91 103 received 226 246 ______ ______ ______ ______ ______ (2,615) (3,481) (1,858) Cash flow from financing activities (6,096) (7,666) ______ ______ ______ ______ ______ Currency translation differences relating to cash and cash 79 36 (170) equivalents 115 (263) ______ ______ ______ ______ ______ INCREASE/(DECREASE) IN CASH AND CASH (993) 1,037 1,438 EQUIVALENTS 44 2,319 ______ ______ ______ ______ ______ Cash and cash equivalents at 12,767 11,730 10,082 beginning of period 11,730 9,201 Cash and cash equivalents at end of 11,774 12,767 11,520 period 11,774 11,520 Operational data - UpstreamQUARTERS SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % thousand b/d CRUDE OIL PRODUCTION thousand b/d 488 531 566 Europe 509 569 321 336 375 Africa 329 375 232 232 233 Asia Pacific 232 233 439 408 413 Middle East, Russia, CIS 424 403 295 291 403 USA 293 402 76 91 80 Other Western Hemisphere 83 86 ______ ______ ______ ______ ______ Total crude oil production 1,851 1,889 2,070 excluding oil sands 1,870 2,068 46 77 98 Oil sands 61 88 ______ ______ ______ ______ ______ Total crude oil production 1,897 1,966 2,168 -13 including oil sands 1,931 2,156 -10 ______ ______ ______ ______ ______ million scf/d 1 NATURAL GAS PRODUCTION million scf/d 1 AVAILABLE FOR SALE 3,027 5,447 3,175 Europe 4,230 4,058 481 444 383 Africa 463 385 2,381 2,488 2,225 Asia Pacific 2,434 2,297 304 320 256 Middle East, Russia, CIS 312 264 1,175 1,117 1,357 USA 1,146 1,371 497 508 479 Other Western Hemisphere 503 494 ______ ______ ______ ______ ______ 7,865 10,324 7,875 9,088 8,869 +2 ______ ______ ______ ______ ______ thousand boe/d 2 BARRELS OF OIL EQUIVALENT thousand boe/d 2 1,010 1,470 1,113 Europe 1,238 1,269 404 413 441 Africa 409 441 642 660 617 Asia Pacific 651 629 491 463 457 Middle East, Russia, CIS 478 448 498 484 637 USA 491 638 162 179 163 Other Western Hemisphere 170 171 ______ ______ ______ ______ ______ Total production excluding oil 3,207 3,669 3,428 sands 3,437 3,596 46 77 98 Oil sands 61 88 ______ ______ ______ ______ ______ Total production including oil 3,253 3,746 3,526 -8 sands 3,498 3,684 -5 ______ ______ ______ ______ ______ 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 SIX MONTHS Q2 Q1 Q2 2006 2006 2005 % 2006 2005 % thousand b/d thousand b/d REFINERY PROCESSING INTAKE 1,627 1,742 1,775 Europe 1,684 1,790 832 813 829 Other Eastern Hemisphere 823 848 978 948 988 USA 963 994 352 359 389 Other Western Hemisphere 355 387 ______ ______ ______ ______ ______ 3,789 3,862 3,981 -5 3,825 4,019 -5 ______ ______ ______ ______ ______ OIL SALES 2,186 2,148 2,587 Gasolines 2,167 2,560 780 732 844 Kerosines 756 843 2,071 2,196 2,449 Gas/Diesel oils 2,133 2,446 735 808 875 Fuel oil 771 890 654 641 703 Other products 648 722 ______ ______ ______ ______ ______ 6,426 6,525 7,458 See 1 Total oil products 1 * 6,475 7,461 See 1 2,513 2,493 5,116 Crude oil 1 2,503 4,773 ______ ______ ______ ______ ______ 8,939 9,018 12,574 See 1 Total oil sales 1 8,978 12,234 See 1 ______ ______ ______ ______ ______ *comprising 1,948 2,021 2,037 Europe 1,984 2,082 1,229 1,216 1,243 Other Eastern Hemisphere 1,222 1,236 1,502 1,477 2,540 USA 1,490 2,478 652 666 697 Other Western Hemisphere 659 697 1,095 1,145 941 Export sales 1,120 968 CHEMICAL SALES VOLUMES BY MAIN thousand tonnes PRODUCT CATEGORY 2 ** thousand tonnes 3,504 3,714 3,418 Base chemicals 7,218 6,931 2,361 2,215 2,192 First line derivatives 4,576 4,499 5 12 37 Other 17 78 ______ ______ ______ ______ ______ 5,870 5,941 5,647 +4 11,811 11,508 +3 ______ ______ ______ ______ ______ **comprising 2,433 2,463 2,440 Europe 4,896 5,017 1,370 1,444 1,264 Other Eastern Hemisphere 2,814 2,585 1,908 1,880 1,784 USA 3,788 3,570 159 154 159 Other Western Hemisphere 313 336 1. Certain contracts are classified as held for trading purposes and reported net rather than gross with effect from Q3 2005. The effect in Q1 2006 is a reduction in Total Oil products sales of approximately 890 thousand b/d and a reduction in crude oil sales of approximately 1,720 thousand b/d and in Q2 2006840 thousand b/d and 1,940 thousand b/d respectively. 2. Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products. Capital investmentQUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 Capital expenditure: Exploration & Production: 5,095 2,500 2,204 World outside USA 7,595 4,086 481 312 227 USA 793 457 ______ ______ ______ ______ ______ 5,576 2,812 2,431 8,388 4,543 ______ ______ ______ ______ ______ Gas & Power: 252 392 460 World outside USA 644 790 1 1 1 USA 2 2 ______ ______ ______ ______ ______ 253 393 461 646 792 ______ ______ ______ ______ ______ Oil Products: Refining: 373 242 310 World outside USA 615 458 57 61 55 USA 118 97 ______ ______ ______ ______ ______ 430 303 365 733 555 ______ ______ ______ ______ ______ Marketing: 314 189 250 World outside USA 503 383 26 18 34 USA 44 66 ______ ______ ______ ______ ______ 340 207 284 547 449 ______ ______ ______ ______ ______ Chemicals: 63 36 47 World outside USA 99 70 47 50 70 USA 97 127 ______ ______ ______ ______ ______ 110 86 117 196 197 ______ ______ ______ ______ ______ 6 21 78 Other segments 27 134 ______ ______ ______ ______ ______ 6,715 3,822 3,736 TOTAL CAPITAL EXPENDITURE 10,537 6,670 ______ ______ ______ ______ ______ Exploration expense: 139 114 121 World outside USA 253 213 64 63 35 USA 127 61 ______ ______ ______ ______ ______ 203 177 156 380 274 ______ ______ ______ ______ ______ New equity in equity accounted investments 135 64 135 World outside USA 199 193 4 5 2 USA 9 3 ______ ______ ______ ______ ______ 139 69 137 208 196 ______ ______ ______ ______ ______ New loans to equity accounted 38 162 106 investments 200 235 ______ ______ ______ ______ ______ 7,095 4,230 4,135 TOTAL CAPITAL INVESTMENT* 11,325 7,375 ______ ______ ______ ______ ______ *comprising 5,823 3,167 2,708 Exploration & Production 8,990 5,063 332 396 467 Gas & Power 728 803 799 518 656 Oil Products 1,317 1,010 118 128 191 Chemicals 246 329 23 21 113 Other segments 44 170 ______ ______ ______ ______ ______ 7,095 4,230 4,135 11,325 7,375 ______ ______ ______ ______ ______ 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 itacquired 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.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.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 12, are as follows:QUARTERS $ million SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 - - - Chemicals segment earnings - (214) - Income/(loss) from discontinued - - - operations - (214) Basic earnings per share for the second quarter 2006 for discontinuedoperations were nil.NOTE 4. Return on average capital employed (ROACE)ROACE on an income basis is the sum of the current and previous 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): Q2 2006 Q2 2005 Income attributable to shareholders (four quarters) 27,617 21,853 Royal Dutch Shell share of interest expense after tax 581 735 ROACE numerator 28,198 22,588 Royal Dutch Shell share of capital employed - opening 100,326 91,370 Royal Dutch Shell share of capital employed - closing 113,717 100,326 Royal Dutch Shell share of capital employed - average 107,022 95,848 ROACE 26.3% 23.6% 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 Jun 30 Jun 2006 2005 Non current debt 8,472 7,905 Current debt 6,112 5,479 ______ ______ Total Debt 14,584 13,384 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 9,874 9,620 ______ ______ Adjusted Debt 17,071 14,092 ______ ______ Total Equity 108,233 94,069 ______ ______ Total Capital 125,304 108,161 ______ ______ Gearing ratio (adjusted debt as a percentage of total capital) 13.6% 13.0% 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 14,217 14,217 326 14,543 Income/(expense) recognised directly in equity 2,438 2,438 76 2,514 Capital contributions from minority shareholders 823 823 Dividends paid (3,929) (3,929) (205) (4,134) Treasury shares: net sales/(purchases) and dividends received 226 226 226 Effect of Unification 154 154 154 Shares repurchased for cancellation (15) 15 (4,010) (4,010) (4,010) Share-based compensation 193 193 193 At June 30, 2006 556 (3,583) 6,384 96,856 100,213 8,020 108,233 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 11,911 11,911 356 12,267 Income/(expense) recognised directly in equity (4,000) (4,000) 38 (3,962) Capital contributions from minority shareholders - 638 638 Dividends paid (6,785) (6,785) (105) (6,890) Treasury shares: net sales/ (purchases) and dividends received 246 246 246 Shares repurchased for cancellation (1) (500) (501) (501) Share-based compensation 92 92 92 At June 30, 2005 583 (3,941) 5,780 85,407 87,829 6,240 94,069 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 SIX MONTHS Q2 Q1 Q2 2006 2006 2005 2006 2005 7,834 7,824 6,322 Cash flow from operating activities 15,658 15,002 4,763 5,015 5,086 Taxation 9,778 9,397 Decrease/(increase) in net working (3,276) (1,979) (1,918) capital (5,255) (3,469) (5,544) (4,395) (5,501) Taxation paid (9,939) (8,688) ______ ______ ______ ______ ______ 11,891 9,183 8,655 21,074 17,762 ______ ______ ______ ______ ______ NOTE 9. Earnings per Royal Dutch Shell shareThe total number of Royal Dutch Shell shares in issue at the end of the periodwas 6,581.0 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): Six Six Q2 Q1 Q2 Months Months 2006 2006 2005 2006 2005 Royal Dutch Shell shares of euro 0.07 6,457.6 6,509.8 6,724.5 6,483.5 6,729.2 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. Six Six Q2 Q1 Q2 Months Months 2006 2006 2005 2006 2005 Royal Dutch Shell shares of euro 0.07 6,483.1 6,535.3 6,744.1 6,508.6 6,747.7 Basic shares at the end of the following periods are (millions): Q2 Q1 Q2 2006 2006 2005 Royal Dutch Shell shares of euro 0.07 6,414.0 6,485.4 6,726.7 One (1) American Depository Receipt (ADR) is equal to two (2) Royal Dutch Shellshares.NOTE 10. Contingencies and litigationThe class actions and individual cases are at an early stage and subject tosubstantial uncertainties concerning the outcome of material factual and legalissues relating to the litigation. In addition, potential damages, if any, in afully litigated securities class action would depend on the losses caused bythe alleged wrongful conduct that would be demonstrated by individual classmembers in their purchases and sales of Royal Dutch and Shell Transport sharesduring the relevant class period. Based on the current status of thelitigation, however, management of the Shell Group has established a $500million provision in respect of this litigation. This amount reflects whatShell is prepared to pay to the plaintiffs to resolve this litigation. Nosettlement has been reached in the matter. Management of the Shell Group willreview this determination 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:
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