Royal Dutch Shell

Summary results

THIRD QUARTER

$ million

NINE MONTHS

2005

2004

%

2005

2004

%

9,032

5,371

+68

Income attributable to shareholders ^{1, 2}

20,943

13,969

+50

7,369

4,381

+68

CCS earnings ^{1, 2}

17,545

12,375

+42

1. including discontinued operations – see note 3

2. excluding minority income attributable to Royal Dutch shareholders of $46 million in the third quarter 2005 – see note 1

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 is paying off with good results. We continue to build our portfolio of integrated gas, unconventional resources and material oil projects and the focused exploration strategy is working. We are attracting the key people to execute our projects and have already recruited around 1,000 technical professionals so far this year. Project management, operations, customers and technology are central to our success and to meet the challenges. We are very grateful to our employees for their great efforts during and after the hurricanes in the USA. Despite the impact of the hurricanes, the production outlook for 2005 is around 3.5 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 €0.23 per A and B share for Royal Dutch Shell.

Segment earnings

THIRD QUARTER

$ million

NINE MONTHS

2005

2004

%

2005

2004

%

2,343

10,677

6,905

354

1,043

1,210

1,525

5,634

4,254

572

1,029

1,168

(1,162)

17,545

12,375

Earnings in the third quarter 2005 reflect the following items, which in aggregate were a net gain of $1,569 million (compared to a net charge of $28 million 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 €0.23 per share for Royal Dutch Shell.

• Third quarter 2005 reported income of $9,032 million was 68% higher than a year

• 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.

• 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.

• 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 quarte

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 developments

Upstream portfolio developments during the quarter:

Shell in Ireland acquired an exploration licence, located in deepwater of the Irish Rockall Trough, some 150 kilometres off the coast. In the 23rd offshore licensing round in the UK Continental Shelf, Shell was awarded a new exploration licence. In Alaska, Shell acquired 19 leases in the western Beaufort Sea adding to the Beaufort leases acquired earlier in Lease Sale 195.

In Malaysia, Shell logged a significant hydrocarbon column in high quality reservoir rock in the deepwater Ubah 2 big cat exploration prospect (Shell share 35%).

In the third quarter 2005, 15 successful exploration and exploratory appraisal 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 line with expectation. First production from Train 4 expected in the fourth quarter 2005 and construction of Train 5 is more than 90% complete. These two trains will bring Nigeria LNG’s overall production capacity to over 17 million tonnes per annum (mtpa) of LNG. Train 6 (4 mtpa) is on schedule for start up in late 2007.

In addition, the 3.7 mtpa Qalhat LNG project (Shell indirect share 11%) in Oman is on schedule. Commissioning is in progress with first production expected to commence around year-end 2005.

The divestment of the majority of the assets of the InterGen joint venture contributed proceeds exceeding $1 billion. The divestment of the two remaining InterGen 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 Republic of Ireland and Northern Ireland was announced. Completion of the sale is expected by the end of the year.

The divestment of Oil Products refining, marketing and distribution businesses in the French Antilles and French Guyana was announced. The sale is to take place by the end of 2005.

Shell and Turcas Petrol A.S. signed an agreement relating to a joint venture to combine their marketing and distribution activities in Turkey. Furthermore Koc and Shell participated in the privatization bid for 51% of Turkiye Petrol Rafinerileri A.S. (“Tupras”) a Turkish refining company; Shell will be a minority shareholder in Tupras. The purchase is subject to approval by the Turkish government.

An agreement was signed for the exchange of Shell’s 20% interest in its Rome refinery for Total’s 18% interest in the Reichstett refinery in France. The transaction is subject to regulatory approval and pre-emptive rights by existing partners. The exchange increases Shell’s ownership interest in the Reichstett refinery to 83%.

Shell and BASF completed the sale of their 50:50 polyolefins joint venture Basell, with net after debt proceeds to Shell of over $1 billion.

Earnings by industry segment

THIRD QUARTER

$ 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

6,551

7,706

-15

Natural gas production available for sale (million scf/d)

8,088

8,505

-5

Third quarter 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 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 these effects earnings increased by 27% compared to a year ago.

Segment unit earnings, calculated as segment earnings divided by production for the quarter are $16.87 per boe. Excluding the effects described above, unit earnings 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 in marker crudes Brent of 48% and WTI of 44%. Outside the USA, gas realisations increased by 37% and in the USA, gas realisations increased by 35%.

Hydrocarbon production in the third quarter 2005 was 3,207 thousand boe per day, reflecting the loss of production from hurricanes in the Gulf of Mexico. Excluding the hurricane loss of production of some 100 thousand boe per day higher than the same quarter last year, 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 than a year ago.

New field production, totalling some 90 thousand boe per day versus a year ago, benefited from Goldeneye (Shell share 49%) in the UK and Holstein (Shell share 50%) in the USA. Field declines were 179 thousand boe per day, mainly in the 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, the build up of new production and the development of future projects.

Capital investment in the third quarter of $2.5 billion, excluding the minority share of Sakhalin and including exploration expense of $0.2 billion, was 21% higher than in the corresponding period last year.

THIRD QUARTER

$ million

NINE MONTHS

2005

2004

%

2005

2004

%

556

354

+57

Segment earnings

1,043

1,210

-14

2.48

2.44

+2

Equity LNG sales volume (million tonnes)

7.84

7.39

+6

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 include 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 of 2.48 million tonnes were 2% higher due to sales increases in Malaysia, Oman and Australia partly offset by unscheduled operational downtime in Nigeria and Australia. Ongoing LNG project development progress is consistent with the expected 14% average annual capacity increase to 2009.

THIRD QUARTER

$ million

NINE MONTHS

2005

2004

%

2005

2004

%

3,439

2,557

+34

Segment earnings

9,154

5,924

+55

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 a year ago and in 2004 included a net gain of $52 million. Higher earnings due to strong refining margins and trading results were partially offset by lower retail marketing margins. Unit earnings were 15% higher than a year ago on a comparable volume definition.

In Manufacturing, Supply and Distribution, third quarter 2005 average industry refining margins increased in Europe and the USA. Refinery intake declined 7% mainly due to refinery divestments. Lost intake from the divested refineries amounted to about 5% of global intake in the third quarter 2004 whereas lower intake due to hurricanes in the Gulf of Mexico amounted to 1%. Refinery utilisation on an Equivalent Distillation Capacity (EDC) basis declined 5.3% to 77.8% mainly due to hurricane related downtime and the Pernis refinery unscheduled downtime in the Netherlands (Shell share 90%).

In Marketing, including Lubricants and B2B (business to business), earnings declined in the third quarter 2005 compared to the same period a year ago. In the USA, gross retail margins came under severe pressure due to higher crude feedstock costs. Retail margins in Asia Pacific and Europe were also down compared to the third quarter 2004. Higher wholesale fuels earnings in Europe partially offset the decline in retail. Marketing sales volumes declined 4% compared to volumes in the third quarter 2004 and increased about 1% relative to the second quarter 2005.

THIRD QUARTER

$ 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 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%.

Operating rates declined by 10 percentage points relative to a year ago and sales volumes were lower, reflecting primarily hurricane-related downtime, and supply constraints. Feedstock and energy costs increased significantly from last year impacting margins.

THIRD QUARTER

$ million

NINE MONTHS

2005

2004

2005

2004

(76)

(39)

Other Industry segment earnings

(92)

(63)

173

(167)

Corporate segment earnings

(154)

(629)

97

(206)

Other Industry and Corporate segments 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 gains from exchange rate movements and lower interest charges. The third quarter 2005 included impairment charges of $60 million in Other Industry Segments and costs related to the Unification of Royal Dutch and Shell Transport and Trading in Corporate.

Note

All amounts shown throughout this report are unaudited.

Fourth quarter results for 2005 are expected to be announced on 2 February 2006. First quarter results for 2006 are expected to be announced on 4 May 2006, second quarter results for 2006 are expected to be announced on 27 July 2006 and third quarter results for 2006 are expected to be announced on 26 October 2006.

This announcement contains forward-looking statements that are subject to risk factors associated with the oil, gas, power, chemicals and renewables businesses. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results, trends or reserves replacement to differ materially, including, but not limited to: price fluctuations in crude oil, natural gas and refined products, changes in demand for the Shell Group’s products, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, risks associated with the identification of suitable potential acquisition properties and targets and the successful negotiation and consummation of transactions, the risk of doing business in developing countries and countries subject to international sanctions, legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves, economic and financial market conditions in various 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 Form 20-F for the year ended 31 December 2004 (as amended) for a description of certain important factors, risks and uncertainties that may affect Royal Dutch Shell businesses. Royal Dutch Shell does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise.

27 October 2005