UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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Royal Dutch Shell plc ——————————————————————————————————— |
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| (Translation of registrant’s name into English) | ||||
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30, Carel van Bylandtlaan, 2596 HR The Hague The Netherlands |
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——————————————————————————————————— (Address of principal executive office) |
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| Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: [x] Form 20-F [ ] Form 40-F | ||||
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Royal Dutch Shell plc: Fourth Quarter and Full Year 2006 Unaudited Results
Delivery and growth - leveraging a strong portfolio
- Royal Dutch Shell's fourth quarter 2006 CCS earnings were $6.0 billion,
compared to $5.4 billion a year ago. CCS earnings per share increased by 14%
versus the same quarter a year ago.
- Full year 2006 CCS earnings were $25.4 billion. Excluding
the 2005 gain of $1.7 billion related to the divestment of pipeline assets
held through Gasunie NV in the Netherlands, full year 2006 CCS earnings per
share increased by 25% versus a year ago.
- Fourth quarter 2006 dividend has been announced of EUR0.25
per share, an increase of 9% from year-ago levels.
- From 2007 onwards the Group will declare its dividends in US
dollars rather than in euros. The first quarter 2007 dividend is expected to
be declared at $0.36 per share, an increase of 14% compared to the first
quarter dividend of 2006.
- $1.4 billion or 0.6% of Royal Dutch Shell shares were bought
back for cancellation during the quarter bringing the total for 2006 to $8.2
billion or 3.7% of the shares.
Chief Executive Jeroen van der Veer commented "In 2006, we saw
good operational and financial performance in Shell. Our exploration strategy
is paying off. Hydrocarbon production was underpinned by the production
re-start from the Mars platform in the USA, growth in LNG and deep water
Nigeria. However onshore Nigeria we continue to have major security related
concerns. Downstream continued to deliver very competitive results. We
increased our reserves, and took important investment decisions on projects
in gas to liquids, deep water, unconventional oil and downstream. We have
agreed to partner with Gazprom in Sakhalin II, and are progressing with the
proposal to acquire the minority shareholding in Shell Canada".
Summary unaudited results
FOURTH $ million FULL YEAR
QUARTER
2006 2005 % 2006 2005 %
5,283 4,368 +21 Income attributable to shareholders 25,442 25,311 +1
Estimated current cost of supplies
(CCS) adjustment for Oil Products
and Chemicals
732 1,073 (see note 2) (77) (2,580)
6,015 5,441 +11 CCS earnings 25,365 22,731 +12
0.84 0.67 Basic earnings per share ($) 3.97 3.79
0.11 0.16 Estimated CCS adjustment per share (0.01) (0.38)
($)
0.95 0.83 Basic CCS earnings per share ($) 3.96 3.41
0.25 0.23 Dividend per ordinary share (euro) 1 1.00 0.92
1. Q1 2005 based on dividend paid by Royal Dutch Petroleum
Company, adjusted for the effects of the unification.
Key features of the fourth quarter and full year 2006
- Fourth quarter 2006 reported income was $5,283 million or
21% higher than the same quarter a year ago.
- Fourth quarter 2006 CCS earnings were $6,015 million or 11%
higher than the same quarter a year ago.
- Full year 2006 reported income of $25,442 million and
similar to 2005 reported income.
- Full year 2006 CCS earnings were $25,365 million and
increased by 21% versus 2005 excluding the 2005 divestment gain of $1.7
billion related to the divestment of pipeline assets held through Gasunie NV
in the Netherlands. Higher Upstream earnings in Exploration & Production and
Gas & Power reflected higher price realisations, increased marketing
opportunities and increased liquefied natural gas (LNG) volumes partly offset
by higher costs. Downstream Oil Products earnings of $7.0 billion reflected a
strong trading performance and higher lubricants earnings offset by lower
refining earnings. Also in Downstream, Chemicals earnings reflected lower
margins offset by the start up of the Nanhai petrochemicals complex in China
and lower charges and provisions than in 2005.
- Return on average capital employed on a reported income
basis (see note 4) was 23.4% for 2006.
- When final volumes are reported in the Annual Report 2006,
it is expected that additions to total world-wide proved SEC oil and gas
reserves and provable mining reserves (oil sands) will total around 2 billion
boe in 2006 (* see note 10). Production totalled some 1.3 billion boe in
2006, including 0.03 billion boe of oil sands production, so that the
Reserves Replacement Ratio (see note 10) for 2006 is expected to be around
150% including oil sands. The movement of reserves related to the Sakhalin II
project were not material in 2006. Year-end pricing effects amount to a
decrease of between 50 to 70 million boe and impact the Reserves Replacement
Ratio by 4% to 6% points. The net impact of acquisitions and disposals in
2006 was an increase of 60 to 70 million boe. No impacts are included for the
offer to buy out the minority shareholding of Shell Canada or the expected
dilution to a 27.5% stake in Sakhalin II. Neither of these transactions have
closed and any impacts are anticipated in 2007. For additional information
see note 10.
- Full year 2006 Exploration & Production segment earnings
were $15,195 million compared with $14,238 million in 2005 (which included a
gain of $1.7 billion related to the divestment of pipeline assets held
through Gasunie NV in the Netherlands). Earnings reflected higher oil prices,
partly offset by lower production volumes, higher operating costs reflecting
industry conditions and increased pre-development activity levels and lower
USA gas prices.
- Full year 2006 Gas & Power segment earnings were $2,650
million, compared to $1,573 million a year ago. The increase in earnings
reflected 14% growth in LNG sales volumes, higher realised LNG prices and
strong LNG and natural gas marketing and trading performance.
- Full year 2006 Oil Products CCS earnings were $7,027 million
compared to $7,532 million in 2005, and reflected lower refining earnings
partly offset by higher trading profits and increased lubricants earnings.
Also in Downstream, full year 2006 Chemicals CCS earnings were $1,095 million
compared to $782 million in 2005. Chemicals earnings reflected lower margins
offset by the start up of the Nanhai petrochemicals complex in China and
lower charges and provisions than in 2005.
- Gearing (see note 6) was 14.8% at the end of 2006 versus, on
a comparable Royal Dutch Shell basis, 13.6% at the end of 2005.
- Total cash returned to shareholders in 2006 was $16.3
billion in the form of dividends and share repurchases.
- Full year 2006 cash flow from operating activities was $31.7
billion compared to $30.1 billion in 2005. Excluding working capital
movements and taxation effects, cash flow from operating activities was $39.5
billion compared to $35.6 billion a year ago (see note 8).
- Capital investment for 2006 was $23.1 billion, excluding the
minority share of Sakhalin of $1.8 billion. This includes $3.0 billion of
acquisitions mainly related to the acquisition by Shell Canada of BlackRock
Ventures Inc. in Canada. Some $1.7 billion of proceeds were realised from
divestments, predominantly in Downstream, so that net capital investment for
the year was $21.4 billion.
- In Russia, Shell, Gazprom, Mitsui and Mitsubishi have signed
a protocol to bring Gazprom into the Sakhalin Energy Investment Company Ltd.
(SEIC) as a leading shareholder. It is expected that the agreements will be
completed in 2007. Under the terms of the protocol, Gazprom will acquire a
50% stake plus one share in SEIC for a total cash purchase price of $7.45
billion. The current SEIC partners will each dilute their stakes by 50% to
accommodate this transaction, with each receiving a proportionate share of
the purchase price. Shell will retain a 27.5% stake, with Mitsui and
Mitsubishi holding 12.5% and 10% stakes, respectively. Gazprom and the
existing SEIC shareholders will enter into an Area of Mutual Interest
arrangement, which will cover both future Sakhalin area oil and gas
exploration and production opportunities, and building of Sakhalin II into a
regional oil and LNG hub. Furthermore, the Sakhalin II shareholders reached
agreement with the Ministry of Industry and Energy as the authorised state
body for the supervision of Production Sharing Agreements of the Government
of the Russian Federation, regarding the amended budget of Sakhalin II and
cost recovery. The Production Sharing Agreement for the Sakhalin II project
will continue. The Sakhalin II amended project budget for phase 2 is expected
to be approved by the SEIC Supervisory Board.
- Royal Dutch Shell plc announced in January 2007 that it has
reached agreement with and obtained the recommendation of the Board of
Directors of Shell Canada on a revised offer to acquire all of the
outstanding common shares of Shell Canada not owned by Royal Dutch Shell at a
cash price of C$45.00 per share. This offer would value Shell Canada's fully
diluted minority share capital at approximately C$8.7 billion. Royal Dutch
Shell currently owns 78% of the common shares of Shell Canada.
Basic earnings per share (see notes 1, 2 and 9)
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
0.84 0.93 0.67 Earnings per share ($) 3.97 3.79
0.95 1.09 0.83 CCS earnings per share ($) 3.96 3.41
Diluted earnings per share (see notes 1, 2 and 9)
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
0.83 0.93 0.66 Earnings per share ($) 3.95 3.78
0.95 1.09 0.83 CCS earnings per share ($) 3.94 3.40
Summary segment earnings
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
Segment
earnings
3,743 Exploration
&
3,710 3,561 Production 15,195 14,238
582 787 530 Gas & Power 2,650 1,573
2,160 Oil
Products
1,469 1,898 (CCS basis) 7,027 7,532
335 Chemicals
273 8 (CCS basis) 1,095 782
260 Other
Industry
and
246 (277) Corporate 277 523)
(337) Minority
(265) (279) interests (879) (871)
___________ ___________ ___________ ___________ ______
6,015 6,948 5,441 +11 CCS 25,365 22,731 +12
earnings
___________ ___________ ___________ ___________ ______
Summary segment earnings - continued
- Earnings in the fourth quarter 2006 reflected the following
items, which in aggregate were a net gain of $515 million (compared to a net
gain of $34 million in the fourth quarter 2005) as summarised in the table
below:
- Exploration & Production fourth quarter 2006 earnings
included a net income of $387 million, reflecting both divestment gains from
assets in the UK and Norway and a gain of $276 million related to the
mark-to-market valuation of certain UK gas contracts, partly offset by tax
effects and pension costs.
- Oil Products fourth quarter 2006 earnings included net
income of $103 million reflecting tax effects partly offset by pension costs.
- Chemicals fourth quarter 2006 earnings included net charges
of $83 million from legal costs and pension costs partly offset by tax
effects.
- Corporate included $108 million of net tax credits.
Summary table
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
Segment
earnings
impact
387 (163) 152 Exploration 641 1,727
&
Production
- - - Gas & Power - (84)
103 - - Oil 38 427
Products
(CCS basis)
(83) - (84) Chemicals (113) (565)
(CCS basis)
108 86 2 Other (206) (148)
Industry
and
Corporate
- - (36) Minority (41) (82)
interests
___________ ___________ ___________ ___________ __________
515 (77) 34 CCS 319 1,275
earnings
impact
___________ ___________ ___________ ___________ __________
These items generally relate to events with an impact of
greater than $50 million on earnings and are shown to provide additional
insight in the direction of the segment earnings, CCS earnings and income
attributable to shareholders. Further additional comments are provided in the
section 'Earnings per industry segment' on page 6 and onwards.
Earnings per industry segment
Upstream
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
Realised Oil Prices (period
$/bbl average) $/bbl
54.93 65.60 52.74 WOUSA 60.37 50.56
52.94 62.57 53.10 USA 58.53 48.94
54.65 65.13 52.77 Global 60.13 50.36
Realised Gas Prices (period
$/thousand scf average) $/thousand scf
7.63 6.43 5.73 Europe 6.94 4.99
4.59 4.05 4.47 WOUSA (including Europe) 4.41 3.84
6.87 7.31 12.40 USA 7.74 8.43
5.06 4.77 5.78 Global 5.08 4.77
Oil and gas marker industry
prices (period average)
59.59 69.63 56.90 Brent ($/bbl) 65.10 54.55
59.90 70.44 60.00 WTI ($/bbl) 66.04 56.60
6.68 6.05 12.29 Henry Hub ($/thousand scf) 6.76 8.80
UK National Balancing Point
29.93 33.77 65.31 (pence/therm) 41.93 40.61
Exploration & Production
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
3,710 3,743 3,561 +4 Segment earnings 15,195 14,238 +7
Crude oil production (thousand
2,201 2,054 1,986 +11 b/d) 2,030 2,093 -3
8,377 6,942 8,784 -5 Natural gas production available 8,368 8,263 +1
for sale (million scf/d)
Barrels of oil equivalent
3,645 3,251 3,500 +4 (thousand boe/d) 3,473 3,518 -1
Fourth Quarter Exploration & Production segment earnings were
$3,710 million compared to $3,561 million a year ago.
Fourth quarter 2006 earnings included a net income of $387
million including both divestment gains from assets in the UK and Norway, and
a gain of $276 million, related to the mark-to-market valuation of certain UK
gas contracts partly offset by tax effects and pension costs. The fourth
quarter 2005 included a net gain of $152 million mainly from tax credits
partially offset by mark-to-market charges in the UK. Excluding these effects
earnings were 3% lower than a year ago.
Earnings reflected higher production volumes and oil prices
partly offset by higher operating costs reflecting industry conditions and
increased pre-development activity levels and lower USA gas prices.
Liquids realisations were 4% higher than a year ago, in line
with marker crudes Brent (+5%) and WTI (flat). Outside the USA gas
realisations increased by 3% and in the USA gas realisations decreased by
45%.
Fourth quarter 2006 production was 3,645 thousand boe per day
compared to 3,500 thousand boe per day a year ago. Production benefited by
103 thousand boe per day due to the resolution of contractual issues
impacting the full year 2006 but recorded in the fourth quarter only. This
impact in the quarter was largely offset by unusually low seasonal gas demand
in North West Europe. Excluding the impact of security concerns in Nigeria in
2006, PSC impacts from oil and gas prices and hurricane damage in the Gulf of
Mexico in 2005, production in the fourth quarter 2006 was 5% higher than a
year ago or 2% also excluding the impact of the resolution of contractual
issues.
Production compared to the fourth quarter 2005 included new
volumes of 278 thousand boe per day including Bonga (Shell share 55%) and
Erha (Shell share 44%) in Nigeria, West Salym (Shell share 50%) in Russia,
Pohokura (Shell share 48%) in New Zealand, Champion West Phase III (Shell
share 50%) in Brunei and the early start up of E8 in Malaysia (Shell share
50%).
Production from Shell Petroleum Development Company's Nigerian
operations was 191 thousand boe per day (Shell share) lower than a year ago
due to deferred production mainly in the Western Delta resulting from
security concerns. Whilst efforts continue towards restoring safe operational
conditions in the Niger Delta, no firm date can be given for the re-start of
the production nor is it possible to predict the rate of ramp up to full
production. Restricted access in the area continues to impact the drilling
programme for the future, and the progress of new projects.
Full Year Exploration & Production segment earnings were
$15,195 million compared to $14,238 million a year ago.
2006 earnings included net gains of $641 million mainly
related to the mark-to-market valuation of certain UK gas contracts and
divestment gains. 2005 included net gains of $1,727 million almost entirely
related to the divestment of pipeline assets in the Netherlands, as various
taxation credits and other divestments were almost offset by a net charge for
mark-to-market valuation of certain UK gas contracts. Excluding these effects
earnings were 16% higher than a year ago.
Earnings reflected higher oil prices, partly offset by 1%
lower production volumes, higher operating costs reflecting industry
conditions and increased pre-development activity levels and lower USA gas
prices.
Liquids realisations were 19% higher than a year ago, in line
with increases in marker crudes Brent of 19% and WTI of 17%. Outside the USA
gas realisations increased by 15% and in the USA gas realisations decreased
by 8%.
2006 production was 3,473 thousand boe per day compared to
3,518 thousand boe per day a year ago. Production benefited by 27 thousand
boe per day due to the resolution of contractual issues. 2006 included
negative PSC effects on production of 18 thousand boe per day from higher oil
and gas prices. Excluding the impact of security concerns in Nigeria, PSC
impacts from higher oil and gas prices, and hurricane damage in the Gulf of
Mexico in 2005, production was around 3% higher than last year or 2% also
excluding the impact of the resolution of contractual issues.
Production compared to 2005 included new volumes of 207
thousand boe per day including Bonga (Shell share 55%) and Erha (Shell share
44%) in Nigeria, West Salym (Shell share 50%) in Russia, Pohokura (Shell
share 48%) in New Zealand, Champion West Phase III (Shell share 50%) in
Brunei and the early start up of E8 in Malaysia (Shell share 50%). In the
USA, production restarted from the Mars platform (Shell share 72%).
Production from Shell Petroleum Development Company's Nigerian
operations was 171 thousand boe per day (Shell share) lower than a year ago
due to deferred production mainly in the Western Delta resulting from
security concerns.
Fourth Quarter Portfolio developments:
In Brazil, Shell announced go ahead of the development of the
BC-10 deepwater block (Shell share 50%) following declaration of
commerciality earlier. The BC-10 development consists of multiple subsea
wells and manifolds, tied back to a Floating Production, Storage and
Offloading vessel with a capacity of 100 thousand barrels per day. First
production is expected around the turn of the decade. Also in Brazil, Shell
declared two accumulations of heavy oil to be commercially viable on Block
BS-4.
In Canada, the Alberta Energy and Utilities Board and the
Government of Canada approved the Muskeg River Mine expansion, an integral
part of Shell Canada's Athabasca Oil Sands Project. This approval completes
the major regulatory approvals required for the fully integrated 100 thousand
boe per day expansion of oil sands mining and related upgrading facilities.
Also in Canada, the integration of the acquired assets and operations of
BlackRock into Shell Canada has been completed.
In the UK, Shell completed the sale of its 50% holding in the
Auk and 43% holding in the Fulmar fields and associated infrastructure and in
Norway, the sale of the Jotun field (Shell share 45%) was completed.
In the Netherlands, Energie Beheer Nederland has agreed to
take a 40% financial interest from NAM (Shell share 50%) in the possible
redevelopment of the Schoonebeek oilfield.
In the USA, major multi-year investment programmes were
approved to further develop the onshore gas projects at Pinedale in Wyoming
and in South Texas (Shell share 100%).
Gas & Power
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
582 787 530 +10 Segment earnings 2,650 1,573 +68
Equity LNG sales volume (million
3.34 2.94 2.81 +19 tonnes) 12.12 10.65 +14
Fourth Quarter Gas & Power segment earnings were $582 million,
compared to $530 million in the same quarter last year. Higher earnings
reflected a 19% increase in LNG sales volumes, and higher realised LNG prices
partially offset by dividend phasing.
LNG equity sales volumes of 3.3 million tonnes were 19% higher
than the same quarter a year ago, driven by growth from Nigeria LNG (Shell
share 26%) and Qalhat LNG (Shell share 11%). In addition, the LNG plants
continued to achieve excellence in operational performance. Realised LNG
prices improved, reflecting the increase in crude prices and continued
opportunities for LNG cargo optimisation.
Full Year segment earnings were $2,650 million, compared to
$1,573 million a year ago. The increase in earnings of 68% reflected growth
in LNG sales volumes, higher realised LNG prices, LNG cargo optimisation and
strong marketing and trading performance in Europe and North America. LNG
sales volumes increased by 14% compared to 2005.
Marketing and trading earnings reflected gas storage
optimisation in the USA and overall strong marketing performance across North
America and Europe.
Full year 2006 LNG sales volumes of 12.1 million tonnes were
an increase of 14% compared to 2005 due to the capacity growth in Nigeria and
Oman. Income from LNG cargo optimisation in 2006 increased reflecting market
conditions and success in accessing high value markets.
Fourth Quarter Portfolio developments:
In Qatar, Shell was appointed by Qatar Gas Transport Company
Limited to manage its fleet of at least 27 new LNG carriers under a long-term
deal. This new fleet of LNG vessels, currently under construction, will be
put into service over the next four years servicing four of Qatar's major LNG
projects including Qatargas4 (Shell share 30%).
In China, construction was completed at Shell's first equity
coal gasification plant (Shell share 50%). The Dongting plant will supply
synthesis gas to a Sinopec fertilizer production facility.
In Australia, Woodside (Shell share 34%) progressed with site
preparation and ordering of long lead items for the Pluto LNG development
ahead of a final investment decision. The project is expected to develop a
production capacity of 5 to 6 million tonnes of LNG per annum to supply to
Japanese and other markets.
Downstream
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
Refining marker industry gross
margins
$/bbl (period average) $/bbl
15.65 13.25 10.30 ANS US West Coast coking margin 16.05 14.45
10.00 14.70 12.65 WTS US Gulf Coast coking margin 14.55 12.30
2.05 3.45 4.80 Rotterdam Brent complex 3.15 4.60
Singapore 80/20 Arab light/Tapis
1.10 0.95 2.45 complex 1.80 2.90
Oil Products
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
791 1,214 828 Segment 7,125 9,982
earnings
CCS
adjustment
- see note
678 946 1,070 2 (98) (2,450)
___________ ___________ ___________ ________ _________
1,469 2,160 1,898 -23 Segment 7,027 7,532 -7
CCS
earnings
Refinery
intake
(thousand
3,890 3,907 3,978 -2 b/d) 3,862 3,981 -3
Total Oil
products
sales
See (thousand See
6,467 6,521 6,695 1 b/d) 6,485 7,057 1
1. Certain contracts are held for trading purposes and reported net
rather than gross with effect from Q3 2005. The effect in Q1 2006, Q2
2006, Q3 2006 and Q4 2006 is a reduction in Total Oil products sales of
approximately 890 thousand b/d, 840 thousand b/d, 870 thousand b/d and
780 thousand b/d respectively. The effect in Q4 2005 was 820 thousand
b/d.
Fourth quarter segment earnings were $791 million compared to
$828 million for the same period last year.
Fourth quarter CCS earnings were $1,469 million compared to
$1,898 million in the fourth quarter of 2005. Earnings for the fourth quarter
2006 included net gains of $103 million reflecting tax effects partly offset
by pension costs.
Lower CCS earnings reflect reduced trading profits, lower
refining margins and higher operating costs. Improved refinery utilisation
and higher lubricants earnings partly offset these declines.
In Manufacturing, Supply and Distribution, industry refining
margins declined in all regions except the US West Coast. Refinery
utilisation on an Equivalent Distillation Capacity (EDC) basis increased to
81.2 % compared to 78.9% in the fourth quarter of 2005.
In Marketing, earnings declined compared to the same period a
year ago. Retail and B2B earnings were lower mainly due to weaker margins in
the USA and higher operating costs. Lubricants earnings improved due to
stronger margins and operating costs improvements.
Marketing sales volumes declined 3.2% compared to volumes in
the fourth quarter of 2005. Excluding the impact of divested volumes (2.7%)
and rationalised uneconomical B2B volumes (1.4%) volumes were some 1% higher.
Full year segment earnings were $7,125 million compared to
$9,982 million for 2005.
Full year CCS earnings were $7,027 million compared to $7,532
million in 2005. Earnings in 2006 included net gains of $38 million related
to tax effects partly offset by pension costs. Earnings in 2005 include $427
million net divestment gains. Lower refining earnings were partly offset by
higher trading profits and increased Lubricants earnings. Higher operating
costs negatively impacted earnings in 2006.
In Manufacturing, Supply and Distribution, average industry
refining margins declined in Europe and Asia Pacific. Refinery utilisation on
an Equivalent Distillation Capacity (EDC) basis was 79.4% after an unusually
heavy planned maintenance schedule, compared to 79.6% in 2005 heavily
impacted by hurricanes.
In Marketing, earnings increased compared to 2005 mainly due
to higher Lubricants earnings offsetting lower retail and B2B earnings.
Marketing sales volumes declined 4.0% compared to volumes in 2005 including
the impact from divested volumes (2.2%) and rationalised uneconomical B2B
volumes (1.1%).
Chemicals
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
184 251 (38) Segment 1,064 991
earnings
CCS
adjustment
- see note
89 84 46 2 31 (209)
___________ ___________ ___________ ___________ _______
273 335 8 Segment 1,095 782 +40
CCS
earnings
Sales
volumes
(thousand
5,690 5,636 5,729 -1 tonnes) 23,137 22,826 +1
Fourth quarter segment earnings were $184 million compared to
a loss of $38 million for the same period last year.
Fourth quarter CCS segment earnings were $273 million and
included net charges of $83 million from legal and pension costs partly
offset by tax effects. This compares to earnings of $8 million in the same
quarter last year, which included $84 million of net charges mainly from
legal costs.
Higher earnings reflected improved margins, higher profits
from equity-accounted investments and lower costs. Higher profits from
equity-accounted investments included the Nanhai petrochemicals complex in
China (Shell share 50%), which continued to build up operating rates and
sales volumes. Overall asset utilisation in the fourth quarter was 77%,
reflecting planned and extended maintenance in Europe and in the USA. This
compared to 82% a year ago when operations in the USA were disrupted by the
hurricanes.
Full year segment earnings were $1,064 million compared to
$991 million for the same period last year.
Full year 2006 CCS earnings were $1,095 million compared to
$782 million in 2005. Chemicals earnings reflected lower margins partly
offset by the start up of the Nanhai petrochemicals complex in China and
lower charges and provisions than in 2005. Earnings in 2006 included $113
million of net charges including legal costs and pension costs partly offset
by tax effects. Earnings in 2005 included charges of $565 million mainly from
the divestment of the polyolefins joint venture, Basell, and legal
provisions. Excluding these effects 2006 earnings were 10% lower than a year
ago reflecting lower margins partly offset by higher earnings from
equity-accounted investments, including the Nanhai petrochemicals complex in
China and the impact in 2005 related to hurricanes in the USA.
Asset utilisation of 81% reflected the impact of the heavy
planned maintenance programme in the USA and in Europe and was comparable to
asset utilisation in 2005, when operations in the USA were disrupted by
hurricanes. Sales volumes were largely in line with last year, excluding
product trading.
Other Industry and Corporate segments
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
(18) (4) (110) Other (37) (202)
Industry
segment
earnings
264 264 (167) Corporate 314 (321)
segment
earnings
___________ ___________ ___________ ___________ ___________
Other
Industry
and
Corporate
segments
246 260 (277) results 277 (523)
Fourth quarter Other Industry and Corporate segments results
were a gain of $246 million, including net tax credits of $108 million,
compared to a loss of $277 million for the same period last year. Increased
currency exchange gains were partly offset by lower net interest income.
Full year Other Industry and Corporate segments results were a
gain of $277 million compared to a loss of $523 million a year ago. Net
interest income, currency exchange results and corporate tax improved during
the year 2006. Included in 2006 were net charges of $206 million related to a
legal provision partly offset by Corporate tax credits versus net charges of
$148 million in 2005 mainly in the Other Industry segment.
Note
All amounts shown throughout this report are unaudited.
First quarter results for 2007 are expected to be announced on
May 3, 2007, second quarter results for 2007 are expected to be announced on
July 26, 2007 and third quarter results are expected to be announced on
October 25, 2007.
In this Report "Group" is defined as Royal Dutch Shell
together with all of its consolidated subsidiaries. The expressions "Shell",
"Group", "Shell Group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made 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 who work for them. These expressions
are also used where no useful purpose is served by identifying the particular
company or companies. The expression "Group companies" as used in this Report
refers to companies in which Royal Dutch Shell either directly or indirectly
has control, by having either a majority of the voting rights or the right to
exercise a controlling influence. The companies in which the Group has
significant influence but not control are referred to as "associated
companies" or "associates" and companies in which the Group has joint control
are referred to as "jointly controlled entities". In this Report, associates
and jointly controlled entities are also referred to as "equity accounted
investments".
This document contains forward-looking statements concerning
the financial condition, results of operations and businesses of Royal Dutch
Shell. All statements other than statements of historical fact are, or may be
deemed to be, forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management's current
expectations and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in these statements.
Forward-looking statements include, among other things, statements concerning
the potential exposure of Royal Dutch Shell to market risks and statements
expressing management's expectations, beliefs, estimates, forecasts,
projections and assumptions. These forward-looking statements are identified
by their use of terms and phrases such 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 affect the future operations of
Royal Dutch Shell and could cause those results to differ materially from
those expressed in the forward-looking statements included in this Report,
including (without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for the Group's products; (c) currency
fluctuations; (d) drilling and production results; (e) reserve estimates; (f)
loss of market and industry competition; (g) environmental and physical
risks; (h) risks associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and completion
of such transactions; (i) the risk of doing business in developing countries
and countries subject to international sanctions; (j) legislative, fiscal and
regulatory developments including potential litigation and regulatory effects
arising from recategorisation of reserves; (k) economic and financial market
conditions in various countries and regions; (l) political risks, project
delay or advancement, approvals and cost estimates; and (m) changes in
trading conditions. All forward-looking statements contained in this Report
are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Readers should not place undue
reliance on forward-looking statements. Each forward-looking statement speaks
only as of the date of this Report. Neither Royal Dutch Shell nor any of its
subsidiaries undertake any obligation to publicly update or revise any
forward-looking statement as a result of new information, future events or
other information. In light of these risks, results could differ materially
from those stated, implied or inferred from the forward-looking statements
contained in this Report.
Please refer to the Annual Report and Form 20-F for the year
ended December 31, 2005 for a description of certain important factors, risks
and uncertainties that may affect Shell's businesses.
Cautionary Note to US Investors:
The United States Securities and Exchange Commission (SEC)
permits oil and gas companies, in their filings with the SEC, to disclose
only proved reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally producible under
existing economic and operating conditions. We may use certain terms in this
announcement that the SEC's guidelines strictly prohibit us from including in
filings with the SEC. US Investors are urged to consider closely the
disclosure in our Form 20-F, File No 1-32575 and disclosure in our Forms 6-K
file No 1-32575, available on the SEC's website www.sec.gov. You can also
obtain these forms from the SEC by calling 1-800-SEC-0330.
February 1, 2007
Appendix 1: Royal Dutch Shell financial report and tables
Statement of income (see note 1)
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
75,500 84,254 75,496 Revenue(1) 318,845 306,731 +4
62,846 70,383 63,889 Cost of sales 262,989 252,622
_______ ___________ ___________ _______ ___________
12,654 13,871 11,607 +9 Gross profit 55,856 54,109 +3
Selling,
distribution and
administrative
4,648 4,126 4,263 expenses 16,616 15,482
630 401 502 Exploration 1,562 1,286
Share of profit
of equity
accounted
1,661 1,358 1,389 investments 6,671 7,123
Net finance
costs and other
(111) (60) 56 (income)/expense (279) (103)
_______ ___________ ___________ _______ ___________
Income before
9,148 10,762 8,175 +12 taxation 44,628 44,567
3,635 4,507 3,572 Taxation 18,317 17,999
_______ ___________ ___________ _______ ___________
5,513 6,255 4,603 Income from
continuing
operations 26,311 26,568
- - - Income/(loss)
from
discontinued
operations - (307)
_______ ___________ ___________ _______ ___________
Income for the
5,513 6,255 4,603 +20 period 26,311 26,261
======= ========== ========== ======= ==========
Income
attributable to
minority
230 313 235 interests 869 950
_______ ___________ ___________ _______ ___________
Income
attributable to
5,283 5,942 4,368 +21 shareholders 25,442 25,311 +1
_______ ___________ ___________ _______ ___________
1. Revenue is stated after deducting sales taxes, excise duties and
similar levies of $17,764 million in Q4 2006, $18,472 million in Q3 2006,
$17,984 million in Q2 2006, $16,709 million in Q1 2006, $17,344 million
in Q4 2005, $18,282 million in Q3 2005, $18,739 million in Q2 2005 and
$17,912 million in Q1 2005.
Earnings by industry segment (see notes 2 and 5)
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
Exploration &
Production:
3,007 2,650 2,836 +6 World outside 11,466 10,541 +9
USA
703 1,093 725 -3 USA 3,729 3,697 +1
______ ___________ ___________ _______ ___________
3,710 3,743 3,561 +4 15,195 14,238 +7
______ ___________ ___________ ______ ___________
Gas & Power:
581 621 465 +25 World outside 2,393 1,526 +57
USA
1 166 65 USA 257 47
______ ___________ ___________ ______ ___________
582 787 530 +10 2,650 1,573 +68
______ ___________ ___________ ______ ___________
Oil Products
(CCS basis):
1,254 1,665 1,583 -21 World outside 5,322 5,787 -8
USA
215 495 315 -32 USA 1,705 1,745 -2
______ ___________ ___________ ______ ___________
1,469 2,160 1,898 -23 7,027 7,532 -7
______ ___________ ___________ ______ ___________
Chemicals (CCS
basis):
233 348 155 +50 World outside 1,063 868 +22
USA
40 (13) (147) USA 32 (86)
______ ___________ ___________ ______ ___________
273 335 8 1,095 782 +40
______ ___________ ___________ ______ ___________
(18) (4) (110) Other industry (37) (202)
segments
______ ___________ ___________ ______ ___________
6,016 7,021 5,887 +2 TOTAL OPERATING 25,930 23,923 +8
SEGMENTS
______ ___________ ___________ ______ ___________
Corporate:
1 35 51 Interest 75 (22)
income/(expense)
93 (19) (145) Currency 113 (65)
exchange
gains/(losses)
170 248 (73) Other - 126 (234)
including
taxation
______ ___________ ___________ ______ ___________
264 264 (167) 314 (321)
______ ___________ ___________ ______ ___________
(265) (337) (279) Minority (879) (871)
interests
______ ___________ ___________ ______ ___________
6,015 6,948 5,441 +11 CCS EARNINGS 25,365 22,731 +12
______ ___________ ___________ ______ ___________
CCS adjustment
for Oil Products
(732) (1,006) (1,073) and Chemicals 77 2,580
______ ___________ ___________ ______ ___________
Income
attributable to
shareholders of
Royal Dutch
5,283 5,942 4,368 +21 Shell plc 25,442 25,311 +1
______ ___________ ___________ ______ ___________
Summarised balance sheet (see notes 1 and 7)
$ million
Dec 31 Sep 30 Dec 31
ASSETS 2006 2006 2005
Non-current assets:
Intangible assets 4,808 4,697 4,350
Property, plant and 100,988 96,133 87,558
equipment
Investments:
equity accounted 20,740 19,453 16,905
investments
financial assets 4,493 3,914 3,672
Deferred tax 2,968 2,664 2,562
Prepaid pension costs 3,926 3,459 2,486
Other 5,468 4,598 4,091
___________ ___________ ___________
143,391 134,918 121,624
___________ ___________ ___________
Current assets:
Inventories 23,215 23,391 19,776
Accounts receivable 59,668 63,895 66,386
Cash and cash equivalents 9,002 11,240 11,730
___________ ___________ ___________
91,885 98,526 97,892
___________ ___________ ___________
___________ ___________ ___________
TOTAL ASSETS 235,276 233,444 219,516
___________ ___________ ___________
LIABILITIES
Non-current liabilities:
Debt 9,713 7,665 7,578
Deferred tax 13,094 12,485 10,763
Retirement benefit 6,096 6,298 5,807
obligations
Other provisions 10,355 8,793 7,385
Other 4,325 4,346 5,095
___________ ___________ ___________
43,583 39,587 36,628
___________ ___________ ___________
Current liabilities:
Debt 6,060 6,395 5,338
Accounts payable and 62,556 64,445 69,013
accrued liabilities
Taxes payable 6,021 10,679 8,782
Retirement benefit 319 284 282
obligations
Other provisions 1,792 1,763 1,549
___________ ___________ ___________
76,748 83,566 84,964
___________ ___________ ___________
___________ ___________ ___________
TOTAL LIABILITIES 120,331 123,153 121,592
___________ ___________ ___________
Equity attributable to 105,726 101,604 90,924
shareholders of Royal
Dutch Shell plc
Minority interests 9,219 8,687 7,000
___________ ___________ ___________
TOTAL EQUITY 114,945 110,291 97,924
___________ ___________ ___________
TOTAL LIABILITIES AND 235,276 233,444 219,516
EQUITY
___________ ___________ ___________
Summarised statement of cash flows (see notes 1 and 8)
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
CASH FLOW FROM OPERATING ACTIVITIES:
Income for the
5,513 6,255 4,603 period 26,311 26,261
Adjustment for:
3,157 4,403 4,490 Current taxation 17,338 19,435
Interest
218 145 148 (income)/expense 716 632
Depreciation,
depletion and
3,306 3,365 2,787 amortisation 12,615 11,981
(Profit)/loss on
(292) (86) (210) sale of assets (571) (1,313)
Decrease/(increase)
in net working
643 560 3,295 capital (4,052) (5,664)
Share of profit of
equity accounted
(1,661) (1,358) (1,611) investments 6,671) (7,123)
Dividends received
from equity
accounted
1,422 1,450 1,441 investments 5,488 6,709
Deferred taxation
and other
219 133 (869) provisions 1,833 (1,515)
51 (299) 1,055 Other (266) (47)
_______ ___________ ___________ _________ ___________
Cash flow from
operating
activities
12,576 14,568 15,129 (pre-tax) 52,741 49,356
_______ ___________ ___________ _________ ___________
(6,617) (4,489) (6,664) Taxation paid (21,045) (19,243)
_______ ___________ ___________ _________ ___________
Cash flow from
operating
5,959 10,079 8,465 activities 31,696 30,113
_______ ___________ ___________ _________ ___________
CASH FLOW FROM INVESTING ACTIVITIES:
(7,065) (5,408) (5,447) Capital expenditure (22,922) (15,904)
Investments in
equity accounted
(317) (126) (139) investments (851) (705)
Proceeds from sale
605 289 396 of assets 1,611 2,310
Proceeds from sale
of equity accounted
201 37 212 investments 282 4,313
Proceeds from sale
of / (additions to)
55 (22) (1) financial assets 22 362
238 285 245 Interest received 997 863
_______ ___________ ___________ _________ ___________
Cash flow from
investing
(6,283) (4,945) (4,734) activities (20,861) (8,761)
_______ ___________ ___________ _________ ___________
CASH FLOW FROM FINANCING ACTIVITIES:
Net
increase/(decrease)
1,442 (843) (1,773) in debt 2,106 (1,482)
(344) (330) (311) Interest paid (1,296) (1,124)
Change in minority
364 287 250 interests 1,434 1,143
Net
issue/(repurchase)
(1,390) (2,801) (2,550) of shares (8,047) (4,988)
Dividends paid to:
Shareholders of
Royal Dutch Shell
(2,130) (2,083) (1,869) plc (8,142) (10,556)
(31) (53) (58) Minority interest (289) (293)
Payment to former
Royal Dutch
- - (1,651) shareholders - (1,651)
Treasury shares:
Net
sales/(purchases)
and dividends
118 149 (37) received 493 378
_______ ___________ ___________ _________ ___________
Cash flow from
financing
(1,971) (5,674) (7,999) activities (13,741) (18,573)
_______ ___________ ___________ _________ ___________
Currency
translation
differences
relating to cash
and cash
57 6 0 equivalents 178 (250)
_______ ___________ ___________ _________ ___________
INCREASE/(DECREASE)
IN CASH AND CASH
(2,238) (534) (4,268) EQUIVALENTS (2,728) 2,529
_______ ___________ ___________ _________ ___________
Cash and cash
equivalents at
11,240 11,774 15,998 beginning of period 11,730 9,201
Cash and cash
equivalents at end
9,002 11,240 11,730 of period 9,002 11,730
Operational data - Upstream
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
CRUDE OIL
thousand b/d PRODUCTION thousand b/d
533 433 510 Europe 496 541
352 346 370 Africa 339 373
Asia
251 254 227 Pacific 242 228
Middle
East,
Russia,
480 489 455 CIS 455 443
349 353 243 USA 322 333
Other
Western
130 81 75 Hemisphere 94 80
___________ ___________ ___________ _________ _________
Total
crude oil
production
excluding
2,095 1,956 1,880 oil sands 1,948 1,998
106 98 106 Oil sands 82 95
___________ ___________ ___________ _________ _________
Total
crude oil
production
including
2,201 2,054 1,986 +11 oil sands 2,030 2,093 -3
___________ ___________ ___________ _________ _________
NATURAL
GAS
million scf/d (1) PRODUCTION million scf/d (1)
AVAILABLE
FOR SALE
3,529 2,125 4,266 Europe 3,523 3,659
418 475 397 Africa 455 377
Asia
Pacific
2,459 2,356 2,359 (3) 2,421 2,250
Middle
East,
Russia,
268 273 332 CIS (3) 291 328
1,173 1,186 919 USA 1,163 1,150
Other
Western
530 527 511 Hemisphere 515 499
___________ ___________ ___________ _________ _________
8,377 6,942 8,784 -5 8,368 8,263 +1
___________ ___________ ___________ _________ _________
BARRELS OF
OIL
thousand boe/d (2) EQUIVALENT thousand boe/d (2)
1,142 800 1,246 Europe 1,104 1,172
424 428 438 Africa 417 438
Asia
Pacific
675 660 634 (3) 659 616
Middle
East,
Russia,
526 536 512 CIS (3) 505 500
551 557 401 USA 523 531
Other
Western
221 172 163 Hemisphere 183 166
___________ ___________ ___________ _________ _________
Total
production
excluding
3,539 3,153 3,394 oil sands 3,391 3,423
106 98 106 Oil sands 82 95
___________ ___________ ___________ _________ _________
Total
production
including
3,645 3,251 3,500 +4 oil sands 3,473 3,518 -1
___________ ___________ ___________ _________ _________
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
3. Q4 2005 and full year 2005 comparative figures for oil and gas
production volumes have been reclassified in line with 2006
reported numbers to reflect a move of the Pakistan volumes from
Asia Pacific to the Middle East region. The impact on total oil and
gas volumes for both Q4 and full year 2005 is a reduction of 13
thousand boe per day in Asia Pacific and an increase of 13 thousand
boe per day for the Middle East.
Operational data - Downstream
QUARTERS FULL YEAR
Q4 Q3 Q4
2006 2006 2005 % 2006 2005 %
thousand b/d thousand b/d
REFINERY
PROCESSING
INTAKE
1,800 1,758 1,861 Europe 1,732 1,804
Other Eastern
791 797 847 Hemisphere 808 849
933 965 916 USA 956 953
Other Western
366 387 354 Hemisphere 366 375
_________ _________ _________ _________ _________
3,890 3,907 3,978 -2 3,862 3,981 -3
_________ _________ _________ _________ _________
OIL SALES
2,232 2,256 2,271 Gasolines 2,206 2,404
732 750 791 Kerosenes 749 811
2,087 2,074 2,154 Gas/Diesel oils 2,106 2,296
715 729 814 Fuel oil 747 844
701 712 665 Other products 677 702
_________ _________ _________ _________ _________
See Total oil See
6,467 6,521 6,695 (1) products (1) * 6,485 7,057(1)
2,443 2,442 2,404 Crude oil (1) 2,472 3,695
_________ _________ _________ _________ _________
See Total oil sales See
8,910 8,963 9,099 (1) (1) 8,957 10,752(1)
_________ _________ _________ _________ _________
*comprising
1,976 1,948 2,119 Europe 1,973 2,093
Other Eastern
1,248 1,215 1,219 Hemisphere 1,227 1,232
1,398 1,506 1,551 USA 1,471 2,013
Other Western
654 658 714 Hemisphere 657 708
1,191 1,194 1,092 Export sales 1,157 1,011
CHEMICAL SALES
VOLUMES BY MAIN
PRODUCT CATEGORY
thousand tones (2)** thousand tonnes
3,498 3,430 3,455 Base chemicals 14,146 13,710
First line
2,188 2,200 2,154 derivatives 8,964 8,891
4 6 120 Other 27 225
_________ _________ _________ _________ _________
5,690 5,636 5,729 -1 23,137 22,826 +1
_________ _________ _________ _________ _________
**comprising
2,233 2,232 2,506 Europe 9,361 10,018
Other Eastern
1,474 1,385 1,362 Hemisphere 5,673 5,252
1,825 1,851 1,693 USA 7,464 6,893
Other Western
158 168 168 Hemisphere 639 663
1. Certain contracts are 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, in Q2 2006 840 thousand b/d and 1,940 thousand
b/d respectively, in Q3 2006 870 thousand b/d and 2,130 thousand b/d
respectively and in Q4 2006 780 thousand b/d and 1,970 thousand b/d
respectively.
2. Excluding volumes sold by equity accounted investments, chemical
feedstock trading and by-products.
Capital investment
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
Capital
expenditure:
Exploration
&
Production:
World
3,612 3,425 3,271 outside USA 14,632 9,633
694 519 450 USA 2,006 1,225
___________ ___________ ___________ ___________ _________
4,306 3,944 3,721 16,638 10,858
___________ ___________ ___________ ___________ _________
Gas & Power:
World
681 599 440 outside USA 1,924 1,564
49 2 2 USA 53 4
___________ ___________ ___________ ___________ _________
730 601 442 1,977 1,568
___________ ___________ ___________ ___________ _________
Oil
Products:
Refining:
World
292 251 359 outside USA 1,158 1,107
87 75 119 USA 280 272
___________ ___________ ___________ ___________ _________
379 326 478 1,438 1,379
___________ ___________ ___________ ___________ _________
Marketing:
World
714 569 554 outside USA 1,786 1,254
59 36 77 USA 139 177
___________ ___________ ___________ ___________ _________
773 605 631 1,925 1,431
___________ ___________ ___________ ___________ _________
Chemicals:
World
254 166 48 outside USA 519 170
152 53 44 USA 302 217
___________ ___________ ___________ ___________ _________
406 219 92 821 387
___________ ___________ ___________ ___________ _________
Other
269 1 95 segments 297 293
___________ ___________ ___________ ___________ __________
TOTAL
CAPITAL
6,863 5,696 5,459 EXPENDITURE 23,096 15,916
___________ ___________ ___________ ___________ _________
Exploration
expense:
World
235 161 215 outside USA 649 555
106 67 143 USA 300 260
___________ ___________ ___________ ___________ _________
341 228 358 949 815
___________ ___________ ___________ ___________ _________
New equity in equity
accounted investments
World
226 112 95 outside USA 537 373
49 3 2 USA 61 17
___________ ___________ ___________ ___________ _________
275 115 97 598 390
___________ ___________ ___________ ___________ _________
New loans to
equity
accounted
42 11 42 investments 253 315
___________ ___________ ___________ ___________ _________
TOTAL
CAPITAL
7,521 6,050 5,956 INVESTMENT* 24,896 17,436
___________ ___________ ___________ ___________ _________
*comprising
Exploration
4,740 4,214 4,144 & Production 17,944 12,046
827 645 457 Gas & Power 2,200 1,602
1,178 962 1,127 Oil Products 3,457 2,844
412 219 118 Chemicals 877 599
Other
364 10 110 segments 418 345
___________ ___________ ___________ ___________ _________
7,521 6,050 5,956 24,896 17,436
___________ ___________ ___________ ___________ _________
Additional segmental information
$ million FULL YEAR
2006 2005
UPSTREAM:
Exploration & Production segment 15,195 14,238
earnings
Of which:
Exploration 1,562 1,286
Depreciation, depletion & amortisation 8,844 8,152
Share of profit of equity accounted
investments 3,075 4,112
___________ ___________
Cash flow from operations 23,229 20,472
Less: Net working capital movements and
taxation paid/accrued (2,644) 477
___________ ___________
Cash flow from operations excluding net
working capital movements and taxation
paid/accrued 25,873 19,995
___________ ___________
Capital Employed 53,453 42,636
___________ ___________
Gas & Power segment earnings: 2,650 1,573
Of which:
Depreciation, depletion & amortisation 289 290
Share of profit of equity accounted
investments 1,515 999
___________ ___________
Cash flow from operations 2,212 448
Less: Net working capital movements and
taxation paid/accrued (367) (1,396)
___________ ___________
Cash flow from operations excluding net
working capital movements and taxation
paid/accrued 2,579 1,844
___________ ___________
Capital Employed 17,706 14,198
___________ ___________
DOWNSTREAM:
Oil products segment CCS earnings: 7,027 7,532
Of which:
Depreciation, depletion & amortisation 2,580 2,622
Share of profit of equity accounted
investments 1,585 1,426
___________ ___________
Cash flow from operations 3,593 10,138
Less: Net working capital movements and
taxation paid/accrued (4,963) (1,956)
___________ ___________
Cash flow from operations excluding net
working capital movements and taxation
paid/accrued 8,556 12,094
___________ ___________
Capital Employed 42,245 34,262
___________ ___________
Chemicals segment CCS earnings: 1,095 782
Of which:
Depreciation, depletion & amortisation 668 599
Share of profit of equity accounted
investments 494 201
___________ ___________
Cash flow from operations 1,853 2,352
Less: Net working capital movements and
taxation paid/accrued 475 105
___________ ___________
Cash flow from operations excluding net
working capital movements and taxation
paid/accrued 1,378 2,247
___________ ___________
Capital Employed 8,468 8,522
___________ ___________
Notes
NOTE 1. Accounting policies and basis of presentation
The quarterly financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) and the financial
statements are 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 to the Consolidated Financial Statements of Royal Dutch Shell
plc in the Annual Report 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 of Royal Dutch Petroleum Company (Royal Dutch) and The
''Shell'' Transport and Trading Company, p.l.c. (Shell Transport) by
acquiring all outstanding shares of Shell Transport and approximately 98.5%
of the outstanding shares of Royal Dutch. The minority in Royal Dutch ceased
to exist as of December 21, 2005 as a result of the merger of Royal Dutch and
Shell Petroleum NV.
The comparative periods represent information for Royal Dutch
Shell as if it had acquired 100% of Royal Dutch and Shell Transport for the
whole of those periods. These financial statements give retroactive effect
for all periods presented prior to the Unification Transaction, which has
been accounted for using a carry-over basis of the historical costs of the
assets and liabilities of Royal Dutch, Shell Transport and other companies
comprising the Royal Dutch/Shell Group of Companies. The interest of the
minority shareholders in Royal Dutch was accounted for using a carry-over
basis of the historical costs of its consolidated assets and liabilities.
Royal Dutch Shell has discontinued the publication of a Dutch
translation of the Annual Report and Form 20-F. This document will now only
be published in English. The Annual Review and Summary Financial Statements,
a summary of the Annual Report and Form 20-F, will continue to be published
in both English and Dutch.
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 of supplies (CCS) basis as applied for the Oil Products and Chemicals
segment earnings. Earnings on an estimated current cost of supplies basis
provide useful information concerning the effect of changes in the cost of
supplies on Royal Dutch Shell's results of operations and is a measure to
manage the performance of the Oil Products and Chemicals segments but is not
a measure of financial performance under IFRS.
On this basis, Oil Products and Chemicals segment cost of
sales of the volumes sold during the period is based on the cost of supplies
during the same period after making allowance for the estimated tax effect,
instead of use of the first-in, first-out (FIFO) method of inventory
accounting. Earnings calculated on 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. The adjustment for the Chemicals segment was
implemented in Q1 2006, historic periods have been restated accordingly.
NOTE 3. Discontinued operations
Income/(loss) from discontinued operations, which comprises gains and
losses on disposals and results of operations for the period, is provided in
the statement of income in accordance with IFRS for separate major lines of
business or geographical area of operations.
Earnings by industry segment relating to discontinued operations,
included within the segment earnings on page 14, are as follows:
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
- - - Chemicals segment earnings - (307)
- - - Income/(loss) from discontinued - (307)
operations
Basic earnings per share for the fourth quarter 2006 for 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 three quarters' income attributable to shareholders plus interest,
less tax and minority interest as a percentage of the average of Royal Dutch
Shell's share of closing capital employed and the opening capital employed a
year earlier. The tax rate and the minority interest components are derived
from calculations at the published segment level.
Components of the calculation ($ million):
2006 2005
Income attributable to shareholders (four quarters) 25,442 25,311
Royal Dutch Shell share of interest expense after tax 662 602
ROACE numerator 26,104 25,913
Royal Dutch Shell share of capital employed - opening 102,917 99,815
Royal Dutch Shell share of capital employed - closing 120,235 102,917
Royal Dutch Shell share of capital employed - average 111,576 101,366
ROACE 23.4% 25.6%
NOTE 5. Earnings by industry segment
Operating segment results are before deduction of minority
interest and also exclude interest and other income of a non-operational
nature, interest expense, non-trading currency exchange effects and tax on
these items, which are included in the results of the Corporate segment.
Operating segment results are after tax and include equity accounted
investments. Segment results in accordance with International Accounting
Standard 14 "Segment Reporting" will be disclosed in Royal Dutch Shell's 2006
Annual Report and Form 20-F, with a reconciliation to the basis as presented
here.
NOTE 6. Gearing
The Group aims to maintain an efficient balance sheet with an
average gearing ratio over time of between 20% and 25%. The numerator and
denominator in the gearing calculation used by the Group is calculated by
adding to reported debt and equity certain off-balance sheet obligations as
at the beginning of the year such as operating lease commitments and unfunded
retirement benefits (as applicable) which it believes to be in the nature of
incremental debt, and deducting cash and cash equivalents judged to be in
excess of amounts required for operational purposes. With effect from the
fourth quarter 2006, the off-balance sheet obligations for the year-end
calculation will be calculated using the data as at year-end instead of using
the off balance sheet obligations as at the beginning of the year. The
previous year has been recalculated accordingly.
Components of the calculation ($ million):
Dec 31 Dec 31
2006 2005
Non current debt 9,713 7,578
Current debt 6,060 5,338
___________ ___________
Total Debt 15,773 12,916
Add: Net present value of operating lease 11,319 9,442
obligations
Unfunded pension benefit obligations - 2,919
Less: Cash and cash equivalents in excess of (7,102) (9,830)
operational requirements
___________ ___________
Adjusted Debt 19,990 15,447
___________ ___________
Total Equity 114,945 97,924
___________ ___________
Total Capital 134,935 113,371
___________ ___________
Gearing ratio (adjusted debt as a percentage of 14.8% 13.6%
total capital)
NOTE 7. Equity
Total equity comprises equity attributable to shareholders of
Royal Dutch Shell and to the minority interests. Other reserves comprises the
capital redemption reserve, share premium reserve, merger reserve,
share-based compensation reserve, cumulative currency translation
differences, unrealised gains/(losses) on securities and unrealised
gains/(losses) on cash flow hedges.
$ million Ordinary Treasury Other Retained Total Minority Total
share shares reserves earnings interests equity
capital
At January 1, 571 (3,809) 3,584 90,578 90,924 7,000 97,924
2006
Income for the - - - 25,442 25,442 869 26,311
period
Income/(expense) - - 4,671 - 4,671 38 4,709
recognised
directly in
equity
Capital - - - - - 1,601 1,601
contributions
from minority
shareholders
Effect of - - 154 - 154 - 154
Unification
Dividends paid - - - (8,142) (8,142) (289) (8,431)
Treasury shares: - 493 - - 493 - 493
net
sales/(purchases)
and dividends
received
Shares (26) - 26 (8,201) (8,201) - (8,201)
repurchased for
cancellation
Share-based - - 385 - 385 - 385
compensation
At December 31, 545 (3,316) 8,820 99,677 105,726 9,219 114,945
2006
$ million Ordinary Treasury Other Retained Total Minority Total
share shares reserves earnings interests equity
capital
At January 1, 584 (4,187) 9,688 80,781 86,866 5,313 92,179
2005
Income for the - - - 25,311 25,311 950 26,261
period
Income/(expense) - - (4,366) - (4,366) 106 (4,260)
recognised
directly in
equity
Capital - - - - - 954 954
contributions
from minority
shareholders
Effect of - - (1,929) 30 (1,899) (30) (1,929)
Unification
Dividends paid - - - (10,556)(10,556) (293)(10,849)
Treasury shares: - 378 - - 378 - 378
net
sales/(purchases)
and dividends
received
Shares (13) - 13 (4,988) (4,988) - (4,988)
repurchased for
cancellation
Share-based - - 178 - 178 - 178
compensation
At December 31, 571 (3,809) 3,584 90,578 90,924 7,000 97,924
2005
NOTE 8. Statement of cash flows
This statement reflects cash flows of Royal Dutch Shell and
its subsidiaries as measured in their own currencies, which are translated
into US dollars at average rates of exchange for the periods and therefore
exclude currency translation differences except for those arising on cash and
cash equivalents.
Cash from operating activities excluding net working capital
movements, current taxation and taxation paid is calculated using the
following line items from the cash flow statement:
QUARTERS $ million FULL YEAR
Q4 Q3 Q4
2006 2006 2005 2006 2005
Cash flow from
operating
5,959 10,079 8,465 activities 31,696 30,113
3,157 4,403 4,490 Current taxation 17,338 19,435
Decrease/(increase)
in net working
643 560 3,295 capital (4,052) (5,664)
(6,617) (4,489) (6,664) Taxation paid (21,045) (19,243)
_______ ___________ ___________ ___________ _________
8,776 9,605 7,344 39,455 35,585
_______ ___________ ___________ ___________ _________
NOTE 9. Earnings per Royal Dutch Shell share
The total number of Royal Dutch Shell shares in issue at the
end of the period was 6,455.1 million. Royal Dutch Shell reports earnings per
share on a basic and on a diluted basis, based on the weighted average number
of Royal Dutch Shell (combined A and B) shares outstanding. Shares held in
respect of share options and other incentive compensation plans are excluded
in determining basic earnings per share.
Basic earnings per share calculations are based on the
following weighted average number of shares (millions):
Q4 Q3 Q4 Full year Full year
2006 2006 2005 2006 2005
Royal Dutch Shell shares of
EUR0.07 6,314.8 6,373.9 6,563.7 6,413.4 6,674.2
Diluted earnings per share calculations are based on the following
weighted average number of shares (millions). This adjusts the basic number
of shares for all share options currently in-the-money.
Q4 Q3 Q4 Full year Full year
2006 2006 2005 2006 2005
Royal Dutch Shell shares of
EUR0.07 6,341.9 6,399.8 6,586.4 6,440.0 6,694.4
Basic shares at the end of the following periods are (millions):
Q4 Q3 Q4
2006 2006 2005
Royal Dutch Shell shares of EUR0.07 6,298.8 6,336.3 6,525.1
One American Depository Receipt (ADR) is equal to two Royal Dutch Shell
shares.
NOTE 10. Reserves Replacement Ratio
The Reserve Replacement Ratio is a measure used by management
to indicate the extent to which production is replaced by SEC proved oil and
gas reserves and provable mining reserves (oil sands) additions during a
particular period. The ratio is calculated based on barrels of oil equivalent
and reflects changes resulting from revisions and reclassifications of
previously reported reserves, improved recovery, extensions, discoveries and
other additions. It includes the impact of sales and purchases of reserves in
place.
Statement of Financial Accounting Standards No.69 requires
separate disclosure of proved reserves associated with (i) consolidated
entities and (ii) investments in entities that are accounted for in the
financial statements using equity method accounting. The SEC has also advised
Shell that they believe Reserve Replacement Ratio should be calculated on a
similar basis. As noted, Shell's Reserve Replacement Ratio includes both SEC
proved oil and gas reserves and provable mining reserves.
For Group companies, without equity accounted investments, the
Reserves Replacement Ratio for 2006 is expected to be in the range of 200% to
220% including oil sands or 165% to 185% excluding oil sands.
The Reserve Replacement Ratio is not an indicator of future
production because the ultimate development and production of reserves is
subject to a number of risks and uncertainties. These include the risks
associated with the successful completion of large-scale projects, including
addressing ongoing regulatory issues and completion of infrastructure, as
well as changes in oil and gas prices, political risks and geological and
other environmental risks.
In December 2006, Shell signed a protocol with Gazprom, which
contemplates a reduction in Shell's 55% interest in Sakhalin II, in Russia,
to a 27.5% interest, in exchange for a $4.1 billion cash payment. As an
indication of the likely impact of this transaction on proven reserves in
2007, Shell has provided the following information. At the end of 2006,
Sakhalin II was recorded in Shell's reserves on a fully consolidated basis,
with net reserves of 0.8 billion barrel of oil equivalent (boe), consisting
of approximately 1.5 billion boe for consolidated Group companies, offset by
0.7 billion attributable to Minority interests. On successful completion of
this transaction, Shell's net share of these reserves would be reduced by
approximately 0.4 billion boe and the remaining reserves of approximately 0.4
billion on a 2006 basis would be reclassified to Group share of equity
accounted investments. This transaction is expected to close in 2007, and to
reduce Shell's reserves from 2007.
* (from page 2) made up of SEC proved reserves additions of
1.6 to 1.7 billion boe from Group Companies, a reduction of 0.05 to 0.07
billion boe in proved reserves from equity accounted investments, and
additions to provable mining reserves of 0.40 to 0.44 billion boe.
The information in these quarterly results reflects the
consolidated financial position and results of Royal Dutch Shell plc ("Royal
Dutch Shell"). All amounts shown throughout this report are unaudited.
Registered Office: England, 4366849, Shell Centre, London, SE1 7NA, UK
- -------------------------------------------------------------------------------
Royal Dutch Shell plc
Fourth Quarter 2006 - Key Financial Data in dollars, euros and pounds
sterling
Royal Dutch Shell plc publishes its financial statements in US dollars. Given
below are some of the key items for the quarter translated into euros and
pounds sterling.
$ million euro million £ million
2006 2005 % 2006 2005 % 2006 2005 %
Revenue
75,500 75,496 +0 Fourth quarter 58,580 63,485 -8 39,441 43,176 -9
318,845 306,731 Twelve months 247,392 257,930 166,565 175,419
Income attributable to shareholders
5,283 4,368 +21 Fourth quarter 4,099 3,673 +12 2,760 2,498 +10
25,442 25,311 Twelve months 19,740 21,284 13,291 14,475
CCS Earnings
6,015 5,441 +11 Fourth quarter 4,667 4,575 +2 3,142 3,112 +1
25,365 22,731 Twelve months 19,681 19,114 13,251 13,000
Total Equity
114,945 97,924 +17 Fourth quarter 87,335 82,618 +6 58,622 56,698 +3
Capital Investment
7,521 5,956 +26 Fourth quarter 5,836 5,008 +17 3,929 3,406 +15
24,986 17,436 Twelve months 19,387 14,662 13,053 9,972
Income attributable to Shareholders
Q4 Q3 Q4
Per Ordinary Share 2006 2006 2005
ROYAL DUTCH SHELL PLC
$ 0.84 0.93 0.67
euro 0.65 0.73 0.56
pence 43.71 49.73 38.06
Notes:
1. The exchange rates used in the quarterly translation are the average rates,
except in the case of total equity where the end rate is used:
euro/$ £/$
2006 2005 2006 2005
Fourth quarter average rate 0.7759 0.8409 0.5224 0.5719
Fourth quarter end rate 0.7598 0.8437 0.5100 0.5790
2. CCS earnings is earnings on an estimated current cost of supplies
basis.
3. Capital investment is capital expenditure, exploration expenses excluding
the cost of carrying and retaining unproven properties and the costs of
unsuccessful exploratory drilling, new investments in equity accounted
investments and certain other investments.
4. Earnings per share calculations are explained in the notes to the Quarterly
Results Announcement.
5. Previous periods are adjusted for discontinued operations.
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| Royal Dutch Shell plc | ||
| Date: 1 February 2007 | By: |
/s/M.C.M. Brandjes |
| Name: | M.C.M. Brandjes | |
| Title: | Company Secretary | |