Delivery and growth. Royal Dutch Shell plc

Transcription

1 Delivery and growth Royal Dutch Shell plc Financial and Operational Information

2 Royal Dutch Shell Financial and Operational Information ABOUT THIS BOOKLET The Financial and Operational Information booklet 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 forwardlooking statements included in this booklet, 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 booklet 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 booklet. 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 booklet. Please refer to the Annual Report on Form 20-F for the year ended 31 December 2006 for a description of certain important factors, risks and uncertainties that may affect the businesses of the Shell Group. This booklet has not been subject to audit. 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. Investors are urged to consider closely the disclosure in our Annual Report on Form 20-F for the year ended 31 December 2006, File No and disclosure in our Forms 6-K file No , available on the SEC s website You can also obtain these forms from the SEC by calling SEC The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this booklet 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 booklet 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 booklet, associates and jointly controlled entities are also referred to as equity accounted investments. The expression operating companies as used in the booklet refers to those Group and equity accounted investments that are engaged in the exploration for and extraction of oil and natural gas and delivery of these hydrocarbons to market, the marketing and trading of natural gas and electricity, the conversion of natural gas to liquids and the refining of crude oil into products including fuels, lubricants, petrochemicals, and other industry segments such as Hydrogen and Renewables. The term Group interest is used for convenience to indicate the direct and/or indirect equity interest held by the Group in a venture, partnership or company (ie after exclusion of all third-party interests). Except as otherwise stated, the Financial Statements contained in this booklet have been prepared in accordance with the provisions of the Companies Act 1985, Article 4 of the International Accounting Standards (IAS) Regulation and with International Financial Reporting Standards ( IFRS ) as adopted by the European Union. As applied to Royal Dutch Shell, there are no material differences with IFRS as issued by the International Accounting Standards Board. Prior to the Shell Group s date of transition to IFRS of 1 January 2004 it prepared Consolidated Financial Statements in accordance with US Generally Accepted Accounting Principles ( US GAAP ). Tables and disclosure that provide data over a five-year period show 2006, 2005 and 2004 on an IFRS basis and 2003 and 2002 on a US GAAP basis. The Consolidated Financial Statements of Royal Dutch Shell and its subsidiaries have been prepared using the carry-over basis to account for the Unification and on the basis that the resulting structure was in place throughout the periods presented. Except as otherwise noted, the figures shown in this booklet are stated in US dollars. As used herein all references to dollars or $ are to the US currency. Internal segment reporting is on a global basis. For the main segments an analysis of certain data is provided in this booklet between the USA and the world outside the USA. Assets and liabilities of non-us dollar Group companies are translated to US dollars at year-end rates of exchange, whilst their statements of income and cash flows are translated at quarterly average rates. Translation differences arising on consolidation are taken directly to a currency translation differences account within equity. Upon divestment or liquidation of an entity, cumulative currency translation differences related to that entity are taken to income. The maps in this publication are intended only to give an impression of the magnitude of the Group s Exploration & Production activities in certain parts of the world. They must not be considered authoritative, particularly in respect of delimitation of national, concession or other boundaries, nor in respect of the representation of pipeline routes and landfalls, field sizes or positions. The maps mainly describe the situation as at 31 December This booklet contains references to Shell s website. These references are for the readers convenience only. Shell is not incorporating by reference any information posted on

3 This booklet supplements the Royal Dutch Shell plc Annual Report and Form 20-F for the year ended December 31, 2006, which contain financial statements and information on the Shell Group, including details of the accounting policies employed. Reference to the Annual Report will assist the understanding of the information in this booklet. REVIEW OF THE YEAR FINANCIAL STATEMENTS EXPLORATION & PRODUCTION GAS & POWER OIL PRODUCTS CHEMICALS OTHER INDUSTRY SEGMENTS SUPPLEMENTARY INFORMATION 2 Our purpose results 4 Where we operate 6 Our strategy 8 Share information 10 Consolidated Statement of Income 12 Consolidated Balance Sheet 14 Consolidated Statement of Cash Flows 16 (Quarterly) earnings by industry segment 18 Financial ratios, Exchange rates 19 Capital investments 20 Fixed assets, Depreciation, depletion and amortisation 21 Capital employed, Taxation 22 Employee data 23 Summary 24 Location of activities 25 North America USA 26 North America Alaska and Canada; Venezuela, Brazil and Argentina 27 North West Europe 28 Italy and Austria, Gabon and Angola, Nigeria and Cameroon 29 Algeria and Tunisia, Libya 30 China, Pakistan 31 West Malaysia, Philippines, Brunei and East Malaysia 32 Australia, New Zealand 33 Iran, Qatar, United Arab Emirates, Saudi Arabia and Oman 34 Syria, Egypt 35 Russia, Ukraine, Azerbaijan and Kazakhstan 36 Oil and gas operations 38 Oil and gas reserves 46 Oil and gas earnings 48 Oil and gas 50 Summary 51 Location of activities 52 Summary 53 Location of activities 54 Refining 55 Oil sales 56 Revenue, Shipping 57 Summary 58 Location of activities, Sales 59 Summary, Location of activities 60 Financial calendar Contact information ROYAL DUTCH SHELL plc 1

4 Our purpose The objectives of the Shell Group are to engage safely, responsibly, efficiently and profitably in oil, gas, oil products, chemicals and other selected businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the world s growing demand for energy. We believe that oil and gas will be integral to the global energy needs for economic development for many decades to come. Our role is to ensure that we extract and deliver them in environmentally and socially responsible ways, safely and profitably. We seek a high standard of performance, maintaining a strong long-term and growing position in the competitive environments in which we choose to operate. We aim to work closely with our stakeholders to advance more efficient and sustainable use of energy and natural resources. 2 ROYAL DUTCH SHELL plc

5 2006 results Delivery and growth are the basis for our success. We deliver projects, top-quality operational performance and competitive returns while investing in new developments to secure the growth of our business. Delivery is doing what we say. Growth is our future Revenue $318.8 billion Income for the period $26.3 billion Cash flow from operating activities $31.7 billion Earnings per share IFRS ($) Earnings per share US GAAP ($) 114,945 10,556 97,924 91,383 81,666 69,763 8,142 7,391 6,352 5, Total assets less total liabilities IFRS ($ million) Net assets before minority interest US GAAP ($ million) Dividends paid to shareholders ($ million) Dividends paid to shareholders ($ million) ROYAL DUTCH SHELL plc 3

6 Where we operate AOSP/Peace River Pinedale We are active in more than 130 countries and territories worldwide. We are exploring for oil and gas in wellestablished regions such as the Gulf of Mexico and in frontier territories such as the Beaufort Sea. Key producing areas today are the USA, Europe and our operations in Africa and the Middle East. New supplies are being brought on stream from major projects in challenging frontier environments such as Sakhalin and Athabasca. Port Arthur REVENUE BY REGION $ million % Europe 136, Middle East, Africa, CIS and Asia Pacific 76, USA 80, Canada, Latin America 24,666 8 TOTAL 318,845 EMPLOYEES BY REGION [A] % UK 8,000 7 Netherlands 10,000 9 Other Europe 19, Middle East, Africa, CIS and Asia Pacific 35, USA 24, Canada, Latin America 12, TOTAL 108,000 BC 10 [A] Average numbers, rounded to nearest thousand. KEY: UPSTREAM Exploration & Production Gas & Power DOWNSTREAM Oil Products Chemicals OTHER Renewables and Hydrogen MAJOR GROWTH HUBS Downstream Upstream > 100,000 BOE/D 50, ,000 BOE/D NORTH AMERICA Canada USA LATIN AMERICA Argentina Bolivia Brazil Chile Colombia Costa Rica Ecuador El Salvador Guatemala Honduras Mexico Nicaragua Panama Peru Surinam Venezuela THE CARIBBEAN Antigua & Barbuda Bahamas Barbados Dominican Republic French Antilles & Guiana Puerto Rico St. Kitts & Nevis St. Lucia St. Vincent Trinidad & Tobago EUROPE Austria Belgium Bulgaria Croatia Czech Republic Denmark Estonia Finland France Germany Gibraltar Greece Hungary Iceland Ireland Italy Latvia Lithuania Luxembourg Montenegro Netherlands Norway Poland Portugal Romania Serbia Slovakia Slovenia Spain Sweden Switzerland Turkey UK 4 ROYAL DUTCH SHELL plc

7 Ormen Lange Kashagan Sakhalin Qatargas 4 Pearl Singapore chemicals Australia AFRICA MIDDLE EAST COMMONWEALTH OF INDEPENDENT STATES ASIA PACIFIC Algeria Lesotho Iran Azerbaijan Australia Angola Libya Oman Kazakhstan Brunei Benin Botswana Burkina Faso Cameroon Cape Verde Islands Democratic Republic of Congo Cote d Ivoire Djibouti Egypt Ethiopia Gabon Gambia Ghana Guinea Kenya Madagascar Mali Morocco Mozambique Namibia Nigeria La Réunion Senegal South Africa Sudan Swaziland Tanzania Togo Tunisia Uganda Zimbabwe Qatar Saudi Arabia Syria United Arab Emirates Yemen Russia Ukraine China (includes Hong Kong) Fiji Guam India Indonesia Japan Laos Malaysia Mauritius New Zealand Pakistan Philippines Singapore South Korea Sri Lanka Taiwan Thailand Vietnam ROYAL DUTCH SHELL plc 5

8 Our strategy BUSINESS AND STRATEGY OVERVIEW Royal Dutch Shell consists of the upstream businesses of Exploration & Production and Gas & Power and the downstream businesses of Oil Products and Chemicals. We also have interests in alternative energy sources including Renewables and Hydrogen. We are a world leader in liquefied natural gas (LNG) and are pioneering new uses of gas including Gas to Liquids (GTL). We have a diverse and well balanced downstream portfolio. A key challenge facing the global oil and gas industry is to find and develop sufficient resources to help meet growing world demand for energy. Over time, the Group has achieved higher earnings and returns on investment in the upstream compared with its other businesses and sees significant growth potential for oil and natural gas. Our upstream business will therefore be the focus for future growth. In the downstream the emphasis will be on sustained cash generation, and selective growth investments, continuing to reshape our portfolio with a focus on the growing markets in the Asia Pacific region. The major themes that underpin the company s strategy are technology, integration, and exploration. Shell s technology capabilities are well known in the industry, with key strengths in drilling technology, complex refining, LNG and GTL. In 2006, the Group s R&D costs were $885 million. This is up from $588 million in 2005 and $553 million in If field tests and involvement in third party technology are included, the total investment in 2006 increases to approximately $1.2 billion. Integration is at the heart of our growth activities, from new chemicals investment in Singapore with Group refining capacity, to oil sands mining and upgrading activities in Canada. In exploration, we deliberately target the prospects that have the scale to add value to Shell s resources base, often in deep water frontiers such as the BC-10 deepwater block offshore of Espirito Santo state, Brazil. In 2006, the company recorded earnings of $26.3 billion. Cashflow was $31.7 billion, and total return to shareholders was $16.3 billion. Net capital investment in 2006 was $24.9 billion; including organic spending, acquisitions, and divestment proceed. At the end of 2006, balance sheet gearing, including certain off-balance sheet items, was 14.8%. We plan net capital spending of $22 to $23 billion in 2007, of which around 80% will be invested in upstream projects. This investment helps create an upstream portfolio of assets that will have long production lives. These investments will be in both conventional and unconventional hydrocarbon projects. Our capital programme will also maintain and enhance our competitive position in the downstream by improving the quality, integrity and competitiveness of our refinery portfolio and by developing our presence in growth markets. Capital employed in downstream should be relatively stable in the coming years, with very selective investments in manufacturing capacity, and a shift in emphasis into the growth markets in the East, such as India, China and others. In Singapore we are expanding our chemicals capacity at 800,000 tonnes of ethylene per annum for the cracker, 750,000 tonnes per annum for the MEG plant, and 155,000 tonnes per annum for the butadiene extraction unit. Currently we are looking at the potential to double our refining capacity at Port Arthur in the USA to over 600,000 barrels per day. We expect strong growth in upstream capital employed. Royal Dutch Shell is making major investments in new projects. By the end of the decade we expect our LNG capacity to have grown by some 50% versus 2006 levels and our oil sands capacity by more than 60%. Early in the next decade, we will be operating the first world scale GTL plant, in Qatar. These long-term positions offer the potential for decades of strong cash generation, as well as opportunities for further profitable growth through adding capacity and economies of scale. Meeting growing world demand for energy in ways that minimise the impact on the environment is a major challenge for the global energy industry. We are pursuing a range of potential opportunities to develop businesses based on alternative energies. Shell recognises the importance of CO 2 management to our business and the opportunities it represents. We are playing a key role in developing responsible ways to manage carbon dioxide. These include CO 2 sequestration projects, energy efficiency and investment in CO 2 mitigation technology. Shell is developing substitutes for oil in the transport and power generation sectors. Our proprietary Gas to Liquids (GTL) technology turns natural gas into cleaner-burning transport fuels, increasing supply alternatives, Shell Hydrogen operated five demonstration refuelling stations in Shell Renewables is investing in next-generation solar and wind, and we are one of the world s leading distributors of biofuels. 6 ROYAL DUTCH SHELL plc

9 STRATEGY ON TRACK CONTEXT Growth energy demand Cash generation + reinvestment Environment + sustainability Competition COMPETITIVE RETURNS COMPETITIVE RETURNS STRATEGY More upstream, profitable downstream Portfolio choices Unconventionals + renewables Downstream includes chemicals PRIORITIES Delivery + growth Top quartile performance Project excellence Technology + people INCREASING PROJECT COMPLEXITY AND INTEGRATION Oil sands Upgrading Refining & chemicals Customers Conventional oil & gas LNG & GTL UPSTREAM DOWNSTREAM TECHNOLOGY AND INNOVATION CO 2 SOLUTIONS NON-STOP INNOVATION LNG Catalysts Seismic imaging Smart wells MEETING CHALLENGES Deepwater Tight gas GTL fuel Coal gasification NEW HORIZONS Wind, solar Biofuels, hydrogen Coal-to-liquids Oil shale CO 2 SOLUTIONS ROYAL DUTCH SHELL plc 7

10 Share information CLASS A AND CLASS B SHARES Royal Dutch Shell has two classes of shares Class A shares and Class B shares. The Class A shares and Class B shares have identical rights except in relation to the dividend source. Dividends having a Dutch source are intended to be paid to holders of Class A shares and dividends having a UK source are intended to be paid to holders of Class B shares. ROYAL DUTCH SHELL LISTING INFORMATION Class A shares Class B shares Ticker symbol London RDSA RDSB Ticker symbol Amsterdam RDSA RDSB Ticker symbol New York (ADR [A] ) RDS.A RDS.B ISIN Code GB00B03MLX29 GB00B03MM408 CUSIP G7690A100 G7690A118 SEDOL Number London B03MLX2 B03MM40 SEDOL Number Euronext B09CBL4 B09CBN6 Weighting on FTSE as at 29/12/ % 3.269% Weighting on AEX as at 29/12/ % not included [A] One ADR is equal to two underlying shares. SHARE PRICES RDSA and Royal Dutch ordinary shares Amsterdam [A] RDSB Amsterdam RDSA Royal Dutch ordinary shares [B] (Jul 20 to (Jan 1 to Dec 31) Sep 30) High Low Year end (Jul 20 to Dec 31) High Low Year end RDSA London RDSB and Shell Transport Ordinary Shares London [E] pence pence RDSB Shell Transport Ordinary Shares (Jul 20 to Dec 31) High 1,880 1,894 Low 1,671 1,633 Year end 1,785 1, (Jul 20 to (Jan 1 to Dec 31) Jul 19) High 2,071 1,968 1,991 1,570 1,531 1,888 Low 1,764 1,717 1,528 1,205 1,154 1,256 Year end 1,790 1,858 1,838 1,545 1,446 1,423 RDS Class A ADRs and Royal Dutch New York Shares New York [C] $ RDS Class B ADRs and Shell Transport ADRs New York [F] $ RDS Class A ADRs Royal Dutch ordinary shares RDS Class B ADRs Shell Transport ADRs [D] (Jul 20 to (Jan 1 to Dec 31) Sep 30) High Low Year end [A] Pursuant to the terms of the Unification, holders of Royal Dutch ordinary shares received two Royal Dutch Shell plc Class A ordinary shares for each Royal Dutch ordinary share. To assist comparison, the historical prices of the Royal Dutch ordinary shares have been divided by 2 to reflect such exchange ratio. [B] Royal Dutch ordinary shares continued to trade on Euronext Amsterdam following the completion of the Unification until such shares were delisted on September 30, [C] Pursuant to the terms of the Unification, holders of Royal Dutch New York Shares received one Royal Dutch Shell plc Class A ADR for each Royal Dutch New York Share. Each Royal Dutch Shell plc Class A ADR represents two Royal Dutch Shell plc Class A ordinary shares. [D] The New York Stock Exchange halted trading in the Royal Dutch New York Shares on October 3, 2005, following delisting in Amsterdam, and resumed trading in the Royal Dutch New York Shares on October 31, 2005, following the joint public announcement by Royal Dutch Shell and Royal Dutch of the definitive terms of the legal merger between Royal Dutch and its wholly owned subsidiary Shell Petroleum N.V., in which all outstanding Royal Dutch shares were (Jul 20 to (Jan 1 to Dec 31) Jul 19) High Low Year end exchanged for?52.21 (or the equivalent in loan notes). The table excludes trading in Royal Dutch New York Shares for the period from October 3, 2005 through their delisting on November 21, [E] Pursuant to the terms of the Unification, holders of Shell Transport Ordinary Shares (including Shell Transport Ordinary Shares to which holders of Shell Transport bearer warrants were entitled) received Royal Dutch Shell plc Class B ordinary shares for each Shell Transport Ordinary Share. To assist comparison, the historical prices of the Shell Transport Ordinary Shares have been divided by to reflect such exchange ratio. [F] Pursuant to the terms of the Unification, holders of Shell Transport ADRs received Royal Dutch Shell plc Class B ADRs for each Shell Transport ADR. To assist comparison, the historical prices of the Shell Transport ADRs have been divided by to reflect such exchange ratio. Each Royal Dutch Shell plc Class B ADR represents two Royal Dutch Shell plc Class B ordinary shares. 8 ROYAL DUTCH SHELL plc

11 SHARES OUTSTANDING Weighted average At year end number of shares excluding shares excluding shares At year end held by the Group held by the Group A shares ,695,780,000 3,585,194,588 3,601,574, ,935,625,000 3,817,240,213 3,965,829, ,148,800,000 4,039,611,920 4,046,424, ,167,000,000 4,066,439,836 4,073,375, ,198,570,000 4,120,339,614 4,115,315,474 B shares ,759,360,000 2,713,568,281 2,713,237, ,759,360,000 2,707,858,347 2,708,431, ,765,552,027 2,712,563,580 2,724,034, ,777,792,416 2,735,191,315 2,737,938, ,777,792,416 2,745,748,422 2,760,872,739 Total shares ,455,140,000 6,298,762,869 6,314,811, ,694,985,000 6,525,098,560 6,674,261, ,914,352,027 6,752,175,500 6,770,458, ,944,792,416 6,801,631,151 6,811,314, ,976,362,416 6,866,088,036 6,876,188,213 DIVIDENDS Royal Dutch Shell intends to pay quarterly dividends and to grow the dividend at least in line with inflation over a number of years. On February 1, 2007 the Board announced that going forward the inflation level will be based on inflation levels in global developed economies, rather than a blend of European inflation rates. Dividend growth going forward will be measured in US dollars. On February 2007 the Board also announced that effective from the first quarter 2007, dividends will be declared in dollars rather than euro. The Company will announce the euro and pound sterling equivalent amounts at the same time as the dollar declaration, using an exchange rate from the day before the declaration date. Dividends declared on A shares are paid by default in euros, although holders of A shares are able to elect to receive dividend in pounds sterling. Dividends declared on B shares are paid by default in pound sterling, although holders of B shares are able to elect to receive dividend in euro. Dividends declared on ADRs are paid in dollars. Eligible shareholders must make currency elections the day before the declaration date. It is expected that holders of Class B ordinary shares will receive dividends through the dividend access mechanism applicable to such shares. Class A shares Q [A] Q Q Q Interim 0.38 [A] 0.37 [A] 0.36 [A] Final/second interim 0.52 [A] 0.51 [A] 0.50 [A] Total Amount paid during the year Class B shares pence Q [A] Q Q Q Interim [A] [A] [A] Final/second interim [A] [A] [A] Total Amount paid during the year Class A ADRs $ Q [A] Q Q Q Interim 0.90 [A] 0.85 [A] 0.70 [A] Final/second interim 1.33 [A] 1.21 [A] 1.10 [A] Total Amount paid during the year Class B ADRs $ Q [A] Q Q Q Interim 0.78 [A] 0.67 [A] 0.64 [A] Final/second interim 1.43 [A] 1.21 [A] 1.04 [A] Total Amount paid during the year [A] Historical data for Royal Dutch converted to Royal Dutch Shell equivalents. ROYAL DUTCH SHELL plc 9

12 Financial statements CONSOLIDATED STATEMENT OF INCOME IFRS $ million Revenue: Exploration & Production 17,909 23,970 18,400 Gas & Power 15,887 13,766 9,625 Oil Products 248, , ,424 Chemicals 36,306 31,018 26,877 Other industry segments and Corporate ,060 Revenue [A] 318, , ,386 Cost of sales 262, , ,259 Gross profit 55,856 54,109 43,127 Selling, distribution and administrative expenses 16,616 15,482 15,098 Exploration 1,562 1,286 1,809 Share of profit of equity accounted investments 6,671 7,123 5,015 Interest and other income 1,428 1,171 1,483 Interest expense 1,149 1,068 1,059 Income before taxation 44,628 44,567 31,659 Taxation 18,317 17,999 12,168 Income from continuing operations 26,311 26,568 19,491 Income from discontinued operations (307) (234) Income for the period 26,311 26,261 19,257 Income attributable to minority interest Income attributable to shareholders of Royal Dutch Shell plc 25,442 25,311 18,540 Research and development expenditure included in cost of sales Depreciation, depletion and amortisation included as follows: Cost of sales 11,275 10,384 10,569 Selling, distribution and administrative expenses 1,176 1,472 1,593 Exploration Total 12,615 11,981 12,845 [A] Revenue is stated after deducting sales taxes, excise duties and similar levies of $70,929 million in 2006, $72,277 million in 2005 and $72,370 million in EARNINGS PER SHARE IFRS $ Basic earnings per share Continuing operations Discontinued operations (0.05) (0.03) Diluted earnings per share Continuing operations Discontinued operations (0.05) (0.03) 10 ROYAL DUTCH SHELL plc

13 CONSOLIDATED STATEMENT OF INCOME US GAAP $ million Revenue: Exploration & Production 12,224 11,640 Gas & Power 7,377 4,254 Oil Products 155, ,025 Chemicals 18,843 14,125 Other industry segments and Corporate Revenue [A] 195, ,797 Cost of sales 162, ,065 Gross profit 33,044 27,732 Selling, distribution and administrative expenses 13,100 11,019 Exploration 1,475 1,052 Research and development Operating profit of Shell Group companies 17,885 15,189 Share of profit of equity accounted investments 3,446 2,792 Operating profit 21,331 17,981 Interest and other income 1, Interest expense 1,324 1,291 Currency exchange gains/(losses) (231) (25) Income before taxation 21,772 17,447 Taxation 9,364 7,723 Income after taxation 12,408 9,724 Income applicable to minority interests Income from continuing operations 12,055 9,550 Income from discontinued operations, net of tax Cumulative effect of a change in accounting principle, net of tax 255 Income attributable to shareholders of Royal Dutch Shell plc 12,322 9,671 Depreciation, depletion and amortisation included as follows: Cost of sales 9,863 7,469 Selling, distribution and administrative expenses 1,409 1,157 Exploration Research and development Total 11,711 8,739 [A] Revenue is stated after deducting sales taxes, excise duties and similar levies of $65,527 million in 2003 and $54,834 million in EARNINGS PER SHARE US GAAP $ Basic earnings per share Continuing operations Discontinued operations 0.02 Cumulative effect of a change in accounting principle 0.04 Diluted earnings per share Continuing operations Discontinued operations 0.02 Cumulative effect of a change in accounting principle 0.04 ROYAL DUTCH SHELL plc 11

14 FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET IFRS $ million Dec 31, 2006 Dec 31, 2005 Dec 31, 2004 Assets: Non-current assets Intangible assets 4,808 4,350 4,528 Property, plant and equipment 100,988 87,558 87,918 Exploration & Production 61,679 51,275 50,889 Gas & Power 8,852 7,256 6,251 Oil Products 23,375 22,263 23,622 Chemicals 6,196 5,945 6,348 Other industry segments and Corporate Investments: equity accounted investments 20,740 16,905 19,190 financial assets 4,493 3,672 2,700 Deferred tax 2,968 2,562 2,789 Pre-paid pension costs 3,926 2,486 2,479 Other 5,468 4,091 5, , , ,397 Current assets Inventories 23,215 19,776 15,375 Accounts receivable 59,668 66,386 37,473 Cash and cash equivalents 9,002 11,730 9,201 91,885 97,892 62,049 Total assets 235, , ,446 Liabilities: Non-current liabilities Debt 9,713 7,578 8,858 Deferred tax 13,094 10,763 12,930 Retirement benefit obligations 6,096 5,807 6,795 Other provisions 10,355 7,385 6,828 Other 4,325 5,095 5,800 43,583 36,628 41,211 Current liabilities Debt 6,060 5,338 5,734 Accounts payable and accrued liabilities 62,556 69,013 37,909 Taxes payable 6,021 8,782 9,058 Retirement benefit obligations Other provisions 1,792 1,549 1,812 76,748 84,964 54,852 Total liabilities 120, ,592 96,063 Equity Ordinary share capital Preference share capital 20 Treasury shares (3,316) (3,809) (4,187) Other reserves 8,820 3,584 8,865 Retained earnings 99,677 90,578 80,788 Equity attributable to shareholders of Royal Dutch Shell plc 105,726 90,924 86,070 Minority interest 9,219 7,000 5,313 Total equity 114,945 97,924 91,383 Total liabilities and equity 235, , ,446 Capital employed [A] 130, , ,975 [A] Capital employed is Group total assets minus total liabilities before deduction of minority interest, plus short-term and long-term debt. 12 ROYAL DUTCH SHELL plc

15 CONSOLIDATED BALANCE SHEET US GAAP $ million Dec 31, 2003 Dec 31, 2002 Fixed assets Intangible assets 4,735 4,696 Property, plant and equipment 87,088 78,363 Exploration & Production 49,273 46,257 Gas & Power 5,949 2,079 Oil Products 24,773 23,763 Chemicals 6,177 5,299 Other industry segments and Corporate Investments: equity accounted investments 19,371 17,945 securities 2,317 1,719 other 1,086 1,420 Total fixed assets 114, ,143 Other long-term assets 11,349 7,333 Current assets Inventories 12,690 11,338 Accounts receivable 29,013 28,797 Cash and cash equivalents 2,117 1,709 Total current assets 43,820 41,844 Current liabilities: amounts due within one year Short-term debt 10,569 12,265 Accounts payable and accrued liabilities 32,383 32,221 Taxes payable 5,927 4,985 Total current liabilities 48,879 49,471 Net current assets/(liabilities) (5,059) (7,627) Total assets less current liabilities 120, ,849 Long-term liabilities Long-term debt 9,100 6,817 Other 6,054 6,174 15,154 12,991 Provisions Deferred taxation 15,185 12,551 Pensions and similar obligations 4,927 5,016 Decommissioning and restoration costs 3,955 3,528 24,067 21,095 Group net assets before minority interests 81,666 69,763 Minority interests (3,415) (3,568) Net assets 78,251 66,195 Shareholders equity Equity share capital Preference shares Additional paid in capital 5,372 5,375 Treasury shares (3,428) (2,797) Other comprehensive income (78) (6,971) Retained earnings 75,778 69,978 78,251 66,195 Capital employed [A] 101,335 88,845 [A] Capital employed is Group total assets minus total liabilities before deduction of minority interest, plus short-term and long-term debt. ROYAL DUTCH SHELL plc 13

16 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS [A] IFRS $ million Cash flow from operating activities: Income for the period 26,311 26,261 19,257 Adjustment for: Current taxation 17,338 19,435 13,081 Interest (income)/expense Depreciation, depletion and amortisation 12,615 11,981 12,845 (Profit)/loss on sale of assets (571) (1,313) (3,087) Decrease/(increase) in net working capital (4,052) (5,664) (4,062) Share of profit of equity accounted investments (6,671) (7,123) (5,015) Dividends received from equity accounted investments 5,488 6,709 4,190 Deferred taxation and other provisions 1,833 (1,515) (1,007) Other (266) (47) 292 Cash flow from operating activities (pre-tax) 52,741 49,356 37,297 Taxation paid (21,045) (19,243) (10,760) Cash flow from operating activities 31,696 30,113 26,537 Cash flow from investing activities: Capital expenditure (22,922) (15,904) (13,566) Investments in equity accounted investments (851) (705) (1,058) Proceeds from sale of assets 1,611 2,310 5,142 Proceeds from sale of equity accounted investments 282 4,313 1,316 Proceeds from sale of/(additions to) financial assets ,739 Interest received Cash flow from investing activities (20,861) (8,761) (5,964) Cash flow from financing activities: Net increase/(decrease) in debt with maturity period within three months 75 (956) 8 Other debt: New borrowings 4,263 2,130 2,121 Repayments (2,232) (2,656) (6,380) Interest paid (1,296) (1,124) (962) Change in minority interest 1,434 1, Net issue/(repurchase) of shares (8,047) (4,988) (777) Dividends paid to: Shareholders of Royal Dutch Shell plc (8,142) (10,556) (7,391) Minority interest (289) (293) (264) Payments to former Royal Dutch shareholders (1,651) Treasury shares: net sales/(purchases) and dividends received (759) Cash flow from financing activities (13,741) (18,573) (13,592) Currency translation differences relating to cash and cash equivalents 178 (250) 113 Increase/(decrease) in cash and cash equivalents (2,728) 2,529 7,094 Cash and cash equivalents at January 1 11,730 9,201 2,107 Cash and cash equivalents at December 31 9,002 11,730 9,201 [A] This statement reflects cash flows arising from the activities of Group companies as measured in their own currencies, translated into dollars at quarterly average rates of exchange. Accordingly, cash flows recorded exclude both the currency translation differences which arise as a result of translating the assets and liabilities of non-dollar Group companies to dollars at year-end rates of exchange (except for those arising on cash and cash equivalents) and non-cash investing and financing activities. 14 ROYAL DUTCH SHELL plc

17 CONSOLIDATED STATEMENT OF CASH FLOWS US GAAP $ million Cash flow from operating activities: Income attributable to shareholders of Royal Dutch Shell plc 12,322 9,671 Adjustment to reconcile net income to cash flow provided by operating activities: Depreciation, depletion and amortisation 11,711 8,739 Profit on sale of assets (2,141) (367) Movements in: inventories (236) (2,079) accounts receivable 1,834 (5,830) accounts payable and accrued liabilities (212) 6,989 taxes payable (223) (744) Associated companies: dividends more/(less) than net income Deferred taxation and other provisions (621) 423 Long-term liabilities and other (1,328) (1,326) Income applicable to minority interests Cash flow provided by operating activities 21,983 15,768 Cash flow used in investing activities Capital expenditure (including capitalised leases) (12,252) (12,102) Acquisitions (Enterprise Oil, Penzoil-Quaker State and additional shares in Equilon) (8,925) Proceeds from sale of assets 2,286 1,099 New investments in associated companies (983) (1,289) Disposals of investments in associated companies Proceeds from sale and other movements in investments 1, Cash flow used in investing activities (8,253) (20,632) Cash flow used in financing activities: Long-term debt (including short-term part) New borrowings 572 5,267 Repayments (2,740) (5,610) (2,168) (343) Net increase/(decrease) in short-term debt (2,501) 7,075 Change in minority interest (1,363) 421 Repurchase of share capital, including expenses (1,393) Dividends paid to Royal Dutch and Shell Transport shareholders (6,532) (5,522) Dividends paid to minority interest (300) (228) Cash flow used in financing activities (12,864) 10 Net investments in treasury stock and dividends received (633) (864) Currency translation differences relating to cash and cash equivalents Increase/(decrease) in cash and cash equivalents 408 (5,545) Cash and cash equivalents at January 1 1,709 7,254 Cash and cash equivalents at December 31 2,117 1,709 ROYAL DUTCH SHELL plc 15

18 FINANCIAL STATEMENTS EARNINGS BY INDUSTRY SEGMENT IFRS $ million World World World outside outside outside USA USA Total USA USA Total USA USA Total Exploration & Production 11,466 3,729 15,195 10,541 3,697 14,238 6,511 3,312 9,823 Gas & Power 2, ,650 1, ,573 2,011 (196) 1,815 Oil Products 5,284 1,841 7,125 7,726 2,256 9,982 5,677 1,920 7,597 Chemicals 1,064 _ 1,064 1, ,298 1, ,347 Other industry segments (37) (202) (145) Total operating segments 25,997 26,889 20,437 Corporate 314 (321) (946) Minority interest Income from continuing operations 26,311 26,568 19,491 Income from discontinued operations, net of tax (307) (234) Cumulative effect of a change in accounting principle, net of tax Income for the period 26,311 26,261 19,257 Income attributable to minority interest Income attributable to shareholders of Royal Dutch Shell plc 25,442 25,311 18,540 QUARTERLY EARNINGS BY INDUSTRY SEGMENT IFRS $ million Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Exploration & Production World outside USA 2,795 3,014 2,650 3,007 11,466 2,010 1,644 4,051 2,836 10,541 1,955 1,168 1,556 1,832 6,511 USA , , , , ,086 3,312 Gas & Power World outside USA , , ,011 USA (42) (63) (41) 9 (242) (196) Oil Products World outside USA 1,588 1,925 1, ,284 2,306 2,034 2,377 1,009 7,726 1,192 1,319 1,953 1,215 5,679 USA 515 1, , ,063 (182) 2, ,920 Chemicals World outside USA , , ,257 USA (22) 101 (53) (26) (178) 59 (9) (70) 125 Other industry segments (8) (7) (4) (18) (37) (8) (8) (76) (110) (202) (16) (8) (39) (82) (145) Total operating segments 6,786 7,971 5,991 5,249 25,997 7,137 5,671 9,311 4,770 26,889 4,987 4,328 5,765 5,394 20,474 Corporate Interest income/(expense) (70) (74) (22) (174) (196) (143) (231) (744) Currency exchange gains/(losses) 112 (73) (19) (40) (6) 126 (145) (65) (7) (2) Other including taxation 118 (410) (7) (130) (24) (73) (234) 20 (103) (59) (165) (307) Minority interest Income from continuing operations 7,016 7,527 6,255 5,513 26,311 7,020 5,461 9,484 4,603 26,568 4,826 4,027 5,598 5,040 19,491 Income from discontinued operations, net of tax (214) (93) (307) (299) (234) Cumulative effect of a change in accounting principle, net of tax Income for the period 7,016 7,527 6,255 5,513 26,311 6,806 5,461 9,391 4,603 26,261 4,846 4,049 5,621 4,741 19,257 Income attributable to minority interests Income attributable to shareholders of Royal Dutch Shell plc 6,893 7,324 5,942 5,283 25,442 6,675 5,236 9,032 4,368 25,311 4,701 3,896 5,372 4,571 18, ROYAL DUTCH SHELL plc

19 EARNINGS BY INDUSTRY SEGMENT US GAAP $ million World World outside outside USA USA Total USA USA Total Exploration & Production 5,814 2,776 8,590 4,763 1,878 6,641 Gas & Power 2, , (90) 747 Oil Products 2, ,834 2, ,550 Chemicals 314 (523) (209) 633 (68) 565 Other industry segments (267) (110) Total operating segments 13,218 10,393 Corporate (810) (669) Minority interest (353) (174) Income from continuing operations 12,055 9,550 Income from discontinued operations, net of tax Cumulative effect of a change in accounting principle, net of tax 255 Income for the period Income attributable to minority interest Income attributable to shareholders of Royal Dutch Shell plc 12,322 9,671 QUARTERLY EARNINGS BY INDUSTRY SEGMENT US GAAP $ million Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Exploration & Production World outside USA 1,979 1,288 1,244 1,303 5,814 1,168 1,221 1,146 1,228 4,763 USA , ,878 Gas & Power World outside USA 1, , USA (26) (8) 14 (23) (73) (90) Oil Products World outside USA 1, , ,217 USA (41) Chemicals World outside USA (123) USA (142) (105) (45) (231) (523) (18) 35 (35) (50) (68) Other industry segments (40) (27) (160) (40) (267) (41) (89) 42 (22) (110) Total operating segments 5,482 2,743 2,600 2,393 13,218 2,582 2,424 2,863 2,524 10,393 Corporate Interest income/(expense) (252) (171) (148) (223) (794) (107) (111) (260) (276) (754) Currency exchange gains/(losses) (10) (19) (31) (100) (160) (7) 32 (16) Other including taxation (13) 144 (41) (48) 81 1 (7) Minority interest (86) (64) (117) (86) (353) (8) (12) (77) (77) (174) Income from continuing operations 5,143 2,584 2,357 1,971 12,055 2,419 2,285 2,591 2,255 9,550 Income from discontinued operations, net of tax 98 (9) 64 (141) Cumulative effect of a change in accounting principle, net of tax Income for the period Income attributable to minority interests Income attributable to shareholders of Royal Dutch Shell plc 5,496 2,575 2,421 1,830 12,322 2,454 2,328 2,609 2,280 9,671 ROYAL DUTCH SHELL plc 17

20 FINANCIAL STATEMENTS FINANCIAL RATIOS IFRS US GAAP Return on average capital employed Income attributable to shareholders of Royal Dutch Shell plc plus interest expense, less tax and minority interest (both calculated at the average rate for the Group), as % of the Group share of average capital employed Return on sales Income attributable to shareholders of Royal Dutch Shell plc plus minority interest as % of sales proceeds (including sales taxes, etc) Return on equity Income attributable to shareholders of Royal Dutch Shell plc as % of average net assets (ie equity attributable to shareholders of Royal Dutch Shell plc and minority interest) Current ratio Current assets: current liabilities Long-term debt ratio Long-term debt as % of capital employed less short-term debt Total debt ratio Long-term debt plus short-term debt as % of capital employed Gearing Total debt plus off-balance sheet commitments less net cash, as % of capital employed plus off-balance sheet commitments less net cash (net cash represents total cash balances less operational cash requirements) DOLLAR EXCHANGE RATE Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Year Year Year Average for period Pound sterling Euro Swiss franc Canadian dollar Japanese yen End-period Pound sterling Euro Swiss franc Canadian dollar Japanese yen ROYAL DUTCH SHELL plc

21 CAPITAL INVESTMENTS IFRS US GAAP $ million $ million Capital expenditure [A] Exploration & Production Europe 2,563 1,820 1,591 1,996 7,342 Other Eastern Hemisphere 7,230 6,654 5,420 4,143 2,634 USA 2,006 1,225 1,061 1,377 1,766 Other Western Hemisphere [B] 4,839 1, ,322 16,638 10,858 8,699 8,129 13,064 Gas & Power Europe Other Eastern Hemisphere 1,706 1,476 1, USA Other Western Hemisphere 170 (13) ,977 1,568 1,357 1, Oil Products Europe 1,426 1,107 1, ,272 Other Eastern Hemisphere 1, USA ,408 Other Western Hemisphere ,363 2,810 2,761 2,367 7,653 Chemicals Europe Other Eastern Hemisphere USA Other Western Hemisphere Other segments Exploration expense (excluding depreciation and release of currency translation differences) Europe Other Eastern Hemisphere USA Other Western Hemisphere , Total capital expenditure and exploration expense 24,045 16,731 14,217 13,311 23,359 New equity investments in equity accounted investments Europe Other Eastern Hemisphere USA Other Western Hemisphere New loans to equity accounted investments Europe Other Eastern Hemisphere USA 1 (22) Other Western Hemisphere Other investments Total capital investments* 24,896 17,436 15,275 14,294 24,648 *comprising Europe 5,151 3,620 3,387 3,391 10,384 Other Eastern Hemisphere 10,692 9,657 8,129 6,172 4,373 USA 3,288 2,204 2,396 3,211 7,461 Other Western Hemisphere 5,765 1,955 1,363 1,520 2,430 24,896 17,436 15,275 14,294 24,648 *comprising Exploration & Production 17,944 12,046 9,708 9,337 14,151 Gas & Power 2,200 1,602 1,633 1, Oil Products 3,457 2,844 2,823 2,405 7,968 Chemicals Other industry segments [A] Includes acquisitions in also includes $1.3 billion for acquisition of DEA (paid in July 2003). [B] Includes capital expenditure on the Athabasca Oil Sands Project. 24,896 17,436 15,275 14,294 24,648 ROYAL DUTCH SHELL plc 19

22 FINANCIAL STATEMENTS FIXED ASSETS [A] (At December 31) IFRS US GAAP $ million $ million Exploration & Production Europe 18,307 15,984 20,448 20,978 21,003 Other Eastern Hemisphere 31,273 26,136 21,274 18,670 15,328 USA 8,044 7,580 7,745 8,064 8,524 Other Western Hemisphere 11,434 7,249 6,977 6,727 6,057 69,058 56,949 56,444 54,439 50,912 Gas & Power Europe Other Eastern Hemisphere 10,884 8,237 6,521 5,290 4,027 USA 2,591 2,568 3,046 4,622 1,894 Other Western Hemisphere ,094 11,909 10,476 11,315 7,272 Oil Products Europe 11,451 9,752 11,339 11,171 10,263 Other Eastern Hemisphere 7,007 6,448 6,516 7,167 6,567 USA 12,697 12,402 12,242 13,164 12,946 Other Western Hemisphere 3,779 3,801 3,726 3,653 3,401 34,934 32,403 33,823 35,155 33,177 Chemicals Europe 2,578 2,091 4,332 4,253 3,887 Other Eastern Hemisphere 2,566 2,472 2,128 2,276 2,461 USA 3,243 3,496 3,626 3,613 3,139 Other Western Hemisphere ,837 8,500 10,558 10,565 9,840 Other industry segments Europe Other Eastern Hemisphere USA Other Western Hemisphere Total operating segments 128, , , , ,126 Corporate 2,691 2,462 2,624 2,475 2,017 Total 131, , , , ,143 [A] Comprises intangible assets, property, plant and equipment and investments. DEPRECIATION, DEPLETION AND AMORTISATION IFRS US GAAP $ million $ million Exploration & Production Europe 3,254 3,777 3,425 3,781 2,292 Other Eastern Hemisphere 2,739 1,915 1,934 1,570 1,787 USA 1,813 1,596 1,595 1,644 1,354 Other Western Hemisphere [A] 1, ,008 8,277 7,698 7,787 5,690 Gas & Power Europe Other Eastern Hemisphere USA Other Western Hemisphere Oil Products Europe 1,075 1,065 1,588 1, Other Eastern Hemisphere USA Other Western Hemisphere ,580 2,622 3,357 2,863 2,406 Chemicals Europe Other Eastern Hemisphere USA Other Western Hemisphere Other industry segments Europe (5) Other Eastern Hemisphere USA Other Western Hemisphere (5) Total operating segments 12,540 11,870 12,701 11,624 8,717 Corporate Total 12,615 11,981 12,845 11,711 8,739 [A] Includes depreciation, depletion and amortisation on the Athabasca Oil Sands Project. 20 ROYAL DUTCH SHELL plc