2nd quarter 2009 unaudited results

• Royal Dutch Shell’s second quarter 2009 earnings, on a current cost of supplies (CCS) basis, were $2.3 billion compared to $7.9 billion a year ago. Basic CCS earnings per share decreased by 70% versus the same quarter a year ago.
• Cash flow from operating activities for the second quarter 2009 was $0.9 billion, including $3.6 billion of cash contributions to pension plans and a $2.8 billion increase in working capital.
• Net capital investment for the quarter was $7.8 billion. Total cash returned to shareholders in the form of dividends was $2.9 billion.
• A second quarter 2009 dividend has been announced of $0.42 per share, an increase of 5% over the US dollar dividend per share for the same period in 2008.
  
  

Key features of the SECOND quarter 2009

Royal Dutch Shell Chief Executive Officer Peter Voser commented:

“Our second quarter results were affected by the weak global economy. This weakness is creating a difficult environment both in Upstream and Downstream.

Energy demand is weak. There is excess capacity in the market, and industry costs remain high.

Conditions are likely to remain challenging for some time, and we are not banking on a quick recovery. Shell is adapting to this new situation, and we must do more. We are sharpening our focus on delivery and affordability.

We are in the middle of a programme to build 1 million barrels of oil equivalent per day (boe) of additional Upstream capacity, with selective Downstream investment.

New production start-ups in the first half 2009, at Sakhalin II in Russia, and Parque das Conchas (BC-10) in Brazil are important milestones in the delivery of this strategy.

This is the most competitive programme in our industry, and managing affordability in today’s climate is a key priority for Shell.

Taking new steps to reduce our costs, combined with Shell’s financing capabilities, allows us to continue with our investments for medium term shareholder value, despite today’s tough market conditions.

Shell has a number of initiatives underway to reduce costs. Through a combination of self-help, reduced supply-chain costs, and lower discretionary spending, we have reduced operating costs by $0.7 billion in the first half 2009, compared to the first half 2008. This reduction excludes the impact of exchange rate movements and non-cash pension costs. We expect to reduce 2010 organic capital spending by over 10% compared to 2009 levels, to around $28 billion.

A new restructuring programme - called ‘Transition 2009’ - which we announced in June, will be completed by the end of this year. This will simplify Shell, and increase personal accountabilities. The top 600 management positions in the new organisation have been announced. This has enabled us to reduce the number of senior management positions by 20%, and substantial further staff reductions are likely.

Looking beyond 2009, Shell needs to become a more efficient company, with faster decision-making, sharper implementation of strategy, and more focus on costs and value. The ‘Transition 2009’ programme is the beginning of that change.

Further out, beyond 2012, we have an industry-leading Upstream option set that can deliver growth to 2020. In addition, we continue to find new fields through exploration. The 6 notable discoveries in the first half of 2009 contribute to at least 0.7 billion boe of new resources potential.

We are keeping our pre-FID options warm, but managing affordability and profitability are key priorities.

The industry outlook remains a challenging one, despite the rally in oil prices in recent months. We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years.”

Key features of the SECOND quarter 2009 (continued)

• Second quarter 2009 CCS earnings were $2,340 million, 70% lower than in the same quarter a year ago.
• Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago.
• Basic CCS earnings per share decreased by 70% versus the same quarter a year ago.
• Total cash returned to shareholders in the form of dividends in the second quarter 2009 was $2.9 billion.
• Cash flow from operating activities for the second quarter 2009 was $0.9 billion, compared to $4.2 billion in the same quarter last year. Excluding cash contributions to pension plans of $3.6 billion and net working capital movements of $2.8 billion, cash flow from operating activities was $7.4 billion in the second quarter 2009, compared to $16.1 billion, on the same basis, for the second quarter 2008.
• Capital investment for the second quarter 2009 was $8.1 billion. Net capital investment (capital investment, less divestment proceeds) for the second quarter 2009 was $7.8 billion.
• Return on average capital employed (ROACE), on a reported income basis (see Note 3), was 8.3%.
• Gearing was 12.6% at the end of the second quarter 2009 versus 5.0% at the end of the second quarter 2008.
• Oil and gas production, including oil sands production, for the second quarter 2009 was 2,960 thousand barrels of oil equivalent per day (boe/d). Security in Nigeria remains a significant challenge. Excluding the impact of the security situation in Nigeria, divestments, production sharing contracts (PSC) pricing effects and OPEC quota restrictions, production was broadly similar to the same quarter last year.

• Liquefied Natural Gas (LNG) sales volumes of 2.89 million tonnes were 6% lower than in the same quarter a year ago. Excluding the impact of the security situation in Nigeria, LNG sales volumes were 7% higher than in the same quarter last year.
• Oil Products marketing sales volumes were 4% lower than in the second quarter 2008. Excluding the impact of divestments, marketing sales volumes decreased by 3%. Chemical product sales volumes in the second quarter 2009 decreased by 17% compared to the second quarter 2008.
• Oil Products refinery availability was 95% compared with 92% in the second quarter 2008. Chemicals manufacturing plant availability was 88%, 7% lower than in the second quarter 2008. Oil Sands upgrader availability was 88% compared to 96% in the same quarter last year.

Summary of identified items

Earnings in the second quarter 2009 reflected the following items, which in aggregate amounted to a net charge of $810 million (compared to a net charge of $677 million in the second quarter 2008), as summarised in the table below:

• Exploration & Production earnings included a net charge of $109 million, reflecting a charge of $389 million related to the mark-to-market valuation of certain UK gas contracts and a charge of $19 million related to a retirement healthcare plan modification in the USA. These charges were partly offset by a gain related to a lease litigation settlement of $229 million and a divestment gain of $70 million. Earnings for the second quarter 2008 included a net gain of $98 million.
• Gas & Power earnings included a charge of $6 million related to a retirement healthcare plan modification in the USA. Earnings for the second quarter 2008 included a charge of $300 million.
• Oil Products earnings included a charge of $611 million, reflecting charges related to the estimated fair value accounting of commodity derivatives of $450 million (see Note 7), an asset impairment of $120 million and a charge of $41 million related to a retirement healthcare plan modification in the USA. Earnings for the second quarter 2008 included a net charge of $269 million.
• Chemicals earnings included a charge of $67 million, reflecting an impairment charge of $57 million and $10 million related to a retirement healthcare plan modification in the USA. Earnings for the second quarter 2008 included a net charge of $206 million.
• Corporate earnings included a charge of $17 million related to a retirement healthcare plan modification in the USA.

These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell’s earnings and are shown to provide additional insight into its segment earnings, CCS earnings and income attributable to shareholders. Further additional comments on the business segments are provided in the section ‘Earnings by business segment’ on page 5 and onwards.

Earnings BY BUSINESS segment

Second quarter Exploration & Production segment earnings were $1,334 million compared to $5,881 million a year ago. Earnings included a net charge of $109 million related to identified items, compared to a net gain of $98 million in the second quarter 2008 (see page 4 for details).

Earnings compared to the second quarter 2008 reflected the impact of significantly lower oil and gas prices on revenues, lower oil and gas production volumes, higher exploration expenses and non-cash pension charges, which were partly offset by lower royalty and tax expenses.

Although oil prices increased during the quarter, realised natural gas prices remained at low levels mainly due to contractual lag effects. European gas demand declined in the second quarter 2009, impacting natural gas production compared to the second quarter 2008.

Global liquids realisations were 53% lower than in the second quarter 2008. Global gas realisations were 47% lower than a year ago. Outside the USA, gas realisations decreased by 39% whereas in the USA gas realisations decreased by 68%.

Second quarter 2009 production (excluding oil sands bitumen production) was 2,882 thousand boe/d compared to 3,054 thousand boe/d a year ago. Crude oil production was down 8% and natural gas production was down 2% compared to the second quarter 2008.

In Nigeria, the security situation remains a significant challenge. As a consequence, The Shell Petroleum Development Company of Nigeria Ltd’s (SPDC) onshore and shallow water oil and gas production declined from some 210 thousand boe/d (Shell share) in the second quarter 2008 to approximately 120 thousand boe/d (Shell share) in the second quarter 2009.

Underlying production, compared to the second quarter 2008, increased by some 210 thousand boe/d from new field start-ups and the continuing ramp-up of fields over the last 12 months, more than offsetting field declines.

Second quarter portfolio developments

During the first half of 2009, Shell made 6 notable discoveries in the US Gulf of Mexico, Australia, Malaysia and Norway. Shell also increased its overall acreage position through acquisitions of new exploration licences in Guyana, Italy, Brazil, USA, Norway, Egypt and Jordan.

In Brazil, on July 13, 2009, production started from the multi-field Parque das Conchas (BC-10) project (Shell share 50%). Production wells, which are some 2 kilometres deep, are linked to a Floating Production, Storage and Offloading (FPSO) vessel with a capacity to process 100 thousand barrels of oil and 50 million cubic feet of natural gas a day (100% basis).

Second quarter Gas & Power segment earnings were $705 million compared to $625 million a year ago. Earnings included a charge of $6 million related to identified items, compared a charge of $300 million in the second quarter 2008 (see page 4 for details).

Earnings compared to the second quarter 2008 mainly reflected lower LNG earnings, reduced gas-to-liquids product prices and non-cash pension charges, which were offset by higher natural gas and power trading contributions.

LNG earnings were lower than in the same quarter last year reflecting the significant impact of lower oil prices on revenues and lower LNG sales volumes. These were partly offset by increased contributions from the North West Shelf (Train 5) and Sakhalin II LNG projects, higher income from LNG cargo diversion opportunities and the benefit of recent sales contract renegotiations.

LNG sales volumes of 2.89 million tonnes were 6% lower than in the same quarter a year ago. Volumes reflected lower contributions from Nigeria LNG due to continued natural gas supply disruptions and reduced Asia Pacific LNG demand, which were partly offset by the ramp-up in sales volumes from Train 5, at the North West Shelf project, and the Sakhalin II LNG project. Excluding the impact of the security situation in Nigeria, LNG sales volumes were 7% higher than the same quarter last year.

Natural gas and power marketing and trading earnings were higher than in the same quarter a year ago, reflecting increased contributions from both Europe and North America.

Second quarter Oil Sands segment earnings were $50 million compared to $351 million in the same quarter last year.

Earnings compared to the second quarter 2008 mainly reflected the impact of significantly lower oil prices on revenues and non-cash pension charges.

Bitumen production compared to the same quarter last year increased by 8%. Upgrader availability was 88% compared to 96% in the same quarter last year.

Second quarter Oil Products segment earnings were $1,163 million compared to $4,539 million for the same period last year.

Second quarter Oil Products CCS segment results were a loss of $255 million compared to earnings of $1,075 million in the second quarter 2008. Results included a charge of $611 million related to identified items, compared to a net charge of $269 million in the second quarter 2008 (see page 4 for details).

CCS earnings compared to the second quarter 2008 reflected significantly lower refining earnings and non-cash pension charges, which were partly offset by higher marketing contributions.

Marketing earnings increased compared to the same period a year ago reflecting higher retail, B2B and lubricants earnings and improved trading contributions.

Oil Products (marketing and trading) sales volumes decreased by 7% compared to the same quarter last year mainly as a result of reduced global demand. Marketing sales volumes were 4% lower than in the second quarter 2008. Excluding the impact of divestments, marketing sales volumes decreased by 3%.

Industry refining margins declined worldwide compared to the same period a year ago.

Oil Products CCS earnings in the second quarter 2009 reflected refining losses mainly as a consequence of declining worldwide realised refining margins and reduced demand for refined products.

Refinery intake volumes decreased by 9% compared to the same quarter last year. Refinery availability was 95% compared to 92% at the second quarter 2008.

Second quarter Chemicals segment earnings were $103 million compared to earnings of $157 million for the same period last year.

Second quarter Chemicals CCS segment results were a loss of $18 million compared to a loss of $142 million in the same quarter last year. Results included a charge of $67 million related to identified items, compared to a charge of $206 million in the second quarter 2008 (see page 4 for details).

CCS earnings compared to the second quarter 2008 reflected lower sales volumes, lower realised margins, and non-cash pension charges, which were partly offset by higher income from equity-accounted investments and lower operating costs.

Sales volumes decreased by 17% compared to the second quarter 2008, mainly as a result of reduced global demand.

Chemicals manufacturing plant availability was 88%, 7% lower than in the second quarter 2008. The reduced global demand for chemical products significantly impacted the chemicals manufacturing plant utilisation rate, which dropped to 68% from 84% in the second quarter 2008.

Second quarter Corporate segment earnings were $548 million compared to $201 million for the same period last year. Earnings included a charge of $17 million related to an identified item (see page 4 for details). Currency exchange gains in the second quarter 2009 were $379 million compared to $27 million in the second quarter 2008.

Earnings, when compared to the second quarter 2008, mainly reflected higher currency exchange gains combined with higher net underwriting income and increased tax credits, which were partly offset by lower net interest income.

Note

All amounts shown throughout this Report are unaudited.

Third quarter results are expected to be announced on October 29, 2009.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries 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. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this document refer 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 Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this document, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 34% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

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 document, 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 share 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, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this document 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. Additional factors that may affect future results are contained in Royal Dutch Shell’s Annual Report and Form 20-F for the year ended December 31, 2008 (available at www.shell.com/investor and www.sec.gov - opens in new window). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this document, July 30, 2009. 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 document.

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 use certain terms in this document that SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

July 30, 2009

Appendix: Royal Dutch Shell financial report and tables

Notes

1. Accounting policies and basis of presentation

The quarterly financial report and tables are prepared in accordance with the accounting policies set out in Note 2 to the Consolidated Financial Statements of Royal Dutch Shell plc in the Annual Report and Form 20-F for the year ended December 31, 2008 on pages 118 to 122. The accounting policies are in accordance with IFRS as adopted by the European Union.

This publication is unaudited and does not comprise statutory accounts. Statutory accounts for the year ended December 31, 2008 were approved by the Board of Directors on March 11, 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain any statement under sections 237(2) or (3) of the Companies Act 1985.

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 provides 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 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 drawdown effects.

3. Return on average capital employed (ROACE)

ROACE is defined as the sum of the current and previous three quarters’ income adjusted for interest expense, after tax, divided by the average capital employed for the period.

Components of the calculation are:

4. Earnings by business segment

Operating segment results are presented 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 Corporate results. Operating segment results are after tax and include equity-accounted investments.

5. Equity

Total equity comprises equity attributable to shareholders of Royal Dutch Shell and to the minority interest. Other reserves comprise the capital redemption reserve, share premium reserve, merger reserve, share plan reserve, currency translation differences, unrealised gains/(losses) on securities and unrealised gains/(losses) on cash flow hedges.

6. Basis for Royal Dutch Shell earnings per ordinary share

The total number of Royal Dutch Shell ordinary shares in issue at the end of the period was 6,241.5 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) ordinary shares outstanding. Shares held in respect of share options and other incentive compensation plans are excluded in determining basic and diluted earnings per share.

Basic earnings per share calculations are based on the following weighted average number of shares:

Diluted earnings per share calculations are based on the following weighted average number of shares. This adjusts the basic number of shares for all share options currently “in-the-money”.

Basic shares outstanding at the end of the following periods are:

One American Depository Receipt (ADR) is equal to two Royal Dutch Shell ordinary shares.

7. Accounting for derivatives

IFRS require that derivative instruments be recognised in the financial statements at fair value. Any change in the current period between the period-end market price and the contract settlement price is recognised in income where hedge accounting is either not permitted or not applied to these contracts.

The physical crude oil and related products held by the Downstream business as inventory are recorded at historical cost or net realisable value, whichever is lower, as required under IFRS. Consequently, any increase in value of the inventory over cost is not recognised in income until the sale of the commodity occurs in subsequent periods.

In the Downstream business, the buying and selling of commodities includes transactions conducted through the forward markets using commodity derivatives to reduce economic exposure. Some derivatives are associated with a future physical delivery of the commodities.

Differences in the accounting treatment for physical inventory (at cost or net realisable value, whichever is lower) and derivative instruments (at fair value) have resulted in timing differences in the recognition of gains or losses between reporting periods.

Similarly, earnings from long-term contracts held in the Upstream business are recognised in income upon realisation. Associated commodity derivatives are recognised at fair value as of the end of each quarter.

These differences in accounting treatment for long-term contracts (on accrual basis) and derivative instruments (at fair value) have resulted in timing differences in the recognition of gains or losses between the reporting periods.

The aforementioned timing differences for Downstream and Upstream are reported as identified items in the quarterly results and are estimates derived from the overall portfolio of derivatives.

Certain UK gas contracts held by Upstream contain embedded derivatives or written options, for which IFRS requires recognition at fair value, even though they are entered into for operational purposes. The impact of the mark-to-market calculation is also reported as an identified item in the quarterly results.

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Contacts:

Investor Relations: + 31 (0)70 377 4540; USA: +1 212 218 3113 (USA investors)

Media: +31 (0)70 377 3600

The information in these quarterly and six months financial reports and tables reflects the consolidated financial position and results of Royal Dutch Shell plc (“Royal Dutch Shell”). All amounts shown throughout this report are unaudited. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK