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  • 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.

Summary OF unaudited results
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
2,089
2,169
6,857
Upstream2
4,258
13,197
(273)
1,018
933
Downstream (CCS basis)3
745
2,328
524
110
112
Corporate and Minority interest
634
153
2,340
3,297
7,902
-70
CCS earnings
5,637
15,678
-64
1,482
191
3,654
Estimated CCS adjustment for Downstream3 (see Note 2)
1,673
4,961
3,822
3,488
11,556
-67
Income attributable to shareholders
7,310
20,639
-65
0.38
0.54
1.28
-70
Basic CCS earnings per share ($)
0.92
2.54
-64
0.24
0.03
0.59
Estimated CCS adjustment per share ($)
0.27
0.80
0.62
0.57
1.87
-67
Basic earnings per share ($)
1.19
3.34
-64
0.42
0.42
0.40
+5
Dividend per ordinary share ($)
0.84
0.80
+5
1 Q2 on Q2 change
2 Exploration & Production, Gas & Power and Oil Sands earnings.
3 Oil Products and Chemicals earnings.


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.”

Summary OF unaudited results
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
1,334
1,697
5,881
Exploration & Production
3,031
11,024
705
514
625
Gas & Power
1,219
1,573
50
(42)
351
Oil Sands
8
600
(255)
1,092
1,075
Oil Products (CCS basis)
837
2,269
(18)
(74)
(142)
Chemicals (CCS basis)
(92)
59
548
133
201
Corporate
681
347
(24)
(23)
(89)
Minority interest
(47)
(194)
2,340
3,297
7,902
-70
CCS earnings
5,637
15,678
-64
1 Q2 on Q2 change


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.

Summary OF IDENTIFIED ITEMS1
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
Segment earnings impact of identified items:
(109)
345
98
Exploration & Production
236
32
(6)
(15)
(300)
Gas & Power
(21)
(311)
-
-
-
Oil Sands
-
-
(611)
(186)
(269)
Oil Products (CCS basis)
(797)
(269)
(67)
(19)
(206)
Chemicals (CCS basis)
(86)
(206)
(17)
162
-
Corporate
145
-
-
-
-
Minority interest
-
-
(810)
287
(677)
CCS earnings impact
(523)
(754)
1 As from the second quarter 2009, the summary of identified items includes the estimated fair value accounting of commodity derivatives related to operational activities (see Note 7). For comparison purposes, the first quarter 2009 was reclassified by a charge of $50 million in the Oil Products segment. The second quarter 2008 was reclassified by a charge of $300 million in the Gas & Power segment and by a charge of $450 million in the Oil Products segment.

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

Exploration & Production
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
1,334
1,697
5,881
-77
Segment earnings
3,031
11,024
-73
1,569
1,639
1,711
-8
Crude oil production (thousand b/d)
1,604
1,733
-7
7,614
9,751
7,789
-2
Natural gas production available for sale (million scf/d)
8,676
8,772
-1
2,882
3,321
3,054
-6
Barrels of oil equivalent (thousand boe/d) 2
3,100
3,246
-4
1 Q2 on Q2 change
2 Excludes oil sands bitumen production

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).


Gas & Power
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
705
514
625
+13
Segment earnings
1,219
1,573
-23
2.89
3.06
3.08
-6
LNG sales volumes (million tonnes)
5.95
6.59
-10
1 Q2 on Q2 change

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.

OIL SANDS
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
50
(42)
351
-86
Segment earnings
8
600
-99
78
75
72
+8
Bitumen production (thousand b/d)
76
78
-3
101
110
104
-3
Sales volumes (thousand b/d)
106
124
-15
88
96
96
Upgrader availability (%)
92
94
1 Q2 on Q2 change

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.

Oil Products
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
(255)
1,092
1,075
Segment CCS earnings
837
2,269
-63
1,418
304
3,464
Estimated CCS adjustment (see Note 2)
1,722
4,637
1,163
1,396
4,539
Segment earnings
2,559
6,906
3,136
3,153
3,464
-9
Refinery intake (thousand b/d)
3,144
3,579
-12
6,174
6,029
6,642
-7
Total Oil Products sales (thousand b/d)
6,102
6,737
-9
95
92
92
Refinery availability (%)
93
92
1 Q2 on Q2 change

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.


Chemicals
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
(18)
(74)
(142)
+87
Segment CCS earnings
(92)
59
121
(108)
299
Estimated CCS adjustment (see Note 2)
13
446
103
(182)
157
Segment earnings
(79)
505
4,459
4,294
5,396
-17
Sales volumes (thousand tonnes)
8,753
10,855
-19
88
92
95
Manufacturing plant availability (%)
90
95
1 Q2 on Q2 change

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.

CORPORATE
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
548
133
201
Segment earnings
681
347

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.



PRICE and margin INFORMATION
oil & gas
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
$/bbl
Realised oil prices – Exploration & Production (period average)
$/bbl
52.19
42.88
110.96
World outside USA
47.56
101.15
55.25
37.81
118.07
USA
46.62
105.02
52.62
42.16
111.92
Global
47.43
101.70
$/bbl
Realised oil prices – Oil Sands (period average)
$/bbl
53.91
37.94
116.20
Canada
45.64
98.12
$/thousand scf
Realised gas prices (period average)
$/thousand scf
5.93
9.44
9.38
Europe
7.76
9.19
3.88
5.75
6.31
World outside USA (including Europe)
4.83
6.09
3.82
4.80
11.89
USA
4.32
10.69
3.87
5.57
7.30
Global
4.74
6.91
Oil and gas marker industry prices (period average)
59.13
44.46
121.26
Brent ($/bbl)
51.60
108.96
59.71
43.20
123.81
WTI ($/bbl)
51.26
110.83
56.85
40.25
125.18
Edmonton Par ($/bbl)
48.55
111.58
3.67
4.61
11.36
Henry Hub ($/MMBtu)
4.14
9.95
27.54
46.90
60.41
UK National Balancing Point (pence/therm)
37.22
56.73
49.79
44.28
110.35
Japanese Crude Cocktail – JCC ($/bbl)1
46.48
101.76
refining & cracker industry Margins2
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
$/bbl
Refining marker industry gross margins (period average)
$/bbl
6.05
10.65
11.55
ANS US West Coast coking margin
8.30
10.10
7.20
7.90
10.55
WTS US Gulf Coast coking margin
7.55
9.60
1.65
3.00
5.85
Rotterdam Brent complex
2.35
4.70
0.20
2.85
3.95
Singapore 80/20 Arab light/Tapis complex
1.50
2.85
$/tonne
Cracker industry margins (period average)
$/tonne
290.00
352.00
413.00
US ethane
321.00
386.00
239.00
164.00
262.00
Western Europe naphtha
202.00
348.00
(8.00)
(67.00)
28.00
North East Asia naphtha
(37.00)
18.00
1 JCC prices for the second quarter 2009 are based on available market data up to the end of May 2009. Prices for these periods will be updated when full market data is available.
2 The refining and cracker industry margins shown above do not represent actual Shell realised margins for the periods. These are estimated industry margins based on available market information at the end of the quarter.


oil & gas – Operational data
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
thousand b/d
Crude oil production
thousand b/d
306
361
390
Europe
333
402
256
274
314
Africa
265
318
181
207
196
Asia Pacific
194
202
470
455
434
Middle East, Russia, CIS
463
431
278
275
293
USA
277
297
78
67
84
Other Americas
72
83
1,569
1,639
1,711
-8
Total crude oil production excluding oil sands
1,604
1,733
-7
78
75
72
Bitumen production – oil sands
76
78
1,647
1,714
1,783
-8
Total crude oil production including oil sands
1,680
1,811
-7
million scf/d2
Natural gas production available for sale
million scf/d2
2,532
4,762
2,930
Europe
3,641
3,912
256
253
549
Africa
254
584
2,673
2,708
2,512
Asia Pacific
2,691
2,475
402
340
230
Middle East, Russia, CIS
371
231
1,056
1,110
1,096
USA
1,082
1,101
695
578
472
Other Americas
637
469
7,614
9,751
7,789
-2
8,676
8,772
-1
thousand boe/d3
Total production in barrels of oil equivalent
thousand boe/d3
743
1,182
895
Europe
961
1,077
300
318
409
Africa
309
419
642
674
629
Asia Pacific
658
628
539
514
474
Middle East, Russia, CIS
527
471
460
466
482
USA
463
487
198
167
165
Other Americas
182
164
2,882
3,321
3,054
-6
Total production excluding oil sands
3,100
3,246
-4
78
75
72
Bitumen production – oil sands
76
78
2,960
3,396
3,126
-5
Total production including oil sands
3,176
3,324
-4
1 Q2 on Q2 change
2 scf/d = standard cubic feet per day; 1 standard cubic foot = 0.0283 cubic metre.
3 Natural gas converted to oil equivalent at 5.8 million scf/d = thousand boe/d.


oil products and chemicals – Operational data
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
thousand b/d
Refinery processing intake
thousand b/d
1,360
1,357
1,498
Europe
1,359
1,619
612
644
741
Africa, Asia, Australia/Oceania
628
749
829
794
874
USA
811
859
335
358
351
Other Americas
346
352
3,136
3,153
3,464
-9
3,144
3,579
-12
Oil sales
2,107
1,957
2,067
Gasolines
2,031
2,076
727
718
816
Kerosenes
723
815
2,047
2,046
2,225
Gas/diesel oils
2,047
2,281
572
620
776
Fuel oil
596
807
721
688
758
Other products
705
758
6,174
6,029
6,642
-7
Total oil products *
6,102
6,737
-9
*Comprising:
1,610
1,645
1,781
Europe
1,627
1,870
1,273
1,229
1,276
Africa, Asia, Australia/Oceania
1,251
1,260
1,368
1,335
1,436
USA
1,352
1,416
690
682
704
Other Americas
686
730
1,233
1,138
1,445
Export sales
1,186
1,461
thousand tonnes
Chemical sales volumes by main product category 2**
thousand tonnes
2,429
2,419
3,061
Base chemicals
4,848
6,180
2,030
1,875
2,335
First line derivatives
3,905
4,675
4,459
4,294
5,396
-17
8,753
10,855
-19
**Comprising:
1,874
1,782
2,189
Europe
3,656
4,478
1,116
1,123
1,294
Africa, Asia, Australia/Oceania
2,239
2,522
1,414
1,321
1,760
USA
2,735
3,544
55
68
153
Other Americas
123
311
1 Q2 on Q2 change
2 Excluding volumes sold by equity-accounted investments, chemical feedstock trading and by-products.


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

Statement of income (see note 1)
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
63,882
58,222
131,419
Revenue2
122,104
245,721
55,415
49,245
109,261
Cost of sales
104,660
206,041
8,467
8,977
22,158
-62
Gross profit
17,444
39,680
-56
3,953
3,693
4,444
Selling, distribution and administrative expenses
7,646
8,413
606
496
408
Exploration
1,102
733
1,535
928
2,671
Share of profit of equity-accounted investments
2,463
5,096
(400)
(18)
(140)
Net finance costs and other (income)/expense
(418)
(193)
5,843
5,734
20,117
-71
Income before taxation
11,577
35,823
-68
1,940
2,218
8,363
Taxation
4,158
14,868
3,903
3,516
11,754
-67
Income for the period
7,419
20,955
-65
81
28
198
Income attributable to minority interest
109
316
3,822
3,488
11,556
-67
Income attributable to Royal Dutch Shell plc shareholders
7,310
20,639
-65
1 Q2 on Q2 change
2 Revenue is stated after deducting sales taxes, excise duties and similar levies of $19,251 million in Q2 2009, $17,555 million in Q1 2009, $25,462 million in Q2 2008 and $22,920 million in Q1 2008.

Basic earnings per share (SEE NOTES 1, 2 AND 6)
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
0.62
0.57
1.87
Earnings per share ($)
1.19
3.34
0.38
0.54
1.28
Basic CCS earnings per share ($)
0.92
2.54

Diluted earnings per share (SEE NOTES 1, 2 AND 6)
Quarters
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
0.62
0.57
1.87
Earnings per share ($)
1.19
3.33
0.38
0.54
1.28
Diluted CCS earnings per share ($)
0.92
2.53


Earnings BY BUSINESS segment (see notes 2 and 4)
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
%1
2009
2008
%
Exploration & Production:
822
1,753
3,952
-79
- World outside USA
2,575
7,492
-66
512
(56)
1,929
-73
- USA
456
3,532
-87
1,334
1,697
5,881
-77
3,031
11,024
-73
Gas & Power:
620
601
788
-21
- World outside USA
1,221
1,721
-29
85
(87)
(163)
-
- USA
(2)
(148)
-99
705
514
625
+13
1,219
1,573
-23
50
(42)
351
-86
Oil Sands
8
600
-99
Oil Products (CCS basis):
(262)
1,036
765
-
- World outside USA
774
1,743
-56
7
56
310
-98
- USA
63
526
-88
(255)
1,092
1,075
-
837
2,269
-63
Chemicals (CCS basis):
127
109
112
+13
- World outside USA
236
416
-43
(145)
(183)
(254)
+43
- USA
(328)
(357)
-8
(18)
(74)
(142)
+87
(92)
59
-
1,816
3,187
7,790
-77
Total operating segments
5,003
15,525
-68
Corporate:
25
21
81
- Interest and investment income/(expense)
46
191
379
(46)
27
- Currency exchange gains/(losses)
333
(35)
144
158
93
- Other - including taxation
302
191
548
133
201
+173
681
347
+96
(24)
(23)
(89)
Minority interest
(47)
(194)
2,340
3,297
7,902
-70
CCS earnings
5,637
15,678
-64
1,482
191
3,654
Estimated CCS adjustment for Oil Products and Chemicals
1,673
4,961
3,822
3,488
11,556
-67
Income attributable to Royal Dutch Shell plc shareholders
7,310
20,639
-65
1 Q2 on Q2 change


Summarised balance sheet (see notes 1 and 5)
$ million
Jun 30, 2009
Mar 31, 2009
Jun 30, 2008
Assets
Non-current assets:
Intangible assets
5,197
4,961
5,336
Property, plant and equipment
121,708
113,255
109,191
Investments:
- equity-accounted investments
29,986
28,516
32,514
- financial assets
4,130
4,092
2,975
Deferred tax
4,144
3,464
4,089
Pre-paid pension costs
9,640
5,575
6,215
Other
8,886
6,976
6,504
183,691
166,839
166,824
Current assets:
Inventories
24,921
21,404
39,624
Accounts receivable
72,529
77,116
127,241
Cash and cash equivalents
10,596
15,961
8,990
108,046
114,481
175,855
Total assets
291,737
281,320
342,679
Liabilities
Non-current liabilities:
Debt
25,469
18,341
11,072
Deferred tax
13,726
12,778
13,994
Retirement benefit obligations
5,787
5,463
6,162
Other provisions
13,259
12,444
14,086
Other
4,619
3,642
4,857
62,860
52,668
50,171
Current liabilities:
Debt
4,621
6,693
5,352
Accounts payable and accrued liabilities
76,298
81,554
126,246
Taxes payable
10,205
9,849
15,895
Retirement benefit obligations
410
386
419
Other provisions
2,221
2,229
2,687
93,755
100,711
150,599
Total liabilities
156,615
153,379
200,770
Equity attributable to Royal Dutch Shell plc shareholders
133,509
126,434
139,809
Minority interest
1,613
1,507
2,100
Total equity
135,122
127,941
141,909
Total liabilities and equity
291,737
281,320
342,679


Summarised statement of cash flows (see note 1)
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
Cash flow from operating activities:
3,903
3,516
11,754
Income for the period
7,419
20,955
Adjustment for:
2,367
1,844
8,701
- Current taxation
4,211
15,106
370
330
269
- Interest (income)/expense
700
447
3,279
3,090
3,439
- Depreciation, depletion and amortisation
6,369
6,585
(138)
(147)
(757)
- (Gains)/losses on sale of assets
(285)
(1,038)
(2,835)
(365)
(11,751)
- Decrease/(increase) in net working capital
(3,200)
(8,967)
(1,535)
(928)
(2,671)
- Share of profit of equity-accounted investments
(2,463)
(5,096)
1,242
977
2,447
- Dividends received from equity-accounted investments
2,219
4,199
(951)
365
(152)
- Deferred taxation and other provisions
(586)
170
(1,931)
141
10
- Other
(1,790)
104
3,771
8,823
11,289
Cash flow from operating activities (pre-tax)
12,594
32,465
(2,852)
(1,264)
(7,121)
Taxation paid
(4,116)
(11,435)
919
7,559
4,168
Cash flow from operating activities
8,478
21,030
Cash flow from investing activities:
(6,806)
(5,985)
(7,352)
Capital expenditure
(12,791)
(14,781)
(1,418)
(436)
(521)
Investments in equity-accounted investments
(1,854)
(1,137)
274
204
2,026
Proceeds from sale of assets
478
2,471
203
17
272
Proceeds from sale of equity-accounted investments
220
333
(58)
6
275
Proceeds from sale of /(additions to) financial assets
(52)
285
69
101
269
Interest received
170
554
(7,736)
(6,093)
(5,031)
Cash flow from investing activities
(13,829)
(12,275)
Cash flow from financing activities:
(2,046)
(3,588)
839
Net increase/(decrease) in debt with maturity period
within three months
(5,634)
(24)
7,044
6,884
131
Other debt: New borrowings
13,928
316
(430)
(1,386)
(1,479)
Repayments
(1,816)
(2,143)
(262)
(262)
(369)
Interest paid
(524)
(667)
7
12
34
Change in minority interest
19
27
-
-
(1,350)
Repurchases of shares
-
(2,423)
Dividends paid to:
(2,852)
(2,405)
(2,489)
- Shareholders of Royal Dutch Shell plc
(5,257)
(4,818)
(69)
(30)
(115)
- Minority interest
(99)
(166)
Treasury shares:
(49)
136
242
- Net sales/(purchases) and dividends received
87
442
1,343
(639)
(4,556)
Cash flow from financing activities
704
(9,456)
109
(54)
(8)
Currency translation differences relating to cash and
cash equivalents
55
35
(5,365)
773
(5,427)
Increase/(decrease) in cash and cash equivalents
(4,592)
(666)
15,961
15,188
14,417
Cash and cash equivalents at beginning of period
15,188
9,656
10,596
15,961
8,990
Cash and cash equivalents at end of period
10,596
8,990


Capital investment
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
Capital expenditure:
Exploration & Production:
2,300
2,835
3,038
- World outside USA
5,135
5,240
969
801
916
- USA
1,770
3,446
3,269
3,636
3,954
6,905
8,686
Gas & Power:
846
877
1,006
- World outside USA
1,723
1,829
3
3
3
- USA
6
4
849
880
1,009
1,729
1,833
762
749
761
Oil Sands
1,511
1,472
Oil Products:
745
454
862
- World outside USA
1,199
1,318
168
188
68
- USA
356
129
913
642
930
1,555
1,447
Chemicals:
470
367
399
- World outside USA
837
773
62
49
34
- USA
111
68
532
416
433
948
841
63
62
83
Corporate
125
120
6,388
6,385
7,170
Total capital expenditure
12,773
14,399
Exploration expense
165
176
218
- World outside USA
341
353
82
79
86
- USA
161
166
247
255
304
502
519
New equity in equity-accounted investments
271
160
347
- World outside USA
431
712
9
36
41
- USA
45
46
280
196
388
476
758
1,138
240
133
New loans to equity-accounted investments
1,378
379
8,053
7,076
7,995
Total capital investment*
15,129
16,055
*Comprising:
3,789
4,191
4,621
- Exploration & Production
7,980
10,060
942
959
1,156
- Gas & Power
1,901
2,081
762
749
761
- Oil Sands
1,511
1,472
1,962
699
934
- Oil Products
2,661
1,470
534
416
439
- Chemicals
950
851
64
62
84
- Corporate
126
121
8,053
7,076
7,995
15,129
16,055


Additional segmental information1
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
Exploration & Production
1,334
1,697
5,881
Segment earnings
3,031
11,024
Including:
606
496
408
- Exploration
1,102
733
1,962
2,073
2,228
- Depreciation, depletion & amortisation
4,035
4,393
813
548
1,103
- Share of profit of equity-accounted investments
1,361
2,315
3,237
4,043
8,659
Cash flow from operations
7,280
18,988
709
(901)
(374)
Less: Net working capital movements2
(192)
549
2,528
4,944
9,033
Cash flow from operations excluding net working capital movements
7,472
18,439
59,713
55,882
49,185
Capital employed
59,713
49,185
Gas & Power
705
514
625
Segment earnings
1,219
1,573
Including:
80
88
85
- Depreciation, depletion & amortisation
168
166
312
319
620
- Share of profit of equity-accounted investments
631
1,204
630
1,724
149
Cash flow from operations
2,354
2,066
(589)
1,030
(845)
Less: Net working capital movements2
441
57
1,219
694
994
Cash flow from operations excluding net working capital movements
1,913
2,009
23,964
22,169
21,010
Capital employed
23,964
21,010
Oil Sands
50
(42)
351
Segment earnings
8
600
Including:
42
38
45
- Depreciation, depletion & amortisation
80
89
141
5
645
Cash flow from operations
146
943
(7)
(57)
66
Less: Net working capital movements2
(64)
(36)
148
62
579
Cash flow from operations excluding net working capital movements
210
979
8,028
6,763
5,881
Capital employed
8,028
5,881
1 Corporate segment information has not been included in the table shown. Please refer to the Earnings by business segment section for additional information. The above data do not consider minority interest impacts on the segments.
2 Excluding working capital movements related to taxation.


Additional segmental information1 (continued)
Quarters
$ million
Six Months
Q2 2009
Q1 2009
Q2 2008
2009
2008
Oil Products
(255)
1,092
1,075
Segment CCS earnings
837
2,269
Including:
747
549
609
- Depreciation, depletion & amortisation
1,296
1,217
(4)
89
441
- Share of profit of equity-accounted investments
85
708
(1,876)
526
(4,148)
Cash flow from operations
(1,350)
(1,786)
(2,367)
(2,113)
(9,439)
Less: Net working capital movements2
(4,480)
(9,874)
491
2,639
5,291
Cash flow from operations excluding net working capital movements
3,130
8,088
52,353
44,690
63,298
Capital employed
52,353
63,298
Chemicals
(18)
(74)
(142)
Segment CCS earnings
(92)
59
Including:
257
159
356
- Depreciation, depletion & amortisation
416
518
187
68
92
- Share of profit of equity-accounted investments
255
250
120
(110)
361
Cash flow from operations
10
747
616
109
(216)
Less: Net working capital movements2
725
(225)
(496)
(219)
577
Cash flow from operations excluding net working capital movements
(715)
972
10,774
10,096
11,328
Capital employed
10,774
11,328
1 Corporate segment information has not been included in the table shown. Please refer to the Earnings by business segment section for additional information. The above data do not consider minority interest impacts on the segments.
2 Excluding working capital movements related to taxation.


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:

$ million
Q2 2009
Q2 2008
Income (four quarters)
12,940
36,628
Interest expense after tax
437
752
ROACE numerator
13,377
37,380
Capital employed - opening
158,333
131,846
Capital employed - closing
165,212
158,333
Capital employed - average
161,773
145,090
ROACE
8.3%
25.8%

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.

$ million
Ordinary share capital
Treasury shares
Other reserves
Retained earnings
Total
Minority interest
Total equity
At December 31, 2008
527
(1,867)
3,178
125,447
127,285
1,581
128,866
Income for the period
-
-
-
7,310
7,310
109
7,419
Other comprehensive income
-
-
3,882
-
3,882
3
3,885
Capital contributions/ (repayments) from/to minority shareholders and other changes in minority interest
-
-
-
3
3
19
22
Dividends paid
-
-
-
(5,257)
(5,257)
(99)
(5,356)
Treasury shares: net sales/(purchases) and dividends received
-
234
-
-
234
-
234
Repurchases of shares
-
-
-
-
-
-
Share-based compensation
-
-
(175)
227
52
-
52
At June 30, 2009
527
(1,633)
6,885
127,730
133,509
1,613
135,122


$ million
Ordinary share capital
Treasury shares
Other reserves
Retained earnings
Total
Minority interest
Total equity
At December 31, 2007
536
(2,392)
14,148
111,668
123,960
2,008
125,968
Income for the period
-
-
-
20,639
20,639
316
20,955
Other comprehensive income
-
-
1,853
-
1,853
(110)
1,743
Capital contributions/ (repayments) from/to minority shareholders and other changes in minority interest
-
-
-
59
59
52
111
Dividends paid
-
-
-
(4,818)
(4,818)
(166)
(4,984)
Treasury shares: net sales/(purchases) and dividends received
-
442
-
-
442
-
442
Repurchases of shares
(5)
-
5
(2,237)
(2,237)
-
(2,237)
Share-based compensation
-
-
(107)
18
(89)
-
(89)
At June 30, 2008
531
(1,950)
15,899
125,329
139,809
2,100
141,909

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:


Millions
Q2 2009
Q1 2009
Q2 2008
Royal Dutch Shell ordinary shares of €0.07 each
6,126.7
6,121.6
6,170.3


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”.

Millions
Q2 2009
Q1 2009
Q2 2008
Royal Dutch Shell ordinary shares of €0.07 each
6,129.4
6,124.5
6,189.1

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

Millions
Q2 2009
Q1 2009
Q2 2008
Royal Dutch Shell ordinary shares of €0.07 each
6,127.4
6,124.9
6,159.1


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.

_________________________________________________________________________________

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