4th Quarter 2007 Results

• Full year 2007 CCS earnings were $27.6 billion compared to $25.4 billion for the full year 2006. Basic CCS earnings per share for the full year 2007 increased by 11% when compared to 2006.

• A fourth quarter 2007 dividend has been announced of $0.36 per share, an increase of 11% over the US dollar dividend for the same period in 2006. From 2007 onwards the Group has been declaring its dividends in US dollars rather than in euros.

• The first quarter 2008 dividend is expected to be declared at $0.40 per share, an increase of 11% compared to the first quarter dividend of 2007.

• $1.5 billion or 0.6% of Royal Dutch Shell shares were bought back for cancellation during the quarter. Shares bought back for cancellation in 2007 totalled $4.4 billion or 1.7% of the shares.

Royal Dutch Shell Chief Executive Jeroen van der Veer commented: “Overall these are satisfactory results. We made good progress in 2007, launched new projects upstream and downstream, and achieved exploration successes. In the fourth quarter, we continued to see weak refining margins. We are proceeding with the rejuvenation of our portfolio with investment in new legacy assets, and through disposals. The execution of our strategy is on track.”

• Fourth quarter 2007 reported income was $8,467 million or 60% higher than in the same quarter a year ago. Full year 2007 reported income was $31,331 million or 23% higher than in 2006.
  

• Basic CCS earnings per share increased by 13% versus the same quarter a year ago. Full year 2007 basic CCS earnings per share increased 11% when compared to 2006.
  

• Total cash returned to shareholders in the form of dividends and share repurchases in the fourth quarter 2007 was $3.9 billion, bringing the total for the full year 2007 to $13.4 billion.
  

• Cash flow from operating activities was $5.3 billion compared to $6.0 billion in the fourth quarter 2006. Excluding working capital movements and taxation effects, cash flow from operating activities was $9.9 billion compared to $8.8 billion a year ago. Full year 2007 cash flow from operating activities was $34.5 billion compared to $31.7 billion in 2006. Adjusted for working capital movements and taxation effects, cash flow from operating activities for the full year 2007 was $39.5 billion, similar to full year 2006.
  

• Capital investment for the fourth quarter 2007 was $8.5 billion. Full year 2007 capital investment was $26.6 billion, excluding the minority share of Sakhalin of $0.5 billion, with an additional $7.1 billion used for the acquisition of the minority shares of Shell Canada. Approximately $9.9 billion of proceeds were realised from divestments. Net capital investment (capital investment, including acquisition of minority interests, less divestment proceeds and the minority share of Sakhalin) for the full year 2007 was $23.8 billion. Net capital investment for 2008 is expected to be in the range of $24 - $25 billion, broadly unchanged from 2007 levels.
  

• Return on average capital employed (ROACE), on a reported income basis (see note 3), was 24.4%.
  

• Gearing (see note 5) was 16.3% at the end of 2007 versus 14.8% at the end of 2006.
  

• Oil and gas production, including oil sands production, for the fourth quarter 2007 was 3,436 thousand barrels of oil equivalent per day (boe/d), compared to 3,645 thousand boe/d in the same quarter last year. Full year 2007 oil and gas production, including oil sands production, was 3,315 thousand boe/d, compared to 3,473 thousand boe/d in 2006. Excluding the impact of divestments, contractual settlements and production sharing contract (PSC) pricing effects, fourth quarter 2007 production increased by 1% compared to the same quarter last year and full year 2007 production decreased by 2% compared to 2006 levels.
  

• Liquefied Natural Gas (LNG) equity sales volumes of 3.34 million tonnes were in line with the same quarter a year ago. Full year 2007 equity LNG sales were 13.18 million tonnes, up 9% compared to 12.12 million tonnes in 2006.
  

• Oil Products refinery availability remained relatively stable at 94% compared to the fourth quarter of 2006 (91% for the full year 2007 versus 92% in 2006). Chemicals manufacturing plant availability was 93% compared to 87% in the fourth quarter 2006 (93% for the full year 2007 versus 90% in 2006). Oil Sands upgrader availability was 79%, compared to 98% in the same quarter last year (89% for the full year 2007 versus 99% in 2006).
  
  

Earnings in the fourth quarter 2007 reflected the following items, which in aggregate amounted to a net gain of $963 million (compared to a net gain of $515 million in the fourth quarter 2006) as summarised in the table below:

• Exploration & Production earnings included a net gain of $715 million, reflecting net divestment gains of $1,514 million and tax credits of $233 million mainly related to tax rate changes in Canada and Italy. These gains were partly offset by tax impacts of $173 million, an asset impairment of $60 million in the USA, $83 million related to the mark-to-market valuation impact of certain UK gas contracts and an aggregate charge of $716 million regarding Nigeria, mainly relating to the onshore assets, including impairments and provisions arising from funding and the security situation. Earnings for the fourth quarter 2006 included a net gain of $387 million reflecting both divestment gains and the mark-to-market valuation of certain UK gas contracts, partly offset by tax effects and pension costs.
  

• Gas & Power earnings included a charge of $7 million related to the mark-to-market valuation impact of certain gas contracts.
  

• Oil Sands earnings included a gain of $94 million related to a tax rate change in Canada.
  

• Oil Products earnings included a net gain of $177 million, reflecting a net gain of $124 million mainly related to an impairment reversal in France, and tax gains of $220 million related to tax rate changes in Canada and Germany, which were partly offset by legal and environmental provisions of $167 million. Earnings for the fourth quarter 2006 included a net gain of $103 million reflecting tax effects partly offset by pension costs.
  

• Chemicals earnings included a net charge of $46 million, reflecting a charge of $50 million mainly related to an impairment in France, which was partly offset by $4 million related to a tax rate change in Canada. Earnings for the fourth quarter 2006 included net charges of $83 million from legal costs and pension costs partly offset by tax effects.
  

• Corporate earnings included a gain of $30 million related to interest income on divestment receivables. Earnings for the fourth quarter 2006 included $108 million related to net tax credits.

These items generally relate to events with an impact of greater than $50 million on Shell Group earnings and are shown to provide additional insight into the segment earnings, CCS earnings and income attributable to shareholders. Further additional comments are provided in the section ‘Earnings per industry segment’ on page 4 and onwards.

Fourth quarter Exploration & Production segment earnings were $4,867 million compared to $3,536 million a year ago. Earnings included a net gain of $715 million related to identified items, when compared to a net gain of $387 million in the fourth quarter 2006 (see page 3 for details).

Earnings, when compared to the fourth quarter 2006, reflected the impact of higher oil and gas prices on revenues, which was partly offset by lower production volumes, higher taxes and royalty charges and higher costs, reflecting current industry conditions. In addition, earnings were impacted by lower profits from the Sakhalin project, as a consequence of the partial divestment in the second quarter 2007.

Liquids realisations were 50% higher than in the fourth quarter 2006, following marker crudes Brent and WTI increases which were up 48% and 51% respectively. Global gas realisations were 19% higher than a year ago. Outside the USA gas realisations increased by 23% whereas in the USA gas realisations increased by 8%.

Fourth quarter 2007 production was 3,381 thousand barrels of oil equivalent per day compared to 3,539 thousand barrels of oil equivalent per day a year ago. Total crude oil production (excluding oil sands bitumen production) was down 14% and total natural gas production was up 10% when compared to the fourth quarter 2006. Fourth quarter 2007 production was impacted by a reduction of 53 thousand barrels of oil equivalent per day due to the resolution of contractual issues. Fourth quarter 2006 production benefited by 103 thousand barrels of oil equivalent per day also related to the resolution of contractual issues.

Production compared to the fourth quarter 2006 included increased volumes from West Salym (Shell share 50%) in Russia, Deimos (Shell share 71.5%) in the USA, Ormen Lange (Shell share 17%) in Norway, Changbei (Shell share 50%) in China, Merganser (Shell share 44%) in the United Kingdom and Stybarrow in Australia (indirect Shell share 17.1%).

Full year Exploration & Production segment earnings were $14,686 million compared to $14,544 million in 2006. Earnings included a net gain of $1,102 million related to identified items, when compared to a net gain of $521 million in 2006.

Earnings, when compared to full year 2006, reflected the impact of higher oil and gas prices on revenues, which was partly offset by lower production volumes, higher tax charges, higher exploration expenses and higher costs, reflecting current industry conditions. In addition, earnings were impacted by lower profits from the Sakhalin project, as a consequence of the partial divestment in the second quarter 2007.

Liquids realisations were 12% higher than in 2006, following marker crudes Brent and WTI increases which were up 11% and 9% respectively. Global gas realisations were 1% higher than a year ago. Outside the USA gas realisations were 5% higher than a year ago, whereas in the USA gas realisations decreased by 7%.

Full year production was 3,234 thousand barrels of oil equivalent per day compared to 3,391 thousand barrels of oil equivalent per day in 2006. Total crude oil production (excluding oil sands bitumen production) was down 7% and total natural gas production was down 2% when compared to the full year 2006. Full year 2007 production was impacted by a reduction of 13 thousand barrels of oil equivalent per day due to the resolution of contractual issues. Full year 2006 production benefited by 27 thousand barrels of oil equivalent per day also related to the resolution of contractual issues.

Production compared to 2006 included increased volumes from Erha (Shell share 44%) in Nigeria, E8 and B12 (Shell share 50%) in Malaysia, West Salym (Shell share 50%) in Russia, Pohokura (Shell share 48%) in New Zealand, Changbei (Shell share 50%) in China, Merganser (Shell share 44%) in the United Kingdom, Enfield in Australia (indirect Shell share 21%), Stybarrow in Australia (indirect Shell share 17.1%) and Deimos (Shell share 71.5%) in the USA.

In Norway, Shell announced that on December 1, 2007 it assumed responsibility for operations in the recently opened Ormen Lange gas field. Production is expected to reach a peak of 70 million standard cubic metres per day, continuing for some 40 years.

In the Netherlands, through its joint venture, Nederlandse Aardolie Maatschappij B.V. (NAM), Shell announced the decision to resume oil production in the Schoonebeek field using new and innovative technology, with expected production of some 100 to 120 million barrels of oil in the coming 25 years.

In Australia, at the end of the third quarter, Shell agreed to sell a 25% interest in Australia’s NT/P48 Permit, which includes the Evans Shoal joint venture in the Timor Sea, offshore Australia's Northern Territory, to Petroliam Nasional Berhad (PETRONAS). During the fourth quarter, in Malaysia, Shell signed a production sharing contract (PSC) with PETRONAS for the Kebabangan Cluster fields (Shell share 30%), enabling parties to conduct exploration, development and production of natural gas.

In China, Shell acquired a 55% equity interest in a coalbed methane venture in Shanxi Province, of which it will also become the operator.

In the USA, Shell completed the sales of the Barnett Shale and Wilcox assets.

In the United Kingdom, Shell agreed to sell the Dunlin Cluster fields in the North Sea.

During 2007 the Group made 11 material discoveries, which are located in Australia, Brunei, Kazakhstan, Malaysia, Nigeria and the USA. Shell also significantly increased its overall acreage position, especially through new exploration licenses in Australia, China, Colombia, Tunisia and the USA.

Fourth quarter Gas & Power segment earnings were $631 million compared to $579 million a year ago. Fourth quarter 2007 earnings included a charge of $7 million related to an identified item (see page 3 for details).

Earnings, when compared to the fourth quarter 2006, reflected higher realised LNG prices, which were partly offset by lower earnings from marketing and trading.

LNG equity sales volumes of 3.34 million tonnes were in line with the same quarter a year ago.

Marketing and trading earnings were lower than the same quarter a year ago, reflecting less favourable market conditions in both North America and Europe.

Full year Gas & Power segment earnings were $2,781 million compared to $2,633 million in 2006. Earnings for the full year 2007 included a net gain of $275 million related to identified items.

Earnings, when compared to the full year 2006, reflected growth in LNG equity sales volumes, higher realised LNG prices and gains from divestments, which were partly offset by lower marketing and trading earnings.

LNG equity sales volumes of 13.18 million tonnes were 9% higher than in 2006, mainly driven by increased gas supply to the Nigeria LNG venture.

Marketing and trading earnings were lower in 2007, reflecting the strong trading conditions in both Europe and North America in 2006.

In Germany, Shell has agreed to sell its share in the transport business of the German joint venture BEB Erdgas und Erdoel GmbH (BEB) including the technical operations to NV Nederlandse Gasunie (Gasunie). The deal is subject to regulatory approvals and is expected to be completed during 2008.

In the USA, a final investment decision was made for the construction of the 100 megawatt Phase II expansion of the Mount Storm wind farm (Shell share 50%). Phase I (164 megawatts) is expected to be completed in 2008.

In Nigeria, construction of the train 6 expansion of the Nigeria LNG venture (NLNG, Shell share 26%) was completed at year-end, increasing capacity by 4 million tonnes per annum (on a 100% basis). Project delivery was on budget, on time and completed with a good safety performance.

Two further coal gasification licences were sold in the quarter, the 16th in China and the first in Vietnam.

Fourth quarter Oil Sands segment earnings were $82 million compared to $174 million in the same quarter last year. Earnings for the fourth quarter 2007 included a gain of $94 million related to an identified item (see page 3 for details).

The mid-November fire at the Scotford Upgrader and subsequent shutdown significantly impacted earnings, production volumes and upgrader availability for the quarter. Operations restarted at the end of the quarter and production is expected to ramp up to full capacity during the first quarter 2008.

Earnings, when compared to the fourth quarter 2006, reflected lower production volumes, higher costs, largely associated with the upgrader repairs, and increased royalty charges following project payout in July 2007. These were partly offset by the impact of higher oil prices on revenues and a gain related to a Canadian tax rate change.

Bitumen production, when compared to the same quarter last year, decreased by 48%. Upgrader availability decreased to 79% compared to 98% in the fourth quarter 2006, mainly as a consequence of the fire and the subsequent unplanned shutdown.

Full year Oil Sands segment earnings were $582 million compared to $651 million in 2006. Earnings for the full year 2007 included a gain of $94 million related to an identified item when compared to a gain of $120 million in 2006.

Earnings, when compared to the full year 2006, reflected higher operating and maintenance costs and increased royalty expenses, which were partly offset by the impact of higher oil prices.

Full year 2007 bitumen production, when compared to the full year 2006, was relatively unchanged.

Oil Sands upgrader availability decreased to 89% compared to 99% in 2006, mainly as a consequence of the mid-November fire at the Scotford Upgrader and subsequent shutdown.

In 2007 Shell acquired some 27,000 hectares of mineable leases compared to some 23,000 hectares acquired in 2006. In the past two years lease holdings have increased by some 50%.

Fourth quarter Oil Products CCS segment earnings were $876 million compared to $1,469 million in the fourth quarter 2006. Earnings included a net gain of $177 million related to identified items, compared to a net gain of $103 million in the fourth quarter 2006 (see page 3 for details).

CCS earnings, when compared to the fourth quarter 2006, were mainly impacted by significantly lower realised refining margins and higher operating costs, which were partly offset by higher marketing margins. Trading contributions were at similar levels when compared to those in the fourth quarter 2006.

In Manufacturing, the industry refining margins, when compared to the same period a year ago, were higher in Europe and the eastern hemisphere, while refining margins declined in the US Gulf Coast and US West Coast. Refinery availability was similar to the fourth quarter 2006 at around 94%. However, realised refining margins were lower than the industry margins reflecting unplanned downtime in certain refinery conversion units, in particular the Bukom refinery in Singapore, and the narrowing of light-heavy oil price differentials.

In Marketing, when compared to the same period a year ago, earnings increased mainly due to higher retail and higher finished lubricants margins, which were partly offset by lower lubricants base oil margins. B2B earnings were similar to those a year ago.

Marketing sales volumes were 2.2% higher than in the fourth quarter 2006. Excluding the impact of divestments, volumes were 3.5% higher than in the fourth quarter 2006, mainly because of higher retail and aviation sales.

Full year Oil Products segment earnings were $10,439 million compared to $7,125 million in 2006.

Full year Oil Products CCS segment earnings were $6,951 million compared to $7,027 million in 2006. Earnings for the full year 2007 included a net gain of $327 million related to identified items when compared to a net gain of $38 million in 2006.

CCS earnings, when compared to the full year 2006, were mainly impacted by lower realised refining margins, a lower trading contribution and higher operating costs, which were partly offset by higher marketing margins.

In Manufacturing, the industry refining margins, when compared to the same period a year ago, were higher in the US Gulf Coast, Europe and eastern hemisphere, while industry margins in the US West Coast declined. Full year refinery availability was 91% compared to 92% in 2006.

In Marketing, earnings increased when compared to 2006 due to higher retail, B2B and lubricant earnings.

Marketing sales volumes declined 1.1% when compared to volumes in 2006. Excluding the impact of divestments, volumes were 1.1% higher than in 2006, mainly because of higher retail sales.

Fourth quarter Chemicals CCS segment earnings were $348 million compared to $273 million in the same quarter last year. Earnings included a net charge from identified items of $46 million compared to a net charge of $83 million in the fourth quarter 2006 (see page 3 for details).

CCS earnings, when compared to the fourth quarter 2006, reflected improved margins and lower fixed costs, which were partly offset by lower income from equity-accounted investments and reduced trading contributions.

Chemicals manufacturing plant availability increased to 93%, some 6% points higher than in the fourth quarter 2006, which was impacted by a heavy planned and extended maintenance programme in the USA and in Europe.

Full year Chemicals segment earnings were $2,051 million compared to $1,064 million in 2006.

Full year Chemicals CCS segment earnings were $1,682 million compared to $1,095 million in 2006. Earnings for the full year 2007 included a net charge of $28 million related to identified items compared to a net charge of $113 million in 2006.

Earnings, when compared to full year 2006, reflected higher margins, higher earnings from equity-accounted investments and lower fixed costs, which were partly offset by a reduced trading contribution. Earnings from equity-accounted investments included the first full year of operations of the Nanhai petrochemicals complex in China (Shell share 50%).

Chemicals manufacturing plant availability increased to 93%, some 3% points higher than in 2006, which was impacted by a heavy planned maintenance programme in the USA and Europe.

Fourth quarter Corporate segment results were a loss of $4 million compared to income of $249 million for the same period last year. Earnings for the fourth quarter 2007 included a gain of $30 million related to an identified item (see page 3 for details).

Earnings, when compared to the fourth quarter 2006, reflected lower tax credits and higher shareholder costs, which were partly offset by higher interest and insurance underwriting income.

Full year Corporate segment earnings were $1,387 million compared to $294 million in 2006. Earnings for the full year 2007 included a net gain of $489 million related to identified items when compared to a net charge of $206 million in 2006.

Earnings, when compared to 2006, reflected higher insurance underwriting income, improved interest and investment income and positive results from exchange rate movements, which were partly offset by lower tax credits. The full year 2007 earnings included gains on the sale of the equity portfolio held by the group insurance companies of some $404 million.