Royal Dutch Shell: 3rd Quarter 2009 Unaudited Results

October 29, 2009

    LONDON, October 29 /PRNewswire-FirstCall/ --

    - Royal Dutch Shell's Third Quarter 2009 Earnings, on a
      Current Cost of Supplies (CCS) Basis, Were $3.0 Billion Compared to
      $10.9 Billion a Year Ago. Basic CCS Earnings per Share Decreased by 72%
      Versus the Same Quarter a Year Ago.

    - Cash Flow From Operating Activities for the Third Quarter
      2009 was $7.3 Billion, and Excluding net Working Capital Movements, was
      $7.7 billion.

    - Net Capital Investment for the Quarter was $7.4 Billion.
      Total Dividends Paid to Shareholders During the Third Quarter 2009 Were
      $2.7 Billion.

    - Gearing at the end of the Third Quarter 2009 was 13.7%.

    - A Third 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              Nine Months
    Q3 2009 Q2 2009 Q3 2008  %[1]                             2009   2008   %

      1,543   2,091   8,647     Upstream                     5,818 21,843
      1,292    (275)  2,419     Downstream                   2,020  4,748
                                Corporate and Minority
        155     524    (163)    interest                       789    (10)
      2,990   2,340  10,903 -73 CCS earnings                 8,627 26,581 -68
                                Estimated CCS adjustment for
        257   1,482  (2,455)    Downstream (see Note 2)      1,930  2,506
      3,247   3,822   8,448 -62 Income attributable to      10,557 29,087 -64
                                shareholders

                                Basic CCS earnings per
       0.49    0.38    1.77 -72 share($)                      1.41   4.31 -67
       0.04    0.24   (0.40)    Estimated CCS adjustment per  0.31   0.40
                                share ($)
       0.53    0.62    1.37 -61 Basic earnings per share ($)  1.72   4.71 -63

                                Cash flow from operating
      7,350     919  12,601 -42 activities                  15,828 33,631 -53

                                Cash flow from operating
       1.20    0.15    2.05 -41 activities per share ($)      2.58   5.45 -53

       0.42    0.42    0.40  +5 Dividend per share ($)        1.26   1.20  +5

    [1] Q3 on Q3 change

Royal Dutch Shell (NYSE: RDS.A)(NYSE: RDS.B) Chief Executive Officer Peter Voser commented:

"Our third quarter results were affected by the weak global economy. Upstream and Downstream profitability has been sharply reduced compared to year-ago levels. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery. Despite Shell's good operating performance in this difficult environment, we have embarked on an ambitious programme of stringent measures to further improve our performance."

"We continue to focus on improving our competitive cost position, simplifying Shell, and increasing personal accountabilities. The Transition 2009 programme, which I announced earlier this year, is progressing well, and will be completed by the end of 2009. Some 5,000 employees are leaving Shell as a result of these changes. This represents around a 10% reduction in employees in the redesigned divisions and corporate functions."

"We have reduced operating costs by some $1.0 billion in the first nine months of 2009 compared to the same period in 2008. This reduction excludes the impact of exchange rate movements and non-cash pension costs."

"I am pleased with the portfolio progress in the third quarter. In Russia, production ramp-up of the Sakhalin II LNG project has been achieved ahead of schedule. In Australia, we have launched the Gorgon project, which will supply global LNG markets for decades to come."

Voser concluded: "Our strategy remains on track, although the near-term industry outlook remains challenging. 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."

Third quarter portfolio developments

In Australia, Shell and its partners took Final Investment Decision (FID) for the Gorgon LNG project (Shell share 25%). Gorgon will supply global gas markets to at least 2050, with capacity of 15 million tonnes (100% basis) of Liquefied Natural Gas (LNG) per year and a major carbon capture and storage (CCS) scheme.

Shell has announced a Front-End Engineering and Design (FEED) study for a Floating Liquefied Natural Gas (FLNG) project, with the potential to deploy these facilities at the Prelude offshore gas discovery in Australia (Shell share 100%).

In the USA, Gulf of Mexico, Shell participated in an oil discovery at the Vito well (Shell share 55%), in sub-salt Miocene reservoirs. In offshore western Australia, Shell participated in the Achilles gas discovery (Shell share 25%). In the North America Haynesville and Groundbirch tight gas areas there is ongoing encouragement from exploration and appraisal well test results.

In Canada, the Government of Alberta and Government of Canada jointly announced their intent to contribute $0.8 billion of funding towards the Quest CCS project. Quest, which is at the feasibility study stage, could capture CO2 from the Athabasca Oil Sands Project at the Scotford Upgrader, for underground storage.

In Russia, the Sakhalin II project (Shell share 27.5%) achieved peak production of some 400 thousand barrels of oil equivalent per day (boe/d), and successfully ramped up production at the two LNG trains, ahead of schedule.

Shell continues with its strategy to refocus its Downstream footprint, and to make selective new investments in its larger, integrated refining sites and growth markets. Some 15% of Shell's worldwide refining capacity, or some 600 thousand barrels per day, is earmarked for possible disposal or conversion to oil terminals.

In the Netherlands, Shell started construction this October of a new hydrodesulphurisation plant at the Pernis refinery to manufacture cleaner-burning oil products.

In Greece, Shell, as part of its strategy to concentrate its global Downstream portfolio, agreed to sell its activities for some $0.4 billion. The retail network will continue to operate under the Shell brand. This transaction is subject to regulatory approvals.

Key features of the THIRD quarter 2009

Third quarter 2009 CCS earnings were $2,990 million, 73% lower than in the same quarter a year ago.

Third quarter 2009 reported earnings were $3,247 million compared to earnings of $8,448 million in the same quarter a year ago.

Basic CCS earnings per share decreased by 72% versus the same quarter a year ago.

Cash flow from operating activities for the third quarter 2009 was $7.3 billion, compared to $12.6 billion in the same quarter last year. Excluding net working capital movements of $0.4 billion, cash flow from operating activities was $7.7 billion in the third quarter 2009, compared to $10.4 billion for the third quarter 2008 on the same basis.

Total dividends paid to shareholders during the third quarter 2009 were $2.7 billion.

Capital investment for the third quarter 2009 was $7.8 billion. Net capital investment (capital investment, less divestment proceeds) for the third quarter 2009 was $7.4 billion.

Return on average capital employed (ROACE), on a reported income basis (see Note 3), was 4.9%.

Gearing was 13.7% at the end of the third quarter 2009 versus 6.0% at the end of the third quarter 2008.

Upstream

Oil and gas production for the third quarter 2009 was 2,926 thousand boe/d, in line with the same quarter last year. Underlying production increased, compared to the third quarter 2008, with new field start-ups and the continuing ramp-up of fields more than offsetting the impact of field declines.

LNG sales volumes of 3.49 million tonnes were 13% higher than in the same quarter a year ago.

Downstream

The weak global economy continued to impact downstream volumes. Oil Products marketing sales volumes were 4% lower than in the third quarter 2008. Chemical product sales volumes in the third quarter 2009 decreased by 5% compared to the third quarter 2008.

Oil Products refinery availability was 94% compared to 88% in the third quarter 2008. Chemicals manufacturing plant availability was 95%, 9% higher than in the third quarter 2008. Third quarter 2008 availability, in both Oil Products and Chemicals, was adversely impacted by hurricanes in the USA.

Supplementary financial and operational disclosure for the third quarter 2009 is available at http://www.shell.com/investor.

Summary of identified items

Earnings in the third quarter 2009 reflected the following items, which in aggregate amounted to a net gain of $371 million (compared to a net gain of $2,813 million in the third quarter 2008), as summarised in the table below:

Upstream earnings included a net charge of $123 million, reflecting charges related to asset impairments and restructuring provisions. These were partly offset by gains related to tax credits, mark-to-market valuation of certain gas contracts and the estimated fair value accounting of commodity derivatives (see Note 7). Earnings for the third quarter 2008 included a net gain of $2,368 million.

Downstream earnings included a net gainof $536 million, reflecting gains related to the estimated fair value accounting of commodity derivatives (see Note 7) and tax credits, which were partly offset by charges related to asset impairments and restructuring provisions. Earnings for the third quarter 2008 included a gain of $445 million.

Corporate and Minority interest earnings included a charge of $42 million, related to restructuring provisions and tax charges.

    SUMMARY OF IDENTIFIED ITEMS[1]

           Quarters                    $ million              Nine Months
    Q3 2009 Q2 2009 Q3 2008                                   2009   2008
                            Segment earnings impact of
                            identified items:
       (123)   (115)  2,368 Upstream                            92  2,089
        536    (678)    445 Downstream                        (347)   (30)
        (42)    (17)      - Corporate and Minority interest    103      -
        371    (810)  2,813 CCS earnings impact               (152) 2,059

    [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 third quarter 2008 was reclassified by a
    gain of $400 million in the Upstream segment and by a gain of
    $350 million in the Downstream 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

    UPSTREAM

             Quarters                    $ million            Nine Months
    Q3 2009 Q2 2009 Q3 2008 %[1]                             2009   2008   %

      1,543   2,091   8,647 -82 Upstream earnings           5,818 21,843 -73

      4,168   4,006  12,496 -67 Upstream cash flow from    13,952 34,482 -60
                                operations

      5,879   5,497  11,614 -49 Capital investment         17,269 25,215 -32

      1,648   1,647   1,689  -2 Crude oil production        1,670  1,770  -6
                                (thousand b/d)[2]
                                Natural gas production
                                available for sale
      7,411   7,614   7,207  +3 (million scf/d)             8,250  8,246   -
                                Barrels of oil equivalent
      2,926   2,960   2,931   - (thousand boe/d)            3,092  3,192  -3

       3.49    2.89    3.10 +13 LNG sales volumes (million   9.44   9.69  -3
                                tonnes)
    [1] Q3 on Q3 change

    [2] Includes oil sands bitumen production

Third quarter Upstream earnings were $1,543 million compared to $8,647 million a year ago. Earnings included a net charge of $123 million related to identified items, compared to a net gain of $2,368 million in the third quarter 2008 (see page 4).

Upstream earnings compared to the third quarter 2008 reflected the impact of significantly lower oil and gas prices. These impacts were partially offset by increased gas sales volumes, including the effect of the successful start-up of the Sakhalin II project, and lower royalty and tax expenses compared to the third quarter 2008.

Third quarter 2009 oil prices increased from second quarter 2009 levels. However mainly due to contractual time lag effects the third quarter 2009 global natural gas realisations remained similar to second quarter 2009 levels. A generally weak environment for natural gas marketing and trading activities also affected the third quarter 2009 earnings.

Global liquids realisations were 43% lower than in the third quarter 2008. Global gas realisations were 42% lower than a year ago. In the Americas, gas realisations decreased by 64% whereas outside the Americas, gas realisations decreased by 29%. LNG realised prices compared to the third quarter 2008 decreased following trends in LNG price markers.

Third quarter 2009 production was 2,926 thousand boe/d compared to 2,931 thousand boe/d a year ago. Crude oil production was down 2% and natural gas production increased by 3% compared to the third quarter 2008.

Underlying production, compared to the third quarter 2008, increased by some 180 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.

LNG sales volumes of 3.49 million tonnes were 13% higher than in the same quarter a year ago. Volumes reflected the ramp-up in sales volumes from the Sakhalin II LNG project and Train 5 at the North West Shelf project, which were partly offset by lower volumes from Nigeria LNG and reduced Asia Pacific LNG demand.

    DOWNSTREAM

             Quarters                    $ million              Nine Months
    Q3 2009 Q2 2009 Q3 2008 %1                                2009   2008   %

      1,292    (275)  2,419 -47 Downstream CCS earnings      2,020  4,748 -57
        251   1,539  (2,543)    Estimated CCS adjustment     1,986  2,540
                                (see Note 2)
      1,543   1,264    (123)  - Downstream earnings          4,006  7,288 -45

      3,157  (1,754)  2,234 +41 Downstream cash flow from    1,813  1,206 +50
                                operations

      1,819   2,492   1,598 +14 Capital investment           5,432  3,931 +38

      2,997   3,136   3,273  -8 Refinery plant intake        3,095  3,476 -11
                                (thousand boe/d)

      6,121   6,174   6,403  -4 Oil Products sales volumes   6,109  6,625  -8
                                (thousand b/d)

      4,723   4,459   4,989  -5 Chemicals sales volumes     13,476 15,844 -15
                                (thousand tonnes)
    [1] Q3 on Q3 change

Third quarter Downstream CCS earnings were $1,292 million compared to $2,419 million in the third quarter 2008. Earnings included net gains of $536 million related to identified items, compared to a gain of $445 million in the third quarter 2008 (see page 4).

Downstream CCS earnings compared to the third quarter 2008 reflected substantially lower realised refining margins and lower refinery plant intake volumes, and lower marketing and chemicals margins which were partly offset by lower costs.

Oil Products marketing CCS earnings compared to the same period a year ago increased due to higher lubricants contributions and higher retail earnings, which were partly offset by lower B2B and trading contributions.

Oil Products sales volumes decreased by 4% compared to the same quarter last year, mainly because of lower B2B volumes, partly offset by increased retail sales volumes, mostly in the Americas and in the Asia Pacific region.

Industry refining margins significantly declined on a worldwide basis compared to the same period a year ago resulting in reduced realised margins. Reduced demand for refined products led to lower refinery plant intake volumes. Refinery plant intake volumes decreased by 8% compared to the same quarter last year.

Refinery availability was 94% compared to 88% in the third quarter 2008, which was impacted by hurricanes in the USA.

Chemicals CCS earnings compared to the third quarter 2008 reflected improved income from equity accounted investments and lower realised chemicals margins.

Chemicals sales volumes decreased by 5% compared to the same quarter last year. Chemicals manufacturing plant availability increased to 95%, some 9% higher than in the third quarter 2008, which was impacted by hurricanes in the USA.

    CORPORATE AND MINORITY INTEREST

           Quarters                    $ million             Nine Months
    Q3 2009 Q2 2009 Q3 2008                                   2009  2008

        202     548     (43) Corporate                         883   304
        (47)    (24)   (120) Minority interest                 (94) (314)
        155     524    (163) Corporate and Minority interest   789   (10)

Third quarter Corporate earnings and Minority interest were $155 million compared to a loss of $163 million for the same period last year. Earnings for the third quarter 2009 included a charge of $42 million related to identified items (see page 4).

Corporate earnings compared to the third quarter 2008 reflected mainly currency exchange gains, which were partly offset by lower net interest income. Currency exchange gains in the third quarter 2009 were $160 million compared to losses of $264 million in the third quarter 2008.

FORTHCOMING EVENTS

Fourth quarter and full year 2009 results, and fourth quarter 2009 dividend, are expected to be announced on February 4, 2010. First quarter 2010 results and first quarter 2010 dividend, are expected to be announced on April 28, 2010. Second quarter 2010 results and second quarter 2010 dividend, are expected to be announced on July 29, 2010. Third quarter 2010 results and third quarter 2010 dividend, are expected to be announced on October 28, 2010. A Shell strategy update is planned on March 16, 2010.

    APPENDIX: ROYAL DUTCH SHELL FINANCIAL REPORT AND TABLES

    Statement of income[3]

             Quarters                   $ million              Nine Months
    Q3 2009 Q2 2009 Q3 2008 %[1]                             2009    2008   %

     75,009  63,882 131,567     Revenue                   197,113 377,288
                                Share of profit of
                                equity-accounted
        746   1,535   2,000     investments                 3,209   7,096
                                Interest and other
        271     826   1,911     income[5]                   1,388   3,854
                                Total revenue and other
     76,026  66,243 135,478     income                    201,710 388,238
     55,781  46,127 104,658     Purchases[6]              142,196 292,644
                                Production and
      5,885   6,092   6,619     manufacturing expenses     17,919  18,819
                                Selling, distribution and
      4,306   3,943   4,123     administrative expenses    11,898  12,471
        318     269     289     Research and development      794     846
        637     524     731     Exploration                 1,509   1,360
                                Depreciation, depletion
      4,341   3,279   3,387     and amortisation[4]        10,710   9,972
        189     166     204     Interest expense              538     836
      4,569   5,843  15,467 -70 Income before taxation     16,146  51,290 -69
      1,281   1,940   6,987     Taxation                    5,439  21,855
      3,288   3,903   8,480 -61 Income for the period      10,707  29,435 -64
                                Income attributable to
         41      81      32     minority interest             150     348
      3,247   3,822   8,448 -62 Income attributable to     10,557  29,087 -64
                                Royal Dutch Shell plc
                                shareholders
                                Estimated CCS adjustment
       (257) (1,482)  2,455     for Downstream             (1,930) (2,506)
      2,990   2,340  10,903 -73 CCS earnings                8,627  26,581 -68




    Basic earnings per share[3]

           Quarters                                             Nine Months
    Q3 2009 Q2 2009 Q3 2008                                    2009    2008

     0.53    0.62    1.37   Earnings per share ($)             1.72    4.71
     0.49    0.38    1.77   CCS earnings per share ($)         1.41    4.31

    Diluted earnings per share[3]

           Quarters                                             Nine Months
    Q3 2009 Q2 2009 Q3 2008                                    2009    2008

     0.53    0.62    1.37   Earnings per share ($)             1.72    4.70
     0.49    0.38    1.77   CCS earnings per share ($)         1.41    4.30

    SHARES[2,3]

           Millions                                              Nine Months
    Q3 2009 Q2 2009 Q3 2008                                     2009    2008

                            Weighted average number of shares
                            as the basis for:
    6,127.0 6,126.7 6,147.3 Basic earnings per share         6,125.1 6,171.0
    6,131.0 6,129.4 6,159.8 Diluted earnings per share       6,128.2 6,186.2

                            Basic shares outstanding at the  6,125.2 6,133.4
    6,125.2 6,127.4 6,133.4 end of the period

    [1] Q3 on Q3 change.

    [2] Royal Dutch Shell ordinary shares of EUR0.07 each.

    [3] See notes 1, 2 and 6, where applicable.

    [4] Includes impairment charges of $1,208 million for the third
        quarter 2009, $310 million for the second quarter 2009 and $144
        million for the third quarter 2008.

    [5] Includes gains/(losses) on sale of assets.

    [6] Includes inventory movements.



    Summarised balance sheet (see notes 1 and 5)
                                                      $ million
                                          Sept 30,      Jun 30,     Sept 30,
                                            2009         2009         2008

    Assets
    Non-current assets:
    Intangible assets                      5,288        5,197        5,541
    Property, plant and equipment        127,207      121,708      114,193
    Investments:
    - equity-accounted investments        30,265       29,986       31,630
    - financial assets                     4,187        4,130        2,952
    Deferred tax                           4,309        4,144        3,978
    Pre-paid pension costs                 9,691        9,640        6,205
    Other                                  9,646        8,886        6,219
                                         190,593      183,691      170,718

    Current assets:
    Inventories                           25,420       24,921       33,442
    Accounts receivable                   66,966       72,529       90,100
    Cash and cash equivalents             14,275       10,596        7,821
                                         106,661      108,046      131,363

    Total assets                         297,254      291,737      302,081

    Liabilities
    Non-current liabilities:
    Debt                                  31,522       25,469       10,742
    Deferred tax                          13,917       13,726       14,688
    Retirement benefit obligations         5,918        5,787        5,961
    Other provisions                      13,523       13,259       13,499
    Other                                  4,719        4,619        4,088
                                          69,599       62,860       48,978

    Current liabilities:
    Debt                                   4,774        4,621        5,984
    Accounts payable and
     accrued liabilities                  69,489       76,298       88,387
    Taxes payable                         11,879       10,205       15,632
    Retirement benefit obligations           435          410          369
    Other provisions                       2,566        2,221        2,356
                                          89,143       93,755      112,728

    Total liabilities                    158,742      156,615      161,706

    Equity attributable to Royal
     Dutch Shell plc shareholders        136,863      133,509      138,469

    Minority interest                      1,649        1,613        1,906
    Total equity                         138,512      135,122      140,375

    Total liabilities and equity         297,254      291,737      302,081


    Summarised statement of cash flows (see note 1)

            Quarters                    $ million               Nine Months
    Q3 2009 Q2 2009 Q3 2008                                    2009     2008

                             Cash flow from operating
                             activities:
      3,288   3,903   8,480  Income for the period           10,707   29,435
                             Adjustment for:
      1,677   2,367   6,935  - Current taxation               5,888   22,041
        157     370     178  - Interest (income)/expense        857      625
                             - Depreciation, depletion and
      4,341   3,279   3,387    amortisation[1]               10,710    9,972
                             - (Gains)/losses on sale of
        (81)   (138) (1,799)   assets                          (366)  (2,837)
                             - Decrease/(increase) in net
       (384) (2,835)  2,215    working capital               (3,584)  (6,752)
                             - Share of profit of
       (746) (1,535) (2,000)   equity-accounted investments  (3,209)  (7,096)
        993   1,242   2,604  - Dividends received from        3,212    6,803
                               equity-accounted
                               investments
                             - Deferred taxation and other
       (401)   (951)    (95)   provisions                      (987)      75
        332  (1,931)   (618) - Other                         (1,458)    (514)
                             Cash flow from operating
      9,176   3,771  19,287  activities (pre-tax)            21,770   51,752

     (1,826) (2,852) (6,686) Taxation paid                   (5,942) (18,121)

                             Cash flow from operating
      7,350     919  12,601  activities                      15,828   33,631

                             Cash flow from investing
                             activities:
     (6,219) (6,806)(12,392) Capital expenditure            (19,010) (27,173)
                             Investments in
       (448) (1,418)   (555) equity-accounted investments    (2,302)  (1,692)
        327     274   1,087  Proceeds from sale of assets       805    3,558
                             Proceeds from sale of
        267     203   1,160  equity-accounted investments       487    1,493
                             Proceeds from sale of
                             /(additions to) financial
        (16)    (58)    (25) assets                             (68)     260
        118      69     267  Interest received                  288      821
                             Cash flow from investing
     (5,971) (7,736)(10,458) activities                     (19,800) (22,733)

                             Cash flow from
                             financing
                             activities:
                             Net increase/(decrease) in
                             debt with maturity period
        (57) (2,046)    215  within three months             (5,691)     191
      5,353   7,044     238  Other debt: New borrowings      19,281      554
       (241)   (430)   (166)             Repayments          (2,057)  (2,309)
        (86)   (262)   (295) Interest paid                     (610)    (962)
         23       7     (18) Change in minority interest         42        9
          -       -    (848) Repurchase of shares                 -   (3,271)
                             Dividends paid to:
                             - Royal Dutch Shell plc
     (2,656) (2,852) (2,290)   shareholders                  (7,913)  (7,108)
        (65)    (69)   (105) - Minority interest               (164)    (271)
                             Treasury shares:
                             - Net sales/(purchases) and
        (17)    (49)     36    dividends received                70      478
                             Cash flow from financing
      2,254   1,343  (3,233) activities                       2,958  (12,689)

                             Currency translation
                             differences relating to cash
         46     109     (79) and cash equivalents               101      (44)

                             Increase/(decrease) in cash
      3,679  (5,365) (1,169) and cash equivalents              (913)  (1,835)

                             Cash and cash equivalents at
     10,596  15,961   8,990  beginning of period             15,188    9,656

                             Cash and cash equivalents at
     14,275  10,596   7,821  end of period                   14,275    7,821

    [1] Includes impairment charges of $1,208 million for the third
    quarter 2009, $310 million for the second quarter 2009 and $144
    million for the third quarter 2008.


    EQUITY (see note 5)
    $ million      Ordinary Treasury Other    Retained Total Minority Total
                      share   shares reserves earnings       interest equity
                    capital

    At December 31,     527  (1,867)  3,178   125,447 127,285  1,581 128,866
    2008
    Income for the
     period               -       -       -    10,557  10,557    150  10,707
    Other
     comprehensive
     income               -       -   6,562         -   6,562     49   6,611
    Capital
     contributions/
     (repayments)
     from/to minority
     shareholders and
     other changes in
     minority interest    -       -       -         3       3     33      36
    Dividends paid        -       -       -    (7,913) (7,913)  (164) (8,077)
    Treasury shares:
     net sales/
     (purchases) and
     dividends received   -     201       -         -     201      -     201
    Repurchases of
     shares               -       -       -         -       -      -       -
    Share-based
     compensation         -       -     (22)      190     168      -     168
    At September 30,
     2009               527  (1,666)  9,718   128,284 136,863  1,649 138,512


    $ million     Ordinary Treasury  Other   Retained  Total  Minority  Total
                     share shares   reserves earnings         interest equity
                   capital

    At December 31,    536  (2,392)  14,148  111,668 123,960   2,008 125,968
     2007
    Income for the
     period              -       -        -   29,087  29,087     348  29,435
    Other
     comprehensive
     income              -       -   (4,906)       -  (4,906)   (204) (5,110)
    Capital
     contributions/
     (repayments)
     from/to minority
     shareholders and
     other changes in
     minority interest   -       -        -       59      59      25      84
    Dividends paid       -       -        -   (7,108) (7,108)   (271) (7,379)
    Treasury shares:
     net sales/
     (purchases) and
     dividends
     received            -     478        -        -     478       -     478
    Repurchases of
     shares             (7)      -        7   (3,085) (3,085)      -  (3,085)
    Share-based
     compensation        -       -      (58)      42     (16)      -     (16)
    At September 30,
     2008              529  (1,914)   9,191  130,663 138,469   1,906 140,375


    EXPLANATORY 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.

The presentation of the Statement of Income has been changed to provide additional information for the evaluation of Shell's performance. This change provides additional information in relation to our costs and more alignment with industry practice. The main changes are the disclosure of purchases, production and manufacturing expenses and research and development separately (previously disclosed within cost of sales). Depreciation, depletion and amortisation charges previously included in cost of sales, selling, distribution and administrative expenses and exploration are now disclosed separately. Gains and losses on sale of assets are now included in interest and other income.

Purchases are all costs related to the acquisition of supplies, including those used for conversion into finished or intermediary products. Production and manufacturing expenses are the costs of operating, maintaining and managing production and manufacturing assets. Selling, distribution and administrative expenses include direct and indirect costs of marketing and selling products.

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 Downstream 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 Shell's results of operations and is a measure to manage the performance of the Downstream segment but is not a measure of financial performance under IFRS.

On this basis, the purchase price 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.

4. Segmental reporting

Segmental reporting has been changed with effect from the third quarter 2009, in line with the change in the way Shell's businesses are managed. Shell now reports its business through three (previously six) reporting segments, Upstream (previously Exploration & Production, Gas & Power and Oil Sands), Downstream (previously Oil Products and Chemicals) and Corporate. Corporate represents the key support functions, comprising holdings and treasury, headquarters, central functions and Shell insurance companies. Prior period financial information has been reclassified accordingly.

Upstream and Downstream 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. With effect from the third quarter 2009, insurance premium costs (excluding external insurance) and self insured claims are reported within the Corporate segment; previously they were reported within the relevant business segments. The impact of this change in allocation is a reduction of $167 million (pre-tax) of the Corporate result in the third quarter 2009, with no effect on Shell's income for the period. Prior period segment results are not reclassified (the insurance costs were $143 million (pre-tax) in the second quarter 2009 and $20 million (pre-tax) in the third quarter 2008). Segment results include equity-accounted investments and are after tax.

5. Equity

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

6. Earnings per share

Basic earnings per share is calculated by dividing the income attributable to Royal Dutch Shell plc shareholders for the period by the weighted average number of Class A and B ordinary shares outstanding during the period. To calculate the diluted earnings per share the weighted average number of shares outstanding is adjusted for the number of shares related to share option schemes.

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.

CAUTIONARY STATEMENT

All amounts shown throughout this Report are unaudited.

Fourth quarter and full year 2009 results are expected to be announced on February 4, 2010. First quarter 2010 results are expected to be announced on April 28, 2010, second quarter 2010 results are expected to be announced on July 29, 2010 and third quarter 2010 results are expected to be announced on October 28, 2010. There will be a Shell strategy update on March 16, 2010.

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 http://www.shell.com/investor and http://www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this document, October 29, 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 http://www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

SOURCE Royal Dutch Shell plc