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Royal Dutch Shell Plc: 3rd Quarter 2012 UNAUDITED Results

"Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products.

"We've made progress with our Alaska exploration programme, commencing drilling operations in the Beaufort and Chukchi seas, as the industry continues to assess offshore potential there. This will be a multi-year exploration programme, demonstrating Shell's commitments to high standards on sustainable development and safety.

"We continue to refresh our portfolio, launching new oil and gas developments, making new exploration discoveries, purchasing new liquids-rich shale acreage and increasing our positions in oil and gas fields where we can add value with our innovation and scale. We are also continuing with our capital efficiency drive, selling down positions where others can add more value. We have announced around $6 billion of acquisitions and new acreage and also around $6 billion of asset sales in 2012, which will better position Shell for growth.

"I am pleased with our progress in a difficult industry environment. There is more to come from Shell."

THIRD QUARTER 2012 portfolio developments


In Australia , Shell signed a agreement to consolidate the Crux gas and condensate field with Nexus Energy and Osaka Gas. Following the completion of the agreement, which is subject to regulatory approvals, Shell will assume operatorship and hold an 80% interest in the new joint venture.

Also in Australia, Shell agreed to exchange its 33.3% interest in Clio-Acme for Chevron's 16.7% interest in East Browse and Chevron's 20% interest in West Browse. In addition to the assets exchanged, a cash payment of some $0.5 billion from Shell to Chevron was agreed. Following the completion of this transaction, Shell's interest will be 35% in West Browse and 25% in East Browse. The transaction is subject to regulatory approvals.

In China , Shell and China National Petroleum Corporation signed an amendment of the production-sharing contract ("PSC") for the onshore Changbei block, covering some 1,692 square kilometres in the Ordos basin. The PSC amendment allows for development of additional tight gas sands as well as further development of the already producing main reservoir.

Shell and China National Offshore Oil Corporation ("CNOOC") agreed for CNOOC to acquire a 25% participating interest in offshore exploration blocks BC9 and BCD10 in Gabon . CNOOC will reimburse Shell for 25% of certain past exploration costs and carry part of the future exploration costs. Following completion of the transaction in October, Shell's interest is 75%.

In Norway , Shell agreed to acquire BP's 18.36% interest in the offshore Draugen field for a consideration of some $0.2 billion. Shell is already the operator of the field and this transaction will bring Shell's interest to 44.56%. The transaction, subject to regulatory approvals, is expected to be completed by the end of the year.

In the United States , Shell agreed to acquire 618 thousand net acres (equivalent to some 2,500 square kilometres) in the Permian basin in West Texas from Chesapeake Energy for a consideration of some $1.9 billion. The acreage is rich in oil and natural gas liquids and currently produces some 26 thousand barrels of oil equivalent per day ("boe/d") with growth potential. The transaction was completed in October.

Also in the United States, Shell agreed to divest its 50% interest in the mature Holstein field (Shell share of production of 5 thousand boe/d) in the Gulf of Mexico for a consideration of some $0.6 billion. The transaction is expected to be completed by the end of the year.

Shell announced three final investment decisions, including on the Quest carbon capture and storage project (Shell share 60%) in Canada . Quest is expected to capture and store deep underground more than one million tonnes per annum of CO 2 produced in bitumen processing. Quest is expected to reduce direct emissions from the Scotford Upgrader by up to 35%. In Italy , the final investment decision was taken on the onshore Tempa Rossa field (Shell share 25%) in the Basilicata region. The project is expected to produce some 45 thousand boe/d at peak production. In October, Shell announced the final investment decision for the Fram oil and gas field (Shell share 32%) in the United Kingdom North Sea. The field will be developed using floating production, storage and offloading technology. The project is expected to produce 35 thousand boe/d at peak production.

In Nigeria , Shell completed the sale of its 30% interest in Oil Mining Lease 34 (Shell share of production of some 20 thousand boe/d) in the Niger Delta for a consideration of some $0.4 billion. In a separate transaction, Shell also completed the sale of its 30% interest in the non-producing Oil Mining Lease 40 for a consideration of some $0.1 billion. Including these transactions, Upstream divestment proceeds totalled some $0.6 billion in the third quarter 2012.

During the third quarter 2012, Shell participated in the Satyr-2 gas discovery (Shell share 25%) in the Carnarvon basin offshore Australia and the Tukau Timur Deep gas discovery (Shell share 50%) offshore Malaysia. Shell also drilled a successful appraisal well at Appomattox Southwest (Shell share 80%) in the Gulf of Mexico.

As part of its global exploration programme, Shell spent some $0.6 billion on new acreage positions during the third quarter of 2012, including positions in Benin deepwater, the Gulf of Mexico and onshore North America. New acreage positions were also added offshore Australia, China, Malaysia and Ukraine.


In Norway , Shell acquired the remaining outstanding shares in Gasnor AS ("Gasnor") for some $0.1 billion. Shell previously owned 4.1% of the shares in the company. Gasnor is a market leader in Norway in small scale LNG, supplying LNG as a transport fuel to industrial and marine customers.

Key features of the Third quarter 2012
    • Third quarter 2012 CCS earnings (see Note 1) were $6,127 million, 15% lower than in the same quarter a year ago.
    • Third quarter 2012 CCS earnings, excluding identified items (see page 6), were $6,559 million compared with $7,001 million in the third quarter 2011, a decrease of 6%.
    • Basic CCS earnings per share decreased by 16% versus the same quarter a year ago.
    • Basic CCS earnings per share excluding identified items decreased by 6% versus the same quarter a year ago.
    • Cash flow from operating activities for the third quarter 2012 was $9.5 billion, compared with $11.6 billion in the same quarter last year. Excluding movements in working capital, cash flow from operating activities in the third quarter 2012 was $11.7 billion, compared with $10.6 billion in the same quarter last year.
    • Net capital investment (see Note 1) for the third quarter 2012 was $8.0 billion. Capital investment for the third quarter 2012 was some $8.8 billion and proceeds from divestments were $0.8 billion.
    • Total dividends distributed in the third quarter 2012 were $2.8 billion, of which some $0.8 billion were settled by issuing some 22.3 million Class A shares under the Scrip Dividend Programme for the second quarter 2012. Under our share buyback programme some 4.3 million Class B shares were bought back for cancellation during the quarter for a consideration of some $0.1 billion.
    • Return on average capital employed (see Note 6) on a reported income basis was 12.9% at the end of the third quarter 2012.
    • Gearing was 8.6% at the end of the third quarter 2012 versus 10.8% at the end of the third quarter 2011.
    • Oil and gas production for the third quarter 2012 was 2,982 thousand boe/d. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, third quarter 2012 production volumes were 1% higher compared with the same period last year.
    • LNG sales volumes of 4.97 million tonnes in the third quarter 2012 were 4% higher than in the same quarter a year ago.
    • Oil products sales volumes in the third quarter 2012 were 1% lower compared with the third quarter 2011.
    • Chemicals product sales volumes in the third quarter 2012 decreased by 3% compared with the same quarter a year ago.
    • Supplementary financial and operational disclosure for the third quarter 2012 is available at .

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