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Royal Dutch Shell Plc: 3rd Quarter 2012 UNAUDITED Results

Date : 11/01/2012 @ 1:25PM
Source : PR Newswire (US)
Stock : Royal Dutch Shell Plc CL A (RDS.A)
Quote : 70.91  1.37 (1.97%) @ 11:07PM
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Royal Dutch Shell Plc: 3rd Quarter 2012 UNAUDITED Results

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Royal Dutch Shell Plc: 3rd Quarter 2012 UNAUDITED Results

THE HAGUE, The Netherlands, November 1, 2012 /PRNewswire/ --

Royal Dutch Shell's (NYSE:RDS.A) (NYSE:RDS.B) third quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $6.1 billion compared with $7.2 billion in the same quarter a year ago.

Third quarter 2012 CCS earnings, excluding identified items (see page 6), were $6.6 billion compared with $7.0 billion in the third quarter 2011, a decrease of 6%. 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. Cash flow from operating activities excluding movements in working capital was $11.7 billion in the third quarter 2012.

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 quarter were $2.8 billion, of which some $0.8 billion were settled under the Scrip Dividend Programme. During the third quarter 4.3 million shares were bought back for cancellation for a consideration of some $0.1 billion.

Gearing at the end of the third quarter 2012 was 8.6%.

A third quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depository Share (ADS), an increase of 2.4% compared with the third quarter 2011.

    SUMMARY OF UNAUDITED RESULTS

              Quarters                   $ million              Nine months
    Q3 2012 Q2 2012 Q3 2011 %[1]                             2012   2011     %
 
                                 Income attributable to
      7,139   4,063   6,976  +2  shareholders               19,921  24,418  -18
                                 Current cost of supplies
                                 (CCS) adjustment for
     (1,012)  1,901     270      Downstream                   (171) (2,252)
      6,127   5,964   7,246 -15  CCS earnings               19,750  22,166  -11
       (432)    245     245      Less: Identified items[2]     193   2,325
                                 CCS earnings excluding
      6,559   5,719   7,001  -6  identified items           19,557  19,841   -1
                                 Of which:
      4,888   4,507   5,435      Upstream                   15,648  15,493
      1,731   1,296   1,818      Downstream                  4,148   4,552
                                 Corporate and
        (60)    (84)   (252)     Non-controlling interest     (239)   (204)
 
                                 Cash flow from operating
      9,483  13,305  11,645 -19  activities                 36,227  30,306  +20
 
                                 Basic CCS earnings per
       0.98    0.95    1.16 -16  share ($)                    3.16    3.57  -11
                                 Basic CCS earnings per ADS
       1.96    1.90    2.32      ($)                          6.32    7.14
                                 Basic CCS earnings per
                                 share excl. identified
       1.05    0.91    1.12  -6  items ($)                    3.13    3.20   -2
                                 Basic CCS earnings per ADS
       2.10    1.82    2.24      excl. identified items ($)   6.26    6.40
 
       0.43    0.43    0.42  +2  Dividend per share ($)       1.29    1.26   +2
       0.86    0.86    0.84      Dividend per ADS ($)         2.58    2.52

    [1] Q3 on Q3 change.
    [2] See page 6.


Royal Dutch Shell Chief Executive Officer Peter Voser commented:

"Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets. Our profits pay for substantial investments in new energy supplies, and they pay dividends for our shareholders.

"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

Upstream

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 CO2 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.

Downstream

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 http://www.shell.com/investor.


Summary of identified items

Earnings in the third quarter 2012 reflected the following items, which in aggregate amounted to a net charge of $432 million (compared with a net gain of $245 million in the third quarter 2011), as summarised in the table below:

  • Upstream earnings included a net charge of $298 million, reflecting impairments of $354 million mainly related to onshore gas properties in North America, a tax charge of $329 million related to the enactment of legislation in the United Kingdom restricting tax relief on decommissioning costs, an update to provisions related to decommissioning and restoration in the United States and the estimated fair value accounting of commodity derivatives. These items were partially offset by divestment gains of $554 million and the mark-to-market valuation of certain gas contracts. Upstream earnings for the third quarter 2011 included a net gain of $636 million.
  • Downstream earnings included a net charge of $134 million, reflecting legal and environmental provisions. Downstream earnings for the third quarter 2011 included a net charge of $338 million.
  • Corporate results and Non-controlling interest included a net charge of $53 million for the third quarter 2011.
    SUMMARY OF IDENTIFIED ITEMS

           Quarters                    $ million              Nine months
    Q3 2012 Q2 2012 Q3 2011                                   2012   2011
                            Segment earnings impact of
                            identified items:
      (298)     181    636  Upstream                           336  2,397
      (134)      64   (338) Downstream                         128    (19)
                            Corporate and Non-controlling
         -        -    (53) interest                          (271)   (53)
      (432)     245    245  Earnings impact                    193  2,325
 


These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's CCS earnings and are shown to provide additional insight into segment earnings and income attributable to shareholders. Further comments on the business segments are provided in the section 'Earnings by Business Segment' on page 7 to 9.


EARNINGS BY BUSINESS SEGMENT

    UPSTREAM

              Quarters                    $ million             Nine months
    Q3 2012 Q2 2012 Q3 2011 %[1]                              2012   2011   %
 
                                 Upstream earnings excluding
      4,888   4,507   5,435 -10  identified items            15,648 15,493  +1
      4,590   4,688   6,071 -24  Upstream earnings           15,984 17,890 -11
 
                                 Upstream cash flow from
      8,278   9,830   8,520  -3  operating activities        26,896 24,094 +12
 
                                 Upstream net capital
      6,932   5,293   5,944 +17  investment                  15,997 11,720 +36
 
                                 Liquids production
                                 available for sale
      1,599   1,612   1,676  -5  (thousand b/d)               1,631  1,674  -3
                                 Natural gas production
                                 available for sale (million
      8,022   8,647   7,749  +4  scf/d)                       9,167  8,769  +5
                                 Total production available
      2,982   3,103   3,012  -1  for sale (thousand boe/d)    3,211  3,186  +1
 
                                 LNG sales volumes (million
       4.97    4.57    4.76  +4  tonnes)                      14.71  13.99  +5

    [1] Q3 on Q3 change


Third quarter Upstream earnings excluding identified items were $4,888 million compared with $5,435 million a year ago. Identified items were a net charge of $298 million, compared with a net gain of $636 million in the third quarter 2011 (see page 6).

Compared with the third quarter 2011, Upstream earnings excluding identified items benefited from the increased contribution from Integrated Gas, which included an additional dividend from an LNG venture. Upstream Americas incurred a loss as a result of higher depreciation, increased operating expenses, lower gas realisations and the impact of hurricane Isaac on offshore operations in the Gulf of Mexico. Upstream earnings also reflected higher maintenance activities and increased exploration expenses.

Global liquids realisations were 5% lower and synthetic crude oil realisations in Canada were 8% lower than in the third quarter 2011. Global natural gas realisations were 3% lower than in the same quarter a year ago. Natural gas realisations in the Americas decreased by 38%, whereas natural gas realisations outside the Americas increased by 8%.

Third quarter 2012 production was 2,982 thousand boe/d compared with 3,012 thousand boe/d a year ago. Liquids production decreased by 5% and natural gas production increased by 4% compared with the third quarter 2011. 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.

New field start-ups and the continuing ramp-up of fields contributed some 163 thousand boe/d to production in the third quarter 2012, in particular from the ramp-up of Pearl GTL in Qatar and Pluto LNG in Australia, which more than offset the impact of field declines.

LNG sales volumes of 4.97 million tonnes were 4% higher than in the same quarter a year ago. LNG sales volumes mainly reflected the contribution from Pluto LNG.

    DOWNSTREAM

              Quarters                    $ million             Nine months
    Q3 2012 Q2 2012 Q3 2011 %[1]                              2012   2011   %
 
                                 Downstream CCS earnings
      1,731   1,296   1,818  -5  excluding identified items   4,148  4,552  -9
      1,597   1,360   1,480  +8  Downstream CCS earnings      4,276  4,533  -6
 
                                 Downstream cash flow from
        335   3,265   2,069 -84  operating activities         6,808  4,597 +48
 
                                 Downstream net capital
      1,051     967     149 +605 investment                   2,804  1,980 +42
 
                                 Refinery processing intake
      2,880   2,810   2,854  +1  (thousand b/d)               2,824  2,905  -3
 
                                 Oil products sales volumes
      6,290   6,321   6,374  -1  (thousand b/d)               6,191  6,210   -
 
                                 Chemicals sales volumes
      4,699   4,671   4,832  -3  (thousand tonnes)           14,049 14,391  -2

    [1] Q3 on Q3 change


Third quarter Downstream earnings excluding identified items were $1,731 million compared with $1,818 million in the third quarter 2011. Identified items were a net charge of $134 million, compared with a net charge of $338 million in the third quarter 2011 (see page 6).

Compared with the third quarter 2011, Downstream earnings excluding identified items benefited from a recovery in industry refining margins and Shell's operating performance. Earnings were also supported by lower operating expenses, mainly as a result of favourable currency exchange rate effects. These items were more than offset by lower Chemicals earnings and reduced contributions from marketing and trading. Rising oil prices during the third quarter 2012 and the global economic slowdown impacted marketing contributions. Compared with the third quarter 2011, Chemicals earnings decreased due to rising feedstock prices in Europe, the impact of hurricane Isaac on operations in the Gulf of Mexico as well as the global economic slowdown.

Oil products sales volumes were 1% lower compared with the same period a year ago. Lower marketing volumes, as a result of weaker demand as well as portfolio divestments, were largely offset by higher trading volumes.

Chemicals sales volumes decreased by 3% compared with the same quarter last year, mainly due to reductions in European capacity and the impact of hurricane Isaac in the Gulf of Mexico. Chemicals manufacturing plant availability was 89% compared with 90% in the third quarter 2011. Improved global operating performance during the quarter largely offset the impact on availability of hurricane Isaac in the Gulf of Mexico.

Refinery intake volumes were 1% higher compared with the third quarter 2011. Excluding portfolio impacts, refinery intake volumes were 3% higher than in the same period a year ago as result of improved operating performance. Excluding the impact of hurricane Isaac in the Gulf of Mexico, availability was in line with the 94% availability in the third quarter 2011.

    CORPORATE AND NON-CONTROLLING INTEREST

           Quarters                       $ million               Nine months
    Q3 2012 Q2 2012 Q3 2011                                        2012  2011
 
                            Corporate and Non-controlling
       (60)    (84)   (252) interest excl. identified items        (239) (204)
                            Of which:
        15     (36)   (201) Corporate                               (51)   39
       (75)    (48)    (51) Non-controlling interest               (188) (243)
 
                            Corporate and Non-controlling
       (60)    (84)   (305) interest                               (510) (257)
 


Third quarter Corporate results and Non-controlling interest excluding identified items incurred a loss of $60 million compared with a loss of $252 million in the same period last year.

Corporate results excluding identified items compared with the third quarter 2011 mainly reflected favourable currency exchange rate effects and higher tax credits. These items were partly offset by increased net interest expense.  In the third quarter 2012 favourable currency exchange rate effects were $77 million compared with adverse currency exchange rate effects of $270 million in the same period last year.

FORTHCOMING EVENTS

Fourth quarter 2012 results and fourth quarter 2012 dividend are scheduled to be announced on January 31, 2013. First quarter 2013 results and first quarter 2013 dividend are scheduled to be announced on May 2, 2013. Second quarter 2013 results and second quarter 2013 dividend are scheduled to be announced on August 1, 2013. Third quarter 2013 results and third quarter 2013 dividend are scheduled to be announced on October 31, 2013.

Unaudited Condensed Consolidated Interim Financial Statements

    CONSOLIDATED STATEMENT OF INCOME

              Quarters                   $ million             Nine months
    Q3 2012 Q2 2012 Q3 2011 %[1]                            2012    2011    %
    112,118 117,068 123,412      Revenue                   349,106 354,596
                                 Share of profit of
                                 equity-accounted
      2,367   1,514   2,041      investments                 6,821   6,504
        944   1,304     504      Interest and other income   3,162   4,261
                                 Total revenue and other
    115,429 119,886 125,957      income                    359,089 365,361
     87,265  95,041  98,094      Purchases                 276,375 278,179
                                 Production and
      6,513   6,379   6,761      manufacturing expenses     18,941  19,465
                                 Selling, distribution and
      3,709   3,459   3,516      administrative expenses    10,857  10,629
        311     289     253      Research and development      895     721
        713     862     661      Exploration                 1,937   1,441
                                 Depreciation, depletion
      3,875   3,503   3,803      and amortisation           10,780   9,985
        415     411     331      Interest expense            1,378   1,086
     12,628   9,942  12,538   +1 Income before taxation     37,926  43,855 -14
      5,389   5,874   5,505      Taxation                   17,785  19,138
      7,239   4,068   7,033   +3 Income for the period      20,141  24,717 -19
                                 Income attributable to
        100       5      57      non-controlling interest      220     299
                                 Income attributable to
                                 Royal Dutch Shell plc
      7,139   4,063   6,976   +2 shareholders               19,921  24,418 -18
 
                                                          [1] Q3 on Q3 change.
 


    EARNINGS PER SHARE

           Quarters                         $                   Nine months
    Q3 2012 Q2 2012 Q3 2011                                    2012    2011
     1.14    0.65    1.12   Basic earnings per share           3.19    3.93
     1.14    0.65    1.12   Diluted earnings per share         3.18    3.93

    SHARES[2]

           Quarters                      Million                Nine months
    Q3 2012 Q2 2012 Q3 2011                                    2012    2011
                            Weighted average number of shares
                            as the basis for:
    6,266.3 6,265.9 6,238.1 Basic earnings per share          6,253.9 6,206.2
    6,273.9 6,273.2 6,247.1 Diluted earnings per share        6,261.2 6,216.2
 
                            Shares outstanding at the end of
    6,284.8 6,266.2 6,236.5 the period                        6,284.8 6,236.5
    [2] Royal Dutch Shell plc ordinary shares of EUR0.07 each.


Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.

    Consolidated Statement of Comprehensive Income

           Quarters                      $ million               Nine months
    Q3 2012 Q2 2012 Q3 2011                                      2012   2011
      7,239   4,068   7,033 Income for the period               20,141  24,717
                            Other comprehensive income, net of
                            tax:
      2,424 (2,805) (4,642) Currency translation differences     1,504 (2,018)
                            Unrealised gains/(losses) on
       (97)      70      23 securities                           (132)      13
      (187)     567   (130) Cash flow hedging gains/(losses)      (70)    (89)
                            Share of other comprehensive
                            income/(loss) of equity-accounted
         27      39      29 investments                           (43)      99
                            Other comprehensive income/(loss)
      2,167 (2,129) (4,720) for the period                       1,259 (1,995)
      9,406   1,939   2,313 Comprehensive income for the period 21,400  22,722
                            Comprehensive income/(loss)
                            attributable to non-controlling
        132    (36)    (46) interest                               254     255
                            Comprehensive income attributable
                            to Royal Dutch Shell plc
      9,274   1,975   2,359 shareholders                        21,146  22,467


Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.

    CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                       Equity attributable to Royal Dutch
                             Shell plc shareholders
                            Shares
                     Share  held in  Other   Retained         Non-controlling  Total
       $ million    capital  trust  reserves earnings  Total     interest     equity
    At January 1,
    2012                536 (2,990)    8,984  162,987 169,517           1,486 171,003
    Comprehensive
    income for the
    period                -       -    1,225   19,921  21,146             254  21,400
    Capital
    contributions
    from and other
    changes in
    non-controlling
    interest              -       -        -       36      36            (76)    (40)
    Dividends paid        -       -        -  (8,194) (8,194)           (266) (8,460)
    Scrip
    dividends[1]          6       -      (6)    2,438   2,438               -   2,438
    Repurchases of
    shares[2]           (2)       -        2  (1,815) (1,815)               - (1,815)
    Shares held in
    trust: net
    sales/
    (purchases) and
    dividends
    received              -     782        -      114     896               -     896
    Share-based
    compensation          -       -      243    (482)   (239)               -   (239)
    At September
    30, 2012            540 (2,208)   10,448  175,005 183,785           1,398 185,183
    [1] During the first nine months of 2012 some 69.6 million Class A shares,
    equivalent to $2.4 billion, were issued under the Scrip Dividend
    Programme.
 
    [2] Includes shares committed to repurchase at September 30, 2012.


                       Equity attributable to Royal Dutch
                             Shell plc shareholders
                            Shares
                     Share  held in  Other   Retained         Non-controlling  Total
       $ million    capital  trust  reserves earnings  Total     interest     equity
    At January 1,
    2011                529 (2,789)   10,094  140,179 148,013           1,767 149,780
    Comprehensive
    income for the
    period                -       -  (1,951)   24,418  22,467             255  22,722
    Capital
    contributions
    from and other
    changes in
    non-controlling
    interest              -       -        -       48      48            (46)       2
    Dividends paid        -       -        -  (7,816) (7,816)           (374) (8,190)
    Scrip
    dividends[1]          9       -      (9)    2,627   2,627               -   2,627
    Repurchases of
    shares[2]           (3)       -        3  (1,501) (1,501)               - (1,501)
    Shares held in
    trust: net
    sales/
    (purchases) and
    dividends
    received              -     961        -       99   1,060               -   1,060
    Share-based
    compensation          -       -    (230)     (67)   (297)               -   (297)
    At September
    30, 2011            535 (1,828)    7,907  157,987 164,601           1,602 166,203
    [1] During the first nine months of 2011 some 77.3 million Class A shares,
    equivalent to $2.6 billion, were issued under the Scrip Dividend
    Programme.
 
    [2] Includes shares committed to repurchase and repurchases subject to
    settlement at September 30, 2011.


Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.

    CONDENSED CONSOLIDATED balance sheet
                                                        $ million
                                            Sept 30,     June 30,     Sept 30,
                                              2012         2012         2011
 
    Assets
    Non-current assets:
    Intangible assets                          4,478        4,425        4,500
    Property, plant and equipment            162,401      155,526      147,027
    Equity-accounted investments              39,033       38,424       38,321
    Investments in securities                  5,492        5,530        3,915
    Deferred tax                               4,246        4,141        5,512
    Prepaid pension costs                     12,461       11,542       11,132
    Trade and other receivables               10,070        9,467        9,040
                                             238,181      229,055      219,447
 
    Current assets:
    Inventories                               32,358       28,295       30,250
    Trade and other receivables               70,972       71,200       78,529
    Cash and cash equivalents                 18,839       17,282       19,256
                                             122,169      116,777      128,035
 
    Total assets                             360,350      345,832      347,482
 
    Liabilities
    Non-current liabilities:
    Debt                                      28,078       28,383       31,092
    Trade and other payables                   4,322        4,250        5,415
    Deferred tax                              16,107       15,626       15,814
    Retirement benefit obligations             6,169        6,026        5,988
    Decommissioning and other
    provisions                                16,262       15,805       15,442
                                              70,938       70,090       73,751
 
    Current liabilities:
    Debt                                       8,280        4,597        8,268
    Trade and other payables                  77,550       75,361       80,357
    Taxes payable                             14,869       14,491       15,305
    Retirement benefit obligations               399          403          374
    Decommissioning and other
    provisions                                 3,131        2,814        3,224
                                             104,229       97,666      107,528
 
    Total liabilities                        175,167      167,756      181,279
 
    Equity attributable to Royal Dutch
    Shell plc shareholders                   183,785      176,637      164,601
 
    Non-controlling interest                   1,398        1,439        1,602
    Total equity                             185,183      178,076      166,203
 
    Total liabilities and equity             360,350      345,832      347,482


Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.

    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

           Quarters                    $ million                 Nine months
    Q3 2012 Q2 2012 Q3 2011                                     2012     2011
 
                            Cash flow from operating
                            activities
      7,239   4,068   7,033 Income for the period              20,141   24,717
                            Adjustment for:
      5,385   5,892   5,746 - Current taxation                 16,756   17,193
        362     358     249 - Interest expense (net)            1,219      889
                            - Depreciation, depletion and
      3,875   3,503   3,803 amortisation                       10,780    9,985
      (428) (1,193)   (347) - Net gains on sale of assets     (2,145)  (3,335)
                            - Decrease/(increase) in net
    (2,209)   3,836   1,011 working capital                     2,397  (5,783)
                            - Share of profit of
    (2,367) (1,514) (2,041) equity-accounted investments      (6,821)  (6,504)
                            - Dividends received from
                            equity-accounted
      2,537   2,799   2,402 investments                         7,918    6,485
                            - Deferred taxation and
                            decommissioning and other
       (75)    (70)   (204) provisions                            826    1,927
      (205)     261   (540) - Other                             (352)    (399)
                            Net cash from operating
     14,114  17,940  17,112 activities (pre-tax)               50,719   45,175
 
    (4,631) (4,635) (5,467) Taxation paid                    (14,492) (14,869)
 
                            Net cash from operating
      9,483  13,305  11,645 activities                         36,227   30,306
 
                            Cash flow from investing
                            activities
    (8,413) (7,033) (7,261) Capital expenditure              (21,902) (16,387)
                            Investments in equity-accounted
      (789)   (724)   (199) investments                       (2,811)  (1,571)
        786   1,675   1,594 Proceeds from sales of assets       4,833    5,815
                            Proceeds from sales of
         56     170     200 equity-accounted investments          283      425
                            Proceeds from sales/(purchases)
       (26)      10       6 of securities (net)                  (56)        7
         47      45      75 Interest received                     140      185
                            Net cash used in investing
    (8,339) (5,857) (5,585) activities                       (19,513) (11,526)
 
                            Cash flow from
                            financing activities
                            Net (decrease)/increase in debt
                            with maturity period
 
        507     248   (365) within three months                   302  (2,883)
      2,551     134     477 Other debt: New borrowings          3,295    1,244
      (182) (1,533) (2,529) Repayments                        (4,682)  (4,064)
      (352)   (339)   (173) Interest paid                     (1,145)  (1,195)
                            Change in non-controlling
       (10)     (2)     (3) interest                              (2)      (3)
                            Cash dividends paid to:
                            - Royal Dutch Shell plc
    (1,973) (2,112) (1,865) shareholders                      (5,756)  (5,189)
      (164)    (78)   (175) - Non-controlling interest          (266)    (374)
      (149)   (890)   (817) Repurchases of shares             (1,039)    (817)
                            Shares held in trust: net
                            sales/(purchases) and dividends
       (93)   (103)      10 received                                9      413
                            Net cash used in financing
        135 (4,675) (5,440) activities                        (9,284) (12,868)
 
                            Currency translation
                            differences relating to cash
                            and
 
        278   (515)   (829) cash equivalents                      117    (100)
                            Increase in cash and cash
      1,557   2,258   (209) equivalents                         7,547    5,812
 
                            Cash and cash equivalents at
     17,282  15,024  19,465 beginning of period                11,292   13,444
 
                            Cash and cash equivalents at
     18,839  17,282  19,256 end of period                      18,839   19,256
 


Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.


Notes to the Condensed Consolidated Interim Financial Statements

1. Basis of preparation

These Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc and its subsidiaries (collectively "Shell") are prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union and on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report and Form 20-F for the year ended December 31, 2011 (pages 105 to 110) as filed with the US Securities and Exchange Commission.

The financial information presented in the Interim Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006. Statutory accounts for the year ended December 31, 2011 were published in Shell's Annual Report and a copy was delivered to the Registrar of Companies in England and Wales. The auditors' report 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 a statement under sections 498(2) or (3) of the Companies Act 2006.

The Interim Statements are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period.

Segment information

Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings thus exclude the effect of changes in the oil price on inventory carrying amounts. Net capital investment information is presented as measured based on capital expenditure as reported in the Condensed Consolidated Statement of Cash Flows, adjusted for: proceeds from divestments; exploration expenses excluding exploration wells written off; investments in equity-accounted investments; and leases and other items.

CCS earnings and net capital investment information are the dominant measures used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance.

2. Information by Business Segment

       Quarters              $ million             Nine months
    Q3 2012 Q3 2011                               2012    2011
                    Third-party revenue
     10,028  10,888 Upstream                      32,066  30,659
    102,075 112,516 Downstream                   317,000 323,907
         15       8 Corporate                         40      30
    112,118 123,412 Total third-party revenue    349,106 354,596
 
                    Inter-segment revenue
     12,338  12,929 Upstream                      38,337  37,304
        172     125 Downstream                       555     545
          -       - Corporate                          -       -
 
                    Segment earnings
      4,590   6,071 Upstream                      15,984  17,890
      1,597   1,480 Downstream                     4,276   4,533
         15   (254) Corporate                      (285)    (14)
      6,202   7,297 Total segment earnings        19,975  22,409


       Quarters                  $ million                Nine months
    Q3 2012 Q3 2011                                        2012   2011
      6,202   7,297 Total segment earnings               19,975 22,409
                    Current cost of supplies adjustment:
      1,130   (260) Purchases                               160  2,787
      (294)      75 Taxation                               (51)  (794)
                    Share of profit of equity-accounted
        201    (79) investments                              57    315
      7,239   7,033 Income for the period                20,141 24,717


3. Share capital

Issued and fully paid

                                                         Sterling
                            shares of EUR0.07 each       deferred
                                                      shares of GBP1
      Number of shares       Class A       Class B         each
    At January 1, 2012    3,668,550,437 2,661,403,172          50,000
    Scrip dividends          69,588,598             -               -
    Repurchases of shares             -  (30,728,970)               -
    At September 30, 2012 3,738,139,035 2,630,674,202          50,000


Nominal value

           $ million            Class A         Class B          Total
    At January 1, 2012                  312             224             536
    Scrip dividends                       6               -               6
    Repurchases of shares                 -             (2)             (2)
    At September 30, 2012               318             222             540
    The total nominal value of sterling deferred shares is less than $1
    million.
 


At Royal Dutch Shell plc's Annual General Meeting on May 22, 2012, the Board was authorised to allot ordinary shares in Royal Dutch Shell plc and grant rights to subscribe for or to convert any security into ordinary shares in Royal Dutch Shell plc up to an aggregate nominal amount of €147 million (representing 2,100 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at the earlier of August 22, 2013, and the conclusion of the Annual General Meeting to be held in 2013, unless previously renewed, revoked or varied in a General Meeting of Shareholders.

4. Other reserves

                                                            Accumulated
                               Share     Capital    Share      other
                    Merger    premium   redemption  plan   comprehensive
      $ million   reserve[1] reserve[1] reserve[2] reserve    income      Total
    At January 1,
    2012               3,432        154         60   1,571         3,767   8,984
    Other
    comprehensive
    income
    attributable
    to Royal
    Dutch Shell
    plc
    shareholders           -          -          -       -         1,225   1,225
    Scrip
    dividends            (6)          -          -       -             -     (6)
    Repurchases
    of shares              -          -          2       -             -       2
    Share-based
    compensation           -          -          -     243             -     243
    At September
    30, 2012           3,426        154         62   1,814         4,992  10,448
 
    At January 1,
    2011               3,442        154         57   1,483         4,958  10,094
    Other
    comprehensive
    loss
    attributable
    to Royal
    Dutch Shell
    plc
    shareholders           -          -          -       -       (1,951) (1,951)
    Scrip
    dividends            (9)          -          -       -             -     (9)
    Repurchases
    of shares              -          -          3       -             -       3
    Share-based
    compensation           -          -          -   (230)             -   (230)
    At September
    30, 2011           3,433        154         60   1,253         3,007   7,907
    [1] The merger reserve and share premium reserve were established as a
    consequence of Royal Dutch Shell plc becoming the single parent
    company of Royal Dutch Petroleum Company and of The "Shell" Transport
    and Trading Company plc, now The Shell Transport and Trading Company
    Limited, in 2005.
 
    [2] The capital redemption reserve was established in connection with
    repurchases of shares of Royal Dutch Shell plc.
 


5. Impacts of accounting for derivatives

In the ordinary course of business Shell enters into contracts to supply or purchase oil and gas products, and also enters into derivative contracts to mitigate resulting economic exposures (generally price exposure). Derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes are, by contrast, recognised when the transaction occurs (see also below); furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.

As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period; or (b) the inventory is measured on a different basis.

In addition, certain UK gas contracts held by Upstream are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes.

The accounting impacts of the aforementioned are reported as identified items in the quarterly results.

6.  Return on average capital employed

Return on average capital employed measures the efficiency of Shell's utilisation of the capital that it employs and is a common measure of business performance. In this calculation, return on average capital employed is defined as the sum of income for the current and previous three quarters adjusted for after-tax interest expense as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. The tax rate is derived from calculations at the published segment level.

LIQUIDITY AND CAPITAL RESOURCES

Third quarter Net cash from operating activities in the third quarter 2012 was $9.5 billion compared with $11.6 billion for the same period last year.

Total current and non-current debt increased to $36.4 billion at September 30, 2012 from $33.0 billion at June 30, 2012 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $17.3 billion at June 30, 2012. During the third quarter 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.

Net capital investment in the third quarter 2012 was $8.0 billion, of which $6.9 billion was in Upstream and $1.1 billion in Downstream. Net capital investment in the same period of 2011 was $6.1 billion, of which $5.9 billion was in Upstream and $0.2 billion in Downstream.

Dividends of $0.43 per share are announced on November 1, 2012 in respect of the third quarter. These dividends are payable on December 20, 2012. In the case of the Class B shares, the dividends will be payable through the dividend access mechanism and are expected to be treated as UK-source rather than Dutch-source. See the Annual Report and Form 20-F for the year ended December 31, 2011 for additional information on the dividend access mechanism.

Shell provides shareholders with a choice to receive dividends in cash or in shares via a Scrip Dividend Programme. Under the Scrip Dividend Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends. Only new Class A shares will be issued under the Programme, including to shareholders who currently hold Class B shares.

Nine months Net cash from operating activities in the first nine months of 2012 was $36.2 billion compared with $30.3 billion for the same period last year.

Total current and non-current debt decreased to $36.4 billion at September 30, 2012 from $37.2 billion at December 31, 2011 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $11.3 billion at December 31, 2011. During the first nine months of 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.

Net capital investment in the first nine months of 2012 was $18.9 billion, of which $16.0 billion was in Upstream, $2.8 billion in Downstream and $0.1 billion in Corporate. Net capital investment in the same period of 2011 was $13.8 billion, of which $11.7 billion was in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate.

CAUTIONARY STATEMENT

All amounts shown throughout this Report are unaudited.

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 23 per cent 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 Shell and the Shell Group 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", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group 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 Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves 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 regulatory measures addressing climate change; (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 Shell's Annual Report and Form 20-F for the year ended December 31, 2011 (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, November 1, 2012. Neither Shell nor any of its subsidiaries nor the Shell Group 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.

We may have used certain terms, such as resources, in this report that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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.

November 1, 2012


Contacts:

  • Investor Relations: Europe: +31(0)70-377-4540; USA: +1-713-241-1042
  • Media: Europe: +31(0)70-377-3600

SOURCE Royal Dutch Shell plc

Copyright 2012 PR Newswire



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