Royal Dutch Shell Plc: 2nd Quarter 2008 Unaudited Results

LONDON, July 31 /PRNewswire-FirstCall/ --

- Royal Dutch Shell's second quarter 2008 earnings, on a
current cost of supplies (CCS) basis, were $7.9 billion compared to $7.6
billion a year ago. Basic CCS earnings per share increased by 7% versus
the same quarter a year ago.

- A second quarter 2008 dividend has been announced of $0.40
per share, an increase of 11% over the US dollar dividend for the same
period in 2007.

- Cash flow from operating activities for the second quarter
2008, excluding net working capital movements, was $15.9 billion. Net
Capital investment for the quarter was $5.7 billion. Total distribution
To shareholders, in the form of dividends and share repurchases, was
$3.8 billion and gearing was 14.5% at the end of the second quarter.

- On July 17, 2008, Royal Dutch Shell, through its wholly
owned subsidiary Shell Canada Limited, launched an offer to acquire all
of the outstanding shares of Duvernay Oil Corp. at a total price of C$5.9
billion, including debt. The offer is subject to certain conditions and
regulatory approvals.

Royal Dutch Shell Chief Executive Jeroen van der Veer commented:
"This is another set of competitive earnings for Shell shareholders. Good
operating performance, combined with increased oil and gas prices, offset the
impact of weaker downstream conditions in the second quarter 2008. Shell is
making substantial, targeted investments to grow the company for shareholders
and help ensure that energy markets remain well supplied. Spending is
increasing on new acreage and selective acquisitions as we refresh the
portfolio with new options for future growth. Our strategy is on track."
Summary unaudited results
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

11,556 9,083 8,667 +33 Income attributable to 20,639 15,948 +29
shareholders
Less: Estimated CCS
adjustment for Oil Products
3,654 1,307 1,111 and Chemicals (see note 2) 4,961 1,460
7,902 7,776 7,556 +5 CCS earnings 15,678 14,488 +8

1.87 1.47 1.38 +36 Basic earnings per share ($) 3.34 2.54 +31
0.59 0.21 0.18 Less: Estimated CCS 0.80 0.23
adjustment per share ($)
+7 Basic CCS earnings per share +10
1.28 1.26 1.20 ($) 2.54 2.31

0.40 0.40 0.36 +11 Dividend per ordinary share +11
($) 0.80 0.72
1 Q2 on Q2 change

Key features of the SECOND quarter 2008

- Second quarter 2008 CCS earnings were $7,902 million or 5%
higher than in the same quarter a year ago.

- Second quarter 2008 reported income was $11,556 million or
33% higher than in the same quarter a year ago.

- As a result of strong increases in oil and related product
prices during the second quarter 2008, Oil Products earnings were
reduced by some $450 million of non-cash charges related to fair value
accounting of commodity derivatives. In addition, strong increases in
natural gas and power prices resulted in Gas & Power earnings being
reduced by non-cash charges of some $300 million related to fair value
accounting of commodity derivatives associated with long-term contracts.
(see Note 8)

- Basic CCS earnings per share increased by 7% versus the same
quarter a year ago.

- Total cash returned to shareholders in the form of dividends
and share repurchases in the second quarter 2008 was $3.8 billion.

- Cash flow from operating activities, excluding net working
capital movements, was $15.9 billion compared to $10.6 billion for the
same quarter last year. Including net working capital movements, cash
flow from operating activities was $4.2 billion compared to $8.8
billion in the second quarter 2007.

- Capital investment for the second quarter 2008 was $8.0 billion, with
net capital investment (capital investment, less divestment proceeds)
of $5.7 billion. As the portfolio focus continues, asset sales proceeds
in 2008 are expected to increase from around $4 billion to some $5
billion. Acquisitions in 2008 are estimated at around $10 billion,
including new growth positions such as new exploration and Australia
coal bed methane assets and the offer to acquire Duvernay Oil Corp.
Net capital investment for the full year 2008 is expected to be in the
range of $35-36 billion, including these acquisitions.

- Return on average capital employed (ROACE), on a reported
income basis (see note 3), was 25.8%.

- Gearing (see Note 5) was 14.5% at the end of the second
quarter 2008 versus 12.0% at the end of the second quarter 2007.

- Oil and gas production, including oil sands bitumen
production, for the second quarter 2008 was 3,126 thousand barrels
of oil equivalent per day (boe/d), compared to 3,178 thousand boe/d
in the same quarter last year. Excluding the impact of divestments
and production sharing contracts (PSC) pricing effects, second quarter
2008 production was in line with the same quarter last year.

- Liquefied Natural Gas (LNG) sales volumes of 3.08 million
tonnes were 5% lower than in the same quarter a year ago.

- Oil Products refinery availability was 92%, at the same level
as in the second quarter 2007. Chemicals manufacturing plant
availability increased to 95% from 93% in the second quarter 2007.
Oil Sands upgrader availability was 96%, unchanged compared to the
same quarter last year.

- Oil Products sales volumes in the second quarter 2008
increased by 2% compared to the same quarter last year. Chemical
product sales volumes decreased by 5% compared to the second quarter
2007.

Summary unaudited results
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %
5,881 5,143 3,099 Exploration & Production2 11,024 6,492
625 948 779 Gas & Power 1,573 1,582
351 249 202 Oil Sands2 600 317
1,075 1,194 2,936 Oil Products (CCS basis) 2,269 4,424
(142) 201 494 Chemicals (CCS basis) 59 974
201 146 177 Corporate 347 978
(89) (105) (131) Minority interest (194) (279)

7,902 7,776 7,556 +5 CCS earnings 15,678 14,488 +8
1 Q2 on Q2 change

2 As from the fourth quarter 2007, the earnings of the Oil
Sands operations, which were previously reported as part of the
Exploration & Production segment, are disclosed as a separate
business segment. For comparison purposes, the Exploration &
Production earnings up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands
segment.

Summary of identified items
Earnings in the second quarter 2008 reflected the following items, which
in aggregate amounted to a net gain of $73 million (compared to a net gain of
$660 million in the second quarter 2007), as summarised in the table below:
Exploration & Production earnings included a net gain of $98 million,
reflecting a gain from divestments of $487 million, which was partly offset
by a charge of $312 million related to the mark-to-market valuation of
certain UK gas contracts and net tax charges of $77 million. Earnings for the
second quarter 2007 included a net gain of $153 million reflecting a gain
from divestment of $226 million and a gain of $19 million related to the
mark-to-market valuation of certain UK gas contracts, which were partly
offset by tax charges of $92 million.
Gas & Power earnings for the second quarter 2007 included a gain from
divestments of $247 million.
Oil Products earnings included a gain of $181 million, reflecting a
divestment gain of $167 million and a tax credit of $14 million. Earnings for
the second quarter 2007 included a divestment gain of $205 million.
Chemicals earnings included a net charge of $206 million, reflecting
asset impairments and provisions of $265 million, which were partly offset by
a divestment gain of $59 million.
Corporate earnings for the second quarter 2007 included a gain of $55
million related to the sale of property in the United Kingdom.
Summary OF IDENTIFIED ITEMS
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007

Segment earnings impact of
identified items:
98 (66) 153 Exploration & Production 32 257
- (11) 247 Gas & Power (11) 286
- - - Oil Sands - -
181 - 205 Oil Products (CCS basis) 181 29
(206) - - Chemicals (CCS basis) (206) -
- - 55 Corporate - 459
- - - Minority interest - -
73 (77) 660 CCS earnings impact (4) 1,031

These identified items generally relate to events with an impact of
greater 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 4
and onwards.
Commodity price effects
During the second quarter 2008 worldwide oil and gas related commodity
marker prices significantly increased.
As a consequence, net working capital increased by $11.8 billion during
the second quarter 2008, mainly due to the higher cost-valued inventory in
Oil Products and increased net accounts receivable.
Second quarter 2008 Gas and Power marketing and trading earnings were
reduced by non-cash charges of around $300 million as a result of fair value
accounting of commodity derivatives associated with long-term contracts, as
required under the International Financial Reporting Standards (IFRS).
Second quarter 2008 Oil Products marketing and trading earnings were
reduced by non-cash charges of around $450 million as a result of fair value
accounting of commodity derivatives. As required under IFRS, physical crude
oil and oil products inventories were recorded at cost although their market
value was higher. Commodity derivatives were recorded at market prices (see
Note 8). Earnings BY BUSINESS segment

Exploration & Production
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

5,881 5,143 3,099 +90 Segment earnings2 11,024 6,492 +70

Crude oil production
1,711 1,756 1,817 -6 (thousand b/d) 3 1,733 1,841 -6
7,789 9,755 7,367 +6 Natural gas production 8,772 8,170 +7
available for sale (million
scf/d)
Barrels of oil equivalent
3,054 3,438 3,087 -1 (thousand boe/d) 3 3,246 3,250 -

1 Q2 on Q2 change

2 As from the fourth quarter 2007, the earnings of the Oil Sands
operations, which were previously reported as part of the
Exploration & Production segment, are disclosed as a separate
business segment. For comparison purposes, the Exploration &
Production earnings up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands segment.

3 Excludes oil sands bitumen production

Second quarter Exploration & Production segment earnings were $5,881
million compared to $3,099 million a year ago. Earnings included a net gain
of $98 million related to identified items, compared to a net gain of $153
million in the second quarter 2007 (see page 3 for details).
Earnings compared to the second quarter 2007 reflected higher gas
production volumes and the benefit of higher oil and gas prices on revenues,
which were partly offset by lower oil production volumes, higher royalty
expenses and higher operating costs.
Global liquids realisations were 74% higher than in the second quarter
2007, compared with marker crudes Brent and WTI increases of 76% and 91%
respectively. Global gas realisations were 54% higher than a year ago.
Outside the USA gas realisations increased by 57% whereas in the USA gas
realisations increased by 53%.
Second quarter 2008 production (excluding oil sands bitumen production)
was 3,054 thousand barrels of oil equivalent per day (boe/d) compared to
3,087 thousand boe/d a year ago. Crude oil production was down 6% and natural
gas production was up 6% compared to the second quarter 2007.
Production compared to the second quarter 2007 included additional
volumes principally from Ormen Lange (Shell share 17%) in Norway, West Salym
(Shell share 50%) in Russia, Stybarrow (Shell share 17.1%) in Australia,
Changbei (Shell share 50%) in China, Deimos (Shell share 71.5%) in the USA,
Starling (Shell share 28%), Caravel (Shell share 71%) and Shamrock (Shell
share 100%) in the United Kingdom and Champion West Phase 3B/C (Shell share
50%) in Brunei.
Second quarter portfolio developments
In Australia, Shell signed a preliminary agreement with Arrow Energy Ltd.
to acquire a 30% stake in Arrow's coal bed methane acreage in Queensland, and
a 10% stake in Arrow International, for a cost of up to $0.7bn . Shell and
Arrow plan to jointly develop projects to extract clean-burning natural gas
from coal deposits. Completion of a definitive agreement is expected by the
end of 2008.
In Peru, Shell signed a preliminary agreement with BPZ Energy Inc. to
jointly explore for oil and gas in the northern part of the country.
During the first half of 2008, Shell had four notable exploration
discoveries in offshore Nigeria, Australia and Brunei and onshore USA. Shell
also significantly increased its overall acreage position through
acquisitions of new exploration licences offshore northwest Australia, in the
Chukchi Sea and the Gulf of Mexico in the USA.
Gas & Power
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

625 948 779 -20 Segment earnings 1,573 1,582 -1

LNG sales volumes (million
3.08 3.51 3.25 -5 tonnes) 6.59 6.55 +1
1 Q2 on Q2 change

Second quarter Gas & Power segment earnings were $625 million compared to
$779 million a year ago. Earnings for the second quarter 2007 included a gain
of $247 million related to an identified item (see page 3 for details). In
addition, second quarter 2008 marketing and trading earnings were reduced by
non-cash charges of around $300 million as a result of fair value accounting
of commodity derivatives associated with long-term contracts (see Note 8).
Gas & Power earnings compared to the second quarter 2007 reflected strong
LNG prices, which were partly offset by lower LNG sales volumes and lower
marketing and trading contributions.
LNG related earnings for the second quarter 2008 were approximately 50%
higher than in the same quarter a year ago, mainly reflecting strong LNG
prices.
LNG sales volumes of 3.08 million tonnes were 5% lower than in the same
quarter a year ago, mainly as a consequence of lower feedgas supplies,
planned maintenance shutdowns and changed lifting schedules of cargoes
compared to the same quarter last year.
Marketing and trading earnings, non-LNG related, were lower than in the
same quarter a year ago, reflecting lower earnings in North America, which
was partly offset by higher European contributions.
Second quarter portfolio developments
In the Middle East, an agreement was reached with Qatargas 4 and the
Dubai Government for the supply of LNG during the summer months for 15 years.
The LNG will be delivered from Qatargas 4 and Shell's portfolio of other LNG
volumes.
In Germany, the sale of the BEB Erdgas und Erdoel GmbH gas transport
business (Shell share 50%) to NV Nederlandse Gasunie was closed on July 1,
2008, with all required approvals in place. Proceeds have been mainly
received in July 2008, with a remaining payment expected by the end of the
year.
OIL SANDS
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

351 249 202 +74 Segment earnings 600 317 +89

72 84 91 -21 Bitumen production (thousand 78 93 -16
b/d)

104 144 141 -26 Sales volumes (thousand b/d) 124 141 -12

96 94 96 Upgrader availability (%) 94 95
1 Q2 on Q2 change

Second quarter Oil Sands segment earnings were $351 million compared to
$202 million in the same quarter last year.
Earnings compared to the second quarter 2007 reflected the impact of
higher oil prices on revenues, which were partly offset by lower production
volumes and higher operating costs.
Bitumen production decreased by 21% compared to the same quarter last
year mainly as a consequence of the execution of the mine tailings management
plan which has temporarily led to lower ore grade being mined and due to
planned and unplanned maintenance. Upgrader availability was 96%, unchanged
compared to the same quarter last year.
Oil Products
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

4,539 2,367 3,928 Segment earnings 6,906 5,730
Less: Estimated CCS adjustment
3,464 1,173 992 (see note 2) 4,637 1,306
1,075 1,194 2,936 -63 Segment CCS earnings 2,269 4,424 -49

3,464 3,694 3,806 -9 Refinery intake (thousand b/d)3,579 3,707 -3

6,642 6,831 6,490 +2 Total Oil Products sales 6,737 6,449 +4
(thousand b/d)

92 92 92 Refinery availability (%) 92 89
1 Q2 on Q2 change

Second quarter Oil Products segment earnings were $4,539 million compared
to $3,928 million for the same period last year.
Second quarter Oil Products CCS segment earnings were $1,075 million
compared to $2,936 million in the second quarter 2007. Earnings included a
gain of $181 million related to identified items, compared to a gain of $205
million in the second quarter 2007 (see page 3 for details). In addition
second quarter 2008 marketing and trading earnings were reduced by a non-cash
charge of around $450 million as a result of fair value accounting of
commodity derivatives (See Note 8).
CCS earnings compared to the second quarter 2007 reflected substantially
lower realised refining margins, higher operating costs, mainly as a result
of exchange rate movements, and lower trading contributions.
Industry refining margins compared to the same quarter a year ago were
lower in Europe, declined significantly in the US Gulf Coast and US West
Coast and were higher in the Asia-Pacific region. Refinery availability
remained at 92%, the same level as in the second quarter of 2007.
Marketing earnings compared to the same period a year ago declined due to
higher operating costs and lower lubricants margins. In addition, retail
margins, net of exchange rate movements, declined, which were partly offset
by higher B2B margins.
Oil Products (marketing and trading) sales volumes increased by 2%
compared to the same quarter last year. Marketing sales volumes were 1% lower
than in the second quarter 2007 and excluding the impact of divestments were
2% higher mainly because of increased aviation, marine and commercial fuels
sales.
Second quarter portfolio developments
In Qatar, a Letter of Intent was signed with Qatar Petroleum
International and PetroChina to build an integrated refinery and
petrochemical manufacturing complex in China.
Chemicals
Quarters $ million Six Months
Q2 Q1 2008 Q2 %1 2008 2007 %
2008 2007

157 DOCVARIABLE 626 Segment 505 1,153
"CPQ_USD_RPTD_CH" earnings
348
Less: 179
Estimated
CCS
adjustment
(see note
299 147 132 2) 446
(142) 201 494 - Segment 59 974 -94
CCS
earnings

5,396 5,459 5,653 -5 Sales 10,855 11,220 -3
volumes
(thousand
tonnes)

95 95 93 Manufacturing 95 92
plant
availability (%)
1 Q2 on Q2 change

Second quarter Chemicals segment earnings were $157 million compared to
$626 million for the same period last year.
Second quarter Chemicals CCS segment earnings were a loss of $142 million
compared to a profit of $494 million in the same quarter last year. Earnings
for the second quarter 2008 included a net charge of $206 million related to
identified items (see page 3 for details).
CCS earnings compared to the second quarter 2007 reflected lower realised
margins, higher operating costs and lower income from equity-accounted
investments. In addition, identified items reflecting provisions and asset
impairments, which were partly offset by a divestment gain, impacted earnings.
Chemicals manufacturing plant availability increased to 95%, some 2%
higher than in the second quarter 2007.
CORPORATE
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007

201 146 177 Segment earnings 347 978

Second quarter Corporate segment earnings were $201 million compared to
$177 million for the same period last year. Earnings for the second quarter
2007 included a gain of $55 million related to an identified item (see page 3
for details).
Earnings compared to the second quarter 2007 reflected higher tax credits
and lower shareholder costs, which were partly offset by lower net
underwriting income and lower net interest income.
PRICE and margin INFORMATION
oil & gas
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007
$/bbl Realised oil prices - $/bbl
Exploration & Production1
(period average)
110.96 90.40 64.88 World outside USA 101.15 59.94
118.07 92.55 61.06 USA 105.02 56.34
111.92 90.72 64.27 Global 101.70 59.36

$/bbl Realised oil prices - Oil Sands $/bbl
(period average)
116.20 85.08 59.94 Canada 98.12 55.49

$/thousand scf Realised gas prices (period $/thousand scf
average)
9.38 9.00 5.95 Europe 9.19 6.93
5.85 4.01 World outside USA (including 6.09 4.36
6.31 Europe)
11.89 9.52 7.78 USA 10.69 7.48
7.30 6.52 4.74 Global 6.91 4.98

Oil and gas marker industry
prices (period average)
121.26 96.66 68.86 Brent ($/bbl) 108.96 63.31
123.81 97.86 64.89 WTI ($/bbl) 110.83 61.47
125.18 97.91 66.21 Edmonton Par ($/bbl) 111.58 61.96
11.36 8.55 7.56 Henry Hub ($/MMBtu) 9.95 7.36
60.41 UK National Balancing Point 56.73
53.05 20.20 (pence/therm) 21.25
100.96 64.76 Japanese Crude Cocktail - JCC 95.09 61.16
93.13 ($/bbl)2
refining & cracker industry Margins3
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007
$/bbl Refining marker industry gross $/bbl
margins
(period average)
11.55 8.75 23.10 ANS US West Coast coking margin 10.10 22.65
10.55 8.70 27.05 WTS US Gulf Coast coking margin 9.60 19.95
5.85 3.55 6.30 Rotterdam Brent complex 4.70 5.00
3.95 Singapore 80/20 Arab light/Tapis 2.85
1.80 3.60 complex 3.35
$/tonne Cracker industry margins (period $/tonne
average)
484.00 359.00 320.00 US ethane 422.00 326.00
346.00 433.00 423.00 Western Europe naphtha 390.00 474.00
92.00 55.00 138.00 North East Asia naphtha 74.00 328.00

1 As from the fourth quarter 2007, the Oil Sands operations, which
were previously reported as part of the Exploration & Production
segment, are disclosed as a separate business segment. For
comparison purposes, the Exploration & Production realised oil
prices up to the third quarter 2007 have been reclassified.

2 JCC prices for the second quarter and six months 2008 are based
on available market data up to the end of April 2008. Prices for
these periods will be updated when full market data are available.

3 The refining and cracker industry margins shown above do not
represent actual Shell realised margins for the periods. These are
estimated industry margins based on available market information at
the end of the quarter.

oil & gas - Operational data
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %
thousand b/d Crude oil production thousand b/d
390 416 442 Europe 402 445
314 322 305 Africa 318 322
196 208 235 Asia Pacific 202 233
434 428 428 Middle East, Russia, CIS 431 425
293 301 328 USA 297 335
84 81 79 Other Western Hemisphere 83 81
1,711 1,756 1,817 -6 Total crude oil 1,733 1,841 -6
production excluding oil
sands
72 84 91 Bitumen production - oil 78 93
sands
1,783 1,840 1,908 -7 Total crude oil 1,811 1,934 -6
production including oil
sands

Natural gas production million
million scf/d2 available for sale scf/d2

2,930 4,894 2,496 Europe 3,912 3,299
549 619 601 Africa 584 560
2,512 2,438 2,414 Asia Pacific 2,475 2,435
230 232 251 Middle East, Russia, CIS 231 255
1,096 1,105 1,091 USA 1,101 1,126
472 467 514 Other Western Hemisphere 469 495
7,789 9,755 7,367 +6 8,772 8,170 +7

Total production in
thousand boe/d3 barrels of oil equivalent thousand boe/d3

895 1,260 872 Europe 1,077 1,014
409 429 409 Africa 419 419
629 628 651 Asia Pacific 628 653
474 468 471 Middle East, Russia, CIS 471 469
482 492 516 USA 487 529
165 161 168 Other Western Hemisphere 164 166
Total production
3,054 3,438 3,087 -1 excluding oil sands 3,246 3,250 -
Bitumen production - oil
72 84 91 sands 78 93
Total production
3,126 3,522 3,178 -2 including oil sands 3,324 3,343 -1
1 Q2 on Q2 change

2 scf/d = standard cubic feet per day; 1 standard cubic foot =
0.0283 cubic metre

3 Natural gas converted to oil equivalent at 5.8 million scf/d =
thousand boe/d

oil products and chemicals - Operational data
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %
thousand b/d Refinery processing intake thousand b/d

1,498 1,741 1,713 Europe 1,619 1,651
741 756 810 Other Eastern Hemisphere 749 785
874 845 905 USA 859 899
351 352 378 Other Western Hemisphere 352 372
3,464 3,694 3,806 -9 3,579 3,707 -3

Oil sales
2,067 2,083 2,224 Gasolines 2,076 2,244
816 814 731 Kerosenes 815 726
2,225 2,337 2,238 Gas/diesel oils 2,281 2,176
776 839 667 Fuel oil 807 673
758 758 630 Other products 758 630

6,642 6,831 6,490 +2 Total oil products * 6,737 6,449 +4

*Comprising:
1,781 1,959 1,826 Europe 1,870 1,830
1,276 1,245 1,238 Other Eastern Hemisphere 1,260 1,241
1,436 1,396 1,518 USA 1,416 1,460
704 755 679 Other Western Hemisphere 730 666
1,445 1,476 1,229 Export sales 1,461 1,252

Chemical sales volumes by
thousand tonnes main product category 2** thousand tonnes
3,061 3,119 3,222 Base chemicals 6,180 6,502
2,333 2,338 2,429 First line derivatives 4,671 4,711
2 2 2 Other 4 7
5,396 5,459 5,653 -5 10,855 11,220 -3

**Comprising:
2,189 2,289 2,220 Europe 4,478 4,493
1,294 1,228 1,380 Other Eastern Hemisphere 2,522 2,633
1,760 1,784 1,873 USA 3,544 3,744
153 158 180 Other Western Hemisphere 311 350
1 Q2 on Q2 change

2 Excluding volumes sold by equity-accounted investments, chemical
feedstock trading and by-products.

Note
All amounts shown throughout this Report are unaudited.
In this announcement, excluding in the financial statements, we have
aggregated our equity position in projects for both direct and indirect
interest (for example, we have aggregated our indirect interest in North West
Shelf LNG via our 34% shareholding in Woodside Energy Ltd).
Third quarter results are expected to be announced on October 30, 2008
and fourth quarter results are expected to be announced on January 29, 2009.
There will be a Shell strategy update on March 17, 2009.
In this document "Shell", "Shell group" and "Royal Dutch Shell" are
sometimes used for convenience where references are made to Royal Dutch Shell
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".
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
Shell's products; (c) currency fluctuations; (d) drilling and production
results; (e) reserve estimates; (f) loss of market 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. Each forward-looking statement speaks only as of the date of this
document, July 31, 2008. 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.
Please refer to the Annual Report and Form 20-F for the year ended
December 31, 2007 for a description of certain important factors, risks and
uncertainties that may affect Shell's businesses.
Cautionary Note to US Investors:
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 may use certain terms in this
announcement that the SEC's guidelines strictly prohibit us from including in
filings with the SEC. US Investors are urged to consider closely the
disclosure in our Form 20-F, File No 001-32575 and disclosure in our Forms
6-K, File No 001-32575, available on the SEC's website http://www.sec.gov.
You can also obtain these forms from the SEC by calling +1-800-SEC-0330.
July 31, 2008
Appendix: Royal Dutch Shell financial report and tables

Statement of income (see note 1)
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 %1 2008 2007 %

131,419 114,302 84,896 Revenue2 245,721 158,376
109,261 96,780 68,715 Cost of sales 206,041 129,381
22,158 17,522 16,181 +37 Gross profit 39,680 28,995 +37

4,444 3,969 4,120 Selling, distribution and 8,413 7,898
administrative expenses
408 325 450 Exploration 733 722
2,671 2,425 2,138 Share of profit of 5,096 3,946
equity-accounted
investments
(140) (53) (477) Net finance costs and (193) (1,378)
other (income)/expense
20,117 15,706 14,226 +41 Income before taxation 35,823 25,699 +39

8,363 6,505 5,415 Taxation 14,868 9,447
11,754 9,201 8,811 +33 Income for the period 20,955 16,252 +29

198 118 144 Income attributable to 316 304
minority interest
11,556 9,083 8,667 +33 Income attributable to 20,639 15,948 +29
shareholders of Royal
Dutch Shell plc
1 Q2 on Q2 change

2 Revenue is stated after deducting sales taxes, excise duties and
similar levies of $25,462 million in Q2 2008, $22,920 million in Q1
2008, $18,993 million in Q2 2007 and $17,305 million in Q1 2007.

Basic earnings per share (SEE NOTES 1, 2 AND 7)
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007
1.87 1.47 1.38 Earnings per share ($) 3.34 2.54
1.28 1.26 1.20 CCS earnings per share ($) 2.54 2.31

Diluted earnings per share (SEE NOTES 1, 2 AND 7)
Quarters Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007
1.87 1.46 1.38 Earnings per share ($) 3.33 2.53
1.28 1.25 1.20 CCS earnings per share ($) 2.53 2.30

Earnings BY BUSINESS segment (see notes 2 and 4)
Quarters $ million Six Months
Q2 Q1 Q2 2007 %1 2008 2007 %
2008 2008

Exploration &
Production2:
3,952 3,540 2,183 +81 - World outside USA 7,492 4,724 +59
1,929 1,603 916 +111 - USA 3,532 1,768 +100
5,881 5,143 DOCVARIABLE +90 11,024 6,492 +70
"PQ_USD_NI.R_EP"
3,099

Gas & Power:
788 933 494 +60 - World outside USA 1,721 1,176 +46
(163) 15 285 - - USA (148) 406 -
625 948 779 -20 1,573 1,582 -1

351 249 202 +74 Oil Sands2: 600 317 +89

Oil Products (CCS
basis):
765 978 1,827 -58 - World outside USA 1,743 2,985 -42
310 216 1,109 -72 - USA 526 1,439 -63
1,075 1,194 2,936 -63 2,269 4,424 -49

Chemicals (CCS
basis):
112 304 454 -75 - World outside USA 416 923 -55
(254) (103) 40 - USA (357) 51 -
(142) 201 494 - 59 974 -94

7,790 7,735 7,510 +4 Total operating 15,525 13,789 +13
segments

Corporate:
81 110 158 - Interest and 191 741
investment
income/(expense)
27 (62) 20 - Currency exchange (35) 66
gains/(losses)
93 98 (1) - Other - including 191 171
taxation
201 146 177 347 978

(89) (105) (131) Minority interest (194) (279)
7,902 7,776 7,556 +5 CCS earnings 15,678 14,488 +8

3,654 1,307 1,111 Estimated CCS 4,961 1,460
adjustment for Oil
Products and
Chemicals
11,556 9,083 8,667 +33 Income
attributable 20,639 15,948 +29
to shareholders of
Royal Dutch Shell
plc
1 Q2 on Q2 change

2 As from the fourth quarter 2007, the earnings of the Oil Sands
operations, which were previously reported as part of the
Exploration & Production segment, are disclosed as a separate
business segment. For comparison purposes, the Exploration &
Production earnings up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands segment.

Summarised balance sheet (see notes 1 and 6)
$ million
Jun 30, 2008 Mar 31, 2008 Jun 30, 2007

Assets
Non-current assets:
Intangible assets 5,336 5,282 5,126
Property, plant and equipment 109,191 105,806 90,584
Investments:
- equity-accounted investments 32,514 31,198 27,185
- financial assets 2,975 3,333 2,954
Deferred tax 4,089 3,409 3,108
Pre-paid pension costs 6,215 5,878 4,772
Other 6,504 6,406 5,548
166,824 161,312 139,277

Current assets:
Inventories 39,624 32,184 26,497
Accounts receivable 127,241 87,507 60,649
Cash and cash equivalents 8,990 14,417 15,117
175,855 134,108 102,263

Total assets 342,679 295,420 241,540

Liabilities
Non-current liabilities:
Debt 11,072 11,378 12,236
Deferred tax 13,994 13,473 13,159
Retirement benefit obligations 6,162 6,304 6,282
Other provisions 14,086 14,016 10,877
Other 4,857 4,189 3,784
50,171 49,360 46,338

Current liabilities:
Debt 5,352 5,684 5,266
Accounts payable and accrued 126,246 89,531 61,978
liabilities
Taxes payable 15,895 14,412 11,214
Retirement benefit obligations 419 455 324
Other provisions 2,687 2,815 2,076
150,599 112,897 80,858

Total liabilities 200,770 162,257 127,196

Equity attributable to shareholders 139,809 131,130 112,621
of Royal Dutch Shell plc

Minority interest 2,100 2,033 1,723
Total equity 141,909 133,163 114,344

Total liabilities and equity 342,679 295,420 241,540

Summarised statement of cash flows (see note 1)
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007

Cash flow from operating
activities:
11,754 9,201 8,811 Income for the period 20,955 16,252
Adjustment for:
8,701 6,405 5,460 - Current taxation 15,106 9,727
269 178 130 - Interest (income)/expense 447 328
- Depreciation, depletion and
3,439 3,146 3,238 amortisation 6,585 6,498
- (Profit)/loss on sale of
(757) (281) (1,133) assets (1,038) (1,495)
- Decrease/(increase) in net
(11,751) 2,784 (1,704) working capital (8,967) (2,103)
- Share of profit of
(2,671) (2,425) (2,138) equity-accounted investments (5,096) (3,946)
2,447 1,752 1,519 - Dividends received from 4,199 3,106
equity-accounted
investments
- Deferred taxation and other
(152) 322 214 provisions 170 62
10 94 (676) - Other 104 (1,123)
Cash flow from operating
11,289 21,176 13,721 activities (pre-tax) 32,465 27,306

(7,121) (4,314) (4,873) Taxation paid (11,435) (7,277)

Cash flow from operating
4,168 16,862 8,848 activities 21,030 20,029

Cash flow from investing
activities:
(7,352) (7,429) (5,652) Capital expenditure (14,781) (11,013)
Investments in
(521) (616) (319) equity-accounted investments (1,137) (689)
2,026 445 6,270 Proceeds from sale of assets 2,471 6,650
Proceeds from sale of
272 61 279 equity-accounted investments 333 394
275 10 585 Proceeds from sale of 285 1,140
/(additions to) financial
assets
269 285 295 Interest received 554 580
Cash flow from investing
(5,031) (7,244) 1,458 activities (12,275) (2,938)

Cash flow from
financing
activities:
839 (863) (1,185) Net increase/(decrease) in (24) (844)
debt with maturity period

within three months
131 185 1,634 Other debt: New borrowings 316 4,396
(1,479) (664) (274) Repayments (2,143) (1,887)
(369) (298) (290) Interest paid (667) (641)
34 (7) (3,585) Change in minority interest 27 (6,695)
Net issue/(repurchase) of
(1,350) (1,073) (900) shares (2,423) (1,386)
Dividends paid to:
- Shareholders of Royal Dutch
(2,489) (2,329) (2,300) Shell plc (4,818) (4,400)
(115) (51) (77) - Minority interest (166) (119)
Treasury shares:
- Net sales/(purchases) and
242 200 568 dividends received 442 552
Cash flow from financing
(4,556) (4,900) (6,409) activities (9,456) (11,024)

(8) 43 36 Currency translation 35 48
differences relating to cash
and

cash equivalents
Increase/(decrease) in cash
(5,427) 4,761 3,933 and cash equivalents (666) 6,115

Cash and cash equivalents at
14,417 9,656 11,184 beginning of period 9,656 9,002

Cash and cash equivalents at
8,990 14,417 15,117 end of period 8,990 15,117

Capital investment
Quarters $ million Six Months
Q2 Q1 Q2 2008 2007
2008 2008 2007

Capital expenditure:
Exploration & Production1:
3,038 2,202 2,281 - World outside USA 5,240 5,153
916 2,530 774 - USA 3,446 1,361
3,954 4,732 3,055 8,686 6,514

Gas & Power:
1,006 823 711 - World outside USA 1,829 1,368
3 1 2 - USA 4 3
1,009 824 713 1,833 1,371

761 711 421 Oil Sands1 1,472 789

Oil Products:
862 456 640 - World outside USA 1,318 1,114
68 61 132 - USA 129 327
930 517 772 1,447 1,441

Chemicals:
399 374 184 - World outside USA 773 337
34 34 96 - USA 68 179
433 408 280 841 516

83 37 75 Corporate 120 120

7,170 7,229 5,316 Total capital expenditure 14,399 10,751

Exploration expense
218 135 143 - World outside USA 353 270
86 80 46 - USA 166 88
304 215 189 519 358

New equity in equity-accounted
investments
347 365 308 - World outside USA 712 555
41 5 3 - USA 46 20
388 370 311 758 575

133 246 8 New loans to equity-accounted 379 114
investments

7,995 8,060 5,824 Total capital investment* 16,055 11,798

*Comprising:
4,621 5,439 3,463 - Exploration & Production1 10,060 7,355
1,156 925 808 - Gas & Power 2,081 1,540
761 711 421 - Oil Sands1 1,472 789
934 536 777 - Oil Products 1,470 1,476
439 412 280 - Chemicals 851 518
84 37 75 - Corporate 121 120
7,995 8,060 5,824 16,055 11,798

1 As from the fourth quarter 2007, the results of the Oil Sands
operations, which were previously reported as part of the
Exploration & Production segment, are disclosed as a separate
business segment. For comparison purposes, the Exploration &
Production results up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands segment.

Additional segmental information1
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007

Exploration & Production3
5,881 5,143 3,099 Segment earnings 11,024 6,492
Including:
408 325 450 - Exploration 733 722
2,228 2,165 2,311 - Depreciation, depletion & 4,393 4,599
amortisation
1,103 1,212 659 - Share of profit of 2,315 1,572
equity-accounted investments

8,659 10,329 7,031 Cash flow from operations 18,988 13,141
(374) 923 1,469 Less: Net working capital 549 383
movements2
9,033 9,406 5,562 Cash flow from operations 18,439 12,758
excluding net working capital
movements

49,185 47,927 42,207 Capital employed 49,185 42,207

Gas & Power
625 948 779 Segment earnings 1,573 1,582
Including:
85 81 77 - Depreciation, depletion & 166 151
amortisation
620 584 428 - Share of profit of 1,204 848
equity-accounted investments

149 1,917 210 Cash flow from operations 2,066 797
(845) 902 76 Less: Net working capital 57 (93)
movements2
994 1,015 134 Cash flow from operations 2,009 890
excluding net working capital
movements

21,010 19,305 16,133 Capital employed 21,010 16,133

Oil Sands3
351 249 202 Segment earnings 600 317
Including:
45 44 43 - Depreciation, depletion & 89 82
amortisation

645 298 421 Cash flow from operations 943 907
66 (102) 113 Less: Net working capital (36) 524
movements2
579 400 308 Cash flow from operations 979 383
excluding net working capital
movements

5,881 5,292 3,672 Capital employed 5,881 3,672

1 Corporate segment information has not been included in the table
shown. Please refer to the Earnings by Business segment section for
additional information. The above data does not consider minority
interest impacts on the segments.

2 Excluding working capital movements related to taxation.

3 As from the fourth quarter 2007, the results of the Oil Sands
operations, which were previously reported as part of the
Exploration & Production segment, are disclosed as a separate
business segment. For comparison purposes, the Exploration &
Production results up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands segment.

Additional segmental information1 (continued)
Quarters $ million Six Months
Q2 2008 Q1 2008 Q2 2007 2008 2007
Oil Products

1,075 1,194 2,936 Segment CCS earnings 2,269 4,424
Including:
609 608 571 - Depreciation, depletion & 1,217 1,227
amortisation
441 267 721 - Share of profit of 708 1,001
equity-accounted investments

(4,148) 2,362 1,464 Cash flow from operations (1,786) 3,587
(9,439) (435) (2,220) Less: Net working capital (9,874) (2,539)
movements2
5,291 2,797 3,684 Cash flow from operations 8,088 6,126
excluding net working capital
movements

63,298 55,768 46,546 Capital employed 63,298 46,546

Chemicals
(142) 201 494 Segment CCS earnings 59 974
Including:
356 162 150 - Depreciation, depletion & 518 305
amortisation
92 158 167 - Share of profit of 250 355
equity-accounted investments

361 386 451 Cash flow from operations 747 567
(216) (9) (230) Less: Net working capital (225) (744)
movements2
577 395 681 Cash flow from operations 972 1,311
excluding net working capital
movements

11,328 11,233 9,888 Capital employed 11,328 9,888
1 Corporate segment information has not been included in the table
shown. Please refer to the Earnings by Business segment section for
additional information. The above data does not consider minority
interest impacts on the segments.

2 Excluding working capital movements related to taxation.

Notes
1. Accounting policies and basis of presentation
The quarterly financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) and are also in accordance
with IFRS as adopted by the European Union.
The Oil Sands operations, which were previously reported within the
Exploration & Production segment, are reported as a separate business segment
with effect from the fourth quarter 2007. Prior period financial statements
have been reclassified accordingly.
The accounting policies are unchanged from those 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, 2007 on pages 117 to 121.
2. Earnings on an estimated current cost of supplies (CCS) basis
To facilitate a better understanding of underlying business performance,
the financial results are also analysed on an estimated current cost of
supplies (CCS) basis as applied for the Oil Products and Chemicals segment
earnings. Earnings on an estimated current cost of supplies basis provides
useful information concerning the effect of changes in the cost of supplies
on Royal Dutch Shell's results of operations and is a measure to manage the
performance of the Oil Products and Chemicals segments but is not a measure
of financial performance under IFRS.
On this basis, Oil Products and Chemicals segment cost of sales of the
volumes sold during the period are based on the cost of supplies during the
same period after making allowance for the estimated tax effect, instead of
the first-in, first-out (FIFO) method of inventory accounting. Earnings
calculated on this basis do not represent an application of the last-in,
first-out (LIFO) inventory basis and do not reflect any inventory drawdown
effects.
3. Return on average capital employed (ROACE)
ROACE is defined as the sum of the current and previous three quarters'
income adjusted for interest expense, after tax, divided by the average
capital employed for the period. Components of the calculation are:

$ million Q2 2008 Q2 2007
Income (four quarters) 36,628 28,020
Interest expense after tax 752 665
ROACE numerator 37,380 28,685

Capital employed - opening 131,846 122,818
Capital employed - closing 158,333 131,846
Capital employed - average 145,090 127,332

ROACE 25.8% 22.5%

ROACE up to the fourth quarter 2007 has been shown on a Shell share
basis. As a consequence of the significant reduction of minority interest
during 2007, ROACE calculations are now presented on a 100%-basis. Prior
period ROACE calculations have been adjusted for comparison purposes.
4. Earnings by business segment
Operating segment results are presented before deduction of minority
interest and also exclude interest and other income of a non-operational
nature, interest expense, non-trading currency exchange effects and tax on
these items, which are included in the Corporate results. Operating segment
results are after tax and include equity-accounted investments.
5. Gearing
The numerator and denominator in the gearing calculation, as demonstrated
below, used by Shell are calculated by adding to reported debt and equity
certain off-balance sheet obligations as at the beginning of the year such as
operating lease commitments and unfunded retirement benefits (if applicable)
which Shell believes to be in the nature of incremental debt, and deducting
cash and cash equivalents judged to be in excess of amounts required for
operational purposes.
$ million Jun 30, 2008 Jun 30, 2007

Non-current debt 11,072 12,236
Current debt 5,352 5,266
Total debt 16,424 17,502

Add: Net present value of operating lease 14,387 11,319
obligations1
Unfunded retirement benefit obligations (after - -
tax)1
Less: Cash and cash equivalents in excess of 6,690 13,217
operational requirements
Adjusted debt 24,121 15,604

Total equity 141,909 114,344

Total capital 166,030 129,948

Gearing ratio (adjusted debt as a percentage of 14.5% 12.0%
total capital)
1 As of December 31, 2007 and 2006, respectively.

6. Equity
Total equity comprises equity attributable to shareholders of Royal Dutch
Shell and to the minority interest. Other reserves comprise the capital
redemption reserve, share premium reserve, merger reserve, share plan
reserve, currency translation differences, unrealised gains/(losses) on
securities and unrealised gains/(losses) on cash flow hedges.
$ million Ordinary 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 - - - 20,639 20,639 316 20,955
period
Income/(expense) - - 1,853 - 1,853 (110) 1,743
recognised
directly in
equity
Capital - - - - - 27 27
contributions/
(repayments)
from/to minority
shareholders
Changes in - - - 59 59 25 84
minority interest
Dividends paid - - - (4,818) (4,818) (166) (4,984)
Treasury shares: - 442 - - 442 - 442
net
sales/(purchases)
and dividends
received
Shares (5) - 5 (2,237) (2,237) - (2,237)
repurchased for
cancellation
Share-based - - (107) 18 (89) - (89)
compensation
At June 30, 2008 531 (1,950) 15,899 125,329 139,809 2,100 141,909

$ million Ordinary Treasury Other Retained Total Minority Total
share shares reserves earnings interest equity
capital
At December 31, 545 (3,316) 8,820 99,677 105,726 9,219 114,945
2006
Income for the - - - 15,948 15,948 304 16,252
period
Income/(expense) - - 1,397 - 1,397 (101) 1,296
recognised
directly in
equity
Capital - - - - - 819 819
contributions/
(repayments)
from/to minority
shareholders
Acquisition of - - - (5,445) (5,445)(1,639) (7,084)
Shell Canada
Sakhalin partial - - - - - (6,711) (6,711)
divestment
Other changes in - - - 7 7 (49) (42)
minority interest
Dividends paid - - - (4,400) (4,400) (119) (4,519)
Treasury shares: - 552 - - 552 - 552
net
sales/(purchases)
and dividends
received
Shares (3) - 3 (1,386) (1,386) - (1,386)
repurchased for
cancellation
Share-based - - 222 - 222 - 222
compensation
At June 30, 2007 542 (2,764) 10,442 104,401 112,621 1,723 114,344

7. Basis for Royal Dutch Shell earnings per ordinary share
The total number of Royal Dutch Shell ordinary shares in issue at the end
of the period was 6,279 million. Royal Dutch Shell reports earnings per share
on a basic and on a diluted basis, based on the weighted average number of
Royal Dutch Shell (combined A and B) ordinary shares outstanding. Shares held
in respect of share options and other incentive compensation plans are
excluded in determining basic earnings per share.
Basic earnings per share calculations are based on the following weighted
average number of shares:
Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary 6,170.3 6,195.5 6,281.7
shares of EUR0.07 each

Diluted earnings per share calculations are based on the following
weighted average number of shares. This adjusts the basic number of shares
for all share options currently in-the-money.
Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary
shares of EUR0.07 each 6,189.1 6,211.4 6,303.1

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

Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary
shares of EUR0.07 each 6,159.1 6,187.0 6,276.8

One American Depository Receipt (ADR) is equal to two Royal Dutch Shell
shares.
8. Accounting for Derivatives
IFRS require that the 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 because hedge accounting is either not permitted or not applied to
these contracts.
The physical crude oil and related products held by the Oil Products
business as inventory is recorded at historical cost or net realisable value,
whichever is the lowest, as required under IFRS. Consequently, any increase
in value of the inventory over costs is not recognised in income until the
sale of the commodity occurs in the subsequent periods.
In the Oil Products business, the buying and selling of commodities
includes transactions conducted through the forward markets using commodity
derivatives to reduce the economic exposure. The derivatives are typically
associated with a future physical delivery of the commodities.
These differences in accounting treatment for physical inventory (cost or
net realisable value, whichever is the lowest) and derivative instruments (at
fair value) can create timing differences in the recognition of the gains or
losses between the reporting periods.
Similarly the earnings from long-term contracts held by Gas & Power are
recognised in the results 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) can create timing
differences in the recognition of the gains or losses between the reporting
periods.
SOURCE Royal Dutch Shell plc

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