Royal Dutch Shell 3rd Quarter 2015 Unaudited Results

 
TIDMRDSA TIDMRDSB 
 
ROYAL DUTCH SHELL PLC 
 
3RD QUARTER 2015 UNAUDITED RESULTS 
 
 
  * Royal Dutch Shell's third quarter 2015 earnings, on a current cost of 
    supplies (CCS) basis (see Note 2), were a loss of $6.1 billion compared 
    with a gain of $5.3 billion for the same quarter a year ago. 
  * Third quarter 2015 CCS earnings included identified items of $7.9 billion. 
  * Third quarter 2015 CCS earnings excluding identified items (see page 5) 
    were $1.8 billion compared with $5.8 billion for the third quarter of 2014, 
    a decrease of 70%. Earnings were impacted by non-cash charges of some $1.0 
    billion related to adverse currency exchange rate effects on deferred tax 
    positions and financing items which were not included as identified items. 
  * Compared with the third quarter 2014, CCS earnings excluding identified 
    items included improved Downstream and lower Upstream results. In 
    Downstream, earnings benefited from steps taken by Shell to improve 
    financial performance and from higher realised refining margins. Upstream 
    earnings were negatively impacted by lower oil and gas prices, partly 
    offset by lower costs, increased production volumes and improved 
    operational performance. 
  * Basic CCS earnings per share excluding identified items decreased by 70% 
    versus the third quarter 2014. 
  * Cash flow from operating activities for the third quarter 2015 was $11.2 
    billion, compared with $12.8 billion for the same quarter last year. 
    Excluding working capital movements, cash flow from operating activities 
    for the third quarter 2015 was $5.3 billion, compared with $11.1 billion 
    for the third quarter 2014. 
  * Total dividends distributed to Royal Dutch Shell plc shareholders in the 
    quarter were $3.0 billion, of which $0.7 billion were settled under the 
    Scrip Dividend Programme. No shares were bought back during the third 
    quarter. 
  * Gearing at the end of the third quarter 2015 was 12.7%. 
  * A third quarter 2015 dividend has been announced of $0.47 per ordinary 
    share and $0.94 per American Depositary Share ("ADS"). 
 
SUMMARY OF UNAUDITED RESULTS 
 
         Quarters                        $ million                   Nine months 
 
Q3 2015   Q2     Q3    %1                                         2015    2014    % 
         2015   2014 
 
(7,416)  3,986  4,463 -266 Income/(loss) attributable to Royal     1,000  14,279 -93 
                           Dutch Shell plc shareholders 
 
  1,296  (625)    803      Current cost of supplies (CCS)          1,002     599 
                           adjustment for Downstream 
 
(6,120)  3,361  5,266 -216 CCS earnings                            2,002  14,878 -87 
 
(7,890)  (474)  (581)      Identified items2                     (6,849) (4,422) 
 
  1,770  3,835  5,847 -70  CCS earnings excluding identified       8,851  19,300 -54 
                           items 
 
                            Of which: 
 
  (425)  1,037  4,343           Upstream                           1,287  14,775 
 
  2,617  2,961  1,793           Downstream                         8,224   4,715 
 
  (422)  (163)  (289)           Corporate and Non-controlling      (660)   (190) 
                           interest 
 
 11,231  6,050 12,811 -12  Cash flow from operating activities    24,387  35,436 -31 
 
 (0.97)   0.53   0.83 -217 Basic CCS earnings per share ($)         0.32    2.36 -86 
 
 (1.94)   1.06   1.66      Basic CCS earnings per ADS ($)           0.64    4.72 
 
   0.28   0.61   0.92 -70  Basic CCS earnings per share excl.       1.40    3.06 -54 
                           identified items ($) 
 
   0.56   1.22   1.84      Basic CCS earnings per ADS excl.         2.80    6.12 
                           identified items ($) 
 
   0.47   0.47   0.47  -   Dividend per share ($)                   1.41    1.41  - 
 
   0.94   0.94   0.94      Dividend per ADS ($)                     2.82    2.82 
 
1 Q3 on Q3 change 
2 See page 5 
 
 
 
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented: 
 
"Shell's integrated business and our performance drive are helping to mitigate 
the impact of low oil prices on the bottom line, in what is a difficult 
environment for the industry today. 
We continue to improve the operational performance of our assets, and 
production volumes are up. Costs are falling across the company and Shell's 
performance drive is delivering at the bottom line. 
Our financial framework is highly competitive, with balance sheet gearing at 
12.7%, similar to year ago levels, despite a halving of oil prices. Both net 
investments and dividends have been covered by operating cash flow over the 
last year, when oil prices have averaged $60 per barrel. 
While our cash flow and our operating performance in the quarter were strong, 
the headline numbers we're reporting today include substantial charges. These 
charges reflect both a lower oil and gas price outlook and the firm steps we 
are taking to review and reduce Shell's longer-term option set. 
We have halted exploration activities offshore Alaska, and stopped the 
construction of the Carmon Creek in-situ oil project in Canada. 
These are difficult, but impactful decisions. I am determined that Shell will 
become a more focused and competitive company as a result. 
The BG deal, which remains on track for completion in early 2016, is a 
springboard to focus Shell into fewer and more profitable themes, especially 
deep water and integrated gas." 
 
 
THIRD QUARTER 2015 PORTFOLIO DEVELOPMENTS 
 
Upstream 
 
In Canada, Shell announced that it will not continue construction of the 80 
thousand barrels of oil equivalent per day ("boe/d") Carmon Creek thermal 
in-situ project (Shell interest 100%). Shell originally sanctioned the project 
in October 2013 and announced in March 2015 that the project would be re-phased 
to take advantage of the market downturn to optimise design and retender 
certain contracts. After careful review of the potential design options, 
updated costs, and the company's capital priorities, Shell's view is that this 
project does not rank in its portfolio at this time. The project SEC Proved 
Reserves estimated at 418 million barrels bitumen at end 2014 will be de-booked 
and the project estimated recoverable petroleum resources will be classified as 
Contingent Resources. 
 
In Malaysia, Shell announced that with the expiry of the Malaysia LNG Dua 
production-sharing contract ("PSC") on August 21, 2015, Shell has handed over 
its operatorship and 50% interest to PETRONAS. In 2014, Shell share of gas 
production from fields under the Malaysia LNG Dua PSC was 62 thousand boe/d. 
 
In the United States, Shell completed the sale of its 49% equity interest in 
Elba Liquefaction Company, LLC, owner of the Elba Liquefaction Project, to 
Kinder Morgan, Inc. Once operational, Shell will retain 100% of the off-take 
capacity of the project, which is proposed to be constructed and operated at 
the existing Elba Island LNG terminal. 
 
Offshore Alaska during the quarter, Shell drilled the Burger J well to target 
depth as planned. The well is considered a dry-hole, with minor oil and gas 
shows, and the result renders the Burger Prospect as uneconomic. This, combined 
with the current economic and regulatory environment, has led Shell to cease 
further exploration activity offshore Alaska for the foreseeable future. 
Shell's leases in the Chukchi Sea do not expire until 2020 and in the Beaufort 
Sea until 2017 and 2019. Recently, the US Government has denied our request for 
a suspension of operations, which would have extended the expiration date of 
these leases. We are considering our options in order to protect the remaining 
value of our assets and leases. 
 
Shell announced the final investment decision ("FID") to advance the Appomattox 
deep-water development (Shell interest 79%) in the United States. The 
Appomattox platform will be Shell's seventh 4-column host in the Gulf of 
Mexico. The Appomattox development will initially produce from the Appomattox 
and Vicksburg fields, with average peak production estimated to reach 
approximately 175 thousand boe/d. 
 
In Shell's heartlands exploration programme there were successful appraisals of 
the Kaikias oil discovery (Shell interest 100%) and the Powernap oil discovery 
(Shell interest 50%) in the United States Gulf of Mexico. 
 
Shell had continued success with near-field exploration discoveries in Brunei, 
Malaysia, Oman and the United Kingdom. 
 
In October, Shell Nigeria Exploration and Production Company Ltd announced the 
first production from the Bonga Phase 3 project (Shell interest 55%). Bonga 
Phase 3 is an expansion of the Bonga Main development, with peak production 
expected to be some 50 thousand boe/d. The oil will be transported through 
existing pipelines to the Bonga floating production, storage and offloading 
facility, which has the capacity to produce more than 200 thousand barrels of 
oil and 150 million standard cubic feet of gas per day. 
 
Downstream 
 
During the quarter in China, Shell announced that it has reached an agreement 
to sell its 75% interest in Tongyi Lubricants to Huo's Group and The Carlyle 
Group. The transaction has received regulatory approval and is expected to 
complete in 2015. 
 
In Japan, Shell reached an agreement with Idemitsu for the sale of 125,261,200 
shares in Showa Shell Sekiyu KK, representing a 33.24% shareholding in the 
company, for a total consideration of JPY 169 billion (approximately $1.4 
billion). Shell will retain a 1.8% holding in the company and continues to 
license its brand to Showa Shell for use in its retail business. The 
transaction is expected to complete in 2016, subject to obtaining regulatory 
approval. 
 
In October, Shell completed the sale of its retail, commercial fuels, and 
supply and distribution logistics businesses in Norway to ST1 Nordic Oy. The 
Shell brand will continue to be highly visible in Norway through a retail brand 
licence agreement, and Shell fuels and lubricants will continue to be sold at 

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