LONDON, April 29 /PRNewswire/ --
FIRST QUARTER $ million
2004 2003 %
Net Income 4,433 5,308 -16
Estimated current cost of supplies (CCS) adjustment
- see note 2 182 126
CCS earnings 4,251 5,182 -18
Special credits/(charges) 1,036
Asset retirement obligations 255
Adjusted CCS earnings * 4,251 3,891 +9
* adjusted for Special credits/(charges) and Asset retirement obligations
(see notes 3 and 1)
Return on Average Capital Employed on a Net Income
basis - see note 4 14.3% 18.3%
To facilitate a better understanding of the underlying business
performance, the financial results are also analysed on an estimated current
cost of supplies (CCS) basis. It should be noted that CCS earnings is not a
measure of financial performance under generally accepted accounting
principles in the Netherlands and the USA.
Key features of the first quarter 2004
* Reported net income of $4,433 million was 16% lower than the same period
last year, which included a special credit (see note 3) and an adjustment
for asset retirement obligations totalling $1,291 million.
* The Group's CCS earnings (i.e. on an estimated current cost of supplies
basis) for the quarter of $4,251 million were 18% lower than the same
period last year, which included a special credit relating to the sale of
the shareholding in Ruhrgas and a credit for asset retirement obligations
totalling $1,291 million. Earnings reflected 2% higher hydrocarbon
prices, and higher earnings in Gas & Power, Oil Products and Chemicals.
* Royal Dutch and Shell Transport have decided to implement a share buy
back program in 2004 with immediate effect. The program is anticipated to
be around $2 billion for the year 2004. This amount includes the purchase
of shares for hedging of employee share options.
* On a net income basis, Royal Dutch basic earnings per share (EPS) were
euro 1.05 ($1.31), and Shell Transport basic EPS were 10.1p. On a CCS
basis, Royal Dutch basic earnings per share (EPS) were euro 1.00 ($1.25),
and Shell Transport basic EPS were 9.7p.
* On 19April 2004, Shell announced that it had reviewed 90% of Shell's
proved oil and gas reserves and that, subject to further consultation
with the US Securities and Exchange Commission (SEC), the final result of
the review is that a total of 4.35 billion barrels of oil equivalent
(boe) as at end 2002 will be recategorised and additionally the 2003
reserves replacement will be finalised. In the announcement Shell
indicated the intention to restate the financial statements contained in
the 2002 Form 20-F. The impact on earnings averages around $100 million
per year for the period 2000 to 2003. Comparative amounts shown herein
have been restated accordingly.
* Shell sold its holding in China Petrochemical Corporation (Sinopec)
during the quarter on the public market, raising approximately $742
million before fees and expenses. The impact on earnings of $348 million
was allocated to Exploration and Production (56%), Gas & Power (16%) and
Oil Products (28%).
* Exploration and Production earnings of $2,746 million were 9% lower than
a year ago which included a credit resulting from a change in accounting
for asset retirement obligations. Higher oil prices (+3%) and gains on
divestments were partly offset by 3% lower hydrocarbon production.
Reported hydrocarbon production was 4,096 thousand barrels of oil
equivalent (boe) per day and decreased by 1% if the effect of divestments
(98 thousand boe per day) is excluded.
* Gas & Power segment earnings were $525 million compared to segment
earnings of $470 million a year ago, excluding last year's special credit
(see note 3) of $1,036 million relating to the sale of the shareholding
in Ruhrgas. Included in the earnings this quarter are portfolio
divestment gains of $166 million whereas last year gains of $142 million
were included.
* Oil Products CCS segment earnings were $1,123 million compared to $1,056
million achieved a year ago. Higher marketing earnings including the sale
of Shell shares in Sinopec in Asia Pacific were partially offset by a
decline in refining earnings largely in Europe.
* Chemicals segment earnings were $144 million compared to a loss of $15
million in the same quarter last year, when earnings were impacted by
charges of $92 million for business restructuring and asset impairments.
Earnings in the first quarter of 2004 benefited from higher volumes and
improved unit margins.
* Capital investment for the quarter totalled $2.7 billion, excluding the
minority share in Sakhalin amounting to $0.3 billion, versus $2.6 billion
a year ago. The capital investment budget for the full year is increased
predominantly in Exploration and Production. This reflects increases due
to upward cost pressure in Sakhalin and Bonga, a switch of investment
into short-term payback projects in higher margin areas and an increase
in the exploration program for this year. The full-year capital
investment is now expected to be some $14.5 billion to $15.0 billion
excluding the minority share of Sakhalin.
* The Return on Average Capital Employed (ROACE) on a net income basis for
the twelve months to March 31, 2004 was 14.3%.
* At the end of the quarter the debt ratio was 17.8%; cash and cash
equivalents amounted to $5.7 billion.
* Cash flow from operating activities for the quarter was $7.8 billion.
This cash, together with divestment proceeds ($1.7 billion), funded the
investment program ($3.0 billion) and a decrease in debt of $3.0 billion
with the balance added to cash and cash equivalents.
* Proceeds from divestments of $1.7 billion included the divestments of
Sinopec shares, upstream assets in Thailand and the UK, midstream gas
distribution assets in Germany and onshore crude pipelines in the USA.
Commentary
Brent crude prices averaged $32.05 a barrel in the first quarter compared
with $31.50 a barrel in the same quarter last year. WTI prices were
relatively stronger, averaging $35.35 a barrel compared with $34.00 a year
earlier, the wider Brent-WTI differential was due to higher cross-Atlantic
crude oil freight rates. Crude prices for the balance of this year will be
influenced strongly by OPEC-10 supply, the pace of Iraqi oil export recovery
and the rate of global economic expansion, particularly in the US and China.
In the first quarter of 2004, US natural gas prices averaged $5.61 per
million Btu, an increase of over 50 cents from the fourth quarter of 2003
($5.08 per million Btu), although below the price levels of the same period
in 2003 ($6.90 per million Btu). This is the sixth consecutive quarter where
Henry Hub natural gas has averaged more than $4 per million Btu. During this
quarter prices were supported by growing industrial demand for natural gas
and continuing uncertainty about US natural gas production trends, despite
continuing increases in drilling activity in onshore basins. Storage levels
remained above last year's record low levels.
Industry refining margins were driven primarily by strength in gasoline
and European margins found support from arbitrage opportunities to the US. In
the first quarter of 2004, industry refining margins averaged $7.65, $9.60,
$2.70 and $2.00 a barrel in US Gulf Coast, US West Coast, Rotterdam, and
Singapore, compared to $6.40, $6.85, $3.90 and $2.05 a barrel in the same
period last year. US and European margins may fall back from the levels of
the first quarter as refinery turnarounds decline. Margins in the USA also
may be impacted by supply versus demand imbalances and low storage levels.
Singapore margins are expected to revert to a lower level and remain subdued
by regional refinery capacity overhang although margins may be impacted by
the Chinese supply and demand position.
Conditions in the chemicals industry have generally improved. Steady
demand has pushed prices higher and mitigated the impact of the continued
high feedstock and energy-related costs on industry margins. Industry
operating rates increased but continued to be low by historical standards.
Industry cracker margins strengthened significantly as a result of strong
demand and by-product price increases, especially propylene. Base chemicals
markets strengthened reflecting higher demand and supply constraints,
particularly in the USA and Asia.
In Exploration and Production, a final investment decision was taken for
the Kashagan project in Kazakhstan.
A heads of agreement (HoA) was signed with the Libyan National Oil
Corporation for the establishment of a long-term strategic partnership in the
Libyan upstream oil and gas industry. This agreement could lead to the
development of world-class integrated upstream and LNG export projects.
In the UK, production from the Brent Charlie platform and Penguins field
recommenced and are now approaching the production levels prior to the
shutdown in the third quarter of 2003.
During the quarter the divestments of the upstream assets in Thailand and
various UK upstream assets were completed. In April, Shell reached an
agreement for the sale of its 50% interest in offshore Block 18 in Angola.
A material deepwater exploration discovery was announced offshore of
Sabah, Malaysia and significant discoveries were made in Nigeria and Egypt.
Gas & Power joint venture projects entered into additional LNG long-term
supply contracts during the quarter. The Australian North West Shelf venture
(Shell share 22%) and Chubu Electric Power Company of Japan signed a 15-year
sale and purchase agreement for 0.6 million tonnes per annum (mtpa) of LNG
starting 2009. The Sakhalin II LNG project (Shell share 55%) recorded its
fourth customer with the signing of a HoA with Japanese Toho Gas of Japan for
up to 0.3 mtpa for over 20 years bringing the total contracted volumes to 3.1
mtpa. Shell secured an additional 1.7 mtpa from Nigeria LNG's (NLNG) proposed
Train 6 (Shell share 26%). All NLNG Train 6 sales volumes (4 mtpa) have now
been committed subject to the final investment decision.
In other Gas and Power portfolio developments, the indirectly held 5.27%
interest in Verbundnetz Gas AG (VNG) in Germany was sold and the interest in
the Altamira regasification project (Shell share 75%) in Mexico was diluted.
Shell also announced that it had agreed terms to dilute its interest in the
Hazira regasification project (Shell share to be 74%) in India. In addition
InterGen (Shell share 68%) continued its portfolio management programme with
dilutions of its Australian interests and divestment of a US project under
development.
The announced major Qatar Gas-to-Liquids (GTL) project spudded its first
appraisal well and awarded the project's Front End Engineering and Design
(FEED) contract for the onshore GTL plant.
In Oil Products, progress continued on portfolio restructuring. In the
USA, sales were completed of two onshore crude pipeline systems and the
agreement for the sale of the Delaware City Refinery (Shell share 50%) was
finalised. The Delaware City transaction is expected to close in the second
quarter of 2004.
Outside the USA, Shell and Sinopec are awaiting final government approval
to jointly build a retail network of 500 service stations in the province of
Jiangsu. The venture will operate the network, which is expected to be
completed within three years. Additionally, Shell announced plans to
restructure operations in Venezuela including transferring its role as
wholesaler to local entrepreneurs during 2004.
Retail network restructuring continued in the USA and Europe. A total of
some 4,700 sites have been rebranded from Texaco to Shell in the USA and
4,400 Shell sites re-imaged. Furthermore some 700 sites have been rebranded
from DEA to Shell in Germany. Through the first quarter, approximately 3,600
sites have been removed from the network in the USA. The network
rationalisation will continue until 2006.
These actions reflect Oil Products' strategy of active portfolio
management and focus on market leadership.
In Chemicals, butadiene production started up at the Sabina
Petrochemicals plant (Shell share 62%) in the USA. Butadiene from the 410
thousand tonnes per year unit will be used in the production of rubber and
plastics products. After an extended outage period for debottlenecking, the
expansion of the ethylene cracker to a capacity of 550 thousand tonnes per
year at Deer Park in the USA is starting up. In Europe, the expansion of the
Ethylene Oxide and Glycols unit in the Netherlands has started up with a
total capacity of over 300 thousand tonnes per year to supply European
customers in the polyester market.
Earnings by industry segment
Exploration and Production
FIRST QUARTER $ million
2004 2003 %
Segment earnings 2,746 3,019 -9
Asset retirement obligations - see note 1 255
Adjusted segment earnings 2,746 2,764 -1
Crude oil production (thousand b/d) 2,342 2,407 -3
Natural gas production available for sale (million
scf/d) 10,172 10,636 -4
First quarter segment earnings of $2,746 million were 9% lower than a
year ago which included a credit resulting from a change in accounting for
asset retirement obligations of $255 million. Higher oil prices (+3%) and
gains on divestments were partly offset by lower hydrocarbon production.
Earnings included a $107 million gain on the divestment of the upstream
assets in Thailand and a gain of $195 million related to the sale of Sinopec
shares. These were partly offset by a total net charge of $74 million.
Earnings were impacted by depreciation related to the reserves
recategorisation of an estimated $45 million after tax.
Divestment of various assets impacted production by 98 thousand boe per
day compared to the same period a year ago. Excluding divestments,
hydrocarbon production decreased by 1%, also reflecting the impact from
hydrocarbons prices on production sharing contracts.
Total hydrocarbon production reduced by 3%, reflecting a 3% decrease in
oil production and a 4% decrease in gas production.
Oil production benefited from new production in Canada (Athabasca Oil
Sands), Brazil, Nigeria and the US. In addition, Nigeria recorded higher
production from the ramp up of the EA field and decreased community
disturbances. These were more than offset by divestments (US, UK and
Thailand), field declines (mainly in the USA and the North Sea) and the
downtime on Brent production in the UK.
Gas production was down on last year's record production due to
divestments in the US, UK and Thailand, field declines in the US and UK and
the down time on Brent production in the UK. These were partly offset by new
production in the US, mainly from Na Kika.
Capital investment in the first quarter of $1.9 billion, including
exploration expense of $0.1 billion, was 7% higher than the corresponding
period last year.
Gas & Power
FIRST QUARTER $ million
2004 2003 %
Segment earnings 525 1,506 -65
Special credits/(charges) - see note 3 - 1,036
Adjusted segment earnings 525 470 +12
Equity LNG sales volume (million tonnes) 2.51 2.33 +8
First quarter segment earnings of $525 million compare with earnings of
$1,506 million in the same period a year ago which included a special credit
of $1,036 million related to the Ruhrgas transaction. Excluding the special
credit the current quarter results are 12% higher. The results reflected LNG
volumes of 2.51 million tonnes (+8%) as Nigeria LNG Train 3 and Malaysia LNG
Tiga Train 2 built up volumes, and higher LNG prices. The result of portfolio
divestments, including a gain related to the sale of Sinopec shares,
contributed to earnings $24 million relative to a year ago. Trading
performance in the USA improved versus the fourth quarter of 2003, but was
weaker than the first quarter of 2003.
Oil Products
FIRST QUARTER $ million
2004 2003 %
Segment earnings 1,318 1,195 +10
CCS adjustment 195 139
Segment CCS earnings 1,123 1,056 +6
Refinery intake (thousand b/d) 4,126 4,166 -1
Oil product sales (thousand b/d) 7,539 7,340 +3
First quarter segment earnings were $1,318 million compared to $1,195
million for the same period a year ago. First quarter CCS segment earnings
were $1,123 million compared to $1,056 million for the same period a year
ago. Marketing earnings improved during the quarter in all regions partly
offset by lower refining earnings in primarily Europe. The profit on sale
from onshore crude pipeline systems in the USA offset the loss arising
following the announced sale of the Delaware City Refinery, while a gain
related to the sale of Sinopec shares contributed to the improved marketing
earnings in Asia Pacific.
Outside the USA, segment earnings were $1,153 million compared to $1,068
million a year ago. Outside the USA, CCS earnings were $960 million compared
to $929 million a year ago.
Higher marketing earnings primarily in Asia Pacific and Latin America,
due largely to stronger margins, a 3% increase in total inland sales, and
asset sales were partly offset by lower refining earnings. Weaker European
refining margins, increased costs associated with the strengthening Euro, and
higher refinery maintenance activity contributed to the earnings decline.
Overall refinery utilisation and refinery intake including the effect of
higher refinery maintenance activity, were 4% and 3% respectively lower than
a year ago. Performance of the global businesses improved over the same
period a year ago.
In the USA, segment earnings were $165 million compared to $127 million a
year ago. In the USA, CCS earnings were $163 million compared to $127 million
a year ago. Marketing earnings increased due primarily to cost reductions
offset by lower retail margins while refining earnings declined. Stronger
refining margins and higher refinery intake were offset by higher maintenance
activity and a $63 million charge to income for the announced sale of the
Delaware City Refinery. Transportation earnings improved as a result of gains
on sales completed for two inland crude pipeline systems while trading
performance declined over the same period last year.
Chemicals
FIRST QUARTER $ million
2004 2003
Segment earnings 144 (15)
Segment earnings for the first quarter were $144 million compared with a
loss of $15 million last year. Excluding $15 million of severance charges
related to business improvement initiatives this quarter and business
restructuring and asset impairment charges of $92 million a year ago,
earnings more than doubled compared to last year despite the impact of
planned and unplanned downtime and start-up costs for the cracker expansion
project at Deer Park in the USA. Earnings benefited from 2% higher sales
volumes due to stronger demand and increased trading activity. Overall unit
margins improved and Shell cracker margins were 35% higher than a year ago.
Other industry segments
FIRST QUARTER $ million
2004 2003
Segment earnings (14) (40)
Segment earnings for the first quarter were a loss of $14 million and
improved compared to a year ago.
Corporate
FIRST QUARTER $ million
2004 2003
Segment net costs (151) (268)
First quarter net costs were $151 million, reflecting lower net interest
costs and improved insurance results.
Note
The results shown for the first quarter are unaudited.
The results for the Royal Dutch/Shell Group of Companies for the first
quarter 2004 give effect to the estimated financial impact of the previously
announced reserves recategorisation and related restatement of prior year
financial statements contained in Form 20-F, as well as the revision of the
earnings for 2003 announced on 5 February 2004. Additionally we remain in
discussion with the SEC regarding the financial statements as contained in
our 2002 Form 20-F. Any further adjustments that could arise out of those
discussions could impact the quarterly earnings information contained herein.
As previously announced, the publication of the 2003 Annual Report is
planned for 28 May 2004. As a result the fourth quarter and full year 2003
Group earnings have been adjusted for certain items including the effect of
post 31 December 2003 balance sheet events. The impact on the fourth quarter
and full year 2003 Group earnings is $(12) million and relates to the
Exploration and Production segment.
Quarterly results are expected to be announced on 29 July 2004 for the
second quarter and 28 October 2004 for the third quarter. The 2004 interim
dividends are expected to be announced on 29 July 2004.
This document contains forward-looking statements that are subject to
risk factors associated with the oil, gas, power, chemicals and renewables
businesses. It is believed that the expectations reflected in these
statements are reasonable, but may be affected by a variety of variables
which could cause actual results or trends to differ materially, including,
but not limited to: the outcome of the ongoing enquiries by the regulatory
authorities, price fluctuations, actual demand, currency fluctuations,
drilling and production results, reserve estimates, loss of market, industry
competition, environmental risks, physical risks, the risks of doing business
in developing countries, legislative, fiscal and regulatory developments
including potential litigation and regulatory effects arising from
recategorisation of reserves, economic and financial market conditions in
various countries and regions, political risks, project delay or advancement,
approvals and cost estimates.
29 April 2004
Statement of income
$ million
Q1 Q4 Q1
2004 2003 2003 % 1
Sales proceeds 76,230 68,517 69,374 +10
Sales taxes, excise duties and similar
levies 18,131 18,131 15,559
______ ______ ______
Net proceeds 58,099 50,386 53,815 +8
Cost of sales 47,881 42,067 43,514
______ ______ ______
Gross profit 10,218 8,319 10,301 -1
Selling, distribution and administrative
expenses 3,395 4,056 3,023
Exploration 125 825 248
Research and development 137 155 132
______ ______ ______
Operating profit of Group companies 6,561 3,283 6,898 -5
Share of operating profit of associated
companies 1,215 675 1,196
______ ______ ______
Operating profit 7,776 3,958 8,094 -4
Interest and other income 610 108 1,469
Interest expense 312 355 374
Currency exchange gains/(losses) (26) (87) (17)
______ ______ ______
Income before taxation 8,048 3,624 9,172 -12
Taxation 3,480 1,737 3,775
______ ______ ______
Income after taxation 4,568 1,887 5,397 -15
Minority interests 135 87 89
______ ______ ______
NET INCOME 4,433 1,800 5,308 -16
______ ______ ______
1 Q1 on Q1 change
Earnings by industry segment
$ million
Q1 Q4 Q1
2004 2003 2003 % 1
Exploration and Production:
World outside USA 1,998 1,469 2,284 -13
USA 748 653 735 +2
______ ______ ______
2,746 2,122 3,019 -9
______ ______ ______
Gas and Power:
World outside USA 448 231 1,472 -70
USA 77 35 34 +126
______ ______ ______
525 266 1,506 -65
______ ______ ______
Oil Products:
World outside USA 960 294 929 +3
USA 163 (58) 127 +28
______ ______ ______
1,123 236 1,056 +6
______ ______ ______
Chemicals:
World outside USA 231 (123) 196 +18
USA (87) (211) (211)
______ ______ ______
144 (334) (15) -
______ ______ ______
Other industry segments (14) (40) (40)
______ ______ ______
TOTAL OPERATING SEGMENTS 4,524 2,250 5,526 -18
______ ______ ______
Corporate:
Interest income/(expense) (163) (231) (259)
Currency exchange gains/(losses) (9) (100) (10)
Other - including taxation 21 (65) 1
______ ______ ______
(151) (396) (268)
______ ______ ______
Minority interests (122) (73) (76)
______ ______ ______
CCS EARNINGS 4,251 1,781 5,182 -18
______ ______ ______
CCS adjustment 182 19 126
______ ______ ______
NET INCOME 4,433 1,800 5,308 -16
______ ______ ______
1 Q1 on Q1 change
Summarised statement of assets and liabilities
$ million
Mar 31 Dec 31 Mar 31
2004 2003 2003
Fixed assets:
Tangible fixed assets 87,385 88,233 79,612
Intangible fixed assets 4,708 4,735 4,659
Investments 22,172 22,403 21,067
______ ______ ______
114,265 115,371 105,338
______ ______ ______
Other long-term assets 9,915 9,257 7,307
Current assets:
Inventories 12,331 11,687 11,007
Accounts receivable 30,664 28,969 31,112
Cash and cash equivalents 5,732 1,952 3,991
______ ______ ______
48,727 42,608 46,110
______ ______ ______
Current liabilities:
Short-term debt 7,548 11,027 9,567
Accounts payable and accrued liabilities 32,377 32,347 32,808
Taxes payable 9,950 5,927 7,669
Dividends payable to Parent Companies 5,091 5,123 5,235
______ ______ ______
54,966 54,424 55,279
______ ______ ______
Net current assets/(liabilities) (6,239) (11,816) (9,169)
______ ______ ______
Total assets less current liabilities 117,941 112,812 103,476
______ ______ ______
Long-term liabilities:
Long-term debt 9,728 9,100 6,799
Other 6,189 6,054 5,838
______ ______ ______
15,917 15,154 12,637
______ ______ ______
Provisions:
Deferred taxation 12,939 13,031 12,547
Other 9,300 8,882 8,809
______ ______ ______
22,239 21,913 21,356
______ ______ ______
Minority interests 3,775 3,422 3,699
______ ______ ______
NET ASSETS 76,010 72,323 65,784
______ ______ ______
Summarised statement of cash flows (Note 6)
$ million
Q1 Q4 Q1
2004 2003 2003
CASH FLOW PROVIDED BY OPERATING ACTIVITIES:
Net income 4,433 1,800 5,308
Depreciation, depletion and amortisation 2,617 3,344 2,533
(Profit)/loss on sale of assets (663) (376) (1,301)
Decrease/(increase) in net working capital 1,780 63 256
Associated companies:
dividends more/(less) than net income (217) 460 (226)
Deferred taxation and other provisions 229 (562) 230
Other (382) (243) (112)
______ ______ ______
Cash flow provided by operating activities 7,797 4,486 6,688
______ ______ ______
CASH FLOW USED IN INVESTING ACTIVITIES:
Capital expenditure (2,427) (3,930) (2,173)
Proceeds from sale of assets 728 1,002 268
Net investments in associated companies (425) 66 (321)
Proceeds from sale and other movements in
investments 942 (205) 1,675
______ ______ ______
Cash flow used in investing activities (1,182) (3,067) (551)
______ ______ ______
CASH FLOW PROVIDED BY/(USED IN) FINANCING
ACTIVITIES:
Net increase/(decrease) in long-term debt (40) (1,617) (409)
Net increase/(decrease) in short-term debt (3,003) (457) (2,971)
Change in minority interests 277 199 12
Dividends paid to:
Parent Companies - - -
Minority interests (46) (56) (43)
______ ______ ______
Cash flow provided by/(used in) financing
activities (2,812) (1,931) (3,411)
______ ______ ______
Parent Companies' shares: net sales/
(purchases) and dividends received (8) (52) (315)
Currency translation differences relating to
cash and cash equivalents (15) 49 24
______ ______ ______
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 3,780 (515) 2,435
______ ______ ______
Operational data
Q1 Q4 Q1
2004 2003 2003 % 1
CRUDE OIL PRODUCTION thousand b/d
Europe 605 645 741
Africa 443 391 344
Asia Pacific 258 265 296
Middle East, Russia, CIS 441 485 472
USA 390 387 460
Other Western Hemisphere 205 210 94
______ ______ ______
2,342 2,383 2,407 -3
______ ______ ______
NATURAL GAS PRODUCTION AVAILABLE FOR SALE million scf/d 2
Europe 4,969 4,359 5,228
Africa 346 377 282
Asia Pacific 2,118 2,104 2,094
Middle East, Russia, CIS 672 558 752
USA 1,405 1,397 1,633
Other Western Hemisphere 662 641 647
______ ______ ______
10,172 9,436 10,636 -4
______ ______ ______
million scm/d 3
Europe 140 123 148
Africa 10 11 8
Asia Pacific 60 59 60
Middle East, Russia, CIS 19 16 21
USA 40 40 46
Other Western Hemisphere 19 18 18
______ ______ ______
288 267 301 -4
______ ______ ______
LIQUEFIED NATURAL GAS (LNG) million tonnes
Equity LNG sales volume 2.51 2.47 2.33 +8
Realised Upstream Oil Prices $/bbl
WOUSA 30.19 27.53 29.49
USA 31.24 27.60 29.01
Global 30.33 27.54 29.43
Realised Upstream Gas Prices $/thousand scf
Europe 3.51 3.38 3.01
WOUSA (including Europe) 3.01 2.84 2.69
USA 5.81 4.65 6.87
Global 3.46 3.16 3.44
1 Q1 on Q1 change
2 scf/d = standard cubic feet per day
3 scm/d = standard cubic metres per day
Operational data (continued)
Q1 Q4 Q1
2004 2003 2003 % 1
REFINERY PROCESSING INTAKE thousand b/d
Europe 1,716 1,820 1,816
Other Eastern Hemisphere 932 950 964
USA 1,076 1,118 1,038
Other Western Hemisphere 402 373 348
______ ______ ______
4,126 4,261 4,166 -1
______ ______ ______
OIL SALES
Gasolines 2,707 2,773 2,677
Kerosines 786 793 809
Gas/Diesel oils 2,298 2,389 2,261
Fuel oil 971 806 865
Other products 777 794 728
______ ______ ______
Total oil products* 7,539 7,555 7,340 +3
Crude oil 4,931 4,838 5,007
______ ______ ______
Total oil sales 12,470 12,393 12,347 +1
______ ______ ______
*comprising
Europe 2,134 2,248 2,059
Other Eastern Hemisphere 1,294 1,304 1,272
USA 2,509 2,447 2,215
Other Western Hemisphere 742 775 714
Export sales 860 781 1,080
CHEMICALS SALES VOLUMES BY MAIN PRODUCT
CATEGORY 2 ** thousand tonnes
Base chemicals 3,472 3,459 3,172
First line derivatives 2,368 2,475 2,536
Other 94 38 112
______ ______ ______
5,934 5,972 5,820 +2
______ ______ ______
**comprising
Europe 2,514 2,564 2,563
Other Eastern Hemisphere 1,429 1,426 1,247
USA 1,830 1,821 1,827
Other Western Hemisphere 161 161 183
CHEMICAL SALES - NET PROCEEDS 3 $ million
Europe 1,625 1,444 1,490
Other Eastern Hemisphere 956 845 753
USA 1,250 1,121 1,116
Other Western Hemisphere 124 (69) 181
______ ______ ______
3,955 3,341 3,540 +12
By-products 461 578 381
______ ______ ______
4,416 3,919 3,921 +13
______ ______ ______
1 Q1 on Q1 change
2 Excluding volumes sold by associate companies, chemical feedstock trading
and by-products
3 Excluding proceeds from associate companies and chemical feedstock trading
Capital investment
$ million
Q1 Q4 Q1
2004 2003 2003
Capital expenditure:
Exploration and Production:
World outside USA 1,455 1,927 1,187
USA 276 364 297
______ ______ ______
1,731 2,291 1,484
______ ______ ______
Gas and Power:
World outside USA 316 310 212
USA 5 9 1
______ ______ ______
321 319 213
______ ______ ______
Oil Products:
Refining:
World outside USA 87 230 66
USA 53 142 127
______ ______ ______
140 372 193
______ ______ ______
Marketing:
World outside USA 141 559 115
USA 10 129 39
______ ______ ______
151 688 154
______ ______ ______
Chemicals:
World outside USA 25 53 24
USA 33 100 66
______ ______ ______
58 153 90
______ ______ ______
Other segments 26 107 41
______ ______ ______
TOTAL CAPITAL EXPENDITURE 2,427 3,930 2,175
______ ______ ______
Exploration expense:
World outside USA 73 344 139
USA 43 108 84
______ ______ ______
116 452 223
______ ______ ______
New equity investments in associated
companies:
World outside USA 89 188 119
USA 239 112 24
______ ______ ______
328 300 143
______ ______ ______
New loans to associated companies 80 (163) 196
______ ______ ______
TOTAL CAPITAL INVESTMENT* 2,951 4,519 2,737
______ ______ ______
*comprising
Exploration and Production 1,937 2,743 1,804
Gas and Power 565 465 321
Oil Products 300 1,089 358
Chemicals 118 21 207
Other segments 31 201 47
______ ______ ______
2,951 4,519 2,737
______ ______ ______
Basic earnings per share (Note 7)
Q1 Q4 Q1
2004 2003 2003
ROYAL DUTCH
Net income per share (euro ) 1.05 0.45 1.45
Net income per share ($) 1.31 0.53 1.56
CCS earnings per share (euro ) 1.00 0.44 1.42
CCS earnings per share ($) 1.25 0.53 1.52
SHELL TRANSPORT
Net income per share (pence) 10.1 4.4 13.9
Net income per ADR ($) 1.12 0.45 1.33
CCS earnings per share (pence) 9.7 4.4 13.5
CCS earnings per ADR ($) 1.07 0.45 1.30
Notes
NOTE 1. Accounting policies
Changes in US Generally Accepted Accounting Principles (GAAP) related to
the accounting for long-term obligations, have brought US GAAP and
Netherlands GAAP into better alignment. At the end of the third quarter 2003,
FIN 46 (Consolidation of Variable Interest Entities) was implemented with a
consequential increase in tangible fixed assets and liabilities.
Additionally in the third quarter of 2003, US accounting standard FAS 150
was implemented requiring certain minority interests to be reclassified as
debt.
US accounting standard FAS 143 was effective for the Group from the first
quarter of 2003 and required that an entity recognises the discounted
ultimate liability for an asset retirement obligation in the period in which
it is incurred together with an offsetting asset. The cumulative effect of
the change has been included within net income for the first quarter of 2003.
In the first quarter of 2003, the Group completed the implementation of US
accounting guidance EITF Issue No. 02-03, which includes the requirement that
gains and losses on certain derivative instruments be shown net in the
Statement of Income. Certain prior period amounts have been reclassified,
resulting in a reduction in sales proceeds and a corresponding reduction in
cost of sales.
In all other respects the Group's accounting policies are essentially
unchanged from those set out in Note 2 to the Financial Statements of the
Royal Dutch/Shell Group of Companies in the 2002 Annual Reports and Accounts
on pages 58 to 60.
NOTE 2. Earnings on an estimated current cost of supplies (CCS) basis
On this basis, cost of sales of the volumes sold in the period is based
on the cost of supplies of the same period (instead of using the first-in
first-out (FIFO) method of inventory accounting used by most Group companies)
and allowance is made for the estimated tax effect. The adjustment from net
income on to an estimated current cost of supplies basis has no related
balance sheet entry. 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 draw down effects. Earnings on an estimated current
cost of supplies basis provide useful information concerning the effect of
changes in the cost of supplies on the Group's results of operations.
NOTE 3. Special items
With effect from the first quarter of 2003, certain items which would
have been treated as special items under previous practice have not been so
treated, in line with SEC Regulation G, on the grounds that items of a
similar nature have occurred, or could occur, within a two-year period.
Special items were those significant credits or charges resulting from
transactions or events which, in the view of management, were not
representative of normal business activities of the period and which affect
comparability of earnings.
NOTE 4. Return on average capital employed (ROACE)
ROACE on a net income basis is the sum of the current and previous three
quarters' net income plus interest expense, less tax and minority interest
(both calculated at the average rate for the Group), as a percentage of the
average of the Group share of closing capital employed and the opening
capital employed a year earlier. The tax rate and the minority interest
components are derived from calculations at the published segment level.
Components of the calculation ($ million):
Net Income (four quarters)
11,801
Group share of interest
expense
after tax
706
ROACE numerator
12,507
Group share of Capital
Employed
- opening
81,523
Group share of Capital
Employed
- closing
92,837
Group share of Capital
Employed
- average
87,180
ROACE
14.3%
NOTE 5. Earnings by industry segment
Operating segment results 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 results of the
Corporate segment, and minority interests.
NOTE 6. Statement of cash flows
This statement reflects cash flows of Group companies as measured in
their own currencies, which are translated into US dollars at average rates
of exchange for the periods and therefore excludes currency translation
differences except for those arising on cash and cash equivalents.
NOTE 7. Earnings per share
Group net income is shared between Royal Dutch and Shell Transport in the
proportion of 60:40 (as described in the Royal Dutch and Shell Transport 2002
Annual Reports and Accounts in Note 1 on page 58). For the purposes of these
calculations, Group CCS earnings are shared in the proportion 60:40. For
Royal Dutch and Shell Transport, earnings per share in euro and sterling
respectively are translated from underlying US dollars at average rates for
the period.
In the first quarter of 2001, Royal Dutch and Shell Transport each
commenced a share buyback programme under authorisation granted at
shareholders' meetings in May 2000. All Shell Transport shares bought as part
of this programme are cancelled immediately. Royal Dutch shares bought as
part of this programme can only be cancelled in arrears after such a
resolution has been passed at the General Meeting of Royal Dutch
shareholders. The last such resolution was on April 23, 2003 for shares
bought under this programme since the previous General Meeting. For the
purpose of earnings per share calculations all shares bought under the share
buyback programme are deemed to have been cancelled upon the day of purchase.
With effect from the fourth quarter of 2003, shares of Royal Dutch and
Shell Transport held by Group companies in respect of share options and other
incentive compensation plans are deducted in determining basic earnings per
share. All quarters have been presented on this basis.
Earnings per share calculations are based on the following weighted
average number of shares and exclude shares held by Group companies.
Q1 Q4 Q1
2004 2003 2003
Royal Dutch shares of euro 0.56
(millions) 2,033.2 2,033.1 2,043.7
Shell Transport shares of 25p
(millions) 9,519.3 9,519.1 9,552.4
Shares at the end of the following periods are:
Q1 Q4 Q1
2004 2003 2003
Royal Dutch shares of euro 0.56
(millions) 2,033.2 2,033.1 2,039.6
Shell Transport shares of 25p
(millions) 9,520.7 9,519.2 9,533.6
One American Depository Receipt (ADR) or New York Share is equal to six
25p Shell Transport shares.
All amounts shown throughout this report are unaudited.
SOURCE Shell Transport & Trading Company
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