Finance Recovery

Comparative Operational & Financial Analysis

DISCUSSION TOPICS

Peer Group Introduction (RD/Shell, BP, and Chevron Texaco) Overview of Shell Operational Analysis Shell’s Recent Reserve Reclassification Financial Analysis Opportunities and Challenges Ahead

SHELL OVERVIEW

OVERVIEW OF SHELL

STRUCTURE OF ROYAL DUTCH/SHELL

OPERATIONAL ANALYSIS

FINDING & DEVELOPMENT COSTS – W/O PURCHASES & REVISIONS

12 10 8 6 4 2 0 1998 Shell Chev 1999 BP plc 2000 Poly. (Shell) 2001 Poly. (Chev) 2002 Poly. (BP plc)

Shell incurred the highest F&D costs, due to poor reserve additions from E&D. Shell’s main reserve additions were from acquisition of Enterprise in 2002 for $5.3 Billion cash and increased stake in the Norwegian Draugen field. BP spent the maximum amount of capital on an average basis for years ending 2002 among the three firms and succeeded in having the lowest Finding Cost because of highest reserve additions especially Gas, in areas classified as “Rest of the World” in its 20-F. BP derives more reserve additions from Improved Recovery than the other two.

1998- 2002 Results of Finding Costs : 3 yr. Wt. Avg. ($/Boe)

Companies Shell Chevron BP 1998 8.19 5.97 4.73 1999 7.46 6.28 4.79 2000 7.22 6.01 5.04 2001 6.58 6.31 4.42 2002 11.29 6.18 4.70

FINDING & DEVELOPMENT COSTS – W/ PURCHASES & REVISIONS

F&D costs decreased for all three companies when purchases and revisions are included. Shell has 51% of its reserve additions from purchases and positive revisions with purchases of reserves playing a bigger role. Shell has been successful in purchasing reserves. F&D costs are substantially lower when purchases are included. BP’s ratios have slightly decreased, but have not been affected much with this variation.

Shell Reserve add (3 yr. avg.)

1998- 2002 Results of Finding Costs : 3 yr. Wt. Avg. ($/Boe)

Companies Shell Chevron BP 1998 2.75 3.94 3.70 1999 3.04 4.23 3.53 2000 3.13 4.17 4.89 2001 4.34 4.67 4.57 2002 7.19 4.56 4.48

Chevron...