TEXT-Fitch release on Dutch Shell plc

(The following statement was released by the ratings agency)

June 24 - Fitch Ratings has affirmed Dutch Shell plc's (RDS) ratings at Long-term Issuer Default (IDR) 'AA+' with Stable Outlook, senior unsecured debt 'AA+' and Short-term IDR 'F1+'.

The ratings reflect RDS's large size, high level of integration, global diversity and strong competitive position in the international integrated oil and gas market. They also reflect its robust financial profile and, historically, conservative use of the balance sheet. The ratings also factor in Fitch's expectations that any increase in capital investment, particularly, that associated with the upstream and the oil sands businesses, will remain affordable and will be funded from internally generated cash flow and asset sales rather than new debt. Therefore, in Fitch's view, RDS's leverage (measured as total adjusted debt/EBITDAR) is likely to remain low for the foreseeable future.

On the upstream side, RDS's proved reserve base fell to 10.8 billion barrels of oil equivalent (boe) in 2007 from 11.8 billion in 2006. This was mainly due to reserves reduction as a result of net divestments in 2007, such as the 50% reduction of RDS's interest in Russia's Sakhalin II project. RDS's production was approximately 3.234 million boe per day in 2007, down 5% down from 2006's level, reflecting production cuts caused by net asset sales and the natural decline in mature fields.

Despite having a high proportion of production from countries with sovereign's ratings in the 'AAA'/'AA' category, RDS has a considerable 12% output contribution from Nigeria, which is highly exposed to political instability. Fitch is concerned about further production declines in 2008 due to production suspension in Nigeria as a result of militant attacks on pipelines and site facilities. RDS has consistently had a proved reserve life of nine years, which is one of the lowest among its peers. Their latest three-year finding, development and acquisition costs were USD14/boe, while the three-year reserve replacement on an all-in basis was 70% including acquisitions and divestments, and 100% excluding acquisitions and divestments, as calculated by Fitch.

Downstream, RDS conducts more advanced activities in the oil sands business than its peers, with a production of 81,000 barrels per day and proved minable reserves at 1.1 billion barrels. Fitch views the oil sands business as one of RDS's competitive advantages as an alternative production resource. As the traditional method to explore crude oil becomes increasingly difficult and expensive for all the majors to use, the oil sands business is considered to be a good unconventional resource for future growth. Furthermore, RDS is also the second-largest refiner in the world, with almost 4 million barrels per day of refining capacity in more than 40 refineries.

RDS's conservative financial strategy is demonstrated in its healthy balance sheet. As of 31 March 2008, the company had USD14.4bn of cash and cash equivalents, which easily covers its short-term financial obligations (including financial lease) of USD5.7bn. RDS's strong cash flows and low leverage translate into among the most robust credit metrics in the industry and across the corporate sector. As of Q108, RDS's gearing, which is calculated by dividing the adjusted net debt (including off-balance sheet obligations) by total capital employed, was 12.7%, well below its target ratio of between 20%-25%. Fitch regards this financial policy as prudent.

RDS is the world's third-largest publicly traded integrated oil and gas company by total production volumes behind ExxonMobil and BP. The company is active in more than 110 countries and territories and had a worldwide labour force of 104,000 as of 31 December 2007.