ROYAL DUTCH SHELL GROUP .COM WILLS & CO STOCKBROKERS LTD

WILLS & CO STOCKBROKERS LTD: ANALYSTS REPORT ON SHELL TRANSPORT & TRADING: “Shell admitted back in January that it had overstated its oil & gas reserves by 20%, leading to the ousting of 3 senior executives, including Chairman Sir Philip Watts, and to $150m in fines from U.S. and U.K. regulators. The company's bloated board structure, with 16 non-executives between Royal Dutch and Shell, has to be addressed and an update following a review of its corporate governance is due in November.”: “We feel that a turn around in the company's fortunes may not begin to show through until 2006”: “Our recommendation is to sell your holding, and switch to BP - which has much stronger growth potential -or something more exciting.": "SELL” (ShellNews.net)

Shell Transport & Trading owns 40% of the Royal Dutch/Shell Group of companies. Shell has operations in approximately 135 countries around the world, involved in chemicals, power generation and renewable resources apart from the main oil & gas businesses.

Shell's recent (22nd September) strategy update was rather thin on the ground in terms of details of oil discoveries or as far as which geographic areas it is looking to expand into. However, the company is intending a spend of $10bn on exploration and production as part of a raised total capital expenditure of $15bn for this year and next. This will certainly crimp share buy backs - which are part of the plans of other majors. Shell plans $10-$12bn of asset sales in the period leading up to 2006 to raise cash and will seek to make more focused acquisitions going forward.

As we all know Shell admitted back in January that it had overstated its oil & gas reserves by 20%, leading to the ousting of 3 senior executives, including Chairman Sir

Philip Watts, and to $150m in fines from U.S. and U.K. regulators. The company's bloated board structure, with 16 non-executives between Royal Dutch and Shell, has to be addressed and an update following a review of its corporate governance is due in November.

The share price of Shell is practically unchanged on the year-to-date, rather lagging its main U.K. rival BP - which has seen its shares rally nearly 20% in the same period. Shell has a better yield but that is partly because of this underperformance and although respectable at 3.8%, is only expected to increase in-line with inflation, at least for the foreseeable future.

More recent news has not been any more upbeat either with the company being accused (along with 13 others) by the European Commission of anticompetitive behaviour in the Dutch market for bitumen - which is used in the surfacing of roads.

The group's production is expected to fall next year -the only major oil company that will see a decline.

We feel that a turn around in the company's fortunes may not begin to show through until 2006 - by which time the price of crude may well have retreated from the recent record highs, balancing out any growth benefits. In the meantime, smaller oil groups such as Cairn Energy (CNE) are making the discoveries and winning a lot more investor's attention.

Our recommendation is to sell your holding, and switch to BP - which has much stronger growth potential -or something more exciting.

I, lan Murrell, hereby certify that the views expressed in this analyst's report reflect my personal views about the subject securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or view expressed in this analyst's report.

Information has been obtained from sources believed to be reliable but we do not warrant its completeness or accuracy. Opinions expressed are our current opinions as at the date appearing on this material. This report should not be construed as advice or as an offer to sell or buy any security. It does not take into account personal circumstances and if you have any doubt about suitability you should obtain expert advice. Past performance will not necessarily be repeated. Approved by Wills & Co Stockbrokers Ltd.

Wills & Co Stockbrokers Ltd 46 Bow Lane London EC4M 9DL. T.020 7246 5454 F.020 7246 5455

Wills & Co Stockbrokers Ltd is authorised and regulated by the Financial Services Authority and is entered in the FSA's Register and the FSA Register number is 126232 http://www.fsa.gov.uk/register/. Wills & Co Stockbrokers Ltd is a member of the London Stock Exchange . Registered in England no. 626115. Registered address 4-10 Barttelot Road Horsham West Sussex RH12 1DQ.

Risk Warnings
Advice given by Wills & Co is subject to the statutory notices that appear on its literature. You accept that all equity investments (particularly in investments that are not readily realisable (INRR) unquoted smaller company shares) involve the risk that all or part of your investment may be lost. Any income from INRR unquoted smaller company shares may be less than from a larger company share or even non-existent. You acknowledge that you may have difficulty selling this type of investment at a reasonable price and in some circumstances it may be difficult to sell at any price. You should not invest in INRR unless you have carefully thought about whether you can afford it and whether it is right for you. There is an extra risk of losing money when shares are bought in some smaller companies including penny shares. There is a big difference between the buying price and the selling price of these penny shares. If they have to be sold immediately you may get back much less than you paid for them. The price may change quickly and it may go down as well as up.

Royal Dutch Shell Group .com