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Turbulence at Royal Dutch Shell

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July 15, 2008

Turbulence at Royal Dutch Shell

We are maintaining our Hold recommendation on Royal Dutch Shell Plc (NYSE: RDS.A) ahead of the company’s quarterly results. Strong performance from its exploration and production arm, aided by high oil and gas prices, is expected to continue driving results. While we continue to believe that the group should benefit from the upstream momentum and restructuring initiatives in 2008, we see better investment opportunities in this space.

Royal Dutch Shell does not compare favorably with its peer group in terms of upstream growth prospects, returns, and costs. The group also remains exposed to continued instability in Nigeria and political interference in Russia. As such we do not foresee much upside from current levels.

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