<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _______________________
Commission File Number 1-2475
SHELL OIL COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-1299890
(State of Incorporation) (I.R.S. Employer Identification No.)
One Shell Plaza, Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (713) 241-6161
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] NO [ ].
The number of shares of Common Stock, $10.00 par value, outstanding as of
April 30, 1995 - 1,000 shares.
OMISSION OF CERTAIN INFORMATION
In accordance with General Instruction H of Form 10-Q, the registrant is
omitting Part II, Items 2, 3, and 4 because:
(1) Royal Dutch Petroleum Company, a Netherlands company, and the "Shell"
Transport and Trading Company, public limited company, an English company, each
of which is a reporting company under the Securities Exchange Act of 1934 that
has filed all material required to be filed by it pursuant to Section 13, 14,
or 15(d) thereof, own directly or indirectly 60 percent and 40 percent,
respectively, of the shares of the companies of the Royal Dutch/Shell Group of
Companies, including all the equity securities of the registrant; and
(2) during the preceding thirty-six calendar months and any subsequent period
of days, there has not been any material default in the payment of principal,
interest, sinking or purchase fund installment, or any other material default
not cured within thirty days with respect to any indebtedness of the registrant
or its subsidiaries, and there has not been any material default in the payment
by the registrant or its subsidiaries of rentals under material long-term
leases.
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PART I. FINANCIAL INFORMATION
SHELL OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Millions of Dollars
<TABLE>
<CAPTION>
FIRST QUARTER
---------------------------
1995 1994
------ ------
<S> <C> <C>
REVENUES
Sales and other operating revenue . . . . . . . . . . . . . . . . . . . $6,307 $5,515
Less: Consumer excise and sales taxes . . . . . . . . . . . . . . . . . 759 742
------- -------
5,548 4,773
Equity earnings, interest and other income . . . . . . . . . . . . . . . 110 41
------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,658 4,814
------- -------
COSTS AND EXPENSES
Purchases and operating expenses . . . . . . . . . . . . . . . . . . . . 4,210 3,629
Selling, general and administrative expenses . . . . . . . . . . . . . . 205 222
Exploration, including exploratory dry holes . . . . . . . . . . . . . . 45 35
Research expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 28
Depreciation, depletion, amortization and retirements . . . . . . . . . 442 438
Interest and discount amortization . . . . . . . . . . . . . . . . . . . 50 40
Operating taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 127
------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,109 4,519
------ -------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 549 295
Federal and Other Income Taxes . . . . . . . . . . . . . . . . . . . . . 209 116
------- -------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 340 $ 179
======= =======
</TABLE>
2
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SHELL OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Millions of Dollars
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
--------------- -------------
1995 1994
---------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 418 $ 617
Receivables and prepayments, less allowance for
doubtful accounts . . . . . . . . . . . . . . . . . . . . . . 2,910 2,974
Inventories of oils and chemicals . . . . . . . . . . . . . . . . 618 564
Inventories of materials and supplies . . . . . . . . . . . . . . 240 229
--------- ----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . 4,186 4,384
INVESTMENTS, LONG-TERM RECEIVABLES AND
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . 2,913 2,911
PROPERTY, PLANT AND EQUIPMENT AT COST, LESS
ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF $19,193 AT MARCH 31, 1995
AND $18,826 AT DECEMBER 31, 1994 . . . . . . . . . . . . . . . . . 19,218 19,084
------- -------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . $26,317 $26,379
======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable - trade . . . . . . . . . . . . . . . . . . . . . $ 1,690 $ 1,953
Other payables and accruals . . . . . . . . . . . . . . . . . . . 1,052 1,058
Income, operating and consumer taxes . . . . . . . . . . . . . . . 761 700
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 1,877 1,449
-------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . 5,380 5,160
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327 1,546
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 3,130 3,137
LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 2,757 2,803
SHAREHOLDER'S EQUITY
Common stock - 1,000 shares of $10 per share
par value . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Capital in excess of par value . . . . . . . . . . . . . . . . . . 2,206 2,206
Earnings reinvested . . . . . . . . . . . . . . . . . . . . . . . 11,517 11,527
-------- --------
TOTAL SHAREHOLDER'S EQUITY . . . . . . . . . . . . . . . . 13,723 13,733
-------- --------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . $26,317 $26,379
======= =======
</TABLE>
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SHELL OIL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of Dollars
<TABLE>
<CAPTION>
FIRST QUARTER
-------------------------
1995 1994
------ -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 340 $ 179
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, amortization and retirements . . . . . . 442 438
Dividends in excess of (less than) equity income . . . . . . . . . (8) 7
(Increases) decreases in working capital:
Receivables and prepayments . . . . . . . . . . . . . . . 64 101
Inventories . . . . . . . . . . . . . . . . . . . . . . . (65) (55)
Current payables and accruals . . . . . . . . . . . . . . (208) (124)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 4 (184)
Other noncurrent items . . . . . . . . . . . . . . . . . . . . . . (53) (9)
------- --------
Net Cash Provided by Operating Activities . . . . . . . . 516 353
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (642) (429)
Proceeds from property sales and salvage . . . . . . . . . . . . . . . 46 --
Other investments and advances . . . . . . . . . . . . . . . . . . . . 22 (128)
------- --------
Net Cash Used for Investing Activities . . . . . . . . . . (574) (557)
------- --------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . 97 27
Principal payments on long-term debt . . . . . . . . . . . . . . . . . (22) (20)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (350) (200)
Increase (decrease) in short-term obligations . . . . . . . . . . . . 134 (1)
------- ---------
Net Cash Provided by Financing Activities . . . . . . . . (141) (194)
------- --------
NET CASH FLOWS
Increase (Decrease) in cash and cash equivalents . . . . . . . . . . . $ (199) $ (398)
======= ========
CASH AND CASH EQUIVALENTS
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . $ 617 $ 1,296
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . (199) (398)
------- --------
Balance at end of period . . . . . . . . . . . . . . . . . $ 418 $ 898
======= ========
</TABLE>
____________________________
OPERATING SEGMENTS INFORMATION
Millions of Dollars
<TABLE>
<CAPTION>
FIRST QUARTER
-------------------------
1995 1994
-------- --------
<S> <C> <C>
SEGMENT NET INCOME
Oil and Gas Exploration and Production . . . . . . . . . . . . . . . . $ 167 $ 71
Oil Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 93
Chemical Products . . . . . . . . . . . . . . . . . . . . . . . . . . 214 67
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (14)
Corporate Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55) (38)
-------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 340 $ 179
======== ========
</TABLE>
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SHELL OIL COMPANY AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
A. INTERIM FINANCIAL STATEMENT MATTERS
The unaudited financial statements and summarized notes of Shell Oil
Company (the Company) and its consolidated subsidiaries (Shell Oil) included in
this report do not include complete financial information and should be read in
conjunction with the Consolidated Financial Statements and the Notes to
Consolidated Financial Statements filed with the Securities and Exchange
Commission in the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. The financial information presented in the financial
statements included in this report reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of results for the
interim periods presented. Any such adjustments are of a normal recurring
nature, except as may otherwise be described in Management's Discussion and
Analysis of Financial Condition and Results of Operations.
The results for the first quarter of 1995 should not be construed as
necessarily indicative of future financial results.
B. SUMMARIZED FINANCIAL INFORMATION - SHELL PIPE LINE CORPORATION
The following summarized financial information for Shell Pipe Line
Corporation, a wholly owned subsidiary of Shell Oil Company, is presented here
for the information of holders of Shell Pipe Line Corporation's 7 1/2%
Guaranteed Sinking Fund Debentures due 1999, which are fully guaranteed by
Shell Oil Company.
<TABLE>
<CAPTION>
March 31 December 31
-------------- -----------
Millions of dollars 1995 1994
-------------- -----------
<S> <C> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . . $ 187 $161
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . 362 356
Current Liabilities . . . . . . . . . . . . . . . . . . . . . 63 61
Noncurrent Liabilities . . . . . . . . . . . . . . . . . . . . 70 70
</TABLE>
<TABLE>
<CAPTION>
First Quarter
---------------------------
Millions of dollars 1995 1994
------- -------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75 $ 63
Operating income . . . . . . . . . . . . . . . . . . . . . . . 39 29
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 30 22
</TABLE>
C. CONTINGENCIES AND OTHER MATTERS
Shell Oil is subject to a number of possible loss contingencies.
These include actions based upon environmental laws involving present and past
operating and waste disposal locations, private claims, and product liability
actions. In addition, federal, state and local income, property and excise tax
returns are being examined and certain interpretations by Shell Oil of complex
tax statutes, regulations and practices are being challenged.
Shell Oil has received allegations or claims under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) or similar
state statutes that it is involved at 213 sites, including the Rocky Mountain
Arsenal (RMA) and the McColl site as discussed below. As of March 31, 1995,
discussions or activities were ongoing concerning 119 of these sites, in some
cases in the early stages. During 1994, expenses recorded (including reserves)
under CERCLA and such state statutes relating to the 213 sites were
approximately $135 million; additional 1995 expenses as of March 31, 1995 were
approximately $3 million. Shell Oil also has certain obligations under the
Resource
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Conservation and Recovery Act (RCRA) and similar state laws regarding
corrective action at manufacturing locations and provides assurances regarding
its financial ability to meet certain closure and post-closure obligations that
will arise in the future at such locations under such laws.
The United States and the Company have entered into a consent decree
to settle environmental claims at the RMA where the Company engaged in chemical
manufacturing operations from 1952 to 1982. Pursuant to such consent decree,
the Company will pay 50 percent of amounts expended for remedial costs and
natural resource damages up to $500 million; 35 percent of expenditures between
$500 million and $700 million; and 20 percent of expenditures in excess of $700
million. Based on its proposed remediation alternative, the Company has
accrued $500 million for its share of related costs including the provision of
$215 million in 1993 and $105 million in 1992. Other remediation alternatives,
some of which could significantly increase the Company's cost at the RMA, have
been proposed by the State of Colorado and the EPA; the Company does not
believe such alternatives to be cost effective or necessary to prevent risk to
the environment. A final remediation plan is not expected until at least
year-end 1995 and possibly 1996. The Company's share of expenditures through
March 31, 1995 was approximately $247 million.
In 1983 the Company was named as one of several potentially
responsible parties for the costs of cleanup of the McColl site which was used
for the disposal of refining waste from 1942 to 1946. The Environmental
Protection Agency (EPA) and the State of California sued the Company and others
in February 1991. In April 1991 the Company and others filed a counterclaim
for contribution naming the United States Department of Defense and others,
since the waste disposal at the McColl site arose primarily from the production
of fuel for the United States military during World War II. In June 1993 the
EPA selected Soft Material Solidification as the remedy, with a contingency for
RCRA equivalent closure. The EPA states that the cost of its remedy is
expected to be $79 million but could go as high as $120 million. In September
1993 the court ruled the Company and other defendants liable for the costs of
remediation but has yet to rule on the counterclaim for contribution.
In December 1993 a Los Angeles Superior Court jury, in two
consolidated lawsuits against the Company and its subsidiary, returned a
verdict for the plaintiffs in the amount of $46.9 million compensatory damages
and $173 million punitive damages. Both cases involve the condition of the
Dominguez oil field. Plaintiffs alleged they were defrauded, that the oil and
gas lease was breached, and that soil contamination on the property constitutes
a continuing trespass. Final resolution through the appeals' process could
take two or more years. The Company and its subsidiary believe the verdict was
wrong and expect ultimately to prevail in the litigation.
The Company is a party to litigation regarding Nemagon(R), an
agricultural chemical containing DBCP manufactured and sold by it from 1955 to
1978. In California, the claims involve alleged contamination of water wells
based on revisions to governmental standards. The claims in the litigation
seek the cost of cleanup and future monitoring of such water wells. The
Company is a co-defendant in these cases with other substantial manufacturers
and suppliers of the same chemical. In Texas, cases have been filed against
the Company, other substantial manufacturers and suppliers of DBCP and various
banana growers alleging that the plaintiffs suffer fertility problems arising
from exposure to DBCP while working on banana plantations outside the United
States. The Company is contesting whether any injury has in fact been incurred
by plaintiffs, whether DBCP was in fact the cause of any such injury as may
exist, and in any case if the Company was a supplier or otherwise has liability
in connection with any such injury.
Since 1984 the Company has been named as a defendant in numerous
product liability cases, including class actions, involving the failure of
plumbing systems in the U.S. constructed with polybutylene plastic pipe. The
plaintiffs in the litigation claim actual and punitive damages arising
primarily from leaking residential plumbing systems. The Company manufactured
the resin used to make the pipe in these systems. Two other substantial
manufacturers made the resins for the polyacetal insert fittings used in the
residential plumbing systems and are also defendants in these cases, as are the
fabricators and installers of the systems. The Company's position and most of
the judgments to date have confirmed that most of the leaks have occurred in
residential plumbing systems due to failure of the polyacetal insert fitting
system, which is no longer used. Almost all the current claims outside of
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litigation are handled through a corporation owned by the Company and the
manufacturers of the resins for the polyacetyl fittings. This corporation makes
arrangements for the repair of leaking polybutylene pipe systems, the costs of
which are allocated on a variable basis depending generally on the
manufacturers of the component parts and the resins. The proposed settlement in
the nationwide class action in Texas state court did not receive preliminary
approval by the court. Class actions have since been filed in eleven states,
bringing the total of such actions to fourteen, and two proposed nationwide
class actions have been filed, one in state court in Alabama and another in
federal court in Texas.
The Company is litigating insurance coverage at the RMA through 1969
and for the McColl site and other environmental claims. Declaratory judgment
actions have also been filed to resolve insurance coverage for polybutylene
through mid-1985 and insurance coverage for Nemagon(R) claims.
The Company's assessment of these matters is continuing. Future
provisions may be required as administrative and judicial proceedings progress
and the scope and nature of remediation programs and related costs estimates
are clarified. However, while periodic results may be significantly affected
by these matters, based upon developments to date, the management of the
Company anticipates that it will be able to meet related obligations without a
material adverse effect on its financial position.
________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Shell Oil Company reported net income of $340 million in the first
quarter of 1995, an increase of $161 million, or 90 percent, over the $179
million in the same 1994 period. Adjusted net income, which excludes special
items, was $303 million for the first quarter of 1995, an increase of $84
million, or 38 percent.
These results made the first quarter one of the Company's best first
quarters in the past 10 years, and were achieved in the face of depressed
margins in oil products and lower natural gas prices.
The first quarter of 1995 reflected growth in several key areas as
total revenues increased to $5.7 billion, up 18 percent over the first quarter
of 1994. Natural gas production rose 12 percent, crude oil production increased
5 percent and light products sales were up almost 4 percent. Overall, earnings
improved in chemical products, which benefited from increased demand and better
economic conditions. Oil and gas exploration and production earnings also
improved as a result of higher crude oil prices. However, oil products results
were significantly lower than in 1994, reflecting unfavorable margins which have
impacted this business over the last two quarters.
Special items benefited net income $37 million in the first quarter of
1995, while decreasing net income in the 1994 quarter some $40 million. In the
1995 quarter, special items consisted primarily of a gain from the sale of an
oil and gas producing property and compensation received related to
international oil and gas assets which were previously expropriated.
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OIL AND GAS EXPLORATION AND PRODUCTION
<TABLE>
<CAPTION>
Income Highlights FIRST QUARTER
- ----------------- -------------------------
1995 1994
-------- --------
(millions of dollars)
<S> <C> <C>
Income from Ongoing Operations . . . . . . . . . . . . . . . . . . . . $ 167 $ 71
Other charges* . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
-------- --------
Segment Net Income . . . . . . . . . . . . . . . . . . . . . . . . 167 71
Special Items (includes "Other charges") . . . . . . . . . . . . . . . 40 (16)
-------- --------
Adjusted Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 127 87
</TABLE>
____________________
* Amounts associated with major product classifications for which there has been
no revenue stream or investment in the last five years.
Oil and gas exploration and production segment net income totaled $167
million for the first quarter 1995, an increase of $96 million over the 1994
quarter. Adjusted net income, which excludes special items, was $127 million
for the 1995 quarter, up $40 million; as previously discussed, special items
included a property sale and compensation related to expropriated assets.
In the first quarter of 1995, benefits from increased crude oil and
natural gas production and higher crude oil prices more than offset the effects
of lower natural gas prices. Domestic crude oil and natural gas production
increased as higher production in the deep-water Gulf of Mexico more than
offset natural declines. International crude oil production increased slightly
over the 1994 period. Despite the increased costs associated with this
increased production, unit producing costs continued their downward trend in
1995.
OIL PRODUCTS
<TABLE>
<CAPTION>
Income Highlights FIRST QUARTER
- ----------------- --------------------------
1995 1994
-------- --------
(millions of dollars)
<S> <C> <C>
Income from Ongoing Operations . . . . . . . . . . . . . . . . . . . . $ 14 $ 107
Other charges* . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (14)
-------- --------
Segment Net Income . . . . . . . . . . . . . . . . . . . . . . . . 14 93
Special Items (includes "Other charges") . . . . . . . . . . . . . . . - (17)
-------- --------
Adjusted Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 14 110
</TABLE>
_____________________
* Amounts associated with major product classifications for which there has been
no revenue stream or investment in the last five years.
Oil products segment net income was $14 million in the first quarter
of 1995, a decrease of $79 million from 1994 despite the increases in light
refined product volumes sold. While selling prices for refined products
increased in 1995 they were more than offset by increased costs for raw
materials. In addition to the lower contribution margin, operating costs
increased slightly, reflecting a higher level of scheduled refinery
maintenance.
8
<PAGE> 9
CHEMICAL PRODUCTS
<TABLE>
<CAPTION>
Income Highlights FIRST QUARTER
- ----------------- --------------------------
1995 1994
-------- --------
(millions of dollars)
<S> <C> <C>
Income from Ongoing Operations . . . . . . . . . . . . . . . . . . . . $ 217 $ 69
Other charges* . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (2)
-------- --------
Segment Net Income . . . . . . . . . . . . . . . . . . . . . . . . 214 67
Special Items (includes "Other charges") . . . . . . . . . . . . . . . (3) (2)
-------- --------
Adjusted Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 217 69
</TABLE>
_____________________
* Amounts associated with major product classifications for which there has been
no revenue stream or investment in the last five years.
Chemical products segment net income was $214 million in the first
quarter of 1995, an increase of $147 million over the respective 1994 period.
Income in the 1995 period was significantly higher due to improved margins
across most product lines. Increases were most significant in the Company's
commodity chemicals businesses, reflecting strong business demand.
OTHER
Net income for the other operating segment was nil in the first
quarter of 1995, compared with a net loss of $14 million in the first quarter
of 1994.
CORPORATE ITEMS
Corporate charges totaled $55 million in the first quarter of 1995
higher by $17 million over 1994.
FINANCIAL CONDITION
CAPITAL RESOURCES AND LIQUIDITY
Cash flow provided by operating activities total $516 million for the
first quarter of 1995, compared with $353 million last year, an increase of
$163 million. The increase was due to higher earnings in 1995. The major uses
of cash generated from operating activities coupled with an increase in debt of
$209 million, and a draw on cash balances of $199 million in the first quarter
of 1995, were for capital expenditures of $642 million, and a dividend payment
of $350 million.
OTHER MATTERS
In addition to the economic conditions and other matters discussed
above affecting Shell Oil, the operations, earnings and financial condition of
Shell Oil may be affected by political developments; litigation; and
legislation, regulation and other actions taken by federal, state, local and
international governmental entities, including those matters discussed in Note
C of the Notes to Interim Financial statements.
___________________________
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<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported in the Company's 1994 Annual Report on Form 10-K
(10-K), since 1984 the Company has been named as a defendant, along with other
co-defendants, in numerous product liability cases, including class actions,
involving the failure of plumbing systems in the United States constructed with
polybutylene plastic pipe. As previously reported, the plaintiffs and
defendants in a proposed nationwide class action pending in a Texas state
court, Beeman v. Shell Oil Company et al., had announced an overall settlement,
which settlement was opposed by certain plaintiffs' counsel in other
polybutylene cases. On February 16, 1995, the judge in Beeman denied
preliminary approval of the proposed nationwide class settlement. Thereafter,
a proposed nationwide class action was filed in Alabama state court and class
actions have been filed in state courts in Oregon, Colorado, Louisiana,
Missouri, Illinois, Iowa, Pennsylvania, Maryland, South Carolina, Georgia and
Florida in addition to those already pending in California, Nevada and Arizona.
The plaintiffs' counsel who were involved in the Beeman state court action have
also filed a new nationwide class action in the U.S. District Court in
Galveston, Texas. This newly filed federal action is also styled Beeman.
As previously reported in the 10-K, Union Carbide Corporation (UCC)
has sued the Company, along with its parent companies and certain other
affiliated companies, in the United States District Court for the Southern
District of New York in connection with the formation of Montell Polyolefins
(Montell), which was formed on March 31, 1995. On February 22, 1995, UCC
withdrew its motion for a preliminary injunction to delay the formation of
Montell. Discovery continues in the remaining litigation where, among other
things, UCC is seeking permanent injunctive relief and remedies for breach of
contract by the Company. In a separate matter and pursuant to the agreement
reached with the Federal Trade Commission related to the formation of Montell,
during the first quarter the Company formed a new subsidiary and transferred
its polypropylene-related assets to that subsidiary.
As previously reported in the 10-K, in April 1994 the Company received
a Report of Violation from the California Air Resources Board (CARB) alleging
violation of regulations regarding gasoline additization. As anticipated, in
March 1995 Shell settled this matter by paying $1 million to Phillips Petroleum
which in turn will provide CARB with specially blended fuel valued at $1
million for testing purposes.
As previously reported in the 10-K, on October 5, 1992, the California
Public Interest Research Group and two of its individual members filed a
citizens' suit under the Clean Water Act against the Company in the United
States District court for the Northern District of California, alleging
violations by the Company's Martinez, California Manufacturing Complex of its
National Pollutant Discharge Elimination System permit by numerous exceedances
of certain effluent discharge limits. A similar suit was filed on February 8,
1993 by the Pacific Coast Federation of Fisherman's Association. The suits,
which were consolidated, sought among other things civil penalties. The
previously reported settlement reached between the plaintiffs and the Company
in these actions was incorporated into a consent decree and entered by the
court on March 30, 1995.
As previously reported in the 10-K, the Office of the Attorney General
of the State of Illinois filed a civil enforcement complaint against the Wood
River Manufacturing Complex alleging violation of various state environmental
statutes and regulations with regard to certain incidents and conditions
occurring at the Complex in 1990-1993. The Company and the Attorney General
had previously agreed to settle these allegations with the Company's payment of
$118,000. This settlement was incorporated into a consent decree, which was
entered by the court on March 16, 1995.
As reported in the 10-K, during September 1994, two individuals filed
separate suits against the Company in the United States District Court for the
Northern District of California seeking, among other remedies, civil penalties
under the Endangered Species Act due to the Martinez Manufacturing Complex's
discharge of excessive amounts of selenium into San Francisco Bay. During the
first quarter, one of the plaintiffs has agreed to withdraw his suit.
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHELL OIL COMPANY
By N. J. CARUSO
------------------------------
N. J. Caruso, Controller
(Principal Accounting and
Duly Authorized Officer)
Date: May 8, 1995
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C>
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000089629
<NAME> SHELL OIL COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 418
<SECURITIES> 0
<RECEIVABLES> 1998
<ALLOWANCES> 18
<INVENTORY> 858
<CURRENT-ASSETS> 4186
<PP&E> 38411
<DEPRECIATION> 19193
<TOTAL-ASSETS> 26317
<CURRENT-LIABILITIES> 5380
<BONDS> 1327
<COMMON> 0
0
0
<OTHER-SE> 13723
<TOTAL-LIABILITY-AND-EQUITY> 26317
<SALES> 5480
<TOTAL-REVENUES> 5658
<CGS> 4210
<TOTAL-COSTS> 4338
<OTHER-EXPENSES> 486
<LOSS-PROVISION> 4
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 549
<INCOME-TAX> 209
<INCOME-CONTINUING> 340
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
