DBRS Places Shell Canada’s AA (low) Under Review – Developing; Confirms at R-1 (middle)

Dominion Bond Rating Service (DBRS) has placed Shell Canada Limited’s (Shell Canada or the Company) AA (low) rating Under Review – Developing and confirmed the Company’s R-1 (middle) rating. DBRS’s rating actions are pursuant to the proposal by Royal Dutch Shell plc (the Parent) to purchase all of the remaining outstanding common shares (22%) of Shell Canada that it does not already own. The shares will be purchased for total cash consideration of approximately CAD 7.7 billion, subject to a number of terms and conditions, including Shell Canada’s Board, shareholder and regulatory approvals. The proposed price of CAD 40 per share represents a 22% premium over the Company's closing trading price on October 20, 2006.

Shell Canada’s Board has appointed a special committee of independent directors to consider the proposal, which is expected to take a minimum of several weeks. In the meantime, the Company is expected to conduct its business as usual and progress with its projects, including whether to proceed with the proposed expansion of its Athabasca Oil Sands Project (AOSP).

Based on its preliminary review, DBRS expects the proposed transaction to have a slightly positive impact on Shell Canada, from a strategic and operational perspective, as a result of the increased scope and scale of the more integrated operation with the Parent, and the prospects for providing a more economical downstream solution for the oil sands development within the North American context, given the highly competitive market in Western Canada.

DBRS’s review will focus on the financial and commercial impact of the transaction, particularly the impact on balance sheet leverage and funding arrangements and how it could affect the economics of the proposed AOSP expansion. Shell Canada announced in July a potential significant increase in the related capital cost estimated at about 56% (on an average basis) to CAD 275 to CAD 350 per annual flowing barrel from CAD 200 previously estimated. A board resolution on the proposed expansion is expected during the fourth quarter of 2006.

Note:
All figures are in Canadian dollars unless otherwise noted.