Shell Buys Pennzoil-QuakerState

HOUSTON, March 25 -- Shell Oil Company, a wholly-owned member of the Royal Dutch / Shell Group, and Pennzoil-Quaker State Company today announced that they have entered into a definitive agreement under which Shell Oil Company will acquire Pennzoil-Quaker State Company at a price of $22.00 per share in cash.

Paul Skinner, managing director of the Royal Dutch / Shell Group of Companies and chief executive officer of the Group's Oil Products business said, ``The combination of Shell and Pennzoil-Quaker State Company, the largest independent lubricants company in the world, will make Shell a leader in the U.S. and global lubricants market. It also strengthens our U.S. Oil Products business.

``This transaction, along with our previously announced transactions in Germany with RWE DEA and in the U.S. regarding Texaco's former interests in Equilon and Motiva, marks another important step in extending our sustained downstream leadership outside the U.S. into a global position.''

The proposed transaction, which was approved by the board of directors of Pennzoil-Quaker State Company, represents a premium of approximately 42 percent over Pennzoil-Quaker State Company's closing market price of $15.49 per share on the New York Stock Exchange on March 22, 2002. The transaction has a total equity value of approximately $1.8 billion. Shell Oil Company will also assume Pennzoil-Quaker State Company's outstanding debt (net book debt end 2001 = $1.1bln).

Under the transaction, Shell Oil Company will acquire Pennzoil-Quaker State Company through a cash merger. Completion of the transaction is subject to approval by Pennzoil-Quaker State Company stockholders and customary reviews by regulatory agencies in the United States and other relevant jurisdictions. It is expected that the transaction will be completed in the second half of 2002 and be accretive to Shell's earnings and cash flow from the first full year after completion.

Rob Routs, president and chief executive officer of Shell Oil Products US said, ``The addition of Pennzoil® and Quaker State®, the number one and two brands in the key U.S. passenger car motor oil segment, will ultimately more than replace our use of the Havoline® brand and complement Shell's brand strength in diesel engine lubricants.

``Combining Shell's networks and infrastructure and Pennzoil-Quaker State Company's leading motor oil brands and portfolio of other businesses, such as its car care brands and its large network of over 2,000 Jiffy Lube® stores will be a great strategic fit and will position Shell as a leader in the U.S. lubricants and car care business. Additionally, we expect pre-tax benefits from the transaction to total approximately $140 million per annum by 2004. One-time transaction costs and costs to achieve these benefits are estimated to be $100 million.''

Jim Postl, chief executive officer of the Pennzoil-Quaker State Company said, ``This is a unique opportunity to immediately increase the value of Pennzoil-Quaker State for the benefit of all shareholders. Pennzoil-Quaker State will benefit significantly from being part of an enterprise with the geographic scope, operational scale, breadth of products and services, and financial resources necessary to compete in a consolidating industry. This transaction makes the combined Shell and Pennzoil-Quaker State Company a stronger competitor in the lubricants and car care industry. I look forward to working closely with Shell to achieve the timely completion of this transaction and a smooth operational integration.''

Pennzoil-Quaker State Company will be integrated with the existing Shell Oil Products US lubricants organization in the United States and will be based in the Houston, Texas area.

Shell Oil Products US is a leader in the marketing of fuels, lubricants, coolants, services and solutions to consumer and business-to-business customers in automotive, commercial and industrial sectors. Shell Oil Products US also operates refineries and a pipeline and terminal system and has a network of nearly 9,000 branded gasoline stations in the Western U.S. Shell Oil Products US is also a 50% owner of Motiva Enterprises LLC, which refines and markets branded products through 13,000 stations in Eastern and Southern states.

Shell Oil Company is an affiliate of the Royal Dutch / Shell Group of Companies . For more information, please visit www.shell.com .

Pennzoil-Quaker State Company is a leading worldwide automotive consumer products company, marketing over 1,300 products with 20 leading brands in more than 90 countries. The company markets Pennzoil and Quaker State brand motor oils, the number one and number two selling motor oils in the United States. Jiffy Lube®, a wholly owned subsidiary of Pennzoil-Quaker State Company, is the world's largest fast-lube operator and franchiser.

Important Legal Information: Investors and security holders are urged to read the proxy statement regarding the proposed transaction when it becomes available because it will contain important information. The proxy statement will be filed with the U.S. Securities and Exchange Commission by Pennzoil- Quaker State Company and security holders may obtain a free copy of the proxy statement when it becomes available, and other documents filed with the SEC by Pennzoil-Quaker State Company, at the SEC's web site at www.sec.gov . The proxy statement, and other documents filed with the SEC by Pennzoil-Quaker State Company, may also be obtained for free by directing a request to Pennzoil-Quaker State Company at 700 Milam, Houston, Texas, 77002. Investors may obtain a detailed list of names, affiliations and interests of participants in the solicitation of proxies of Pennzoil-Quaker State Company's stockholders to approve the transaction at the following address: 700 Milam, Houston, Texas, 77002.