<PAGE>   1
================================================================================



                       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 September 30, 1997
                                       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
September 30, 1997 - 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.

================================================================================
<PAGE>   2

                         PART I. FINANCIAL INFORMATION

                       SHELL OIL COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
                              Millions of Dollars

<TABLE>
<CAPTION>
                                                               THIRD  QUARTER             NINE MONTHS
                                                           ----------------------    ----------------------
                                                             1997         1996         1997         1996
                                                           ---------    ---------    ---------    ---------
<S>                                                        <C>          <C>          <C>          <C>      
REVENUES
    Sales and other operating revenue .................    $   7,952    $   8,149    $  24,253    $  23,257
    Less:  Consumer excise and sales taxes ............        1,007          953        2,911        2,660
                                                           ---------    ---------    ---------    ---------
                                                               6,945        7,196       21,342       20,597
    Equity earnings, interest and other income ........          192           71          520          227
                                                           ---------    ---------    ---------    ---------
          TOTAL .......................................        7,137        7,267       21,862       20,824
                                                           ---------    ---------    ---------    ---------

COSTS AND EXPENSES
    Purchased raw materials and products ..............        4,536        4,568       13,978       13,200
    Operating expenses ................................          896          949        2,673        2,526
    Selling, general and administrative expenses ......          250          149          750          670
    Exploration, including exploratory dry holes ......           62           74          224          199
    Research expenses .................................           45           31          121           96
    Depreciation, depletion, amortization and
       retirements ....................................          442          529        1,418        1,580
    Interest and discount amortization ................           52           52          149          155
    Operating taxes ...................................           85          118          278          355
                                                           ---------    ---------    ---------    ---------
          TOTAL .......................................        6,368        6,470       19,591       18,781
                                                           ---------    ---------    ---------    ---------

INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST .....................................    $     769    $     797    $   2,271    $   2,043

    Federal and other income taxes ....................          276          278          696          560
    Minority interest in income
       of subsidiaries ................................           14           15           48           35
                                                           ---------    ---------    ---------    ---------

NET INCOME ............................................    $     479    $     504    $   1,527    $   1,448
                                                           =========    =========    =========    =========
</TABLE>

Note: Certain 1996 amounts have been reclassified to conform with current year
      presentation.

                          ----------------------------


                         OPERATING SEGMENTS INFORMATION
                              Millions of Dollars

<TABLE>
<CAPTION>
                                                               THIRD QUARTER                  NINE MONTHS
                                                           -----------------------     -----------------------
                                                              1997         1996          1997          1996
                                                           ---------     ---------     ---------     ---------
<S>                                                        <C>           <C>           <C>           <C>      
SEGMENT NET INCOME (LOSS)
    Oil and Gas Exploration and Production ............    $     268     $     286     $     983     $     908
    Oil Products ......................................          146           110           286           318
    Chemical Products .................................          107           112           364           152
    Other .............................................           (1)           (8)           (3)          (17)
Corporate Items .......................................          (41)            4          (103)           87
                                                           ---------     ---------     ---------     ---------

NET INCOME ............................................    $     479     $     504     $   1,527     $   1,448
                                                           =========     =========     =========     =========
</TABLE>




                                       2

<PAGE>   3

                      SHELL OIL COMPANY AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                              Millions of Dollars


<TABLE>
<CAPTION>
                                                          SEPTEMBER 30  DECEMBER 31
                                                          ------------  -----------
                                                             1997          1996
                                                          ------------  -----------
<S>                                                        <C>          <C>      
ASSETS
CURRENT ASSETS
   Cash and cash equivalents ..........................    $     520    $     393
   Receivables and prepayments, less allowance for
      doubtful accounts ...............................        3,342        4,376
   Inventories of oils and chemicals ..................          884          631
   Inventories of materials and supplies ..............          212          219
                                                           ---------    ---------
             TOTAL CURRENT ASSETS .....................        4,958        5,619
INVESTMENTS, LONG-TERM RECEIVABLES AND
   DEFERRED CHARGES ...................................        7,637        3,098
PROPERTY, PLANT AND EQUIPMENT AT COST, LESS
   ACCUMULATED DEPRECIATION, DEPLETION AND
   AMORTIZATION OF $15,985 AT SEPTEMBER 30, 1997
   AND $21,063 AT DECEMBER 31, 1996 ...................       16,489       19,992
                                                           ---------    ---------
             TOTAL ....................................    $  29,084    $  28,709
                                                           =========    =========


LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
   Accounts payable - trade ...........................    $   1,856    $   2,568
   Other payables and accruals ........................        1,725        1,591
   Income, operating and consumer taxes ...............           74          416
   Short-term debt ....................................        3,291        2,418
                                                           ---------    ---------
           TOTAL CURRENT LIABILITIES ..................        6,946        6,993
LONG-TERM DEBT ........................................          831          794
DEFERRED INCOME TAXES .................................        3,457        3,229
LONG-TERM LIABILITIES .................................        2,252        2,458
MINORITY INTEREST .....................................          898          861
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 ................................       12,494       12,168
                                                           ---------    ---------
           TOTAL SHAREHOLDER'S EQUITY .................       14,700       14,374
                                                           ---------    ---------
           TOTAL ......................................    $  29,084    $  28,709
                                                           =========    =========
</TABLE>



                                       3

<PAGE>   4



                       SHELL OIL COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                              Millions of Dollars

<TABLE>
<CAPTION>
                                                                               NINE MONTHS
                                                                          -----------------------
                                                                             1997          1996
                                                                          ---------     ---------
<S>                                                                       <C>           <C>      
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income ........................................................    $   1,527     $   1,448
   Adjustments to reconcile net income to net cash
       provided by operating activities:
      Depreciation, depletion, amortization and retirements ..........        1,418         1,580
           Dividends in excess of (less than) equity income ..........         (221)          (88)
           (Increases) decreases in working capital:
            Receivables and prepayments ..............................          910           (81)
            Inventories ..............................................         (246)         (313)
            Current payables and accruals ............................         (920)          159
           Deferred income taxes .....................................          228           (92)
           Minority interest in income of subsidiaries ...............           48            35
           Other noncurrent items ....................................         (232)            7
                                                                          ---------     ---------
            Net Cash Provided by Operating Activities ................        2,512         2,655
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES
   Capital expenditures ..............................................       (2,244)       (2,476)
   Proceeds from property sales and salvage ..........................          176           359
   Other investments and advances ....................................          (16)          (30)
                                                                          ---------     ---------
              Net Cash Used for Investing Activities .................       (2,084)       (2,147)
                                                                          ---------     ---------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES
   Proceeds from issuance of long-term debt ..........................          211            68
   Principal payments on long-term debt ..............................         (484)         (292)
   Proceeds from sales of redeemable securities of subsidiaries ......           32           104
   Dividends to minority interest ....................................          (43)          (39)
   Dividends .........................................................       (1,200)       (1,100)
   Increase (decrease) in short-term obligations .....................        1,183           923
                                                                          ---------     ---------
              Net Cash Used For Financing Activities .................         (301)         (336)
                                                                          ---------     ---------
NET CASH FLOWS
   Increase (Decrease) in cash and cash equivalents ..................    $     127     $     172
                                                                          =========     =========
CASH AND CASH EQUIVALENTS
   Balance at beginning of period ....................................    $     393     $     421
   Increase (decrease) in cash and cash equivalents ..................          127           172
                                                                          ---------     ---------
              Balance at end of period ...............................    $     520     $     593
                                                                          =========     =========
</TABLE>





                                       4

<PAGE>   5




                       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, 1996. 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 third quarter and first nine months of 1997 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>
                                     September 30      December 31    
                                     ------------      -----------    
Millions of dollars                      1997             1996       
                                     ------------      -----------    
<S>                                    <C>              <C>           
Current assets ....................    $    170         $    122      
Noncurrent assets .................         745              739      
Current Liabilities ...............          64              121      
Noncurrent Liabilities ............          78               79      
</TABLE>                                               

<TABLE>
<CAPTION>
                                         Third Quarter        Nine Months
                                       ----------------    ----------------
Millions of dollars ...............     1997      1996      1997      1996
                                       ------    ------    ------    ------
<S>                                    <C>       <C>       <C>       <C>   
Revenues ..........................    $   97    $   98    $  294    $  271
Operating income ..................        45        49       143       143
Net income ........................        37        38       112       109
</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 and related private claims, contract and
product liability actions and federal, state and private actions challenging
the correctness of oil and gas royalty calculations. 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.


                                       5

<PAGE>   6



         Since 1984, the Company has been named with others as a defendant in
numerous product liability cases, including class actions, involving the
failure of residential plumbing systems in the United States constructed with
polybutylene plastic pipe. The Company has also been sued regarding failures in
polybutylene pipe connecting users with utility water lines and polybutylene
pipe used in municipal water distribution systems. Two other substantial
manufacturers made the resins for the polyacetal insert fittings used in many
of the residential plumbing systems (the fittings' co-defendants) and are also
defendants in those cases. The Company and the fittings co-defendants have
agreed on a mechanism to fund the payment of most of the residential plumbing
claims as the result of two class action settlements (the "class action
settlement"). The class action settlement provides for the creation of an
entity to receive and handle claims and for a $950 million fund to pay such
claims, which claims may be made over a period of up to 14 years, depending on
various factors. If the settlement funds are exhausted, additional funds may be
provided by the defendants, or claimants who have not received their full
benefits under the class action settlements may seek their remedy in a new
court proceeding at that time. One fittings co-defendant has agreed to fund 10%
of all acetal fittings costs related to the class action settlement; the
Company and the other fittings co-defendant have agreed to arbitration to
determine how the remaining acetyl fittings portion of the costs will be shared
between them. Additionally, in matters outside the residential plumbing
litigation and class action settlement, claims involving problems with
polybutylene pipe used in municipal water distribution systems have increased
during the past two years. The Company will continue to defend these matters
vigorously but it cannot currently predict when or how polybutylene related
matters will finally be resolved.

         In December 1993, a Los Angeles Superior Court jury, in two
consolidated lawsuits against the Company and its subsidiary involving the
condition of the Dominguez oil field, returned a verdict for the plaintiffs in
the amount of $46.9 million compensatory damages and $173 million punitive
damages. 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 several
years. The Company and its subsidiary believe the verdict was wrong and expect
ultimately to prevail in the litigation.

         In an October 1997 decision by the United States District Court in
Delaware, certain income tax credits recorded by Shell Oil in previous years
arising out of production of oil from tar sands were denied because the Court
determined that Shell Oil used the wrong definition of tar sands production to
calculate the same. Shell Oil is currently examining the effect of this
decision on other previously recorded tar sands tax credits. However, Shell Oil
believes that the District Court decision was incorrect and intends to
vigorously appeal such decision. In any case, Shell Oil believes that many of
its tar sands tax credits are validly claimed under the alternative definition
asserted by the government in the District Court case.

         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
costs in excess of provisions related to one or more of these proceedings,
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.

                            ------------------------



                                       6

<PAGE>   7

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

         Shell Oil reported third quarter net income of $479 million, a
decrease of $25 million from the same quarter of 1996. Excluding special items
in both quarters, adjusted net income in the third quarter of 1997 totaled $459
million, a decrease of $34 million from the record 1996 quarter.

         The key factor contributing to the lower income in the third quarter
of 1997 compared to the same period in 1996 was a significant price decline for
domestic crude oil. This decline more than offset the benefits achieved from
increased production of domestic crude oil and improved refined product
margins.

         Net income for the nine months of 1997 totaled $1,527 million, an
increase of $79 million over the comparable 1996 period. Excluding special
items in both periods, adjusted net income for the nine months of 1997 totaled
$1,434 million, an increase of $111 million or 8 percent.

         Contributing to the earnings improvement in the first nine months of
1997 were increased production of domestic crude oil, higher average prices for
crude oil and natural gas, and improved margins and sales volumes of chemicals.

         Special items in the 1997 periods increased net income $20 million for
the quarter and $93 million for the nine months. In comparison, special items
in 1996 increased net income by $11 million for the quarter and $125 million in
the first nine months. Special items in the 1997 quarter included gains from
asset sales, including oil and gas producing properties.


OIL AND GAS EXPLORATION AND PRODUCTION

<TABLE>
<CAPTION>
Income Highlights                                            Third Quarter        Nine Months
-----------------                                          ----------------     ----------------
(millions of dollars)                                       1997      1996       1997      1996
                                                           ------    ------     ------    ------
<S>                                                        <C>       <C>        <C>       <C>   
   Income from Ongoing Operations .....................    $  268    $  288     $  983    $  910
   Other Charges* .....................................        --        (2)        --        (2)
                                                           ------    ------     ------    ------
     Segment Net Income ...............................       268       286        983       908
   Special Items (includes "Other Charges") ...........        10        (9)        46        41
                                                           ------    ------     ------    ------
   Adjusted Net Income ................................       258       295        937       867
</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 in the third
quarter of 1997 totaled $268 million, a decrease of $18 million over 1996. For
the nine months of 1997, net income was $983 million, up $75 million. Excluding
special items in the comparable periods, adjusted net income was down $37
million in the 1997 quarter versus 1996, but up $70 million in the nine-month
comparison.

         Lower prices of crude oil during the third quarter of 1997 compared to
1996 more than offset the benefit from increased domestic crude oil production.
For the third quarter of 1997, domestic crude oil prices for Shell Oil's net
production averaged $16.77 per barrel, down $1.43 per barrel, while natural gas

                                       7

<PAGE>   8



prices averaged $2.28 per thousand cubic feet, down $.06 from the same 1996
period. Income increased in the first nine months of 1997 over 1996, primarily
due to increased domestic crude oil production, as average domestic crude oil
and natural gas prices were about the same.

         Domestic production of crude oil in the third quarter of 1997 averaged
413,000 barrels per day, an increase of 45,000 barrels per day over the same
period in 1996. For the nine months of 1997, domestic crude oil production
averaged 403,000 barrels per day, up 29,000. Natural gas production was
virtually unchanged in the quarter comparison, but down 6 percent in the nine
months of 1997 from 1996. New and increased crude oil and natural gas
production in the deep water Gulf of Mexico was partially offset by normal
declines elsewhere. These production numbers include Shell Oil's net production
plus a prorata share, based on ownership interest, of domestic associated
companies' production. Associated companies are those companies in which Shell
Oil has significant influence but not control.


OIL PRODUCTS

<TABLE>
<CAPTION>
Income Highlights                                            Third Quarter         Nine Months
-----------------                                          -----------------     -----------------
(millions of dollars)                                       1997       1996       1997       1996
                                                           ------     ------     ------     ------
<S>                                                        <C>        <C>        <C>        <C>   
   Income from Ongoing Operations .....................    $  147     $  111     $  288     $  320
   Other Charges* .....................................        (1)        (1)        (2)        (2)
                                                           ------     ------     ------     ------
     Segment Net Income ...............................       146        110        286        318
   Special Items (includes "Other Charges") ...........         8        (11)         3        (22)
                                                           ------     ------     ------     ------
   Adjusted Net Income ................................       138        121        283        340
</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 $146 million in the third quarter
of 1997, an increase of $36 million from 1996. In the nine months of 1997 net
income totaled $286 million, a decrease of $32 million from 1996. Excluding
special items in the comparable periods, adjusted net income was $17 million
higher than in the 1996 quarter, but down $57 million from 1996 in the
nine-months comparison.

         For the third quarter of 1997, improved margins and increased refined
products sales volumes more than offset the effects of higher advertising and
sales development costs. For the nine months of 1997, income was lower as
higher operating and marketing costs more than offset the benefit from slightly
improved average refined product margins.

         Refined product sales volumes in the third quarter and first nine
months of 1997 were higher than in 1996, with automotive gasoline sales volumes
to branded service stations up 4 percent in the quarter and 3 percent in the
nine months. In addition, overall sales of light oils increased in both 1997
periods by 15 percent and 14 percent, respectively.



                                       8

<PAGE>   9



CHEMICAL PRODUCTS

<TABLE>
<CAPTION>
Income Highlights                                            Third Quarter         Nine Months
-----------------                                          -----------------     -----------------
(millions of dollars)                                       1997       1996       1997       1996
                                                           ------     ------     ------     ------
<S>                                                        <C>       <C>        <C>        <C>   
   Income from Ongoing Operations .....................    $  105    $  114     $  370     $  159
   Other Charges* .....................................         2        (2)        (6)        (7)
                                                           ------    ------     ------     ------
     Segment Net Income ...............................       107       112        364        152
   Special Items (includes "Other Charges") ...........         2        (2)        (6)      (106)
                                                           ------    ------     ------     ------
     Adjusted Net Income ..............................       105       114        370        258
</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 in the third quarter of 1997 was
$107 million, a decrease of $5 million from 1996. For the nine months of 1997,
chemical products segment net income totaled $364 million, an increase of $212
million. Excluding special items in the comparable periods, adjusted net income
was down $9 million in the 1997 quarter, but up $112 million in the nine months
of 1997.

         Income declined in the 1997 quarter compared to 1996 due to lower
sales volumes of primary chemicals, partly due to damages incurred in an
explosion and fire at a major olefins unit at the end of the second quarter of
this year. While selling prices were generally higher in the 1997 quarter,
costs for feedstocks and purchased products also increased, resulting in little
change to margins.

         For the first nine months of 1997, income benefited from increased
sales volumes of intermediates and polymers and lower costs related to
litigation. In addition, margins for primary chemicals were higher in the first
nine months of 1997, despite significantly higher costs for feedstocks and
fuels.

OTHER

         The other segment incurred net losses of $1 million and $3 million in
the third quarter and the nine month periods of 1997, respectively, compared to
net losses of $8 million and $17 million in the comparable 1996 periods.


CORPORATE ITEMS

         Corporate items reduced earnings $41 million and $103 million in the
third quarter and nine month periods of 1997, respectively, compared to a
contribution to earnings of $4 million and $87 million in the comparable 1996
periods. Excluding special items, corporate costs totaled $41 million and $153
million in the 1997 third quarter and nine months periods respectively compared
to costs of $29 million and $125 million in the same 1996 periods. Corporate
costs in the 1996 periods benefited from proceeds from an insurance recovery.

FINANCIAL CONDITION

CAPITAL RESOURCES AND LIQUIDITY

         Cash flow provided by operating activities totaled $2,512 million for
the first nine months of 1997, compared with $2,655 million in the comparable
period last year, a decrease of $143 million. Cash flow in 1997 benefited from
higher net income as compared with the 1996 period; however, cash flow declined

                                       9

<PAGE>   10



from last year due to lower dividends from equity investments. Cash generated
from operating activities and property sales, combined with an increase in debt
of $910 million, was used primarily for capital expenditures of $2,244 million
and dividend payments of $1,200 million.



OTHER MATTERS

RECENT DEVELOPMENTS

         On September 23, 1997, Shell Oil and Tejas Gas Corporation ("Tejas")
announced they had entered into a merger agreement pursuant to which Shell Oil
would acquire all of the outstanding common stock of Tejas for $61.50 per share
in cash which, on a fully diluted common stock basis, would represent an
aggregate common stock purchase price of approximately $1.45 billion. In
addition, Shell Oil would assume Tejas' balance sheet debt and preferred stock
of approximately $900 million. The transaction is subject to the approval of
the Tejas stockholders, applicable regulatory approvals and certain other
conditions, and is expected to close by December 31, 1997.

         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
foreign governmental entities, including those matters discussed in Note C of
the Notes to Interim Financial Statements. 

                           ------------------------

                          PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         As previously reported on Form 10-Q for the quarter ended March 31,
1997, Environmental Protection Agency ("EPA") Region 5 and the U. S. Department
of Justice ("DOJ") notified the Company and its subsidiary, the Shell Wood
River Refining Company ("Wood River"), of an intention to bring a multi-media
civil enforcement action against the Company and Wood River for alleged
violations of the Clean Air Act, Resource Conservation and Recovery Act,
Comprehensive Environmental Response, Compensation and Liability Act, and the
Emergency Planning and Community Right-to-Know Act. The Company, Wood River,
the EPA and the DOJ have been engaging in settlement discussion and have
reached conceptual agreement on the major terms of a settlement to resolve this
matter. The tentative settlement provides for a cash penalty of $2 million and
performance of supplemental environmental projects. Discussions to finalize the
details of a settlement are ongoing.

         The Company and its subsidiary, Shell Oil Products Company, received a
notice of violation from the California Environmental Protection Agency
alleging that between January 3, 1994 and November 26, 1995, the Company
underadditized 5,900,273 gallons of gasoline at its non-proprietary terminals
and 2,437,662 gallons at its proprietary terminals in violation of state law.
Shell Pipe Line Corporation received a notice of violation from the California
Environmental Protection agency alleging that Shell underadditized certain
gallons of gasoline in 1996 contrary to state law. The Company and the Agency
are currently discussing the scope and resolution of these alleged violations.

                                       10

<PAGE>   11
     On October 16, 1997, the United States District Court in Delaware issued 
an opinion holding that certain income tax credits recorded by Shell Oil in 
previous years arising out of production of oil from tar sands were denied 
because the Court determined that Shell Oil had used the wrong definition of 
tar sands production to calculate the same. Shell Oil is currently examining 
the effect of this decision on other previously recorded tar sands tax credits. 
However, Shell Oil believes that the District court decision was incorrect and 
intends to vigorously appeal such decision. In any case, Shell Oil believes 
that many of its tar sands tax credits are validly claimed under the 
alternative definition asserted by the government in the District Court case.


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:  November 4, 1997


                                       11

<PAGE>   12


                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
Exhibit                                                        Page
Number          Description                                    Number
-------         -----------                                    ------
    <S>         <C>                                            <C>
    27          Financial Data Schedule................
</TABLE>



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