THE TIMES (UK): Shell delays AGM to end chaos over its reserves: “Shell’s decision to postpone its annual meeting is extremely unusual. They are postponed occasionally if an outstanding event needs to be resolved before shareholders make decisions, such as a corporate raider indicating it may make a takeover bid or the company being in negotiations with creditors.”: “Yesterday’s news came as police in Nigeria released on bail three members of a minority rights group who protested against Shell’s activities.” (ShellNews.net) 27 Nov 04
By Jenny Davey
November 27, 2004
SHELL has taken the unusual step of delaying its annual meeting by two months, amid doubts about its oil reserves.
The world’s third-biggest oil company said that the decision was a “prudent measure” to rid investors of uncertainty.
Last month Shell said that it could be forced to lower its 14.35 billion barrels of reported proven oil reserves by as much as 900 million barrels. This would come on top of a 25 per cent writedown in its oil and gas reserves this year. That led to the ousting of Sir Philip Watts, chief executive. A spokesman for Shell insisted yesterday that the review of the oil reserves was on schedule and due to complete by the end of the year.
However, Shell said that once the audit was completed it may be forced to revise its estimates. This, in turn, could mean that historical financial statements may need to be revised and this year’s results could be delayed.
The company’s final results must be published before shareholders can vote on plans to replace a century-old dual ownership structure with a single company. Investors had been due to vote on the restructuring at the annual meeting in April, but this will take place on June 28. If approved, unification would complete in July.
Shell said that it expected to update the market on the outcome of the oil reserve audit on February 3 when it announces fourth-quarter results.
Investors appeared to be relaxed at the news.
William Claxton-Smith, of Insight Investment, the fund manager, said: “I read this as Shell being ultra-cautious, rather than a major concern, but it is understandable.”
Colin Morton, a fund manager at Rensburg, a Shell shareholder, said: “This doesn’t appear to be anything sinister. It is good news that they are putting together some definite proposals for investors.”
Under Shell’s plans the company will merge its British and Dutch holding companies in an attempt to restore investor confidence. Under the plan about 200 senior UK staff will move to the Netherlands. However, the oil products and chemicals division, as well as the trading business and finance departments, will stay in the UK where about 9,000 of the company’s 119,000 staff are based.
Shell’s decision to postpone its annual meeting is extremely unusual. They are postponed occasionally if an outstanding event needs to be resolved before shareholders make decisions, such as a corporate raider indicating it may make a takeover bid or the company being in negotiations with creditors. Sometimes, a beleaguered board puts off a meeting to muster its forces in the face of a shareholder revolt.
Yesterday’s news came as police in Nigeria released on bail three members of a minority rights group who protested against Shell’s activities.
ON THE SLIDE
Jan: Admits overstating reserves by 3.9 billion barrels of oil and gas
March: Chairman Sir Philip Watts, and Walter van de Vijver, head of exploration, ousted. Admits to another 470m barrels overstated
October: Says it may be forced to lower oil reserves by as much as 900 million barrels and announces big restructuring