Times Online: Shareholders hit for six by Shell reserves bungle
By Stella Shamoon
February 07, 2004
The surprise admission that Shell has had to cut its estimates for proved reserves by 20 per cent knocked its shares for six and prompted up to five class action lawsuits in the US. If this latest Shell bungle serves to oust its embattled chairman, Sir Philip Watts, it will be worth going the round trip in its shares.
Sir Philip’s failings as a communicator were said by Shell’s spin-doctors to be eclipsed by his “brilliance” as head of exploration and production (E&P). But the doubtful reserves were booked under his watch at E&P and he ought to take responsibility and go.
Even if he digs in, Shell’s shares discount disaster, so mere droplets of better news will push up the price. Full-year net income was 35 per cent higher at $12.7 billion and cashflow from operations was a record $21.9 billion. Shareholders want more: Sir Philip’s exit. Hold, along with shares in ENI and Schlumberger.