Yahoo! Business News: Shell delays AGM as another reserves cut looms: “The news unnerved investors, who feared that the delay could mean the reduction could be bigger than what Shell advised”: “The latest cut, if confirmed, will bring the overall reserves reduction to 5.4 bln barrels, equivalent to over a third of the group's proved reserves base.”: “Standard & Poor's Ratings Services said it placed its AA+ long-term ratings on Shell on CreditWatch with negative implications immediately after the company announced on Oct 28 that it plans to cut reserves again. (ShellNews.net) Posted 27 Nov 04
LONDON (AFX) - The Royal/Dutch Shell Group has postponed its 2005 annual shareholders meeting by two months to June while it tries to sort out the extent of the next round of a planned oil reserves downgrade.
The AGM, originally set for April 22, will give investors a chance to decide on whether to accept or reject the structural revamp it unveiled in October.
The planned overhaul will unite the group's British and Dutch parent companies to create Royal Dutch Shell PLC, which will be run by a single board, chairman and chief executive.
But on the day the restructuring was announced, while investors were cheering the end of the group's complicated century-old dual-board structure, Shell casually mentioned that it could reduce reserves again, this time affecting the 14.35 bln barrels in proved reserves it booked in 2003.
It warned that about 900 mln barrels, out of the 8 bln barrels it has audited so far, could be taken out of last year's figures.
The review, conducted by Shell employees at its various oil and gas fields worldwide, will finish before the end of the year.
The latest cut, if confirmed, will bring the overall reserves reduction to 5.4 bln barrels, equivalent to over a third of the group's proved reserves base.
'We're conducting an extensive and thorough audit of the reserves. We're doing it on a field-by-field and well-by-well basis,' said a Shell spokeswoman.
Independent engineer Ryder Scott is working with Shell on the review.
Should there be a need for further revision in reserves, Shell will have to restate previous financial statements, which could delay the publication of its results.
If everything proceeds as planned, it will release the fourth-quarter results, alongside an update on reserves, on Feb 3.
The news unnerved investors, who feared that the delay could mean the reduction could be bigger than what Shell advised, a possibility that could significantly impact on its production targets.
Shell hopes to raise production to 3.8-4.0 mln barrels per day by 2009, from 3.7-3.8 mln in 2004 and 3.5-3.8 mln in 2005 and 2006.
It also has an 'aspiration' to lift output to 4.5-5.0 mln barrels by 2014.
At 11.19 am, shares in Shell Transport & Trading, which makes up 40 pct of the Anglo-Dutch oil giant, were down 3-1/2 at 444-3/4 pence in London.
In Amsterdam, shares in Royal Dutch Petroleum, which accounts for the remaining 60 pct, were off 0.15 at 43.25 eur.
Most sector followers, though disappointed by the AGM delay -- which also pushes back the implementation of the widely supported reforms -- understood Shell's decision.
The revamp will now be completed in July, instead of May as originally planned.
'It buys them a little time to put everything in order,' said Jonathan Copus of Investec (LSE: INVP.L - news) . 'It's better to tell us now than two weeks before it happens.'
Standard & Poor's Ratings Services said it placed its AA+ long-term ratings on Shell on CreditWatch with negative implications immediately after the company announced on Oct 28 that it plans to cut reserves again.