Yahoo! News: Shell Canada Ups 3rd-Party Evaluation of Reserves: “Shell Canada Ltd. is stepping up third-party evaluation of oil and gas reserves following the reporting scandal at its parent, but has no plans to have outside experts pore over all the data, the company's chief executive said on Friday.” (ShellNews.net) 20Nov 04
By Jeffrey Jones
CALGARY, Alberta (Reuters) - Shell Canada Ltd. is stepping up third-party evaluation of oil and gas reserves following the reporting scandal at its parent, but has no plans to have outside experts pore over all the data, the company's chief executive said on Friday.
Shell Canada CEO Clive Mather also said Royal Dutch/Shell Group's decision to unify its century-old corporate structure was positive, but would have no impact on his operation, which is 78 percent owned by the oil major.
"We have done a completely thorough overhaul (of reserve reporting practice), and I have no doubt as to the importance of third-party audits in that process," Mather, who has led Canada's No. 2 oil producer and refiner since August, said in an interview.
"Now, I wouldn't say they need to be involved at every stage, but I think there's clearly going to be situations where they should come in and verify, and that we will do."
Shell Canada's reserves were not in question when Royal Dutch/Shell revealed in January that it had overbooked its oil and gas reserves by 20 percent, a bombshell that sparked a drop in the stock price, regulatory fines and executive firings.
It also shook investor confidence in the reliability of the industry's evaluations of oil and gas in the ground, the most important measure of what companies are worth.
Mather, 57, took the helm of Shell Canada, now one of the biggest developers of the country's vast oil sands, when former chief executive Linda Cook went back to the parent company in the midst of the crisis. He had been head of Shell UK Ltd.
Shell Canada -- which this week announced a 60 percent jump in capital spending for 2005 -- has retrained all staff involved in the tally and reporting of reserves over the past few months, including Mather, he said.
"With all my experience, I still had lost track of how incredibly complex it is, and how many different regulatory authorities are involved, all of whom have different standards and different definitions," he said.
"Where Shell is positioning itself now is frankly to take the most conservative definition of every issue."
In late October, Royal Dutch/Shell said it will scrap its dual-ownership structure that some analysts blamed for the overbooking scandal. Under the plan, the group's Dutch and British holding companies will be merged under a single board.
The change will not affect the ownership, governance or operations of Shell Canada as it moves ahead with its own expansion plans for the oil sands and Arctic gas resources, Mather said.