DallasNews.com: Revamped Shell to widen drilling: Once internal merger is done, oil giant must gain reserves, CEO says: “After uniting its parent companies and boards, Royal Dutch/Shell Group must find the next generation of oil fields to rebuild reserves and gain investor trust, chief executive Jeroen van der Veer said Friday” (ShellNews.net)
Posted 31 Oct 04
LONDON – After uniting its parent companies and boards, Royal Dutch/Shell Group must find the next generation of oil fields to rebuild reserves and gain investor trust, chief executive Jeroen van der Veer said Friday.
Shell, the third-largest publicly traded oil company, said Thursday that it would drop its century-old dual ownership, responding to investor calls for change after writing off a fifth of its reserves in January.
The announcement led to the departure of former chairman Phil Watts and two other senior executives. Shareholders filed more than a dozen lawsuits, and the company agreed to pay about $150 million in fines to regulators.
The combination of Royal Dutch and Shell "is a first step, but the company isn't where it should be by a long shot," said Wouter de Ridder at Kempen Capital Management. "Step 2 is to improve the company's operations."
Shell will combine its two parent companies in Britain and the Netherlands into a single business that will be incorporated in Britain but based in The Hague. Mr. van der Veer, 57, was named chief executive of the new Royal Dutch Shell PLC, reporting to a single board. The committee of managing directors that ran Shell is abolished.
The company probably won't want to make acquisitions to boost its reserves in the short term after record oil prices helped drive up the price of assets, investors said.
The change is a "very sensible move, but they aren't going to get any more oil out of it," said Andrew Green at SG Asset Management. "They need real operational and strategic improvements."
Royal Dutch shares have lagged behind competitors such as BP PLC, the world's second-largest oil company, and Exxon Mobil Corp., the world's largest, which benefited this year as oil prices surged.
Royal Dutch is up 2.4 percent this year, while BP advanced 17 percent and Exxon Mobil gained 19 percent.