BBC NEWS: Profits rise as Shell unites board (ShellNews.net)
28 Oct 04
Rising oil prices have boosted Shell's bottom line
Oil giant Shell has said it is to abolish its twin board structure in a move aimed at easing investor unrest.
The firm has a board in the Netherlands and the UK and this structure was blamed for a lack of transparency during the firm's oil reserves crisis.
The Dutch and UK holding firms will be merged into one single company.
The news came as Shell unveiled a 70% rise in third-quarter net profits to $4.4bn (£2.4bn) as the firm benefited from the recent record oil prices.
Investors welcomed news of Shell's restructuring, sending the firm's shares 4% higher in early trade on the London stock market.
Shell said earlier this year that it would review the way the company was organised after it shocked investors by revealing that its oil and gas reserves had been overbooked by 20%.
So far this year it has cut its reserves estimates by 4.47 billion barrels. On Thursday, it added that a further 900 million barrels of reserves were "under consideration" .
Investors had complained that its twin board structure lacked clarity and accountability, factors which, it was argued, had contributed to the reserves scandal.
The controversy over reserves led to the departure of several top executives, including chairman Sir Philip Watts. The firm was also fined a total of £82.7m by US and UK regulators.
The Anglo-Dutch oil group currently has two boards: one oversees Royal Dutch Petroleum, which owns 60% of the group, while the other heads UK-based Shell Transport & Trading.
The two companies have now agreed to unify under a single parent firm, Royal Dutch Shell.
Having one board, with one chairman and one chief executive, would improve clarity, efficiency and accountability, Shell said.
The former chairman of the dual group, Jeroen van der Veer, will become chief executive of the new company, while the former chairman of Royal Dutch, Aad Jacobs, will be non-executive chairman until his planned retirement in 2006.
The combined firm's new headquarters will be based in The Hague in the Netherlands. More than 200 UK management jobs will move from the firm's London headquarters to the Dutch HQ.
"Our proposals will not satisfy everyone in every respect but we firmly believe that we have come up with the best solution possible," said Royal Dutch chairman Aad Jacobs.
Shell's jump in profits follows BP's record third-quarter figures reported on Tuesday.
BP attributed the rise in profits to recent record oil prices as well as strong margins at its refining business.
The $4.4bn net profit figure on a current cost of supply (CCS) basis was ahead of analysts' expectations.