Citywire Financial Publishers: Shell cracks after reserve cut
10:39 Fri 9 Jan 2004
Shell startled the City with news of a significant cut in reserves as the FTSE 100 failed to draw inspiration from strong overnight gains on Wall Street.
At 10.10am the FTSE 100 was down 14 points at 4,480, coming off an early low of 4,465. The FTSE 250 was down 8 points at 5,908 and the techMARK was up 2 points at 1,054.
Shell said that 3.9 billion barrels of oil, representing 20% of its proved reserves, had been recategorised, resulting in a cut in the oil giantís overall reserves. Shares in Shell plunged 28p to 373.25p making it the biggest blue chip faller in opening business.
In a statement to the City Shell said the move will not have any material effect on the groupís financial statements, nor to its production in the near term and that the volumes are expected to be recovered. However, Merrill Lynch was less confident and immediately downgraded the stock from buy to neutral.
Fellow oil giant BP (BP.) shed 9p to 433.5p in sympathy but will hope the market will respond positively to its fourth quarter trading update in which it said liquid and gas realisations were in line with expectations.
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