London Evening Standard: Shell stuns City with revamp: “The troubled group wants to draw a line under its devastating oil and gas reserves crisis earlier this year by creating a new £100bn holding company, Royal Dutch Shell Plc.”: “Buried deep in the results statement, Shell said it was considering yet another downgrade after a review of 8bn barrels of reserves for the year to December.” (ShellNews.net)
28 October 2004
ANGLO-DUTCH giant Shell stunned the City today by unveiling plans to scrap its century old corporate structure and create 'one company, one board and one chief executive.
The troubled group wants to draw a line under its devastating oil and gas reserves crisis earlier this year by creating a new £100bn holding company, Royal Dutch Shell Plc.
It will effectively take over the British and Dutch arms, which came together in a joint venture in 1907 with Royal Dutch owning 60%. The new group will be based in the Netherlands but listed in London.
Shell chairman Jeroen van der Veer had been due to update investors on his plans next month but the group said it had finished its work earlier than expected.
Van der Veer will become the group's first chief executive next year if shareholders back the plans at its annual meeting in the spring.
Aad Jacobs, senior non-executive director at Royal Dutch, will be the first chairman. He will be replaced by an external appointment in 2006.
Jacobs said: 'We have been listening to what to the world had to say. Our proposals will not satisfy everyone in every aspect but our firm belief is we have come up with the best solution possible.'
Shares in the UK arm, Shell Transport & Trading, jumped nearly 3% in London after the news was announced, rising 12 1/2p to 436 1/4p as critics welcomed the news.
Peter Hitchens, oil analyst at Chevreux, said: 'Most people were looking for the idea of a unified board. They have gone above and beyond that. They are unifying the company.'
Target-beating third-quarter results, with underlying profits up 70% to $4.41bn (£2.41bn) for the three months to September, also helped to overshadow more disappointing news on reserves.
Shell said it was considering whether it had to cut a further 900 million barrels of 'proven' oil and gas to 'probable'. It has downgraded 4.4bn barrels so far this year following the scandal that cost Van der Veer's predecessor Sir Philip Watts his job.
Furious investors demanded a shake-up at Shell to prevent a repeat of the crisis. Its ageing structure means there are various boards, overseen by a separate committee of managing directors led by Van der Veer. Critics complain the chairman is plagued by having to gain approval from both arms of the business for any decision.
SHELL may have just bought itself some time and saved itself from another battering by bringing forward the announcement of its eagerly-awaited corporate overhaul, write Steve Hawkes and Tom Nicholls.
Analysts welcomed its plans for a unified company, as well as its forecastbusting results, but they remained anxious over the state of the group's oil and gas reserves.
Buried deep in the results statement, Shell said it was considering yet another downgrade after a review of 8bn barrels of reserves for the year to December.
One analyst said: 'I'm looking at the relationship with BP. BP already has a board, and a great chairman. The reserves issue is the only thing that differentiates Shell from its rival.'
Another added: 'If they hadn't made the corporate governance announcement, it would have come down to the results versus the possible reserves downgrade and the shares would probably have come off a bit. But cleaning up the board is a positive.'