Financial Times: Shell restates 2002 reserves for the fourth time
By Clay Harris and Andrea Felsted
Posted 25 May 04
Royal Dutch/Shell on Monday restated its proved oil and gas reserves at the end of 2002 for the fourth time this year.
The latest revision, largely reflecting a change in the accounting treatment of reserves in Canada, was smaller and more technical than previous restatements but increased the total reduction from 4.35bn to 4.47bn barrels.
The Anglo-Dutch group announced the revision and accounting changes ahead of the publication of its annual report on Friday, two months later than normal. The accounts will show proved reserves of 14.35bn barrels at the end of 2003, equal to 10.2 years of production. Its reserve replacement ratio was 63 per cent in 2003.
Asked if this was the final restatement, Malcolm Brinded, head of exploration and production, said: "At the moment, we're not planning to make any further changes, but I think we've learnt never to say never."
Speaking from Houston, where 400 senior managers are meeting for a strategy conference, Jeroen van der Veer, chairman of the committee of managing directors, said the accounts had received an unqualified audit opinion from KPMG for Royal Dutch and PwC for Shell Transport & Trading.
Discussions were continuing with the US Securities and Exchange Commission about filing its 20-F annual financial statement for 2003 and the revised one for 2002.
Oil analysts joined Shell in looking ahead rather than back. Peter Hitchens of CAI Cheuvreux said: "We have closed the chapter on the reserve problems [at Shell]. The uncertainty is out of the way, and the [accounting policy changes] are tinkering along the edges".
JJ Traynor, of Deutsche Bank, said: "The reserves question for Shell now is can they replace production going forward."
He said he would be looking for Shell to "crystallise" some of its options - for example by expanding its gas-to-liquids project in Qatar or the Canadian oil sands business - and to decide whether some other regions were core or should be divested.
But this represented a "normalising back to what oil companies do . . . the scandal is winding down here, and it's all about strategy".
Shell Transport shares closed 1½p higher at 393½p, while Royal Dutch added 29 cents to €40.80.