Houston Chronicle: Chairman defends action on reserves
(Bloomberg News Story)
Jan. 20, 2004, 12:20AM
Royal Dutch/Shell Group Chairman Philip Watts, criticized by shareholders for an unexpected cut in Shell's proven reserves, defended the decision and assured Shell's work force there had been no wrongdoing.
Shares plunged Jan. 9 after Europe's second-largest oil company told investors it cut its estimate of proven oil reserves by 20 percent and that it failed for a third year in a row to replace its production with new reserves.
"The purpose of my note today is to you assure you that I am committed to the full resolution of this issue as soon as possible and to advise you of the process that is under way," Watts said in a message to staff posted on the company's Web site.
He acknowledged there'd been "significant concern and, in some quarters, outrage."
The Shell chairman didn't join in a company conference call with investors and reporters on Jan. 9 to explain the changes.
The reserve announcement came during a "closed period" before the company's Feb. 5 quarterly earnings results, and that "as is always the case in such period, our communication must be limited," Watts said in his message to staff.
The scope and timing of Shell's announcement were "determined by compliance with regulatory requirements on disclosure," he said, and the information had been released "at the earliest possible time after the recategorized reserves had been quantified with some certainty."
Shell had initiated contact with the U.S. Securities and Exchange Commission before the Jan. 9 announcement, he said.
The Shell group has two parent companies each with its own board, one in the U.K. and one in the Netherlands, a structure that dates from 1907 when Shell Transport & Trading Co. merged with Royal Dutch Petroleum.
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