Reuters: Shell board discuss probe into reserves cut

By Melanie Cheary and Anna Mudeva

Fri 16 April, 2004 14:58

AMSTERDAM/THE HAGUE (Reuters) - Directors of Anglo-Dutch oil giant Royal/Dutch Shell have been meeting in The Hague to discuss an internal investigation into its surprise January cut in oil and gas reserves.

Although Royal Dutch/Shell RD.AS SHEL.L routinely declines comment on internal proceedings, a Dutch spokesman confirmed on Friday earlier comments made by Aad Jacobs, chairman of the audit committee and of the Royal Dutch supervisory board.

"Jacobs confirmed yesterday that there would be a meeting today and that the internal report...regarding the reserves...would be on the agenda," the spokesman said.

He said the internal review was not yet complete but that the outcome would be announced before the end of April.

"Before the end of the month the conclusions of the internal report will be made public," he said.

"There are a number of meetings which will take place before an announcement is made," the spokesman added.

The world's third-largest oil group shocked investors in January when it revealed it had over-estimated by 20 percent the amount of oil and gas it was certain it could profitably extract from its fields.

Gert Jan Geels, an asset manager at Eureffect in Amsterdam, said he would be watching the outcome of the board meeting in The Hague in the hope it would further clarify the firm's troubles, but he did not have high hopes of any big news.

"We feel a little uncertain about this once very predictable company. Every day brings more negative stories in the media... This is all very un-Royal Dutch," he said.

He said that Eureffect had decided to reduce its holdings in the company.

The spokesman said the committee would come out with the main conclusions of the internal report when the review is completed but could not say when that announcement might be.

He said the board meeting involved members of the so-called "conference", which includes the supervisory and management boards of Royal Dutch Petroleum and the directors of Shell Transport and Trading.

A source close to the company said the meeting had started at around 10.30 a.m. (9:30 a.m. British time) and was still going on.

A Shell representative in London declined to comment.

NEW ACTION PONDERED

The group's shares were hovering around their previous closing level by 2:12 p.m. British time, largely in line with the benchmark DJ Stoxx European energy index, with Shell Transport and Trading SHEL.L shares in London down 0.32 percent at 389.8 pence and Royal Dutch Petroleum shares in Amsterdam up 0.02 percent at 41.36 euros.

The stocks fell more than seven percent when the reserves cut was announced but have almost recovered their losses since then.

In March Royal Dutch/Shell sacked two top group executives -- Chairman Philip Watts and the head of the core oil and gas exploration and production unit Walter van de Vijver -- and later that month cut its reserves again.

Citing an unnamed source, the Wall Street Journal earlier on Friday said that the directors would discuss at today's meeting whether the group needed to take further action on the reserves issue.

The board may also examine the roles of current Shell Chairman Jeroen van der Veer and Chief Financial Officer Judy Boynton and what the two knew of the problems before they became public earlier this year, the Journal said.

The U.S. Securities and Exchange Commission launched a formal probe into the group in February.

http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=494348&section=finance