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Sky News: Shell shares slid

SKY NEWS: SHELL SHARES SLIDE

 

Shares in Anglo-Dutch oil group Shell fell around 6% on the news that the company is to recategorise about 20% of its proved oil and gas reserves.

 

When oil firms recategorise proved reserves as being unproved, it means that they are no longer sure they will be able to produce commercially oil from yet untapped resources.

 

Although the world's second-largest oil firm said that the recategorisation would have no effect on its results, dealers and analysts expressed concern.

 

The reserves issue has been a difficult one for some years as Shell struggles to replace in its booked reserves the amount of oil and gas it actually produces, analysts say.

 

"A 20% cut in your proven reserve base is not good news.

 

"Their reserve replacements ratio will again be under 100%, which will raise concerns over their growth outlook," said one analyst.

 

The group said the recategorisation was a one-off revision and involved about 3.9bn barrels of oil equivalent or 20% of proved reserves stated at December 31, 2002.

 

Shell said in a statement that more than 90% of the reserves being reclassified were undeveloped.

 

The reserves affected were mainly booked in 1996 to 2002.

 

"There is no material effect on financial statements for any year up to and including 2003," Shell said.

 

"It is anticipated that most of these reserves will be re-booked in the proved category over time as field developments mature."

 

http://www.sky.com/skynews/article/0,,30400-12969839,00.html

 

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