The Scotsman: All eyes on Shell as results are unveiled
BY JAMES ASHTON
DEPUTY CITY EDITOR
Monday 2nd February 04
SIR Philip Watts will face one of the toughest weeks of his two-and-a-half year tenure at the helm of oil giant Royal Dutch/Shell when he meets shareholders and the media on results day this Thursday.
Watts must explain to investors why the giant Anglo-Dutch group decided earlier this month to cut the estimate of its proven petroleum reserves by 20 per cent, a move which wiped more than £8 billion off the value of its twin share listing.
His decision not to take part in a telephone briefing after the announcement on 9 January enraged many shareholders.
The chairman of the committee of managing directors has since promised to be "at the forefront" of this week’s presentation, but this is unlikely to stop institutions from calling for a restructuring of Shell’s unwieldy executive structure.
Watts told staff recently that resignation was not on the agenda, but nobody in the company is more closely linked to the over-optimistic bookings, which took place between 1996 and 2001. For most of that period, Watts was running the company’s core exploration and production division.
Peter Hitchens, an analyst at broker Cheuvreux, said: "Shell looks like the accident prone one, the clumsy one of the pack. Watts is going to face a real grilling on Thursday."
Bryan Johnston, a director at private client investment manager Bell Lawrie White, added: "With the crude price still at around $30 surely there must be some good news in the pipeline?"
The group is expected to report a 3 per cent drop in production growth when it posts full year and fourth quarter results. A further US$100 million (£55 million) of operational charges are set to dampen benefits arising from a strong operating environment.
Shell is predicted to report full-year and fourth quarter profits of $2.83bn (£1.55bn), against $2.78bn (£1.52bn) last time.