US watchdog launches full Shell inquiry
BY JAMES DOW
Fri 20 Feb 2004
SHELLíS hopes that
it had shut the door on the outcry following its reserves re-statement in
January were blown apart yesterday after Wall Street regulators revealed they
are launching a formal investigation into the shock downgrade.About 10 per cent
was wiped off Shellís share price in a matter of minutes last month after the
Anglo-Dutch energy giant admitted it had been overstating its proven oil and gas
reserves by 3.9 billion barrels, or 20 per cent of its global supplies.
Institutional investors were then left fuming when Shell chairman Philip Watts subsequently failed to make himself available to explain the misjudgement. And the company was unable to provide the full background to how the error occurred.
At its results announcement on 5 February, Shell attempted to deflect a barrage of criticism over the debacle. But investors, who have questioned Wattsí future, said their questions remained unanswered. Management at the company have since refused to respond to further investigation.
However, the US Securities and Exchange Commission revealed yesterday that its preliminary investigations into the affair have prompted it to begin a formal inquiry.
In a brief statement to the stock market, Shell said its legal representatives had been contacted by the SEC, and told the regulatorís enforcement division wants to extend its informal queries.
"Shell will continue to co-operate fully with the SECís investigation," a spokesman for the company said. He stressed the inquiry was not a criminal investigation.
Analysts remained sanguine about the implications of the investigation. Oil expert Tony Alves at Investec Securities said: "Itís not unexpected because the initial informal review would probably have raised further questions.
"I would say itís 99.5 per cent a reputational issue."
The shares closed up 2p, or 0.5 per cent, at 352.5p.
SHELL has restarted gas production at its Brent Charlie platform in the North Sea, which closed last September after a fatal accident on the nearby Brent Brave complex.