Toronto Star: Restatement of reserves rocks Shell
Coopman dropped after downgrade SEC conducting formal probe
Apr. 9, 2004. 01:00 AM
LONDON—The Royal Dutch/Shell Group of Cos. has replaced the chief financial officer of its exploration and production division, which is at the centre of the controversy over Shell's oil and gas reserves estimates.
The group said yesterday that Simon Henry, the head of investor relations, will take over the position from Frank Coopman, who had been in the job since July, 2002. The division has until recently been solely in charge of booking oil and gas reserves.
A Shell spokesperson refused to comment on whether the change was connected to the January downgrading of 3.9 billion barrels in reserves of oil and natural gas, or about 20 per cent of its total holdings. That disclosure caused a shareholder uproar that led to the resignations of Shell's former chairman, Sir Philip Watts, and its head of exploration and production, Walter van de Vijver.
Last month, Shell announced additional cuts to its estimated reserves and suggested that more reductions might follow.
Shell downgraded 250 million barrels in reserves to other, less certain categories. At the same time, it decided not to book a separate batch of 220 million barrels that it had earlier considered worthy of classifying as reserves.
The group also said last month that it was strengthening controls on its reserves-reporting procedures.
In the past, top executives had assumed that the company's exploration and production staff were booking reserves correctly.
But from now on, top executives themselves will have to certify each year's reserves estimates.
Reserves constitute an oil company's most valuable asset, and any reclassification of reserves into less certain categories is a major concern for investors. The U.S. Securities and Exchange Commission is conducting a formal investigation into Shell's reserves accounting.
Shell spokesperson Matt Samuel said he had no information on why the decision was made to replace Coopman, who remains a Shell employee.
In a statement, Shell said that Coopman had been offered a "key alternative position" within the group, which he chose not to accept.
"We will continue to work toward a mutually acceptable alternative," the statement added.
"Relationships with the investment community are important to us and we will fill the post of head of group investor relations as soon as possible."