UK- AFP: Shell restates proved oil reserves, shares slide
Fri Jan 9,11:48 AM ET
LONDON (AFP) - Anglo-Dutch oil major Royal Dutch/Shell announced it was downgrading one-fifth of its proved oil and gas reserves, sending its share price tumbling.
Shell said in a statement that it had re-categorised 3.9 billion barrels of oil, and gas, equivalent to 20 percent of its proved reserves.
The company insisted that the change would not affect its near-term production nor the amount of oil it expects to ultimately recover.
"It is anticipated that most of these reserves will be re-booked in the proved category over time as field developments mature," the statement said Friday.
"These hydrocarbon molecules are still in the ground, it's just the way we move them from one category to another," said Shell spokesman Andy Corrigan.
"We're moving the majority to something we call 'scope for recovery', which basically means that the resource in question is associated with development projects that are not yet sufficiently mature to qualify as reserves."
Investors responded nervously to the announcement, sending the price of Shell shares down 7.3 percent to 372 pence in London and those in Royal Dutch 6.8 percent lower to 38.62 euros in Amsterdam.
Analysts also expressed surprise at the move.
"It was shocking, to say the least," said one oil industry analyst, asking not to be named.
"They gave no detailed explanation why this has happened. It will be received negatively in the market," he added.
The reserves affected were mainly booked from 1996 to 2002, mostly from the company's operations in Nigeria and Australia.
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