The Observer (UK): Shock, stock and a few smoking barrels: “Shell has been in the doghouse in much the same way as BP was.”: “Shell should not eschew the possibility of a tie-up with Total.” (ShellNews.net) 30 Jan 05
Sunday January 30, 2005
Extract from article entitled: Rio Tinto digs deep for victory
BP is one of Britain's most successful companies, but it wasn't always so. More than a decade ago, costs were out of control and debt soared to a point where the City worried that the company might go bust. It took a five-year recovery programme before BP turned the corner.
Shell has been in the doghouse in much the same way as BP was. But reforms, announced in 2004, have boosted its shares and there is confidence that the company can move on to the sort of upward trajectory BP experienced after 1992.
Not that Shell's shocking admission that it had overstated its proven oil reserves by about 25 per cent has faded from the collective consciousness. There is still unease because no one is certain how such a monumental oversight was allowed to happen. The suspicion was that Shell's complicated corporate structure - Royal Dutch Shell is two companies, separately listed in London and Amsterdam - lay at the heart of the problem. So last year's decision to merge the British and Dutch companies into a single company makes sense, as does Shell's decision to sell non-essential businesses, which could net $8 billion in 2005.
Buy notes have rolled thick and fast - partly because the sale proceeds will enable the company to unveil a share buyback worth between $2bn and $5bn. What better way to lift the stock?
The high oil price and absence of write-downs associated with the reserves scandal of 12 months ago means Shell should produce bumper annual figures this week. But Shell still needs to catch up with BP by finding more oil. To do so, it must become more entrepreneurial and less averse to risk. Shell should not eschew the possibility of a tie-up with Total.
The directors under new chief executive Jeroen van der Veer are getting there, slowly, but Rome wasn't built in a day.