Daily Telegraph (UK): Dutch chiefs take helm of merged Shell: “The radical move, which needs to be approved by shareholders, is likely to be seen as a Dutch takeover of the energy giant…”: “The news was overshadowed by yet more revelations about the company's "proven" reserves…” (ShellNews.net)
By Christopher Hope, Business Correspondent (Filed: 29/10/2004)
Shell yesterday announced a long-awaited restructuring which will see the company run by a Dutch chairman and chief executive, and a single headquarters established in the Netherlands.
The radical move, which needs to be approved by shareholders, is likely to be seen as a Dutch takeover of the energy giant, which is 40pc owned by shareholders in UK-listed Shell Transport and Trading and 60pc owned by investors in the Netherlands' Royal Dutch.
The news was overshadowed by yet more revelations about the company's "proven" reserves, already cut by 4.47billion barrels this year. Shell admitted another 900m proven barrels were now questionable.
Under the restructuring plans, Shell will scrap the two holding companies, their boards and the committee of managing directors (CMD) which runs Shell. These will be replaced by a single company, called Royal Dutch Shell, which will be registered in the UK and have its primary listing in London with an expected market capitalisation of about £100billion.
Royal Dutch Shell will be based in the Hague, where it will pay tax and where it will initially hold its annual meetings. Its chairman will be Aad Jacobs, the current chairman of Royal Dutch, and the chief executive will be Jeroen van der Veer, current chairman of the CMD.
Lord Oxburgh, Shell Transport's chairman who will retire from the board in the spring, strongly denied that Shell's UK arm had allowed itself to be taken over. He said: "That is a total misrepresentation of the situation. This is a win-win situation. It is a win for the shareholders and it is a win for the two parent companies."
Only 10 of the current 19 non-executives on the boards of Royal Dutch and Shell Transport will make up the new board. One of the directors standing down is Sir Mark Moody-Stuart, one of Mr Van der Veer's predecessors. Lord Oxburgh added that half of these 10 would be expected to stand aside within the first three years, to allow "new blood" to join theboard. He said: "When we look for a successor for Aad Jacobs [who retires in April 2006] we will be looking worldwide and the same is true of our board."
Under the terms of the deal, which must be approved by investors at April's annual meeting, each Shell Transport investor receives 0.2874 Royal Dutch Shell shares for every share they own.
While the merger of the two boards had been widely expected, Shell surprised investors by reopening the vexed issue of the company's proven reserves of oil and gas.
Earlier this year, Shell was in crisis after revealing that 4.47billion barrels, or 23pc, would have to be knocked off the proven or commercially exploitable reserves tally.
Yesterday Shell said that after checking its reserves again, a further 900m "proven" barrels were now questionable and that further revisions were possible because it had only checked - for the third time - 55pc of its 14billion "proven" barrels.
Malcolm Brinded, head of exploration and production, said the revisions came up in the past two weeks as a result of retraining 3,000 staff. He said: "This is clearly a disappointment. This is a subject we thought we had put behind us."
The news came with Shell's third quarter figures yesterday, showing a 115pc jump in pre-tax profits to $10.3billion on sales up 35pc to $89.46billion, helped by the high oil and gas price and a strong downstream performance.