THE WALL STREET JOURNAL: MORNING BRIEF: Shell, Finally, Goes Ahead With Corporate Unification: “While questions linger about what Messrs. van der Veer and Jacobs knew about the reserves issue, Shell may now finally be able to move on.” (ShellNews.net)
By JOSEPH SCHUMAN
October 28, 2004
To outsiders, Royal Dutch/Shell Group's century-old bi-national corporate structure had long seemed a hindrance for one of the world's largest petroleum companies. Even after the scandal of over-reported oil reserves that forced out Shell's leadership earlier this year, the split company remained resistant to calls by investors and analysts to simplify a complicated structure partly blamed for the reserves trouble. But this morning, at a time when oil profits are soaring, the boards of Royal Dutch Petroleum Co. and Shell Transport & Trading said they were finally ready.
The two companies agreed to unite under a single parent called Royal Dutch Shell. Clearly aware that some industry analysts remain skeptical, Royal Dutch/Shell added in its press release that "real reforms in management and governance structure are also planned." There will be one listed company, one board, one chairman and one chief executive. Shell chief Jeroen van der Veer will serve as CEO, with Royal Dutch head Aad Jacobs as the nonexecutive chairman of the board. The company will be incorporated in the United Kingdom with its head offices consolidated in a Netherlands headquarters. Its stock will trade in London, Amsterdam and, through American depositary receipts, New York.
The surprise announcement came as Royal Dutch/Shell reported its quarterly net profit more than doubled to $5.40 billion. Like its petro-giant rivals, Shell benefited from rising oil and chemicals prices that boosted earnings at its refining, development, gasoline and petrochemicals businesses. Shell expressed confidence that it would be able to comply with the reserve-requirement rules of the U.S. Securities and Exchange Commission. The company was forced earlier this year to reduce by 23% the oil reserves on its books – a key indicator of future earnings. While questions linger about what Messrs. van der Veer and Jacobs knew about the reserves issue, Shell may now finally be able to move on.