Forbes.com: TEXT-S&P may still cut Shell Group entities

Reuters, 05.28.04, 10:39 AM ET

Posted 29 May 04

(The following statement was released by the ratings agency)

NEW YORK, May 28 - Standard & Poor's Ratings Services said today that, following the release of the Royal Dutch/Shell Group of Companies' (Shell) audited 2003 annual report, its 'AA+' long-term ratings on Shell and the group's fully owned subsidiaries Shell Oil Co., Shell Petroleum N.V., and Shell Petroleum Co., Ltd., remain on CreditWatch with negative implications, where they were placed on Jan. 9, 2004.

Standard & Poor's will resolve the CreditWatch placement after discussing the report and related issues, including governance, with Shell's management.

The Royal Dutch Petroleum Company released its 2003 audited report on May 28, 2004, with an unqualified opinion from both auditors. These accounts are Shell's first to fully conform with U.S. GAAP standards, and contain commendably detailed information on the proved-reserve recategorizations.

"The report, together with Shell's May 24, 2004, press release, revealed certain negative credit factors, including a fourth, 103-million boe recategorization; the confirmation of weak 2003 reserve replacement; and the correction of recently announced inappropriate departures from FAS 19, 133, and 144," said Standard & Poor's credit analyst Emmanuel Dubois-Pelerin.

"On the positive side, however, SFAS 69 disclosure was improved; the reserve recategorization has had a limited impact on accounts; and disclosures on securities held, goodwill, previously undisclosed $12.0 billion rights and concessions included within tangible assets (potentially reclassified to intangibles depending on future FASB pronouncements), pro forma information for the large 2002 acquisitions, deferred taxation, and downstream gross margin were also enhanced," added Mr. Dubois-Pelerin.

Copyright 2004, Reuters News Service