ChannelNewsAsia.com: Moody's cuts 'AAA' debt rating of Shell subsidiaries  

22 April 04

PARIS : International credit rating agency Moody's Investors Service cut the ratings on the debt of subsidiaries of Royal Dutch/Shell amid a crisis sparked by the restatement of the Anglo-Dutch oil group's energy reserves.

Moody's said it was downgrading the long-term debt ratings of the guaranteed subsidiaries of the Royal Dutch/Shell group to Aa1 from Aaa because of the company's weaker position in relation to rivals in the wake of the lowering of its proven energy reserves.

"A weaker fundamental upstream position is evidenced by the series of large petroleum reserve re-categorizations announced since January 2004," it said in a statement.

It also cited "the organizational and cultural challenges manifested by the serious breaches in executive level oversight and governance" as reasons for the downgrade.

Shell shocked investors by announcing in January that it had overestimated its proven oil and gas reserves by 3.9 billion barrels, or one-fifth.

Since then, the crisis has claimed the heads of three top executives, including former chairman Philip Watts.

On Monday the oil giant said it planned to restate its 2002 earnings and that it was cutting its estimates for recoverable reserves for the third time in under four months.

Moody's downgrade was the third by a major credit rating agency since Monday.

Fitch cut its rating on the group to "AA plus" from "AAA" on Wednesday following Standard and Poor's downgrade also to "AA plus" from "AAA" on Monday.

In the wake of the latest developments, Shell has been left reeling by a rash of damning front-page headlines in British newspapers accusing the group of lies and a cover-up after an explosive internal report admitted executives knew of problems with reserves over two years ago.

http://www.channelnewsasia.com/stories/afp_world_business/view/81275/1/.html