Daily Mail: Shell launches charm offensive: “Shell shares at 417 1/2p have recouped their losses on the reserve shock. That should help in fighting US legal claims, but it is largely due to the soaring price of crude.” (ShellNews.net)

20 September 2004,

SHELL will this week beat the drum about slimming down its sprawling global empire. Chief executive Jeroen van der Veer can point to up to £5.6bn of likely proceeds from a growing list of disposals.

But his major City presentation on Wednesday needs to convince investors that the sales cash will not be soaked up in cost overruns on major projects.

The best news of all would be some sizable new discoveries. Shell has been drilling actively in the Gulf of Mexico, Nigeria, Morocco and Malaysia. It is also seeking to line up a big gas deal in Libya. Its £1.1bn share buyback programme is likely to be stepped up.

Van der Veer can take credit for steadying the ship after the shock departures of Sir Philip Watts and exploration chief Walter van de Vijver. But reserve replacement - the issue at the heart of the upheaval - is likely to be no better than 60% to 80% this year. He will stress that it should top 100% in the next four years.

Another critical issue for Shell is the return on its huge asset base. Deutsche Bank analyst JJ Traynor says Shell's 12-month average return is the weakest of the top five oil companies, at 16.5% against an average of 19.8%.

The new team, including exploration chief Malcolm Brinded, appears ready to cut deep into the asset base, selling 5% of its refineries and putting its stake in Intergen power stations up for sale. Van der Veer will give a pleasant surprise if he reveals more about the Anglo-Dutch group's structural reform, but this seems likely to be kept until November.

Opting for a single board with a formal chief executive role is the minimum which big investors will accept.

Shell shares at 417 1/2p have recouped their losses on the reserve shock. That should help in fighting US legal claims, but it is largely due to the soaring price of crude.

• Russian oil giant Yukos suspended oil exports by rail to China because it is struggling to pay export duties. Its bank accounts have been frozen while bailiffs try to recover £3.9bn in taxes.

http://www.thisismoney.com/20040920/nm82634.html