ThisisLondon.co.uk: Shell bosses reject shares buyback

ThisisLondon.co.uk: Shell bosses reject shares buyback

1 February 2004

TROUBLED oil giant Shell is expected to disappoint the City this week by ruling out a return to its share buyback programme.

The Anglo-Dutch company has been under mounting pressure from investors after announcing on 9 January that it had over-estimated the levels of its oil reserves.

In a move that enraged shareholders, about 3.9bn barrels of oil it had claimed were in its fields were reclassified as unproven. 

Last week, speculation from the investment community focused on whether Shell would attempt to win back favour when it announces its results on Thursday by confirming a return to the share buyback scheme it abandoned last year.

Sources close to the company said there were no such plans. The company's share price has fallen by 14% this year and investors are likely to be disappointed by the decision.

Traditionally, Shell, made up of London-listed Shell Transport and Royal Dutch Shell, listed in Holland, has been protected from shareholder pressure or the threat of a takeover by its twin listing.

But in recent weeks, chairman Sir Philip Watts has come under intense pressure from institutional shareholders to reform Shell's complex management structure.

With pre-tax profits expected to come in at £5.5bn, Shell has cash to finance a buy-back programme, but if it decides not to, its management is sure to face a trying day on Thursday.

Sir Philip is also sure to be questioned on Thursday about whether the company has plans to reform its labyrinthine management structure.

Shares in Shell Transport closed last week at 362p each, 54 1/4p down on their price at the start of the year.

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