Financial Times: Look under the Shell: “One conspiracy theory doing the rounds yesterday was that those Dutch chaps now running Royal Dutch/Shell were more cunning than they first appear, in spite of the company's inability to count reserves over several years.” (ShellNews.net)

By Clay Harris

Published: October 30 2004

One conspiracy theory doing the rounds yesterday was that those Dutch chaps now running Royal Dutch/Shell were more cunning than they first appear, in spite of the company's inability to count reserves over several years.

The proposed merger of the Dutch and UK companies will create a super-heavyweight Royal Dutch Shell, a £100bn company with a primary listing in London. Its FTSE 100 weighting will rise from 3 to 4 per cent to a whopping 7 to 8 per cent, making it the second-biggest presence.

This means that index-tracker funds will need to increase their exposure, whether they like it or not. So-called active fund managers are likely to follow suit by closing underweight positions in Shell Transport & Trading and buying lots of stock.

So there could be plenty of upside potential in Shell's stock if the merger goes ahead, despite its woeful performance in replacing the oil it produces.

Far be it from anyone to suggest that Shell might engineer something like this on purpose but it would not be the dumbest move ever.

As one market analyst puts it: "It may be a crap company but you could end up in the position where nobody can sell it."