The Independent: Shell replaces executive at embattled exploration arm

By Our City Staff

09 April 2004

Shell has appointed a new chief financial officer of its exploration and production division, which until recently was solely in charge of booking oil and gas reserves.

The Anglo-Dutch oil giant, which is being dogged by investigations into its energy reserves accounting, said that Simon Henry would take over the position from Frank Coopman, who had been in the job since July 2002. Mr Henry is the head of group investor relations and had the task of informing investors in January that the group was reducing by 20 per cent the size of the reserves it reports to the US Securities and Exchange Commission.

A Shell spokesman refused to comment on whether the change was connected to that downgrading of 3.9 billion barrels in reserves of oil and natural gas. That disclosure caused a shareholder uproar that led to the resignations of Shell's chairman, Sir Philip Watts, and its head of exploration and production, Walter van de Vijver. Investors were especially annoyed with Sir Philip for not being around when the reserves reduction was first announced.

Last month, Shell announced additional cuts to its estimated reserves and suggested that further reductions could follow.

Shell downgraded 250 million barrels in reserves to other, less certain categories. At the same time, it decided not to book a separate batch of 220 million barrels that it had earlier considered worthy of classifying as reserves.

The group also said last month that it was strengthening controls on its reserves reporting procedures.

In the past, top executives had assumed that the company's exploration and production staff were booking reserves correctly. From now on, top executives themselves will have to sign off each year's reserves estimates.

Reserves constitute an oil company's most valuable asset and any reclassification of reserves into less certain categories is a major concern for investors. The Securities and Exchange Commission is conducting a formal investigation into Shell's accounting for its reserves.

In a statement, Shell said that Mr Coopman had been offered a "key alternative position" within the group, which he had chosen not to accept.

"We will continue to work towards a mutually acceptable alternative," the statement added. "Relationships with the investment community are important to us and we will fill the post of head of group investor relations as soon

as possible."

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