News Leader.com Shell admits overstating its profits: "also made errors in the way it accounted for exploration costs, certain gas contracts and earnings per share of its parent companies"

By Brad Foss

Associated Press

Published July 4, 2004

Washington — The Royal/Dutch Shell Group said Friday that the overestatement of its proven oil and gas reserves and "inappropriate" accounting in other business segments resulted in profits being exaggerated by $432 million.

The revision followed an embarrassing series of disclosures that in total reduced the company's reported reserves by nearly one-quarter and led to the departure of several top executives.

The biggest downward revision was for 2002, when faulty accounting resulted in profits being overstated by $208 million. In 2001 the reduction was $56 million, in 2000 it was $122 million and prior to 2000 it was $46 million.

The company disclosed the overstated profits in a filing with the Securities and Exchange Commission late Friday, explaining that in addition to the problematic reserves accounting it had also made errors in the way it accounted for exploration costs, certain gas contracts and earnings per share of its parent companies.