Sunday Express (UK): Shell boardroom changes backfire on reserves news: “ONE OF the world's most influential financial firms has given the thumbs down to an announcement from Shell it is to end its 97-year-old dual board structure.”: “…financial ratings agency Standard & Poor's said it had adjusted Shell's investment rating downwards to "creditwatch negative", a status which implies there may be more bad news to come from the company.” (ShellNews.net)

By Robin Pagnamenta

31 Oct 04

ONE OF the world's most influential financial firms has given the thumbs down to an announcement from Shell it is to end its 97-year-old dual board structure.

Many investors welcomed Shell's decision, revealed on Thursday, that was designed to simplify management of the crisis-hit Anglo-Dutch oil company. But financial ratings agency Standard & Poor's said it had adjusted Shell's investment rating downwards to "creditwatch negative", a status which implies there may be more bad news to come from the company.

Eric Tanguy, analyst at Standard & Poor's in Paris, said he was more concerned about the possibility of further downward revisions to Shell's oil and gas reserves than the news of reforms to its structure.

Alongside the announcement, Shell also warned it might be forced to make fresh reductions to its proven reserves of oil and gas. The company said about 900 million barrels — 6 per cent of the total — were under review.

Critics had claimed the group's complex dual structure had been a factor in a rumbling crisis that engulfed the company earlier this year when it was forced to downgrade its proven reserves by 4.47bil-lion barrels.

Tanguy told the Financial Sunday Express: "For us, the key area of interest in a company is its ability to generate cashflow in the future. "Although the changes in 'Shell's governance structure may be headed in the right direction we need to indicate to investors the dangers of further reserves downgrades. We would be surprised if they did not take place in the future." He added the news that further reserves downgrades might be possible came as a surprise to Standard & Poor's as well as to other market participants.

"Our discussions with Shell suggested they had put the [reserves] issue behind them," he said. "It turns out it is not the end of the story."

The restructuring at Shell will mean the company is listed primarily on the London Stock Exchange but is run from a single headquarters in the Netherlands.

Previously, it had a dual listing in Amsterdam and London as well as head offices in each city.