stuff.co.nz (New Zealand): Shell new discoveries less than half pumped in 2004: “While the figures were broadly in line with previous guidance, they will cement many investors' worries that Shell has lost its knack of finding oil, following a reserves over-booking scandal last year that led the company to downgrade around a quarter of its oil and gas reserves.” (ShellNews.net) 01 April 2005
LONDON: Oil major Royal Dutch/Shell replaced less than half the oil it pumped last year with new finds, according to revised reserves data published yesterday.
Shell said its proved reserves stood at 11.9 billion barrels of oil equivalent (boe) an the end of 2004, equal to less than 9 years' production at average 2004 rates, excluding the Athabasca oil sands reserves, which it put at 0.6 billion boe.
While the figures were broadly in line with previous guidance, they will cement many investors' worries that Shell has lost its knack of finding oil, following a reserves over-booking scandal last year that led the company to downgrade around a quarter of its oil and gas reserves.
"The Reserve Replacement Ratio (RRR), excluding the impact of divestments and year-end pricing and including associates, was 49 per cent," Shell said after it filed a report with the US Securities & Exchange Commission (SEC). "Including the impact of divestments and year-end pricing, the RRR was 19 per cent."
Shell, the world's third-largest oil group by market capitalisation, added that it continued to target at least a 100 per cent replacement of its oil reserves from 2004 to 2008.
Most of the large international oil firms are finding it increasingly hard to make new oil finds big enough to meet their goals to replace and increase production, threatening their long-term health.
The world's biggest reserves are controlled by Middle Eastern states which restrict access to their reserves to their own national oil companies.
While Shell's 20-F filing shows its problems in finding oil are among the worst in its peer group, many in the industry believe the SEC rules are too strict and underestimate the true state of firm's oil reserves.
Shell says the oil in the ground at its projects is many more times the dbug 234llion boe figure.
The company also cut its net income for 2004 to $US18.2 billion ($NZ25.97 billion) from a previously reported $US18.5 billion, to take into account its February reserves downgrade of 1.4 billion barrels of oil equivalent.
Shell's London-listed shares were up 0.84 per cent at 480 pence at 0937 GMT, while its Amsterdam-listed stock was up 0.74 per cent at 46.58 euros. This compared to a 0.68 per cent rise in the DJ Stoxx European oil and gas sector index.
Chief Executive Jeroen van der Veer received 2.9 million euros ($NZ5.37 million) in salary and cash bonuses in 2004, the statement said.
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