THE INDEPENDENT (UK): Shell profits surge despite cut in production: “Last year the company cut its proved reserves by a quarter and replaced only 19 per cent of the oil it pumped using the US Securities and Exchange Commission's strict criteria”: “Last year's reserves fiasco, which is still being investigated by four regulatory bodies including the US Justice Department and the California Department of Corrections, led to the sacking of Shell's two top executives.” (ShellNews.net) 29 April 05
By Michael Harrison Business Editor
29 April 2005
Royal Dutch/Shell reported record first-quarter profits yesterday of $5.5bn (£2.9bn) despite a sharp fall in oil production as output declined from some of its ageing fields.
The 29 per cent increase comfortably outstripped analysts' forecasts and came on the back of surging oil prices and higher refining margins. But in an effort to limit criticism of its record profits at a time of soaring petrol prices, Shell said its UK retail business had made a loss in the three-month period.
The increase in profits enabled Shell to reward investors with a $2bn dividend payment and a $500m share buy-back programme. Over the course of this year, the company expects to return a total of between $13bn and $15bn to investors.
Shell sought to deflect criticisms that it should be ploughing more of its surplus cash into exploration to improve its battered reserves ratio. Last year the company cut its proved reserves by a quarter and replaced only 19 per cent of the oil it pumped using the US Securities and Exchange Commission's strict criteria.
Jeroen van der Veer, Shell's chief executive, repeated the company's objective of lifting its reserves replacement ratio back above 100 per cent. He ruled out achieving this with the help of acquisitions, saying the current high oil price made takeover deals too expensive.
Even though production from Shell's new fields in the North Sea, Gulf of Mexico and Malaysia more than offset the decline in output from older fields, crude oil production fell by 8 per cent. Overall hydrocarbon production, which includes Shell's large and growing gas resources, fell by 2 per cent.
Last year's reserves fiasco, which is still being investigated by four regulatory bodies including the US Justice Department and the California Department of Corrections, led to the sacking of Shell's two top executives.
Shell said it remained on track to implement the sweeping corporate reforms prompted by the scandal, unifying its UK and Dutch halves into one London-listed company with a single board in July. Shareholders will receive documentation on the plan next month and will vote in June.
http://news.independent.co.uk/business/news/story.jsp?story=634063
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