BLOOMBERG: Shell's 4th-Quarter Almost Triples on Oil, Gas Prices (Update2): “The company cut its reserves for the fifth time in 13 months. The shares fell as much as 1.5 percent in London.” (ShellNews.net) 3 Feb 05

Feb. 3 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-biggest oil company, said fourth-quarter profit almost tripled because of surging oil and gas prices. The company cut its reserves for the fifth time in 13 months.

The shares fell as much as 1.5 percent in London. Net income rose to $5.13 billion from $1.69 billion a year earlier, Shell said today in a statement, based on accounting that strips out gains from holding oil inventories. Its reserves for the year ending in 2003 were reduced by 1.4 billion barrels.

Chief Executive Jeroen van der Veer ended a probe that already had reduced oil reserves by 26 percent. Shell said Oct. 28 it might have to eliminate another 900 million barrels, or 6.3 percent, from its books. The restatements led to the departure of three senior executives, more than a dozen shareholder lawsuits and U.S. and U.K. regulatory fines totaling $151.5 million.

``We have taken the steps necessary to close out the reserves issue,'' Van der Veer said in the PR Newswire statement.

Shell said its reserves at the end of 2003 were 12.95 billion barrels and the review of its holdings is complete for that year. The company indicated reserves will fall again in 2004, because it replaced only 45 percent to 55 percent of production.

The shares fell as much as 7 pence or 1.5 percent, to 473 pence and were down 3.5 pence as of 8:11 a.m. in London. It was the largest percentage drop since Oct. 29.

Earnings of $4.9 billion were expected, according to the median forecast of 12 analysts surveyed by Bloomberg News.

Irving, Texas-based Exxon Mobil Corp., the world's largest publicly traded oil company, on Jan. 31 said fourth-quarter profit rose 27 percent to a record $8.42 billion and reported a $25.3 billion profit for 2004, the second-highest in U.S. history. BP Plc, Europe's biggest oil company, will report fourth-quarter earnings on Feb. 8.

Restructuring

Royal Dutch/Shell three months ago announced plans to combine the boards and shares of its parent companies in the U.K. and Netherlands, ending almost a century of dual ownership. The restructuring is prompting some funds to buy the shares because they need to track index changes.

Shares in Shell Transport closed at 481 pence in London yesterday, the highest since July 2002.

Van der Veer, 57, will run the combined company, to be called Royal Dutch Shell Plc. He was paid 1.12 million euros ($1.46 million) in 2003, according to Shell's annual report.

The planned combination of Shell's two parents will improve accountability and clarity to investors, Van der Veer said in October. The write-off of the reserves led to the departure of his predecessor, Phil Watts, and two other senior executives.

Van der Veer's Strategy

Van der Veer will hold a press conference in London at noon and a conference with investors at 2:15 p.m. to discuss his strategy for turning around Shell. BP, led by Chief Executive John Browne, in 2003 replaced Shell as the world's second-largest publicly traded oil company behind Exxon Mobil.

Shell said July 29 it may sell its half stake in Basell, a polyolefins venture with BASF AG, the world's biggest chemicals maker. Polyolefins are a type of polymer plastic derived from chemicals called olefins and used to makes products from outdoor furniture to diapers.

Shell also said it may sell power businesses, including a 68 percent stake in InterGen, a venture with Bechtel Group Inc. In September, Shell said it had been approached by an unspecified buyer for its liquid petroleum gas business.

To contact the reporter on this story:

Mathew Carr in London at  m.carr@bloomberg.net

To contact the editors on this story:

Tim Coulter in London  at tcoulter@bloomberg.net

Last Updated: February 3, 2005 03:12 EST

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