Daily Express (UK) Shell cuts reserves by further 1.4bn barrels: Brinded said "everything humanly possible" had been done to draw a line under the reserves scandal but warned of further possible revisions…” (ShellNews.net) Posted 5 Feb 05

By Andrew Johnson

Published by The Daily Express 4 Feb 05

SHELL wiped a further 1.4 billion barrels from its oil reserves yesterday.

The Anglo-Dutch giant's fifth restatement of reserves means nearly 6 billion barrels or 31 per cent have been wiped from the group's oil reserves since its overbooking scandal first emerged in January 2004. Reserves now stand at I3billion barrels.

Shell shares fell 8.25p to 471.75p, despite the company reporting profits of $17.6billon (£9.3 billion), the highest year-end profit ever recorded by a UK company.

Chief executive Jeroen van der Veer said: "Last year was a year of extremes, with the reserves recategorisation on one hand, and record net income and cash generation on the other."

Shell is not replacing the oil it takes out of the ground with new reserves. Exploration and production chief Malcolm Blinded said the company's reserves-replacement ratio was running at 45 to 55 per cent, down from the 60 to 80 per cent he expected last year. He admitted he was "disappointed" but he was "reasonably confident" reserves replacement would catch up with production as fields came on stream. But test drilling on new prospects had produced less oil than hoped.

Brinded said "everything humanly possible" had been done to draw a line under the

reserves scandal but warned of further possible revisions after discussions with the United States regulator, the Securities & Exchange Commission.

When Shell last restated reserves, 55 per cent of total assets had been given only an initial examination. Yesterday's announcement came from detailed work by 3,000 specially trained staff examining 1,500 fields and 12,000 wells.

Shell's record profits were achieved thanks to high oil and other commodity prices.

Chief financial officer Peter Voser stressed they had not been achieved at the expense of British motorists.

"The UK market is a very tough and low-margin market," he said.

But despite a commitment to drive up the profitability of refining and petrol stations, the company has no plans to quit the UK retail market.

Shell is to raise investment hi the exploration arm from $12 billion a year to $15billion. A further $10billion is to be paid out in dividends to shareholders.

The reserves scandal cost van der Veer's predecessor Sir Philip Watts his job and forced a restructuring which will see Shell's complex two-board structure replaced with a single board later this year.