FINANCIAL TIMES: Shell cuts reserves by another 10%: “The Anglo-Dutch oil group also warned that it had only replaced between 15 and 25 per cent of the oil it pulled from the ground in 2004. Rivals such as BP and ExxonMobil have reserves replacement ratios of more than 100 per cent.”: “…the scale of the downward revision and its reserves replacement figure is further bad news for the company as it struggles to rebuild its reputation.” (ShellNews.net) 3 Feb 05
By James Boxell, FT.com, Feb 3 2005 8:30
Royal Dutch/Shell was on Thursday forced to cut its proved oil and gas reserves by another 10 per cent, or 1.4bn barrels.
The Anglo-Dutch oil group also warned that it had only replaced between 15 and 25 per cent of the oil it pulled from the ground in 2004. Rivals such as BP and ExxonMobil have reserves replacement ratios of more than 100 per cent.
Investors were warned about further cuts to Shell's reserves in October, but the scale of the downard revision and its reserves replacement figure is further bad news for the company as it struggles to rebuild its reputation.
It had already cut its reserves by 23 per cent last year, a move that led to the departure of its three top executives, investigations by US regulators and class action lawsuits.
However, the company did offer some comfort to shareholders on Thursday when it said it would take advantage of the cash bonanza from record crude oil prices by buying back $3bn-$5bn of its shares this year. It will also pay at least $10bn cash to shareholders from dividends in 2005, subject to exchange rates.
Shell suspended its buy-back programme last year at a time when rival BP was returning $7bn to its shareholders.
Shell made record net income of $18.5bn in 2004, a 48 per cent increase on the previous year. In the three months to December 31, net income was $4.5bn, more than double the figure for same period in 2003.
Profits were boosted by record oil prices, strong refining margins and a cyclical recovery in the chemicals business.
Jeroen van der Veer, chief executive, described 2004 as a "year of extremes, with the reserves recategorisation on one hand and record net income and cash generation on the other".
In early morning trade in London Shell's shares were down 5p at 480p.