THE WALL STREET JOURNAL: SEC Has More Questions After 1st Inquiry On Oil Reserves: “The Securities and Exchange Commission is seeking additional information from some companies about oil reserves following last year's initial round of inquiries in the wake of the Royal Dutch/Shell scandal”: “Shell stunned capital markets in January 2004 when it announced it was slashing its reserves by 23% due to huge overbookings in Nigeria, Australia and elsewhere. A subsequent investigation showed executive correspondence about the need to "fool" the market and complaints of "lying about the extent of our reserves issue.": “The current debate on oil reserves policy focuses in part on the oil industry's confusion on whether certain assets qualify as reserves. Shell's problems, Degenhardt said, did not fall into that category because documents showed that executives knew they were breaking the rules. "They knew they were violating the commission's guidelines," Degenhardt said. "That was not a case of them not knowing what the guidelines are." (ShellNews.net) Posted 26 Feb 05

By JOHN M. BIERS

Of DOW JONES NEWSWIRES

HOUSTON -- The Securities and Exchange Commission is seeking additional information from some companies about oil reserves following last year's initial round of inquiries in the wake of the Royal Dutch/Shell (RD,SC) scandal, a senior SEC official said Thursday.

The SEC sent inquiry letters to leading energy companies after Shell announced a large downgrade in January 2004. The three largest U.S. oil companies - ChevronTexaco Corp. (CVX), ConocoPhillips (COP) and ExxonMobil Corp. (XOM) - all confirmed receiving letters soon after the Shell announcement.

"There are certain companies that provided information, and we don't need any more," said Harold Degenhardt, director of the SEC's Fort Worth office. "There are others that we continue to gather information about."

Some of the responses from companies "answered questions" while others "raised questions," Degenhardt told Dow Jones Newswires shortly before addressing a Houston conference on oil reserves organized by the Energy Forum.

Degenhardt characterized the SEC industry-wide inquiry as comparable to those carried out on other industries after major announcements like Shell 's. Investors closely watch oil and natural gas reserves as a benchmark that measures how many resources a company can develop.

Degenhardt declined to discuss specific companies, or to appraise the oil industry's overall compliance record with reserve accounting rules. He did, however, confirm that the agency gives close scrutiny when partner oil companies report different reserves on the same project. That happened with a large Australian natural gas project when Shell booked reserves and partners ChevronTexaco and ExxonMobil didn't.

Shell stunned capital markets in January 2004 when it announced it was slashing its reserves by 23% due to huge overbookings in Nigeria, Australia and elsewhere. A subsequent investigation showed executive correspondence about the need to "fool" the market and complaints of "lying about the extent of our reserves issue."

Degenhardt, who led the SEC's case against Shell, praised the Anglo-Dutch giant for offering "model" cooperation with the agency after disclosing the problem.

The current debate on oil reserves policy focuses in part on the oil industry's confusion on whether certain assets qualify as reserves. Shell's problems, Degenhardt said, did not fall into that category because documents showed that executives knew they were breaking the rules.

"They knew they were violating the commission's guidelines," Degenhardt said. "That was not a case of them not knowing what the guidelines are."

-By John M. Biers, Dow Jones Newswires; 713-547-9214; john.biers@dowjones.com