THE FINANCIAL TIMES: Yawns to die for: “Directors at Royal Dutch/Shell would kill for that reaction when they make their next announcement on oil reserves…” (ShellNews.net) 13 Jan 05

By Jane Fuller

Published: January 13 2005

BP's fourth-quarter trading update was greeted with a bit of a yawn.

Directors at Royal Dutch/Shell would kill for that reaction when they make their next announcement on oil reserves, due with or before its fourth-quarter results early next month.

By October, when 8bn of its 14bn barrels of reserves had been reviewed, the reduction in the amount legitimately booked was running at more than 11 per cent. Reserving policy was revealed as the company's Achilles heel about a year ago.

Yet Shell's shares have performed rather better than BP's in the past couple of months. It might seem churlish, but Lord Browne, BP's chief executive, has a hard time these days to improve on his excellent record.

BP's profits have been running at about $4bn (£2.1bn) a quarter; it spent $7.5bn buying back shares last year without restraining capital spending of about $14bn; production is moving up outside Russia and its TNK joint venture has been gushing inside it. Nevertheless, President Vladimir Putin's strangling of Yukos may have frightened a few horses.

Quite simply, Shell has more room for improvement. Its unification plan, including a single and more accountable board, should either see the position of its present leaders strengthened or provide the means to replace them if they inflict another reserves shock.

That seems unlikely since the company has already switched to conservative mode. Nevertheless, there will be no yawns when it makes its next statement.

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