Extracts from an article by Eoin O’Cinneide published by upstream online.com
South African petrochemicals giant Sasol is eyeing some of Shell’s shale gas acreage in the country’s Karoo basin… ”We are really interested in what is going in the Shell block and would love to farm in or take a piece of it,” Reuters quoted Sasol chief executive David Constable as saying on Monday. “Shell is issuing profit warnings and pulling back capex right now.”
In 2002, Royal Dutch Shell had a close call in the Gulf of Mexico when the oil giant was “forced to abandon drilling an $80 million well at a prospect called Deep Mensa in the Mississippi Canyon after the drill bit got stuck at nearly 28,000 feet attempting to drill through fractured rock.”
The event was described in a recent book by Tom Bower – “The Squeeze” – as a disaster.
He wrote: “Technicians monitoring the data witnessed the ‘crash out’ – the uncontrolled vibrations which smashed the drill as it struggled through fractured rock.”
It took Shell a year to correct mistakes that had been made.
Extract from an article by Joe Carroll published 10 March 2014 by Bloomberg News
Pioneer Natural Resources Co. (PXD), the top energy stock in the S&P 500 last year, is tripling drilling in shale fields as international energy explorers five times its size recoil from losses on the U.S. oil renaissance. Pioneer’s wildcatting bucks the trend among bigger explorers including Royal Dutch Shell Plc (RDSA) that are writing down U.S. shale assets and shrinking their footprints after drilling money-losing wells. For Shell, the world’s second-largest oil producer by market value, the dwindling value of its U.S. shale prospects contributed to a $2.7 billion writedown of its oil and gas portfolio announced in January. The Hague-based company said it would scale back drilling in those fields because of disappointing results. Shell’s global output dropped 1.9 percent last year to the lowest since 2009, according to data compiled by Bloomberg.
However, unbeknown to Van de Vijver, Michiel Brandjes (right), who was alarmed by the findings of the report, sent a copy to a New York law firm Cravath, Swaine & Moore. This meant that events were no longer in the control of Shell. Instead, Shell’s most sensitive issue since its close association with Adolf Hitler and the Nazis several decades ago, had been disclosed to an outside firm, that had to consider and protect its own reputation.
By John Donovan
In May 2003, Frank Coopman, the then Chief Financial Officer of Shell EP, delivered bad news about Shell’s operations in Nigeria to the Chief Executive of Shell EP, Walter van de Vijver.
Van de Vijver sent Coopman back to Nigeria to investigate further.
The subsequent findings, set out in a status report, were even more devastating, revealing an overstatement of 1.1 billion boe.
Van de Vijver had instructed a team led by Coopman to work on the reserves issues.
The team included a top Shell lawyer, Michiel Brandjes, the then Company Secretary of Royal Dutch Petroleum.
Upon receiving Coopman’s status report in early December, Van de Vijver said that he “considered the report to be incomplete and prematurely conclusive…”
He sent an email dated December 2, 2003, instructing Coopman to destroy the report.
CLICK ON IMAGE TO ENLARGE
However, unbeknown to Van de Vijver, Michiel Brandjes, who was alarmed by the findings of the status report, sent a copy to a New York law firm Cravath, Swaine & Moore.
This meant that events were no longer in the control of Shell.
Instead, Shell’s most sensitive issue since its close association with Adolf Hitler and the Nazis several decades ago, had been disclosed to an outside firm that had to consider and protect its own reputation.
The advice which came back from Carvath’s was unequivocal. Shell must downgrade its reserves and notify the US Securities & Exchange & Commission accordingly.
Brandjes summarized the relevant legal advice within a section of a three-page document “Script for Walter” as follows:
“If and from the time onwards that it is accepted or acknowledged by the management of the issuers (Royal Dutch and SIT) that, when applying the SEC rules, the 2002 proved reserves as reported in the Form 2o-F are materially wrong, the issuers are under a legal obligation to disclose that information to all investors at the same time and without delay_ Not to disclose it would constitute a violation o f US Securities law and the multiple listing requirements….”
The “Script for WaIter” noted that Oman and Nigeria reserves were overstated by 1.3 billion boe and that LKH compliance would require an additional 300 million boe debooking. It also noted that approximately 757 million boe of the reserves disclosed in the 2002 Annual Report on Form 20-F (including Gorgon), which formerly had complied with the Shell Guidelines when booked, now were “possibly at odds with the strictest possible interpretation of the SEC guidelines.”
The “Script” was e-mailed by Coopman to van de Vijver and Boynton on the morning of December 2, 2002 in advance of a CMD meeting (Committee of Managing Directors) scheduled for that day.
Approximately one hour later, van de Vijver e-mailed Coopman directly with the now infamous message:
“This is absolute dynamite, not at all what I expected and needs to be destroyed!
But it was too late, Michiel Brandjes had already acted and the genie could not be put back in the bottle.
Mr. Brandjes is currently the Company Secretary and General Counsel Corporate of Royal Dutch Shell Plc. In that capacity he had an important role in the recent issuance of a profits warning by the company, which once again took the markets by surprise.
SADISTIC SACKING OF WALTER VAN DE VIJVER“The Squeeze” also contains some information about the sadistic sacking of Walter van de Vijver. Apparently when Lord Oxburgh appeared in Walters office, the Dutchman was expecting to be offered the chairmanship, replacing Sir Philip Watts, the then Group Chairman of the Royal Dutch Shell Group. Instead, Oxburgh demanded his resignation. In tears, Walter called his wife Bernadette who quickly arrived at his office and “firmly shut the door.” John Hofmeister forced the door open and dramatically issued a ultimatum.
The hapless Jeroen van der Veer was appointed as successor of Sir Philip “although he had been party to the mismanagement of the group since 2002. He was, it was decided, the least guilty of the group“.
Chris Fay, the former CEO & Chairman of Shell UK Limited who had lost out to Watts in the race for the top job at Shell, is said by Tom Bower to have told Mark Moody-Stuart, a former Shell Group chairman, ‘I warned you that Watts was a cover-up guy, that there was a geological mafia cover-up.‘
Interesting to note that Ben van Beurden, the recently appointed CEO of Royal Dutch Shell Plc was at the time of the reserves scandal, advising Sir Philip Watts and presumably was his close confidant?
Walter van de Vijver (middle) was forced to quit Shell in 2004, together with former chairman Philip Watts (left), and CFO Judy Boynton (right) in a huge scandal that resulted from Shell’s downgrading of its proven oil and gas reserves. Van de Vijver was a Royal Dutch Shell Group Managing Director and head of the Exploration & Production division.
Royal Dutch Shell employed on a part time basis, one non-independent retired former employee, Anton Barendregt, to audit its oil and gas reserves. In stark contrast, Exxon used eight full-time employees – all expert reservoir engineers, supported by a former lawyer for the US Securities & Exchange Commission.
Some of the above information comes directly from the Report of Davis Polk & Wardwell to The Shell Group Audit Committee.
I have also relied on information from the excellent book by Tom Bower “THE SQUEEZE” – “Oil, Money & Greed in the 21st Century” and from an 850 page searchable legal document containing the testimony of Walter van de Vijver also containing related exhibits. The comments about Exxon reserve auditors come from page 326 of his book.
Extracts from a Reuters article by Selam Gebrekidan published on 7 March 2014 by The Chicago Tribune
NEW YORK (Reuters) – Royal Dutch Shell on Friday said construction crew members punctured its Houston-to-Houma (Ho-Ho) pipeline near Port Neches, Texas, on Thursday afternoon, releasing 364 barrels of crude oil.
The company said it shut the pipeline after the leak. Emergency crews and first responders were deployed to the scene and are using absorbent booms to contain the oil, Shell said.
COMMENT RECEIVED FROM A SHELL RELATED SOURCE
The pipeline that was ruptured by a Shell contractor (Houston-Houma or HoHo line) is one of the assets that Shell is trying to sell… they recently modified it to reverse the direction of flow. And while 100 barrels might not sound like much, the actual amount might be considerably more (it’s not easy to measure) and even 100 barrels (~16000 litres) is enough to make a bit of a mess… and incur some serious cleanup costs. Presumably, the pipeline itself is now shut down.
The location is between Beaumont and Lake Sabine on the border between Texas and Louisiana.
Global coverage for the pipeline, but not a great advertisement for an asset that Shell is trying to sell….
Extract from an article by John Pendleton published Friday 7 March 2014 by righands.com
In 2013 several of the major oil companies spent lavishly on offshore prospects and are now feeling the pain of exploration efforts that didn’t pay off. Royal Dutch Shell, for example, spent more than five billion dollars in a bid for Arctic oil that was mired in litigation and so far has produced little in the way of results. Under new leadership Shell is now scaling back drastically on exploration and is selling assets.
Extracts from article by Maxime Zech published on Friday 7 March 2014 by NL Times.nl
The Ukrainian parliament asked the new government on Wednesday for an investigation into the gas contract with Shell. There is suspicion that money is being funneled to ousted president Yanukovych and his cronies via the contract. The deal with Shell must be entirely clarified and must be off the table as soon as possible. As well as suspicion of corruption, Shell is also causing environmental damage in Ukraine by the application of techniques which are illegal in the Netherlands…
Extracts from an article by Alex Brummer published on 6 March 2014 by thisismoney.co.uk (The Daily Mail)
Royal Dutch Shell has often shown a rather cavalier approach to corporate governance. Its annual general meetings have become a battle ground over directors pay with institutional investors notably concerned over less than stretching bonus arrangements.
There has also been irritation over the failure to fulfil an undertaking to hold parallel annual meetings in London and the Hague.
It is a general principle on the London Stock Exchange that all shareholders, from the smallest private investor to big institutions, receive price sensitive information at the same time. So it is unfortunate that Shell chose selectively to release details of its views on Scottish independence before the new chief executive Ben van Beurden formally confirmed that the oil major – a key player in the North Sea – wants Scotland to remain part of the United Kingdom.
Extracts from an article by Alex Lawler published on 6 March 2014 by Reuters
BP says U.S., Asia regulators ask for details after EU price probe
(Reuters) – BP Plc said regulators from the United States and Asia have asked it for information after the European Commission’s started an investigation last year into suspected manipulation of oil prices. London-based BP, Europe’s second-largest oil company, made the disclosure in its annual report released on Thursday. Last May, European authorities raided offices of BP, and Royal Dutch Shell and Statoil in an investigation of suspected price manipulation. “Related inquiries and requests for information have also been received from U.S. and other regulators following the European Commission’s actions,” BP said in its 2013 annual report, published on its website.
Extract from an article published by LAW360.com on 27 Feb 2014 under the headline…
Law360, New York (February 27, 2014, 4:15 PM ET) — Shell Oil Co. will pay $4 million to settle False Claims Act allegations that it sought payments from a Massachusetts fund for hazardous waste cleanup at its gas stations while it also received reimbursements from its insurers, state authorities said Thursday. Shell and its joint venture, Motiva Enterprises LLC, sought false reimbursements from Massachusetts’ Underground Storage Tank Petroleum Product Cleanup Fund program for more than a hundred gas stations throughout the state, but did not reveal to authorities that it also received payments from insurers, according…
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