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National Post: Shell Canada distances itself from parent company reserves estimates scandal

National Post: Shell Canada distances itself from parent company reserves estimates scandal 

JAMES STEVENSON

Canadian Press

Friday, April 30, 2004

Shell Canada president and CEO Linda Cook speaks with the media after the company’s annual meeting in Calgary on Friday. (CP/Jeff McIntosh)

CALGARY (CP) – Shell Canada Ltd. distanced itself from the reserve reporting problems of its European parent Friday, saying the Calgary-based subsidiary is a separate entity that has full confidence in its own oil and gas estimates.

“The activities that are going on in the Royal Dutch/Shell group are in most respects quite isolated from our company,” Shell Canada chief executive Linda Cook said following her company’s annual meeting in Calgary.

“The reserves reclassifications that were announced did not involve any Canadian reserves, so from that standpoint we are not involved.”

Cook said the only real impact on her company was the downgrading of the credit rating for the entire group of Shell companies by Standard & Poors, the New York-based credit rater.

But Shell Canada, which has just finished a big new oilsands project in northern Alberta, said it is not in the market to raise money by issuing long-term bonds right now. “So any financial impact is immaterial . . . with respect to that,” Cook said.

Although Shell Canada trades publicly on the Toronto stock market (TSX:SHC), it is 78 per cent owned by Royal Dutch/Shell group, one of the world’s biggest oil companies headquartered in London and the Netherlands.

The parent company first came under scrutiny in January, when it announced that confirmed oil and gas holdings were 20 per cent, or 3.9 billion barrels, smaller than it had previously claimed.

Shareholders were outraged and three top executives have since resigned, including chairman Sir Philip Watts and finance chief Judith Boynton.

Since then Shell has further reduced its estimates of “proven” holdings, bringing the total downgrade to 4.85 billion barrels.

Cook said the reserve reporting scandal at the parent company “impacts all of us, when there’s a hit on your reputation like that, and knowing it will take years now to restore our reputation to the place that we think it should be.”

Before accepting the job as president and chief executive at Shell Canada last year, Cook worked in London as head of Shell Gas and Power for three years. She has also worked on the global executive committee of Shell’s exploration and production team.

Shell Canada is one of Canada’s biggest natural gas producers and a major producer of sulphur and oilsands crude. The company has no conventional oil production in Canada, but operates a national gasoline station network under the Shell brand.

The company generated a profit of $810 million on revenues of more than $8.8 billion last year and employed about 3,850 people at the end of 2003.

In trading on the Toronto stock market on Friday, Shell Canada stock rose 10 cents to $64.10.

© The Canadian Press 2004

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