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Posts from ‘July, 2004’

JULY 2004 ROYAL DUTCH SHELL NEWS

The Guardian: British watchdog catches up with US hare

The Guardian: British watchdog catches up with US hare

“Shell faces the prospect of a string of civil actions from shareholders who feel duped.”

Shell case is a rare example of the FSA applying American-style rapid justice – but why the transatlantic gulf in size of fines?

Edmond Warner

Saturday July 31, 2004

It is not just burgers, buildings and election advertising budgets that are bigger in the United States, it seems. The same is true of fines meted out by financial regulators, and regulatory justice gets administered much more swiftly, too. Those on the receiving end of these fast-track punishment beatings can console themselves that their wounds will be more superficial and swifter to heal than in Britain’s tortuously slow system.

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The Guardian: See Shell

The Guardian: See Shell

Ian Wylie

Saturday July 31, 2004

Many students try to makes themselves more attractive to employers by gaining work experience as well as a good degree. But oil giant Shell claims to offer two programmes that go beyond the average work placement.

In its Gourami Business Challenge, teams of undergraduates battle to develop a five-year business plan which will be presented to senior Shell leaders. The game, says Shell, allows students to gain first-hand knowledge about the energy business, test their management potential and develop valuable skills along the way. At the end of the challenge, successful students are invited to a Shell recruitment day when the Gourami performance will contribute to the overall evaluation.

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New Zealand City: Fuel price hike expected says Shell

New Zealand City: Fuel price hike expected says Shell

Oil company not surprised production problems in Russia can drive up world fuel prices-expected to happen here too

31 July 2004

It is no surprise to one major oil company that production problems in Russia can drive up world fuel prices.

US light crude has hit a new all-time high, closing at $US43.80 a barrel. The price is tipped to hit $US45 soon.

Shell spokesman Simon King says a range of international events can affect world prices.

He says events in the Middle East can affect it as well as disruption to supplies in Russia.

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UK Market Regulator Earns Stripes With Shell Fine

The Wall Street Journal: UK Market Regulator Earns Stripes With Shell Fine

“”The Shell case, by raising the stakes so dramatically for the FSA, is kind of another way of rattling the handcuffs.”

By JACK GRONE

Of DOW JONES NEWSWIRES

July 30, 2004 11:07 a.m.

Posted 31 July 04

LONDON — The U.K.’s Financial Services Authority has hit the big time.

By slapping Royal Dutch/Shell Group (RD, SC) with a GBP17 million fine Thursday over the company’s misreporting of its oil and gas reserves earlier this year, the FSA did little damage to the oil giant’s bottom line.

But the penalty, announced alongside a bigger fine that Shell will pay to the U.S. Securities and Exchange Commission, should send a clear warning to the broader market, observers said.

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Shell Transport And Trading Buys Back 2M Shares

The Wall Street Journal: Shell Transport And Trading Buys Back 2M Shares

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Shell SEC Deal Fails To Solve Governance Issues – Lawyer

The Wall Street Journal: Shell SEC Deal Fails To Solve Governance Issues – Lawyer

“accuses executives and board members of numerous wrongdoings – including breach of fiduciary duty and fraud”

DOW JONES NEWSWIRES

July 30, 2004 5:27 a.m.

Posted 31 July 04

LONDON — Royal Dutch/Shell Group’s (RD, SC) agreement to pay a fine to the U.S. Securities and Exchange Commission over the company’s reserves overstatements fails to correct corporate governance flaws, the attorney for two large U.S. institutional shareholder groups said Thursday.

“The fine is the exact type of damage to the company that should be paid by the defaulting executives or board members,” Bill Lerach, a partner at the San Diego-based law firm Lerach Coughlin Stoia & Robbins, said in a statement.

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Moody’s Cuts Deer Park Refining L-T Rating To A2

The Wall Street Journal: Moody’s Cuts Deer Park Refining L-T Rating To A2

“The long-term rating downgrade primarily reflects the impact of Moody’s downgrade in May 2004 of Deer Park’s 50% owner, Shell Oil Company”

DOW JONES NEWSWIRES

July 30, 2004 5:48 p.m.

Posted 31 July 04

The following is a press release from Moody’s Investors Service:

New York, July 30, 2004 — Moody’s Investors Service downgraded Deer Park Refining L.P.’s (Deer Park) long-term debt to A2 from A1 and confirmed the company’s Prime-1 commercial paper rating. The rating outlook is stable. Deer Park is a refinery project joint-venture owned 50% by Shell Oil Company and 50% by P.M.I. Norteamerica, a subsidiary of Petroleo Mexicano (PEMEX, rated Baa1 foreign currency). It is financed on a non-recourse basis to its owners. The long-term rating downgrade primarily reflects the impact of Moody’s downgrade in May 2004 of Deer Park’s 50% owner, Shell Oil Company to Aa2 from Aa1.

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Moody’s Cuts Motiva Enterprises L-T Debt To A2

The Wall Street Journal: Moody’s Cuts Motiva Enterprises L-T Debt To A2

“The long-term rating downgrade primarily reflects the impact of Moody’s downgrade in May 2004 of Motiva’s 50% owner, Shell Oil”

DOW JONES NEWSWIRES

July 30, 2004 4:44 p.m.

Posted 31 July 04

The following is a press release from Moody’s Investors Service:

New York, July 30, 2004 — Moody’s Investors Service downgraded Motiva Enterprises LLC’s long-term debt to A2 from A1 and confirmed the company’s Prime-1 commercial paper rating. The rating outlook is stable. Motiva Enterprises is a refining and marketing joint-venture owned 50% by Shell Oil Company (Aa2, stable) and 50% by Saudi Refining Inc. (not rated). Motiva is financed on a non-recourse basis to its owners. The long-term rating downgrade primarily reflects the impact of Moody’s downgrade in May 2004 of Motiva’s 50% owner, Shell Oil Company, to Aa2 from Aa1.

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Moody’s Confirms Aa1 Ratings Of Royal Dutch Shell Entities

The Wall Street Journal: Moody’s Confirms Aa1 Ratings Of Royal Dutch Shell Entities

“the negative outlook reflects uncertainties”: “Another factor implicit in the negative outlook”

DOW JONES NEWSWIRES

Posted 31 July 04

The following is a press release from Moody’s Investors Service:

New York, July 30, 2004 — Moody’s Investors Service confirmed the Aa1 long-term debt ratings of the guaranteed subsidiaries of the Royal Dutch/Shell Group of companies with a negative outlook. Ratings confirmed included the Aa1 long-term securities of Shell Finance (Netherlands) B.V. and Shell Finance (U.K) PLC. The Prime-1 guaranteed commercial paper ratings of both entities were not under review and are affirmed. At the same time, Moody’s confirmed the Aa2 Issuer Rating and certain IRBs of Shell Oil Company and the A1 preferred stock of Shell Frontier Oil & Gas, both with a stable outlook. The Issuer Rating of Coral Energy Holding, L.P. was downgraded to A2 from A1, also with a stable outlook maintained.

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The Guardian: A slap on the wrist for Shell

The Guardian: A slap on the wrist for Shell

“Nor can it yet draw a line under the costs of the affair. That lies with the US justice department and the American courts.”

Reserves fine won’t dent bottom line

Friday July 30, 2004

Posted 31 July 2004

The $120m it cost Royal Dutch/ Shell to settle with the securities and exchange commission over the reserves scandal sounds a lot. Even the significantly more modest £17m slapped on by the Financial Services Authority dwarfs the previous record fine (£4m) imposed by the British regulator. But when a company is the world’s third-largest oil company, will it really notice fines on this scale?

Not surprisingly, Royal Dutch/Shell says it will. “Eye watering” was the term used by one executive yesterday. But pause a moment. A quick back-of-the-envelope calculation shows the fines equate to less than four days of the group’s second-quarter net income of $4bn.

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The Guardian: Shell fined £84m over reserves scandal

The Guardian: Shell fined £84m over reserves scandal

“Shell is facing a criminal investigation by the US department of justice, ongoing inquiries by the Dutch financial market regulator and the Euronext stock exchange as well as litigation in the US”

Mark Milner

Friday July 30, 2004

Posted 31 July 2004

Royal Dutch/Shell said yesterday it had agreed in principle to pay £83.6m in fines to regulators in Britain and the US to settle investigations into the oil reserves scandal that broke this year.

News of the fines came alongside results from Shell which showed higher oil prices helped the group to earn net income of $4bn (£2.2bn) in the second quarter.

Shell said it would pay $120m to the securities and exchange commission for breaches of SEC rules and US laws, and £17m to the Financial Services Authority under UK market abuse provisions. The British fine is the largest imposed by the FSA and more than four times the previous record. Shell promised the SEC it would spend another $5m on bolstering internal compliance procedures.

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Shell fighter begins the big clean-up

Financial Times: Shell fighter begins the big clean-up

“it could itself become a bid target”; “if you get it hopelessly wrong, then people start sniffing around.”: “In answer to a question about whether they are sniffing now, he said: “You will have to ask the sniffers.”

By Deborah Hargreaves

Jul 30, 2004

Jeroen van der Veer, chairman of the committee of managing directors at Royal Dutch/Shell, has just completed the most bruising episode of his 33-year career at the Anglo-Dutch oil company.

He was appointed to the top post in March to clear up the mess left after the company downgraded its proved reserves by 20 per cent – a debacle that led to the departure of three executives, including Sir Philip Watts, his predecessor.

Mr van der Veer is now fighting on all fronts to put the reserves issue behind him and draft a future for Shell in which it clarifies its complex governance structures, opens itself up to the outside world and focuses on building the business. But he still has a long way to go to convince shareholders that the company has taken the issues seriously enough.

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Settling the bill but not the issues

FT: Settling the bill but not the issues

“companies also tend to look to their more reputable peers, of which Shell used to be one. This is no longer the case.”: “whether a management that lied to its biggest shareholders would have any compunction doing the same to Nigerian villagers.”

Published: July 30 2004 5:00 | Last Updated: July 30 2004 5:00

Part of the bill came in yesterday for Royal Dutch/Shell’s misreporting of its reserves. The Anglo-Dutch oil group said it would pay £17m to settle the UK Financial Services Authority’s charge of market abuse, and $120m (£65.8m) to settle wider charges by the US Securities and Exchange Commission, including breaking anti-fraud and reporting rules. Two US regulatory bodies also announced fines of $38m on Coral Energy, a Shell subsidiary, to settle charges of manipulating gas and electricity prices in the US. By paying the fines, Shell has been able to get these investigations closed without having to admit any wrongdoing.

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Shell files revised statement with SEC

FT: Shell files revised statement with SEC

The revision was necessary because of the Dutch-UK oil and gas group’s serial restatements of proved reserves earlier this year.

By Clay Harris

Published: July 3 2004 5:00 | Last Updated: July 3 2004 5:00

Royal Dutch/Shell late yesterday filed its revised 20-F financial statement for 2002 with the US Securities and Exchange Commission.

The revision was necessary because of the Dutch-UK oil and gas group’s serial restatements of proved reserves earlier this year. Shell downgraded its proven reserves by 4.47bn barrels, or 23 per cent, in four separate revisions starting in January.

The 20-F statement for 2003 was filed earlier in the week. Shell said last night that all of the financial impact of the new SEC filings had been reflected in its 2003 annual report published in late May.

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An ocean of difference across the Atlantic

FT: An ocean of difference across the Atlantic

“It still faces a regulatory inquiry in the Netherlands, potential criminal investigation by the US Justice Department and myriad class action suits. They form a pretty powerful deterrent against following Shell’s abuse of the markets.”

By Martin Dickson

Published: July 30 2004 5:00 | Last Updated: July 30 2004 5:00

Gas guzzling cars; meal portions that would quell a giant’s hunger; tough fines by financial regulators. Is everything bigger and better in the US than the UK?

You might think so on the basis of yesterday’s news that Royal Dutch/ Shell is to pay a £17m penalty in the UK for its reserves accounting scandal, while it will pay $120m (£66m) in the US to settle with the Securities and Exchange Commission. Are the different punishments on the two sides of the Atlantic explicable and appropriate to the offence?

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Daily Mail: Shell is beached in the past

Daily Mail: Shell is beached in the past

“there are deep-seated problems at Shell that go far beyond fiddling the numbers to make the reserves look better than they were.”: “exploration and production look dire” (ShellNews.net)

Alex Brummer, Daily Mail

30 July 2004

N THE context of Shell’s enormous profits of £4.7bn over the first six months, the penalties of £83m imposed on the company by regulators over the oil reserves scandal is petty cash.

Indeed, the £17m fine by the City regulator may be the biggest ever exacted by the Financial Services Authority*, but it is unlikely to discourage other big firms from lying about their accounts if they find themselves in a temporary hole.

Shell would like us to think that this is the end of the reserves affair so that it can return to its old smug self.

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New York Times: Shell to Pay $150 Million in Settlement on Reserves

New York Times: Shell to Pay $150 Million in Settlement on Reserves

“Separately, the Commodity Futures Trading Commission said… Shell’s energy trading unit, Coral Energy Resources, had agreed to pay $30 million to settle accusations that it submitted false price data to publishers”

By HEATHER TIMMONS

Published: July 30, 2004

LONDON, July 29 – The Royal Dutch/Shell Group said on Thursday that it had agreed to pay a total of $150 million in fines to settle investigations by American and British securities regulators into its reporting of crude oil and natural gas reserves. The company said in January that it had substantially overstated those reserves.

The agreement eases some of the pressure on Shell, the world’s third-largest publicly held oil company. But Shell still faces a separate criminal investigation into the matter by the United States Justice Department, a continuing regulatory investigation in the Netherlands and several shareholder lawsuits.

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Shell to Pay $150 Million in Penalties

The Wall Street Journal: Shell to Pay $150 Million in Penalties

“Shell also has arranged with U.S. authorities to grant Dutch and British employees special diplomatic safe passage to and from American shores” (ShellNews.net)

Oil Titan Agrees to Settle With U.S., U.K. Authorities For Overstating Its Reserves

By ALMAR LATOUR and CHIP CUMMINS

Staff Reporters of THE WALL STREET JOURNAL

July 30, 2004; Page A3

The world’s third-biggest public oil company reached preliminary settlements with U.S. and British authorities to pay penalties of about $150 million for overstating one of the most vital signs of its future health, its tally of energy reserves.

Royal Dutch/Shell Group unveiled the hefty settlements after months of assiduously trying to right its relationship with regulators. It ousted top executives, turned over troves of documents and shared the full findings of an internal Shell investigation of the company’s overstatements of oil and natural-gas reserves.

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Daily Telegraph: Shell to pay watchdogs £80m for oil reserves row

Daily Telegraph: Shell to pay watchdogs £80m for oil reserves row

“but warned it could not put a figure on the cost of investor lawsuits.”

By Caroline Muspratt (Filed: 30/07/2004)

Royal Dutch/Shell has agreed to pay more than £80m to regulators to settle investigations into the oil giant’s overstatement of reserves, but warned it could not put a figure on the cost of investor lawsuits.

The company will pay £17m to the Financial Services Authority, the largest settlement ever paid to the UK watchdog. It will also pay $120m (£66m) to the US Securities and Exchange Commission and will spend a further $5m to develop an internal compliance programme.

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Daily Telegraph: It’s a big bite for bureaucrats

Daily Telegraph: It’s a big bite for bureaucrats

“Shell shareholders are writing the cheques and, as the American lawyers get going, they will be writing more and bigger ones.”

City comment

Edited by Neil Collins, City Editor

(Filed: 30/07/2004)

Even given the salaries at the Financial Services Authority (pay peanuts and you get. . .) £17m should cover quite a few of them, so it was a good day for the bureaucrats yesterday. The fine, levied on Shell for breaching the catch-all rules on “market abuse” looks modest compared with the $120m hit from the Securities & Exchange Commission in America, but everything’s bigger over there.

In truth, the fines are a classic case of kicking the dog to punish the cat, since those in charge when Shell overstated its oil reserves have all gone (and we may be sure they have been well rewarded for their incompetence). Shell shareholders are writing the cheques and, as the American lawyers get going, they will be writing more and bigger ones.

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The Boston Globe: Shell to pay $151m to settle misstatements

The Boston Globe: Shell to pay $151m to settle misstatements

“fails to hold personally accountable the corporate insiders who perpetrated the fraud,”

By Associated Press

July 30, 2004

LONDON — The Royal Dutch/Shell Group of Cos. agreed to pay a $120 million penalty to US authorities for misstating its oil and gas reserves.

Shell disclosed the fine yesterday as it reported a 54 percent increase in quarterly net income that reflected high global oil prices. Net income for the three months to June 30 was $4.0 billion, compared with $2.6 billion in the same period a year earlier.

Shell said it had agreed in principle to pay a $120 million civil penalty to resolve the pending inquiry by the Securities and Exchange Commission, as well as $31 million in connection with an inquiry by British authorities.

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SINGAPORE PRESS: GIC Buys 5% Of Malaysia Shell Refining

SINGAPORE PRESS: GIC Buys 5% Of Malaysia Shell Refining

Friday July 30, 9:24 AM

SINGAPORE (Dow Jones)–The Government of Singapore Corp. has bought another substantial stake in a listed company in Malaysia amid signs of warmer bilateral ties between the two countries, the Business Times reports.

The investment arm of the Singapore government has emerged as possibly the third-largest shareholder of Shell Refining Co. (Federation of Malaysia), after it bought a 5% stake, or 15 million shares, in the company for S$43.91 million, the Singapore business daily says.

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Shell’s road to redemption remains a long one

The Independent: Shell’s road to redemption remains a long one

“An extradition battle involving Shell’s former chairman Sir Phil Watts would provide splendid entertainment but it would also guarantee plenty more bad headlines”

Michael Harrison’s Outlook:

30 July 2004

Two down, only six to go. The settlements Shell announced yesterday with the Securities and Exchange Commission in America and the Financial Services Authority over here means that it can, at last, begin to put a little bit of clear water between it and the reserves reporting scandal.

Tim Morrison, Shell’s acting-finance-director-but-not-for-much-longer, insists that the £83m in fines was sufficient to make eyes water in the boardroom. But, in truth, this is the kind of sum that can be lost in the rounding for a company like Shell, which made a $4bn profit in the second quarter of the year alone.

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UK and US regulators team up and levy £83m in penalties

Financial Times: UK and US regulators team up and levy £83m in penalties

“more robust policing since the Enron scandal broke in 2001.”

By Andrew Parker in London and Adrian Michaels in New York

Jul 30, 2004

The fines meted out to Royal Dutch/Shell yesterday by the authorities on both sides of the Atlantic are indicative of regulators’ more robust policing since the Enron scandal broke in 2001.

The Financial Services Authority, the chief UK financial regulator, delivered its biggest fine by finalising a £17m penalty with Shell. But the FSA fine is dwarfed by the $120m (£66m) penalty that Shell has agreed with the Securities and Exchange Commission, the main US regulator.

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Rescued by fuel sales and refining

Financial Times: Rescued by fuel sales and refining

“fails to mask the problems in Shell’s basic business of finding and producing oil.”

By James Boxell

Jul 30, 2004

Shell is reaping the benefits, like its international peers, of record oil prices as demonstrated by net adjusted earnings of $3.8bn (£2.1bn) in the second quarter of 2004.

This is 16 per cent higher than the same period last year but it fails to mask the problems in Shell’s basic business of finding and producing oil.

As Richard Rose, analyst at Oriel Securities, put it: “Their downstream business managed to get the upstream (exploration and production) business off the hook.”

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Setting the scene

Financial Times: Setting the scene

“Shell expects hostile takeover bids from BP and ExxonMobil within the next few months. These bids will be followed by a successful ‘white knight’ bid from Total”

By Clay Harris

Jul 30, 2004

Royal Dutch/Shell has long been known for its “scenario” planning. Mudlark’s man at the downstream end of the rumour pipeline reports the following scenario from a “senior Shell source”.

“Shell expects hostile takeover bids from BP and ExxonMobil within the next few months. These bids will be followed by a successful ‘white knight’ bid from Total, which will agree to sell some of Shell’s assets to BP and Exxon to persuade them to withdraw.” It’s something to think about.

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The Washington Times: Shell agrees on penalty to settle charges

The Washington Times: Shell agrees on penalty to settle charges

“While trying to put the scandal behind it, Shell reported a 16 percent increase in underlying second-quarter profits thanks to higher oil prices.”

Posted 30 July 04

New York, NY, Jul. 29 (UPI) — Royal Dutch/Shell has agreed to pay $150 million to settle alleged market abuse and reporting fraud in the United States and Britain.

Shell said Thursday it would pay a penalty of $120 million to the U.S. Securities and Exchange Commission and 17 million pounds ($30 million) to the British Financial Services Authority.

Shell said it would make no admissions or denials against the finding by the SEC that the company violated the anti-fraud, reporting, record-keeping and internal control provisions of the U.S. securities law.

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Shell gets hefty fine for reserves fiasco

Business Report: Shell gets hefty fine for reserves fiasco

“The SEC found the Anglo-Dutch group had violated reporting, record-keeping and anti-trust rules”

Posted 30 July 2004

London – Energy multinational Shell said Thursday it had been fined $120 million (R753.6 million) by the Securities and Exchange Commission in the United States following the fiasco regarding the repeated downgrading of its proven reserves earlier this year.

The SEC found the Anglo-Dutch group had violated reporting, record-keeping and anti-trust rules.

An announcement by Shell in January that its oil and gas stocks were 20 percent lower than previously stated led to a spike in the oil price and a decline in its shares.

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Shell pays huge penalties to regulators

AccountancyAge.com: Shell pays huge penalties to regulators

“Shell also confirmed that it breached market abuse provisions of the FSA’s Financial Services and Markets Act 2000”

By Kevin Reed

Posted 30 July 04

The Royal Dutch/Shell Group has agreed massive payouts to both the Financial Services Authority and the US Securities and Exchange Commission as investigations continue into the oil giant’s overstatement of oil reserves.

Shell will pay the FSA a £17m penalty, while the SEC will receive a $120m (£66m) civil penalty plus an additional $5m will be spent by the company to develop a ‘comprehensive internal compliance program’.

Shell also confirmed that it breached market abuse provisions of the FSA’s Financial Services and Markets Act 2000 and the listing rules made under it. However it is not ‘admitting or denying’ the pending findings or conclusions of either the FSA or the SEC.

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US watchdog shows its teeth

Financial Times: US watchdog shows its teeth

“Shell”; “Parmalat”; “Enron”

By Emiliya Mychasuk in London

Posted 30 July 04

The Securities and Exchange Commission, the US chief regulator, is set to chalk up two important settlements this week alone, as a result of a string of probes into accounting related issues.

Ahead of the $120m settlement with Shell announced on Thursday in which the company neither admitted nor denied wrongdoing, the bankrupt Italian dairy company Parmalat also this week agreed to an overhaul of its corporate governance as part of a deal that will eventually allow it to emerge from its restructuring next year.

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Shell pays $151m to watchdogs

Financial Times: Shell pays $151m to watchdogs

“Thursday’s announcement has no bearing on the civil and criminal cases against individuals linked to the company.”

By Carola Hoyos, James Boxell and Deborah Hargreaves in London and Adrian Michaels in New York

Posted 30 July 04

Royal Dutch/Shell on Thursday paid $151m in fines to draw a line under its disputes with the US Securities and Exchange Commission and the UK’s Financial Services Authority.

But the world’s third largest energy group revealed the extent of the operational challenges it still faces by admitting that its production was declining and that it was unable to find sufficient new sources of oil and natural gas to replace old fields.

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Shell agrees to pay fines of £83m

The Times: Shell agrees to pay fines of £83m

“continuing criminal investigation by the US Department of Justice.”: “Both Euronext and AFM, the Dutch securities institute, are also investigating Shell”

By Carl Mortished, International Business Editor

July 30, 2004

SHELL will pay fines totalling £83 million to UK and US stock market regulators as a penalty for offences of market abuse and violation of securities laws relating to its misreporting of oil and gas reserves.

The payments, revealed yesterday by the oil company in a statement that did not concede liability, include £17 million to the Financial Services Authority, the largest fine ever imposed by the UK regulator, and a $120 million (£66 million) civil penalty to the Securities and Exchange Commission.

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The Times: Shell and BASF set to sell $6bn plastics business

The Times: Shell and BASF set to sell $6bn plastics business

“first strategic move for the Anglo-Dutch oil company since becoming mired in its oil reserves scandal in January.”

By Carl Mortished, International Business Editor

July 30, 2004

SHELL and BASF, the German chemical company, are preparing to sell Basell, a $6 billion (£3.3 billion) global plastics business, marking the first strategic move for the Anglo-Dutch oil company since becoming mired in its oil reserves scandal in January.

Shell’s plan to cut its exposure to the chemicals sector emerged as the oil company announced second-quarter profits of $3.8 billion — a 16 per cent increase on 2003. The figures include a strong improvement in its refining and chemicals profits, but a weak result from the upstream oil production business, which suffered a 3 per cent fall in profits despite the exceptionally high oil price.

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Simple solutions are best for Shell

The Times: Simple solutions are best for Shell

“One of the world’s most trusted investments lost its credibility and its top credit rating.”: “directors and top managers were the authors of Shell’s misfortunes”

By Patience Wheatcroft

July 30, 2004

SHELL shareholders have suffered enough. They have seen oil prices booming, yet their own fortunes have been shrinking. One of the world’s most trusted investments lost its credibility and its top credit rating. Investors have suffered a series of sudden downgrades of reserves of unproven value, resignations of top executives, class-action lawsuits and investigations by regulators in London, New York, Washington, The Hague and Amsterdam.

They have watched shares of their arch rival BP rise 10 per cent so far this year. BP has comfortably beaten the market and is poised to reach new highs on the strength of analysts’ plaudits and buoyant oil prices. Over the same climatically benign period, Shell shares had fallen 7 per cent, until yesterday that is.

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BG’s bet on Bolivian gas could help it to breeze past oil majors

The Times: BG’s bet on Bolivian gas could help it to breeze past oil majors

By Angela Jameson

29 July 2004

OIL prices soar and another energy company reports record profits. Sounds like a familiar story but at BG Group there is something different going on.

Of course, BG has benefited from the high oil price but that is not the whole picture. For a start, BG Group is quite a different animal from its giant cousins, Shell and BP. The company is 70 per cent dependent on gas, which means that its earnings are less volatile. And in an increasingly environmentally friendly world, it will reap the benefit of being cleaner than an oil-biased explorer.

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BG investigated over Kazakhstan customs duties

The Times: BG investigated over Kazakhstan customs duties

“BG is talking to the Kazakhstan Energy Minister to try to settle the deal on the terms agreed with the partners Eni, ExxonMobil, Shell and Total.”

By Angela Jameson, Industrial Correspondent

July 29, 2004

BG GROUP, the oil and gas producer, is being investigated by the Kazakhstan authorities for alleged underpayments in customs duties from the Karachaganak oil and gasfield.

The Reading-based group yesterday downplayed the investigation into its alleged underpayment of $5 million (£2.8 million) as a “routine audit”. BG rejected suggestions that the investigation was connected with the Kazakhstan Government’s ambitions to buy the company’s stake in a second oilfield.

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BP ‘risking its reputation’ in Russian oil deal

The Times: BP ‘risking its reputation’ in Russian oil deal

By Dominic Kennedy

July 29, 2004

BP WAS accused yesterday of gambling with its reputation by buying into a Russian oil company part-owned by the Chelsea football club boss Roman Abramovich.

The warning came from the Liberal Democrat Treasury spokesman Vincent Cable, an oil expert, as shareholders in Russia claim in law suits that they have been cheated of $1 billion in profits.

BP, the London-based oil giant, said it was trying to improve corporate governance in its Russian investments but admitted: “It’s clearly something that’s going to take time.”

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BG soothes fears over Kazakhstan tax inquiry

The Independent: BG soothes fears over Kazakhstan tax inquiry: “BG had planned to sell its stake to its partners, who include Shell, Exxon-Mobil, Total and ENI, until the government stepped in.”

By Michael Harrison Business Editor

29 July 2004

BG, the oil and gas exploration group, yesterday shrugged off an investigation by the Kazakhstan government into alleged non-payment of taxes as a “routine” matter.

Speaking as BG became the latest oil producer to benefit from soaring prices, posting a 16 per cent increase in second-quarter operating profits, Frank Chapman, the chief executive, said BG was in discussions with the country’s tax authorities, as was “usual” in the these circumstances. “It is a routine business and really not exceptional in any sense,” he added.

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BG burns as bright as sector’s giants

Financial Times: BG burns as bright as sector’s giants: Royal Dutch/Shell is also expected to report impressive earnings today as a result of higher oil prices.

By James Boxell

Jul 29, 2004

BG Group continued to match its bigger rivals yesterday as it reported a sharp rise in second-quarter profit on the back of record energy prices and continued growth in production.

The UK-based oil and gas exploration company revealed a 20 per cent rise in underlying earnings, a day after BP announced a 23 per cent rise in second-quarter profit. Royal Dutch/Shell is also expected to report impressive earnings today as a result of higher oil prices.

Production volumes in BG’s key exploration and production division, which accounts for most of its profit, rose by 5 per cent in the quarter, although this was down from 9 per cent in the year’s first three months.

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SEC Settlement With Royal Dutch Shell Fails to Fix Governance Flaws

Yahoo.com: SEC Settlement With Royal Dutch Shell Fails to Fix Governance Flaws That Allowed Fraud to Occur and Fails to Hold Executives Personally Accountable for Over $150 Million in Fines

Thursday July 29, 3:14 pm ET

SAN DIEGO, July 29 /PRNewswire/ — The Securities and Exchange Commission’s (SEC) decision to end its investigation of the Royal Dutch Shell Group petroleum companies is short-sighted and disappointing because it does nothing to force the company to correct corporate governance flaws that allowed the oil reserve fraud to occur and fails to hold personally accountable the corporate insiders who perpetrated the fraud, the attorney for two large American institutional shareholder groups said today.

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Bloomberg: Shell Pays $150 Million to End Probe; Output May Fall

Bloomberg: Shell Pays $150 Million to End Probe; Output May Fall

“hopeful step in ending the reserves debacle that led to the ouster of three senior executives, the loss of a top-tier investment rating and more than a dozen shareholder lawsuits”

July 29, 2004

July 29 (Bloomberg) — Royal Dutch/Shell Group agreed to pay $150 million to settle U.S. and U.K. regulatory probes into the overstatement of its reserves and said the billions spent on drilling may not boost production in the next two years.

Oil and gas output at Shell, Europe’s second-largest oil company, may drop to 3.5 million barrels a day in 2006, down 2.2 percent from now. Second-quarter net income rose 16 percent to $3.77 billion from $3.26 billion a year ago, using accounting that excludes inventory-related gains.

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London Evening Standard: Shell pays over reserves scandal

London Evening Standard: Shell pays over reserves scandal

“It still faces a host of multi-billion dollar class-action lawsuits and a US Department of Justice probe.”:

Steve Hawkes, Evening Standard

29 July 2004

TROUBLED oil giant Shell has agreed to fork out £83m in penalties to UK and US stock market regulators to settle the reserves crisis that cast a huge shadow over half-year results unveiled today.

Shell plans to pay £17m to the Financial Services Authority* and $120m (£66m) to the US Securities and Exchange Commission to ‘resolve’ investigations into whether it broke disclosure rules.

It still faces a host of multi-billion dollar class-action lawsuits and a US Department of Justice probe.

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BBC NEWS: Shell fined over reserves scandal

BBC NEWS: Shell fined over reserves scandal

“will pay a penalty of £17m to the FSA – the biggest fine ever imposed by the regulator – and a $120m (£65.7m) civil penalty in the US.

The scandal rocked investor confidence

29 July 04

Oil giant Shell has agreed to pay more than £80m in penalties to settle inquiries by US and UK regulators into the firm’s restatement of reserves. The firm slashed its reserves estimates by 20% in January, a move which cost three top executives their jobs.

News of the settlement came as the company unveiled second-quarter net income of $4bn (£2.2bn) boosted by high oil prices from last year’s $2.6bn.

Shell added the review of its corporate structure was moving at a “good pace”.

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Shell fined US$120 million

TheStarOnline: Shell fined US$120 million

“Rebuilding credibility” and “regaining trust” are now the company’s key priorities, it said in its annual report.”

29 July 04

LONDON (AP) – The Royal Dutch/Shell Group of Cos. said Thursday it has agreed to pay a penalty of US$120 million to the U.S. authorities over the company’s misstatement of its oil and gas reserves.

Shell announced the fine as it reported a 54 percent increase in quarterly net income that reflected high global oil prices. Net income for the three months to June 30 was US$4 billion, compared with US$2.6 billion in the same period a year ago.

Shell said it had agreed in principle to pay a US$120 million civil penalty to resolve the pending inquiry by the U.S. Securities and Exchange Commission into the reserves downgrading.

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Reuters: Shell pays fines for reserves woes

Reuters: Shell pays fines for reserves woes

“Royal Dutch/Shell will pay about $150 million (82 million pounds) in fines for an oil reserves scandal that tarnished its reputation”

“Shell’s profits looked reasonable, but concerns remain over future production.” Oriel Securities analyst Richard Rose

By Sudip Kar-Gupta

Thu 29 July, 2004 09:12

LONDON/AMSTERDAM (Reuters) – Royal Dutch/Shell will pay about $150 million (82 million pounds) in fines for an oil reserves scandal that tarnished its reputation, the group says after reporting higher second-quarter profits.

The world’s third-biggest oil group said on Thursday net profit adjusted for the current cost of supply was $3.768 billion in the quarter, up 16 percent from a year earlier, but below forecasts. The company said production was lower and would fall further.

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The Scotsman: Shell Fined £65M after Reserves Crisis

The Scotsman: Shell Fined £65M after Reserves Crisis

“inquiry which found that Shell violated reporting, record-keeping and anti-trust rules.”

By David Winning, City Staff, PA News

Thu 29 Jul 2004 8:07am (UK)

Oil giant Shell said today it had been hit with a 120 million US dollar (£65.7 million) fine following its reserves crisis earlier this year.

The penalty was imposed by the Securities and Exchange Commission (SEC) in the US after an inquiry which found that Shell violated reporting, record-keeping and anti-trust rules.

The Anglo-Dutch group rocked the market in January by announcing that its oil and gas stocks were 20% lower than previously thought. It subsequently downgraded its reserves a further three times.

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Shell Transport To Resolve FSA And SEC Investigations

The Wall Street Journal: Shell Transport To Resolve FSA And SEC Investigations

“Shell to cease and desist from future violations of, the antifraud, reporting, recordkeeping and internal control provisions of the U.S. Federal securities laws and related SEC rules.”

DOW JONES NEWSWIRES

July 29, 2004 3:12 a.m.

Edited Press Release

LONDON — The Royal Dutch/Shell Group of Companies said Thursday that it has reached agreements in principle with the United Kingdom’s Financial Services Authority and the staff of the United States Securities and Exchange Commission to resolve their pending inquiries related to Shell’s reserves recategorisation.

In connection with the agreement in principle with the FSA, Shell will agree, without admitting or denying the FSA’s findings or conclusions, to the entry of a Final Notice by the FSA finding that Shell breached market abuse provisions of the UK’s Financial Services and Markets Act 2000 and the Listing Rules made under it.

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Canadian Press: Western Oil Sands posts Q2 loss of $9.2M after year-ago profit

Canadian Press: Western Oil Sands posts Q2 loss of $9.2M after year-ago profit

Wednesday, July 28, 2004

CALGARY (CP) – Western Oil Sands Inc. is reporting a second-quarter loss of $9.2 million due to increased expenses and a foreign-exchange loss.

The loss at Western Oil Sands, whose sole holding is a 20 per cent stake in the Athabasca oilsands project operated by Shell Canada, came to 17 cents a share in the quarter ended June 30, the Calgary-based firm (TSX:WTO) reported Wednesday.

That compared with a profit of $1.2 million, or three cents a share, in the year-earlier quarter.

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Press Release From Shell Exploration & Production Company: Shell Announces First Production From Glider Field

Press Release From Shell Exploration & Production Company: Shell Announces First Production From Glider Field

Wednesday July 28, 10:09 am ET

NEW ORLEANS, July 28 /PRNewswire/ — Shell Exploration & Production Company announced today that it has recently commenced production from its Glider field in the Gulf of Mexico’s Green Canyon Block 248. The Glider field is the first subsea tieback to the Brutus tension leg platform. Glider is located in approximately 3,400 feet of water, about 165 miles south-southwest of New Orleans. Shell is operator with a 75% interest in the field; Newfield Exploration holds the remaining 25% interest.

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