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The Guardian: El Paso staff accused of reserves ploy

The Guardian: El Paso staff accused of reserves ploy

David Teather in New York

Tuesday May 4, 2004

El Paso, the American energy firm struck by a markedly similar scandal to the one afflicting Shell, yesterday said workers might have deliberately overstated oil and gas reserves between 1999 and 2003.

A review prepared by an outside law firm found that some unidentified employees had used methods that were “aggressive and at times unsupportable” to book proven reserves.

Houston-based El Paso slashed its proven oil and gas reserves by 41% in February, weeks after Shell cut its reserves. The US attorney’s office and the securities and exchange commission are continuing investigations into El Paso.

In a statement, the company said: “Certain employees provided reserve estimates that they knew or should have known were incorrect at the time they were reported.”

The report cleared El Paso’s senior management team of any wrongdoing.

The review confirmed the need for El Paso to restate its earnings for the years in question.

The problems at El Paso are another blow to the American energy sector and pointedly to Houston, Texas, the former home of Enron – once the seventh largest company in America and brought down by accounting skullduggery.

http://www.guardian.co.uk/business/story/0,3604,1208690,00.html

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