Ananova.com: Reserves Crisis Flares At Shell
The reserves crisis at Shell has resurfaced with the oil giant restating its stocks for the fourth time this year.
Shell shocked the City by announcing ahead of its annual report on Friday that it was lowering its reserves by a further 120m barrels.
The downgrade relates to royalties paid on properties in Canada and means that Shell’s accessible stocks are now 4.47bn barrels lower than previously thought at the start of 2004.
The latest downgrade was due to accountancy policy changes and would have no impact on its reported cash flows, the company said.
Reserves are an oil company’s most valuable asset, and any reclassification into less certain categories is a serious concern for investors.
Shell shocked investors in January by slashing its proven oil and gas reserves by 20%.
Further smaller reserves cuts, while not as dramatic as the first, have dealt further blows to shareholder confidence.
The scandal led to the ousting of Chairman Philip Watts, oil and gas chief Walter van de Vijver and Chief financial officer Judy Boynton, and has led to a probe by US regulators. Analysts say the Shell scandal had raised questions about reserves accounting throughout the whole industry.
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