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Moody’s fears pace of Shell shake-up

Daily Telegraph: Moody’s fears pace of Shell shake-up

“In a letter that confirmed Shell’s Aa1 rating with negative outlook”: “Shell’s competitive positioning in global exploration and production, while formidable, has suffered relative to its high-rated industry peers..”

By Christopher Hope (Filed: 03/08/2004)

Moody’s, the credit reference agency, is worried that changes to Shell’s unwieldy corporate structure could happen too quickly.

The Anglo-Dutch oil giant has pledged to review its structure after announcing that it had 23pc or 4.47 billion fewer barrels of “proven” oil and gas than previously thought. An update by a special steering committee is promised for November.

In a letter that confirmed Shell’s Aa1 rating with negative outlook, Moody’s said: “The negative outlook reflects the uncertainties over timing as well as the scope and direction of governance and legal structural changes to be recommended by the steering committee.

“Management has set an aggressive calendar for announcing the committee’s proposals but execution risk remains a concern for an organisation with over a century of commercial, managerial and cultural traditions tied to Shell’s dual structure.”

Moody’s added that “Shell’s competitive positioning in global exploration and production, while formidable, has suffered relative to its high-rated industry peers with regard to asset life, petroleum reserve replacement and production growth”.

Shell’s shares closed up .25 at 398.75p.

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