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BBC NEWS: Shell escapes charges on reserves

BBC NEWS: Shell escapes charges on reserves

“US prosecutors have decided not to take Royal Dutch Shell to court for overstating its oil reserves by 4.47 billion barrels, the company has said.”

Thursday 30 June 2005

US prosecutors have decided not to take Royal Dutch Shell to court for overstating its oil reserves by 4.47 billion barrels, the company has said.

The threat was withdrawn after the company assisted an investigation into how it had overstated reserves by 20%.

The firm revealed the miscalculation last year, and agreed to pay a $120m (£66.9m) penalty to settle with the US Securities and Exchange Commission.

Oil reserves can affect share prices as they indicate potential future income.

Shell’s shares dived when it downgraded its reserves last year, but they have since recovered, boosted by the rising global price of oil.

‘Enhanced reporting’

David Kelley, US Attorney for the southern district of New York, said Shell had “co-operated fully” with a government investigation.

He said the firm had also “implemented substantial remedial efforts to enhance its reserves reporting and compliance”.

“The public interest has been sufficiently vindicated,” Mr Kelley said in a statement.

In July 2004 Shell was fined £17m by the UK’s Financial Services Authority, the largest penalty the body had imposed.

The scandal surrounding the downgrades led to the departure of Shell’s chairman Sir Philip Watts, oil and gas chief Walter van de Vijver and finance chief Judy Boynton.

Management structure

Following the controversy over the reserves, investors called on Shell to simplify its twin board structure.

On Wednesday, shareholders approved plans to merge its dual-ownership structure and create a single company worth £120bn.

Until now, the firm has been 60% owned by Royal Dutch Petroleum and 40% owned by Shell Transport & Trading. Merging the two sides should simplify the chain of command.

New Royal Dutch Shell shares will have their primary listing on the London Stock Exchange and are scheduled to start trading on 20 July.

SOURCE

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