Posts from ‘May, 2004’

Mail on Sunday: £150m bonanza for Shell auditors

Patrick Tooher,

30 May 2004

Posted 31 May 04

ACCOUNTANTS who failed to spot Shell’s massive overbooking of reserves were paid more than £150m in the past five years by the embattled oil giant.

Most of the fees paid to KPMG and PwC were for lucrative consultancy work rather than the basic audit, which spectacularly missed major shortcomings in Shell’s own internal financial controls.

However, Shell says it has no plans to change its auditors, who will stand for re-election at next month’s annual meeting. read more

BARRON’SOnline.com: Winds of Fortune

MONDAY, MAY 31, 2004
By JACQUELINE DOHERTY

With oil at $40 a barrel, windmills and solar panels are getting a second look

IT USED TO BE A QUAINT DREAM of the granola and Birkenstock crowd: widespread use of windmills and solar panels to generate electricity. But now, lured by the potential profits, some big corporations are starting to plow billions into the field. Giants such as General Electric and Royal Dutch/Shell Group have jumped into the manufacturing end of the business, while wind farms are finding equity financing from the likes of FPL Energy, a unit of Florida’s FPL Group; PPM Energy, a unit of Scottish Power; and the Zilkha family of Texas, which made a fortune in natural gas in the 1990s. read more

News.com.au: Shell cuts earnings $285m

By Bruce Stanley in London
May 31, 2004

ROYAL Dutch/Shell Group has reduced its annual earnings by $US203 million ($285 million).

This was revealed in an annual report delayed by two months due to the scandal arising from the company’s downgrading of its oil and gas reserves. Yet even as it sought to restore its battered reputation, Shell suffered another blow when a US refinery said it had supplied Shell stations in the US state of Florida with petrol that contained potentially damaging amounts of sulphur. read more

The Business: Benchmark Column: Shell

The oil industry is still essentially run by geologists, so Shell’s executives will have a ready analogy for the periodic tremors the seismic upheaval of Shell’s 3.9bn barrel reserves downgrade in January is still throwing out. Last week’s 120m barrel downgrade, Shell’s fourth this year, barely registered however.

The cut pushed Shell’s total reduction in proven reserves to a new total of 4.47bn barrels, and it was forced to trim earnings for 2001-03 by $402m. Shell Transport’s shares rose 2%. What really held up the share price was belief that Shell’s auditors, KPMG and Pricewaterhouse-Coopers, had decided to give the annual report a clean bill of health. read more

The Business: Shell UK bosses join push for single board

By Richard Orange

30 May 2004

DIRECTORS of Shell Transport and Trading, the British side Anglo-Dutch oil giant Royal-Dutch-Shell, have swung behind investors pushing for the company to unify its two boards.

A UK fund manager involved in meetings with directors on corporate government told The Business: “I’ve spoken to most of the Shell Transport board and they are very much in favour of changing the structure.”

British directors favour moving towards a unified structure, he said, but most would rather do so by appointing the same boards of Shell Transport and Trading and Royal Dutch. This would avoid the expense and legal headaches of unifying the UK and Dutch holding companies into a single listed firm. read more

The Wall Street Journal: Hostages Are Released After Saudi Crisis Ends

Associated Press

May 30, 2004 3:44 a.m.

Saudi Arabia — Saudi authorities freed American, European and other foreign hostages Sunday after a shooting rampage turned into a daylong standoff, and a Saudi security official said the lead attacker was in custody and two other suspected Islamic militants were being arrested.

The Saudi security official wouldn’t comment on the whereabouts or conditions of the hostages, saying only: “It has ended. One has been arrested and two are in the process of being arrested — they are surrounded.” With reports of up to seven gunmen, it wasn’t clear if some of the gunmen had been killed. read more

The Independent: Shell chief faces investors’ wrath over reform at annual meeting

By Tim Webb

30 May 2004

Leading shareholders in Anglo-Dutch company Shell are threatening to vote against the chairman, Jeroen van der Veer, at its Dutch annual shareholder meeting next month.

Under Dutch listing rules, companies must ask shareholders to vote to “discharge directors of their responsibility” for their actions in order to approve its annual report.

Shell sent Royal Dutch shareholders the agenda last week for its annual general meeting. One prominent investor said he was considering not approving this motion as a protest against the board. Some senior Shell executives, especially Mr van der Veer, did not appear committed to significant reform, he said. It follows the scandal over Shell’s misreporting of its oil and gas reserves, prompting investigations by the US Securities and Exchange Commission and the UK Financial Services Authority. read more

The Times: The Andrew Davidson Interview: Life’s a gas for BG supreme

30 May 04

Frank Chapman is the man his rivals would like to poach. But the man who loves sailing says he has already plotted a course for the next nine years

SIZE, says Frank Chapman, looking as lean and sleek as a greyhound, is not important. Well, you could have fooled me. For a boss whose business is sprinting ahead right now, you would think size is one of the mission aims carved above the firm’s front door.

For one thing, doesn’t size make you less likely to be taken over by someone bigger? “Well, maybe,” grins Chapman, “but it’s not something I spend a lot of time thinking about.”   read more

The Observer: Don’t vote before you read this

Sunday May 30, 2004

Heather Connon hears fighting talk from bosses of two very pugnacious shareholder activists

‘Vote often, vote early and vote on an informed basis’ is a motto that Sarah Wilson hopes will become universally accepted. Wilson is founder and managing director of Manifest, the corporate governance and proxy voting agency, which aims to help institutional investors do just that.

Its team of 26 employees produces reports analysing the resolutions put forward at the annual meetings of every British company, highlighting where they do not comply with best practice, comparing salary and bonus levels with averages for the industry and the market as a whole, calculating what that complicated incentive scheme could mean in pounds and pence. When its clients have digested this and decided how to vote, Manifest then ticks the appropriate box – or, more frequently, presses the appropriate button – on their behalf. read more

The Observer: Shell’s ground zero

Sunday May 30, 2004

The reserves scandal has left the Anglo-Dutch oil giant a long way behind its rivals. Dogged by difficulties in Nigeria and elsewhere, can it ever catch up, asks Oliver Morgan

On Friday morning there were loud thumps across the City as oil giant Shell’s hefty annual report finally landed on desks. The long-awaited document, delayed thanks to the internal turmoil caused by four downgrades that have stripped 4.7 billion barrels of oil from the company’s proved reserves, was an attempt to ‘fess up and move on.
read more

The Observer: Saudi horror sparks fears of oil crisis

· Militants hold 50 hostages · £4 gallon looms as battle rages

Nick Mathiason and Mark Townsend

Sunday May 30, 2004

Oil prices are set to surge after al-Qaeda gunmen killed at least 16 people, including a Briton, and seized 50 hostages yesterday during an indiscriminate rampage through the Saudi Arabian city of Khobar.

In a day that left the oil city, in the east of the country, littered with bodies and bullet-riddled buildings and cars, the terrorists attacked four compounds housing foreign workers, seized American and Italian hostages and fought running battles through the streets. read more

news-press.com: Shell Oil replaces sulfur-tainted gasoline

Staff and wire reports

Published by news-press.com on May 30, 2004

Shell Oil interrupted or stopped the sale of gasoline at more than 500 stations in the South because of high levels of sulfur that can damage vehicle fuel gauges and make an empty tank appear full.

The damage done by the bad gasoline could cause some drivers to run out of gas unexpectedly. Also, car owners may have to replace their fuel gauges — a repair job that easily can cost $400 to $600.

The tainted gasoline originated at the Motiva Enterprises refinery in Norco, La., according to Shell. Motiva is the refining arm of Shell in the East and South, including Florida. read more

The Scotsman: Shell

Posted 30 May 04

THE oil industry is still essentially run by geologists, so Shell’s executives will have a ready analogy for the periodic tremors the seismic upheaval of Shell’s 3.9 billion barrel reserves downgrade in January is still throwing out.

Last week’s 120 million barrel downgrade, Shell’s fourth this year, barely registered on the market’s Richter scale, however.

The cut pushed Shell’s total reduction in proven reserves to a new total of 4.47 billion barrels, and the company was forced to trim earnings between 2001-2003 by $402m. Shell Transport’s shares rose 2%. read more

Houston Chronicle: Former SEC leader Levitt notes irony in Shell’s troubles

Associated Press

May 29, 2004, 7:03PM

Posted 30 May 04

Sometimes a selection of keynote speakers for a high-profile conference is all luck.

Former Securities and Exchange Commission Chairman Arthur Levitt kicked off accounting firm KPMG’s annual energy conference last week in Houston with a message similar to the event’s 2003 keynote speaker: Restoration of investor trust and attention to integrity are key in the post-Enron corporate world.

Then Levitt noted the 2003 speaker was Philip Watts, former chairman of Royal Dutch/Shell Group, who resigned under fire last March in the wake of shareholder anger over the company’s overstatement of oil and gas reserves. On Monday the company downgraded the size of its proven oil and gas reserves for the fourth time this year as the oil giant continued to struggle with the scandal. read more

The Sun Herald: Shell shuts pumps in parts of South

By ALAN SAYRE

THE ASSOCIATED PRESS

Posted on Sat, May. 29, 2004

New Orleans on empty

Shell stations on the Coast were not affected by the problem at the Norco refinery because the gas they sell comes from the Mobile area.

Tom Russell, owner of Russell’s Service Center on Scenic Drive in Pass Christian, said a number of customers asked him about the problem. “Ours comes out of Mobile,” he said. “This is different gas altogether. I doubt if anybody in this part of the country picks up in Norco anymore.” read more

Arizona Republic: Shell reduces earnings for ’03 by $203 million

Associated Press

May. 29, 2004 12:00 AM

LONDON – The Royal Dutch/Shell Group of Cos. on Friday reduced its 2003 earnings by $203 million in an annual report delayed by two months due to a scandal involving the downgrading of its oil and gas reserves.

Even as it sought to restore its reputation, Shell suffered another blow when a U.S. refinery said it had supplied Shell gas stations in parts of Louisiana and Florida with gasoline with potentially damaging amounts of sulfur.

Shell’s revised net income for 2003 was $12.50 billion, compared with the original $12.70 billion that it announced in February, before the full extent of its reserves problems emerged. read more

The Scotsman: Troubled Shell’s board bonuses axed

MARTIN FLANAGAN CITY EDITOR

Sat 29 May 2004

STORM-tossed Shell, the subject of regulatory investigations on both sides of the Atlantic for the overstated oil reserves scandal, dispensed with annual bonuses last year as a result, it emerged yesterday.

The British/Dutch oil giant’s twin annual reports released yesterday, after months of delay in the wake of the reserves overstatement, also showed that two of the three directors who were sacked had no contractual right to a severance payoff. read more

The Times: Shell withholds bonuses from ousted directors

By Ingrid Mansell

May 29, 2004  

SHELL yesterday sought to assuage shareholder anger over its reserves misreporting scandal by revealing that it had withheld more than £2.5 million worth of bonuses from its ousted senior directors.

The Anglo-Dutch oil major said Sir Philip Watts, the former chairman, and Walter van de Vijver, the exploration chief, had missed out on potential bonuses worth £843,021 and £563,000 respectively. Sir Philip also failed to qualify for £752,000 worth of long-term incentives.   read more

The Times: Oil price bubble will burst, but fear of shortage remains

By Graham Searjeant

May 29, 2004 

ON WEDNESDAY, the markets paused in suspended animation, waiting for that crucial figure. It was not the rate of interest, output, employment or the election result. It was the routine weekly totting-up of petrol and oil stockpiles in America. On this occasion, the statistic was worth traders waiting for.

Instead of rising, as predicted, stocks fell on the week, which had been set up symbolically in advance as the start of America’s summer driving season. This time, at least, the oil bulls were proved right. When routine reports become staged occasions, however, you can be sure that you are in the middle of a speculative bubble.   read more

The New York Times: Shell Discloses a Large Pay Package for Its Former Chairman

By HEATHER TIMMONS

Published: May 29, 2004

LONDON, May 28 – Sir Philip B. Watts, the ousted chairman of the Royal Dutch/Shell Group, was awarded a pay and option package worth more than £5.84 million ($10.7 million) in 2003, according to annual reports filed on Friday in London and Amsterdam.

The reports also showed that the company’s proven annual reserves were overstated by about one-fifth in each of the last six years.

Shell, the third-largest oil and gas company, had been viewed as one of world’s most conservative energy companies. In January, however, the company shocked investors by cutting its estimates for proven oil and gas reserves by 20 percent. Since then, it has hired scores of outside advisers to investigate the discrepancy, and has ousted three top executives. read more

The Wall Street Journal: More Oil Co Reserves Shocks Unless Rules Tighten -Banker

DOW JONES NEWSWIRES

May 28, 2004 5:05 a.m.

Posted 29 May 04

BERLIN — The oil industry faces more reserves downgrade shocks unless disclosure regulations are radically overhauled, said Matthew Simmons, chief executive and chairman of investment bank Simmons & Co (SIC.XX).

Talking to Dow Jones Newswires on the sidelines of a two-day workshop on oil depletion in Berlin this week, Simmons said: “At the moment exploration and production disclosure amounts to little more than ‘just trust us.’ No other industry gets away with this. We need a new set of disclosures. Without more transparency there’s going to be another bombshell along the lines of Shell .” read more

The Wall Street Journal: Ousted Shell Executives Won’t Get 2003 Bonuses

Associated Press

May 28, 2004 12:10 p.m.

Posted 29 May 04

LONDON — None of the Royal Dutch/Shell Group senior executives ousted after a furor over oil reserves will receive annual bonuses for 2003, the Anglo-Dutch conglomerate said in its annual report.

Former Chairman Sir Philip Watts received his annual salary of £865,000 ($1.56 million or €1.27 million) last year, the report said. But the Shell remuneration committee decided Mr. Watts should miss out on an annual bonus — typically worth the same as his yearly pay. It also said he wasn’t entitled to 50% of stock options granted in 2001 as the company hadn’t met performance targets. read more

Daily Telegraph: Watts’ pension pot tops £10m

By David Litterick

29/05/2004

Former Shell chairman Sir Philip Watts will retire on an annual pension of £568,000 after seeing his salary increase by 13pc last year, it emerged yesterday.

The oil giant’s annual report shows that Sir Philip’s pension pot is now worth more than £10m – a 25pc increase on last year.

The £88,000 increase in his pension entitlement comes after Sir Philip saw his annual salary boosted from £746,000 in 2002 to £843,000 in 2003. Under the group’s final salary pension scheme, his pension is also increased for every year he served. read more

The Telegraph: Shell’s Sir Philip still connected to the pipeline

29 May 04

After months of refusing to explain itself, Shell turned on the PR gushers yesterday. The oil giant was positively dripping as it put the best possible gloss on the company’s annual report, which had (finally) arrived. Look! No bonuses for senior management, it spurted. See how we’ve scrapped Sir Philip Watts’ incentive shares!

Let’s not feel too sorry for Sir Philip. Shell may have suddenly developed a sense of fiscal responsibility and a love of proper procedure, but Sir Philip will still find £568,000 pumping its way into his bank account each year when he retires. read more

The Independent: Where to invest and still have a clear conscience

Jenne Mannion

29 May 2004

Doubts over the profitability of ethical investments are quashed by funds’ returns

Ethical investing has blossomed since it was introduced to investors in the UK exactly 20 years ago next Tuesday.

The Isis Stewardship Growth Fund – the first ethical fund in Europe for retail investors – celebrates its 20th birthday on 1 June. When launched, it was treated with suspicion. Cynics nicknamed it the Brazil fund – because you had to be nuts to invest in it. read more

The Independent: Sacked Shell chief keeps 1m options

By Michael Harrison

29 May 2004

The disgraced former chairman of Royal Dutch/Shell, Sir Philip Watts, is to be allowed to retain more than a million share options granted to him last year. He will also be entitled to a £568,000 income in retirement after a £2m increase in his pension pot last year to more than £10m.

Sir Philip’s basic pay went up in 2003 by £98,000 or 13 per cent to £843,000. However, he received no annual bonus. He has also forfeited £752,000 worth of performance shares in Shell’s long-term incentive plan and 232,500 share options granted in 2001 because of the company’s below-average financial performance. However, the share options are worthless anyway because their exercise price is more than a pound above Shell’s current market price. read more

The Guardian: Apologetic Shell promises culture change

David Gow

Saturday May 29, 2004

Shell’s long-delayed annual report – a 125-page document riddled with apologies and admissions of blame – was finally made public yesterday.

Jeroen van der Veer, Shell’s new chairman, promised radical cultural change within the oil group as it confirmed that it had paid no bonuses last year to his predecessor or other executives in the wake of the reserves debacle.

The report, published after a two-month delay, said Sir Philip Watts, who was ousted as chairman in March, had seen his pay almost halved last year because of the 23% downgrade in the group’s reserves.
read more

San Jose Mercury News: Shell Reduces Earnings by $203 Million

BRUCE STANLEY

Associated Press

Posted 29 May 2004

LONDON – Royal Dutch/Shell Group of Cos. reduced its 2003 earnings by $203 million Friday, in an annual report delayed by two months due to the scandal arising from the company’s downgrading of its oil and gas reserves.

Yet even as it sought to restore its battered reputation, Shell suffered another blow when a U.S. refinery said it had supplied Shell gas stations in parts of Louisiana and Florida with gasoline that contained potentially damaging amounts of sulfur. read more

Financial Times: Shell goes for the ultimate in transparency

By Clay Harris in London

Posted 29 May 04

Royal Dutch/Shell’s new emphasis on transparency begins on the cover of its 2003 annual report, finally published on Friday after a two-month delay because of the group’s reserves cuts and management upheaval.

For Shell Transport and Trading, the UK arm of the Anglo-Dutch oil and gas group, this year’s featured shell is the Rhysota, which one can see right through. Unfortunately, its spiral looks remarkably like liquid going down a plughole. read more

BBC News: Disgraced Shell bosses lose bonus

Posted 29 May 04

Sir Phillip Watts lost his bonus while the oil reserves row was at its height.

Disgraced Shell bosses have lost their bonuses, following the scandal over oil and gas reserves.

In its annual report, already delayed by months, the oil giant also states that two of the three directors who were sacked have no right to a pay-off.

Shell shocked investors when it announced it had overstated reserves by 20% and has made four downgrades. The decision not to pay bonuses appears to be Shell’s attempt to draw a line under the scandal. read more

Bloomberg.com: Shell Says It’s Reviewing Timing of Canada Reserves Revision

May 28 (Bloomberg) — Royal Dutch/Shell Group, Europe’s second- largest oil company, said it is reviewing the timing of revisions to some proved natural gas reserves in Canada, after cutting its holdings four times this year.

Shell is looking into the timing of the removal from proved reserves from 2000 through 2003 of gas at Canada’s Sable Island field, Shell Transport & Trading Co., Shell’s U.K. parent company, said in its annual report. The amount of gas equals between 100 million to 150 million barrels of oil, Shell said.
read more

London Evening Standard: Shell boss missed £2m payout

Steve Hawkes,

28 May 2004

SIR Philip Watts missed out on almost £2m of lucrative stock options* and incentives in his final year at Shell.

But details of a pay-off for the former chairman are notably absent from the oil giant’s mammoth annual report, published today after a 10-week delay.

A spokesman said severance deals for Watts, former exploration chief Walter van de Vijver and finance director Judy Boynton following Shell’s reserves scandal were being thrashed out.

‘It is still a matter of discussion between the boards and the individuals,’ he said. ‘Once final agreement has been reached, we will provide full disclosure.’
read more

The New York Times: Raised Sulfur Levels in Gas Reported

By THE ASSOCIATED PRESS

Published: May 28, 2004

SARASOTA, Fla. (AP) — A Houston-based oil refinery is asking the Shell and Texaco stations it supplies to stop selling regular and mid-grade gasoline that was shipped through the Port of Tampa or Broward County’s Port Everglades.

Motiva Enterprises says the fuel it provided to about 450 stations might contain too much sulfur, which wouldn’t affect engine performance but could cause faulty gas gauge readings.

“It may show you are full, but in fact you’re on empty,” said Helen Bow, a Motiva spokeswoman.
read more

The Wall Street Journal: Tiny SEC Staff Monitors Data on Oil Reserves

Amid Lawyers and Accountants,

Two Petroleum Engineers Plumb

The Depths of Corporate Claims

By MICHAEL SCHROEDER

Staff Reporter of THE WALL STREET JOURNAL

Posted 27 May 04 (originally published 12 March 04)

WASHINGTON — Hundreds of lawyers and accountants at the Securities and Exchange Commission scour company annual reports to make sure the numbers add up. But when it comes to double-checking the oil and natural-gas reserves claimed by oil companies in their filings, the job is left to just two staff petroleum engineers.
read more

The Wall Street Journal: Shell Annual Report: Co Vows To Regain Trust Of Shareholders

DOW JONES NEWSWIRES

May 28, 2004 3:12 a.m.

LONDON — Royal Dutch/Shell Group (RD, SC), humbled by a reserves scandal that saw four top executives dismissed, said in its delayed annual report Friday that “rebuilding credibility” and “regaining trust” would be key priorities going forward.

But, it also stressed that its core exploration and production and refining and marketing businesses are in good shape and that the company is engaged in several new development projects that augured well for the future. read more

The Observer: Oiling the machinery of war

By Eric Watkins
Posted 28 May 2004

The governments of the US and the UK have always insisted that oil had nothing to do with the invasion of Iraq. But few Iraqis are convinced of that, and many have sought to prevent control of their oil by what they call the “occupation authorities”.

Iraqi oil assets are formidable. Industry sources say Iraq contains 115 billion barrels of proven oil reserves, the third largest in the world behind Saudi Arabia and Canada.

But Iraq could have even larger amounts of oil, since only about 10 per cent of the country has been explored. read more

The Guardian: City diary

 Adam Jay

Thursday May 27, 2004

Disappointment at Tuesday night’s LexisNexis UK Tax Awards, where Shell was pipped to the best in-house tax team gong by BT. The oil giant (not quite as giant as we thought a few months back) denies it was asked to consider standing in if no one pitched up from BT, but declined as it has a problem with reserves. And bad news too for KPMG’s Transfer Pricing Team which failed to win best international tax team. Still, as host Clive Anderson pointed out, they sound a top team for Sir Alex and Jason Ferguson.
read more

HeraldTribune.com: Shell temporarily shuts down 106 stations

The Associated Press

Posted 27 May 2004

NEW ORLEANS — Shell has temporarily halted the sale of gasoline at 106 of its Shell and Texaco gas stations in the greater New Orleans area after discovering high levels of sulfur in the fuel.

The company detected elevated levels of sulfur in gasoline that was delivered to its Kenner distribution center, Shell spokesman Shawn Frederick said. Stations that had received gas from that center were notified and began ceasing gasoline sales Wednesday, Frederick said. They will remain closed until further notice, he said. read more

Newsday.com: Kansas, other states’ pension funds involved in Shell litigation

By JOHN HANNA

Associated Press Writer

Posted 27 May 04

TOPEKA, Kan. — Public pension funds in eight states, including Kansas, are battling affiliates of the Royal Dutch/Shell Group of Cos. in federal court, alleging that the conglomerate misled investors about its oil and gas reserves.

Since January, Shell has downgraded the status of about 4.47 billion barrels of its oil and gas reserves. The controversy forced the company’s three top executives to resign.

Shell’s parent companies, the Royal Dutch Petroleum Co. and Shell Transport & Trading Co., face 20 lawsuits in U.S. District Court in New Jersey. The company has a manufacturing, research and sales facility in Linden, N.J. read more