Royal Dutch Shell Group .com Rotating Header Image

LA Times: SEC Weighs Requiring Certified Reserves: ‘scandal at Shell oil’

LA Times: SEC Weighs Requiring Certified Reserves: ‘scandal at Shell oil’

‘overstatement of its proven reserves and “inappropriate” accounting in other business areas resulted in profits being inflated by $432 million.’

By Associated Press

Posted 21 July 04

WASHINGTON — Following scandal at Shell oil, federal regulators are considering requiring outside auditors to review and certify energy companies’ oil and gas reserves, documents show.

A memorandum from two officials of the Securities and Exchange Commission to its chairman, William Donaldson, indicates that the move being considered would mandate that outside auditors review and certify oil and gas reserves the way they do now for companies’ finances.

An embarrassing series of disclosures in recent weeks by the Royal/Dutch Shell Group cut the oil giant’s reported oil and natural gas reserves by nearly one-quarter and brought the departure of several top executives. The company said recently that overstatement of its proven reserves and “inappropriate” accounting in other business areas resulted in profits being inflated by $432 million.

The SEC has been investigating the Anglo-Dutch company’s accounting for its energy reserves.

The June 24 memo from Alan Beller, director of the SEC’s corporation finance division, and Donald Nicolaisen, the agency’s chief accountant, notes that oil and gas reserves are a critical indicator of energy companies’ financial condition.

“Significant misrepresentations of proved reserves could adversely impact investor confidence in the accuracy and reliability of the reserve data disclosed by industry participants,” it says.

The memo also says that SEC staff will consult with the independent board overseeing the accounting industry, created in response to the corporate scandals of two years ago, to determine whether new accounting rules for energy reserves are needed.

On the Net:

Securities and Exchange Commission: http://www.sec.gov

Royal/Dutch Shell Group: http://www.shell.com

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Comments are closed.

%d bloggers like this: