Shell Oil Cuts Reserves Again

[poe]

LONDON (Reuters) - Royal Dutch/Shell Group unveiled another, bigger-than-expected, cut in oil reserves on Thursday but tempered the news by announcing record profits and plans for higher dividends and share buybacks.

Surging oil prices and strong refining margins enabled Shell to report fourth-quarter profits of $5.127 billion on a current cost of supply basis, the measure preferred by analysts.

Full-year profits by this measure were $17.59 billion, or $18.54 billion on a historical-cost basis. Analysts said both figures exceeded any profit ever recorded by a UK-listed company, which Tony Woodley, General Secretary of the Transport and General Workers Union, said argued for the introduction of a windfall tax to curb excessive profits in the oil sector.

Excluding one-off gains of $318 million, the fourth-quarter figure was in line with a Reuters poll of 12 analysts which forecast $4.826 billion.

News of the higher payouts to shareholders cheered investors but Shell's fifth reserves cut in just over a year weighed on the company's stock.

Shell shares were down 1.8 percent at 471-1/2 pence at 5:50 a.m. EST, while Royal Dutch was down 1.39 percent in Amsterdam at 45.55, compared with the European oil and gas sector which was down 0.6 percent.

Some dealers said the share fall was also partly due to profit expectations rising in recent days after U.S. majors Exxon Mobil and ChevronTexaco reported forecast-beating results.

RESERVES TARGETS UNCHANGED

Shell has been struggling to rebuild investor confidence after a reserves over-booking scandal last year that led to the sacking of top management and raised serious concerns about the company's ability to replace the oil it pumps with new finds.

The company said it had completed its reserves review and would restate around 1.4 billion barrels of oil equivalent (boe), worse than analyst expectations of around 900 million.

Chief Executive Jeroen van der Veer said he was confident the company would not have to make further reserves cuts.

"We have taken the steps necessary to close out the reserves issue," van der Veer said.

Nonetheless, he reiterated that his head was on the block over the matter. He said the restatement would have only a minor impact on earnings in recent years.

The company stuck to its target of 100 percent reserve replacement over the period 2004-2008, adding that the biggest impacts would come at the end of this period.

Shell, the world's third-largest oil group by market capitalization, got off to a bad start in 2004, hitting a replacement level of between 45 and 55 percent.

//www.energybulletin.net/4220.html

[KalicoKitty]

1. To hell with Shell

I NEVER trade with a Shell station!

[Ezlivin]

2. Peak Oil, anyone?

It does seem like oil reserves are a bit overstated by everyone.

I would not be surprised to see this trend of announcing reserve reductions continue and even accelerate.

[DoYouEverWonder]

3. Time to legalize hemp

but then Shell Oil wouldn't be able to reap billions in profits.