Peak Oil? Oil Giant's Officials Knew of Gaps in Reserves in '02

[Renew Deal]

By STEPHEN LABATON and JEFF GERTH

WASHINGTON, March 8 — The new head of the Royal Dutch/Shell Group and its current chief financial officer, as well as the chairman ousted last week, were advised of huge shortfalls in proven oil and natural gas reserves in 2002, two years before they were publicly disclosed, according to company memorandums and notes of executive discussions.

But rather than disclose the problems to investors, senior executives in a July 2002 memorandum came up with — and later carried out — what the memorandum described as an "external storyline" and "investor relations script" that tried to "highlight major projects fueling growth," "stress the strength" of existing resources, and minimize the significance of reserves as a measure of growth.

Problems with reserves were discussed among senior executives months earlier.

A February 2002 memorandum said that one billion barrels of reserves "are no longer fully aligned" with Securities and Exchange Commission rules because the agency issued an interpretation of them. The memorandum said that an additional 1.3 billion barrels of reserves were at risk because it was no longer certain that they could be extracted during the remaining term of licenses between the company and three foreign countries.
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http://www.nytimes.com/2004/03/09/business/09OIL.html?hp

[Turbineguy]

1. July 2002

Sudden $10 drop in stock price.