Accounting & Tax

Groundhog Day for Royal Dutch/Shell

The beleaguered energy giant will cut its estimates of its proven reserves one more time.
Stephen TaubMay 25, 2004

Royal Dutch/Shell has restated its reserve estimates for the fourth time this year. The multi-national energy giant said it is cutting another 112 million barrels of oil from its proven reserve base.

The company made the announcement while noting that auditors have finally signed off on its 2003 reports, which will be released to shareholders on Friday.

When it does make the filing, the company will show a reduction of 4.47 billion barrels in its 2002 reserves, up from an estimated reduction of 4.35 billion when it last updated its numbers back in mid-April.

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The latest downgrade in proven reserves reflects “an adjustment with respect to royalties paid in cash in Canada,” the company stated. The adjustment resulted in a reduction of 103 million barrels of oil equivalent and a reduction of production of nine million barrels of oil for 2003.

The company, which has been wracked by a scandal concerning the overstatement of reserve estimates, said the upcoming restatement was part of its shift toward using stricter American accounting regulations rather than a combination of Dutch and American rules, according to the Associated Press.

In January, the company announced that it had reduced its confirmed oil and gas estimated by 20 percent, or 3.9 billion barrels, according to AP.