El Paso Corp. will delay the release of its fourth quarter 2003 earnings indefinitely because it will probably have to restate its results, according to the company. On February 17, the energy giant had revised its estimate of proven natural gas and oil reserves downward by the equivalent of about 1.8 trillion cubic feet.
The total amount of the estimate revision will not change, the company stressed. However, since El Paso’s revision announcement, the company has been reviewing whether parts of the revision should be applied to previous years. That would cause a restatement of those years’ financial statements and related supplemental oil and gas reserve disclosures.
As a result of El Paso’s internal reviews, as well as the independent review of its audit committee, the company will restate its financial statements as well as those of El Paso CGP Co. and El Paso Production Holding Co., according to an El Paso spokesperson. The company also warned that investors should not rely on previously filed reports until further notice.
El Paso is not the only energy company to admit that it has overstated its estimate of proven reserves. Earlier this year, Royal Dutch/Shell Group stunned investors when it said it overstated reserves by about 20 percent.
According to Wednesday’s New York Times, one month before Royal Dutch/Shell cut its reserves estimate, it concluded that a number of its biggest competitors, including Exxon Mobil, had more conservative accounting of their reserves.