Proved reserve recategorisation following internal review: No material effect on financial statements.
09/01/2004
"The Royal Dutch/Shell Group of Companies (`Shell') announced today that, following internal reviews, some proved hydrocarbon reserves will be recategorised. The total non recurring recategorisation, relative to the proved reserves as stated at December 31st 2002, represents 3.9 billion barrels of oil equivalent (`boe') of proved reserves, or 20% of proved reserves at that date. Over 90% of the total change is a reduction in the proved undeveloped category; the balance is a reduction in the proved developed category".
This is being spun in the business news as poor management. Not so. Shell is simply the first of the majors to come clean. Notice that most of this 20% reduction comes from the catagory "proved and undeveloped". This isn't just Shell's problem. This is a world wide problem. The USGS and the EIA has been routinly overestimating the amount of undeveloped reserves in a manner that is almost criminal. We are all going to pay a heavy price for this duplicity.