Shell boss to stay on and 'fix it'

SHELL chairman Sir Philip Watts today defiantly vowed to stay in his post and address the fallout from the oil giant's devastating reserves downgrade, declaring: 'I will not resign.'

Despite conceding he had made a mistake in not explaining the shock warning last month, Watts said he wanted to lead the group's efforts to talk to investors and put things right.

'I won't be resigning because I'm determined to fix this situation on reserves as well as pursue the strategy progress we are making and demonstrated during 2003,' he said.

'We believe people have acted in good faith in all of this and we have to learn from these incidents. I'm not sure what will happen in the future but my priority is to fix the problem.'

His comments came as Shell unveiled full-year adjusted profits of $11.7bn (£6.4bn) for 2003, up 27% on the previous year despite a stream of one-off costs over the final months of the year.

These exceptionals, signalled by the oil giant in a trading update before Christmas, pushed fourth-quarter earnings down 33% year-on-year to $1.86bn (£1.01bn).

Shell shares dipped 2 3/4p to 362 3/4p despite a 3.3% rise in the dividend to 15.75p. Tony Alves, analyst at Investec, said: 'The results are quite poor and at the bottom end of expectations.'

Shell stunned the oil industry on 9 January by reclassifying some 3.9bn of oil and gas reserves from 'proven' to 'potential for recovery' in a filing to the US Securities and Exchange Commission. Almost £3bn was wiped off the group's market value as the shares dived on the news.

Watts infuriated the City by putting his investor relations team forward to explain the move. His first appearance since then took place this morning in what promised to be a heated confrontation with analysts.

He was expected to go into further detail about why Shell had placed assets such as the Gorgon gas field in Australia in the proven category when its partners Chevron and Exxon decided not to.

He told journalists on a conference call the group's audit committee had now set up a 'senior team, with outside counsel' to carry out an independent investigation into the reserves issue.

Watts also revealed he plans for a whirlwind tour of at least one-third of Shell's investor base when today's analysts' meeting is out of the way.

The oil supermajors are facing an uphill battle to find new sources of oil and gas as production from existing fields begins to slide. Shell today admitted its production in 2005 would decline.

Despite the problems, sources state the group is pressing on with plans to sell another swathe of mature North Sea assets in three packages which it hopes will generate £200m for future exploration.

News of the sale comes just days after Cairn Energy announced what could be one of the biggest oil strikes this year in India on land it bought from Shell for only £4m.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in