Royal Dutch/Shell Group on Thursday reiterated its target to replace at least 100% of its oil and natural gas reserves between 2004 and 2008, following restatements that showed the oil giant had reserves totaling 11.9 billion boe, down from a restated figure of 12.95 billion boe in 2003. Shell replaced only 19% of its output last year.
In its annual filing of Form 20-F to the Securities and Exchange Commission, the European producer noted that the rate at which new discoveries are coming on stream is "clearly a concern." Shell blamed the low reserves numbers on the exploration and production strategy by the board of directors in the 1990s, and said there was relatively low investment made on exploration during that time.
"Exploration has since been refocused and investment levels have increased," the report said. Among other things, the company announced earlier this year that it plans to hire more than 1,000 engineers worldwide to strengthen its unit.
Shell also reiterated its target to replace at least 100% of its reserves between 2004 and 2008. It is forecasting gas and oil output for 2005 and 2006 to remain in the range of 3.5-3.8 million boe/d, which will then rise to between 3.8-4 million by 2009. Under its new "production aspirations," Shell said that it expects to produce between 4.5- 5 million boe/d by 2014.
By 2006, Shell said that it plans to deliver about $5 billion of upstream divestments and business swaps, and added that it may acquire some properties as well. "Focused acquisitions will be considered, especially those which provide price and exploration upside, which fit the strategic themes the group targets and where the group can see clear scope for long-term value growth."
The 266-page filing revealed that it is in settlement talks on some of the class action lawsuits brought in the United States by holders of Shell Oil Co. pension plans over the reserves scandal that began last year. It did not disclose any estimated amount it may have to pay in settlement costs.
The entire document may be downloaded from http://www.shell.com.
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