A group of more than 50 European investors stands to collect a record US$352.6 million, plus administrative costs, from Royal Dutch Shell to settle a class action lawsuit filed over the producer's alleged overbooking of oil and natural gas reserves over a five-year period. A U.S. settlement is expected in the next few weeks.
The lawsuit was originally filed by U.S. shareholders, which claimed Shell had committed securities fraud after allegedly overstating its oil and gas reserves by amounts worth more than $100 billion between 1997 and 2002. Following an internal review, Shell in early 2004 recategorized its reserves bookings and lowered its total reserves 4.47 billion boe (see Daily GPI, May 25, 2004; April 20, 2004).
The restatements led to a complete overhaul of Shell's management team and the ouster of long-time CEO Philip Watts and Walter van de Vijver, CEO of Shell's exploration and production business (see Daily GPI, March 4, 2004).
Shell agreed as part of the European settlement to request that the U.S. Securities and Exchange Commission (SEC) distribute to shareholders the $120 million paid by Shell in 2004 under a consent agreement resolving the SEC's investigation into Shell's reserves recategorization. Shell agreed in August 2004 to pay a total of $151 million, including $120 million to the SEC, to settle the U.S. and U.K. complaints (see Daily GPI, Aug. 25, 2004). Shell in 2005 also agreed to pay U.S. pension holders $90 million to settle another class action (see Daily GPI, July 13, 2005).
The European settlement was filed in the Amsterdam Court of Appeals and is expected to be approved this summer.
Shell, which admitted no wrongdoing, expects to propose a settlement to U.S. investors "within weeks," according to Beat Hess, Shell's legal director. He said the settlement is expected to be around $80 million.
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