Royal Dutch Shell plc will not include oil and natural gas reserves estimates in its 2007 annual results Thursday, waiting instead to release the numbers in its Securities and Exchange Commission (SEC) 20-F annual report, the company said.

Shell’s reserves estimates have been a concern since it recategorized nearly 20% of its proved reserves, or about 3.9 billion boe, in early 2004 (see Daily GPI, Jan. 12, 2004). The restatement, which led to the resignation of CEO Philip Watts (see Daily GPI, March 4, 2004), reduced Shell’s proved reserves to 15.6 billion boe from the 19.5 billion boe estimated in December 2002.

A company spokesman told the Daily Telegraph of London that quarterly results are “purely financial,” and “we think the right place to update on reserves is in the 20-F.” The SEC requires foreign firms to file 20-F reports annually according to U.S. generally accepted accounting rules.

Financial analyst Dresdner Kleinwort called Shell’s decision “regrettable” but understandable because the oil major’s reserve replacement figures were weaker and more complex because of some foreign investments. Delaying the filing “doesn’t mean there’s a problem. But it doesn’t inspire confidence.”

In early 2007 Shell ceded control of its stake in the Sakhalin-2 project to Russia’s Gazprom, which took a 51% share of the project. The sale to Gazprom halved Shell’s stake to 27.5%. Shell also has had some operational problems in Nigeria.

Earlier this month Moody’s Investors Service reported that even though the majors, including Shell, have strong cash flows, their prosperity belies formidable challenges to replace their reserves, grow their production and control costs (see Daily GPI, Jan. 24).

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