Royal Dutch/Shell's beleaguered boss insisted on Thursday he would not resign over a shock cut in oil reserves, as the Anglo-Dutch firm posted fourth-quarter profits towards the bottom of forecasts.
The energy giant confirmed rubbed salt in unhappy investors' wounds with confirmation that oil and gas production would be flat this year and fall in 2005. But Phil Watts, chairman of the committee of managing directors, was defiant.
"No I will not resign," Watts told journalists in a telephone briefing. "I am determined to fix the reserves situation." Watts is due to retire anyway in June 2005.
Shell sent its shares into a tailspin in January when it revealed its proven reserves had been overbooked by 20 percent. The news outraged shareholders and knocked more than $15 billion off its stock-market value.
On Thursday, the company's twin London- and Amsterdam-listed shares were little changed, down less than one percent and in line with the energy sector.
Some investors saw glimmers of light. Eureffect asset manager Florian van Laar homed in on news that Shell's reserves-replacement ratio was 98 percent in 2003 - above the 70-90 percent guidance it gave in January.
Despite its problems, Shell's full-year 2003 net profit adjusted to reflect the current cost of oil supplies was the third largest it had ever produced.
It rose to $11.701 billion, below the record year 2000, when the world's third largest oil firm made $13.111 billion, but well up from $9.218 billion in 2002.
Shell had already said it would take a $1.02 billion fourth-quarter charge to write down the value of assets sold in its recent drive to improve returns.
After the charge, fourth-quarter current-cost net profit was $1.856 billion, down from $2.782 billion a year ago, as the charge more than offset higher crude prices. This was below the consensus of analysts forecasts at $2.0 billion but within a $1.725-2.40 billion range of expectations. Traders continued to compare Shell unfavourably with its arch-rival BP, and bemoaned Shell's spiralling cost base and lack of room for share buybacks despite strong cash flow.
Shell's reserve cut in January shrank the group's available oil and gas to less than 11 years' supply at current output rates from more than 13 years' worth previously.
On Thursday, it confirmed the downgrade, but said that in future, reserves replacement would exceed 100 percent, partly thanks to rebooking most of these reserves.
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