Saturday, July 3, 2004

Shell says it overstated profits by $432M



By Brad Foss
The Associated Press

WASHINGTON - The Royal/Dutch Shell Group said Friday that the overstatement of its proven oil and gas reserves resulted in profits being exaggerated by $276 million, and that "inappropriate" accounting in other areas resulted in profits being embellished by an additional $156 million.

The revision followed a series of disclosures that in total reduced the company's reported reserves by nearly one-quarter and led to the departure of several top executives.

The biggest downward revision was for 2002, when the faulty accounting resulted in profits being overstated by $208 million. In 2001 the reduction was $56 million, in 2000 it was $122 million and before 2000 it was $46 million.

The company disclosed the overstated profits in a filing with the Securities and Exchange Commission Friday, explaining that in addition to the reserves accounting it had made errors in the way it accounted for exploration costs, certain gas contracts and the earnings per share of its parent companies.




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