Yet Another Reserve Revision at Royal Dutch/Shell

Royal Dutch/Shell(RD) will finally file its annual report for 2003 this week, but not before slashing another 112 million barrels of oil from its proven reserve base -- the fourth such revision this year.

The world's third-largest oil company said its auditors have finally signed off on the 2003 reports and they will be made available to shareholders on Friday. Filing of the documents has been complicated by a scandal that came to light in January when the company announced that its proven reserves were overstated by 20%.

Shell has revised the shortfall higher on three subsequent occasions, culminating Monday with news 2003's financial report will show a reduction of 4.47 billion barrels, up from an estimated reduction of 4.35 billion at the last update on April 19.

The latest reduction reflects "an adjustment with respect to royalties paid in cash in Canada," the company said.

"For the years ended 1999 to 2002, proved reserves and production included royalties paid in cash on certain properties in Canada (consistent with practice for properties outside North America)," Shell said. "These have now been removed from proved reserves (consistent with practice for properties in the United States), resulting in a reduction at 31 December 2003, relative to earlier announcements, of 103 million barrels of oil equivalent and a reduction of production of nine million barrels of oil equivalent for the year 2003."

Following discussions with securities regulators worldwide, Shell said, the company will start presenting its financial statements under U.S. accounting rules, with a reconciliation to the Dutch treatment, and impose the same inventory accounting standard -- first in, first out -- worldwide.

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