El Paso

(EP)

slipped 6% Friday after the company hinted that its reserve problems could get bigger.

The Houston-based energy giant told investors on a conference call that its reserve overstatements could lead to a charge bigger than the $1 billion it has already set plans for,

Reuters

reported. El Paso

blindsided investors in February by announcing that it would need to slash its proved reserves by

a stunning 41%.

The company later said it would have to restate past-year financial results to fix the inaccurate projections. El Paso's reserve troubles come as oil major

Royal Dutch/Shell

(RD)

struggles with similar issues.

"The combination of lower historical reserves, different and often lower historical natural gas prices and finding costs over this period may result in cumulative ceiling test charges that are greater than the $1 billion pretax charges that we expected to take in the fourth quarter of 2003," Scott said on the conference call,

Reuters

reported.

Critics of El Paso say such charges amount to an outgrowth of what they call

aggressive accounting. Most major energy companies use "successful efforts" accounting that requires them to expense exploration-and-production losses at the time they occur.

But El Paso and some others avoid that hit to earnings by using the full-cost method, which allows them to capitalize expenses -- at the risk of massive writedowns if fuel prices decline. Because fuel prices are anything but static, the writedowns occur with some regularity.

On Friday, El Paso slipped 43 cents to $7.40.