Bad news continues to gush from Royal Dutch/Shell ( SC).

For the second time this year, Shell has cut the proved reserves that measure the company's health. The oil supermajor, which triggered public outcry and government probes with a huge writedown in January, announced a second revision -- with the possibility of more -- on Thursday. The company cut its 2002 reported reserves by 250 million barrels of oil equivalent and expects to trim its 2003 reserves by 220 million more. It has now slashed its proved reserves by 21% this year and, following the completion of an independent review, could announce further cuts in the weeks to come.

In the meantime, the company has delayed both its 2003 10-K filing and its shareholder meeting until this summer.

"Things are going from bad to worse for RD/Shell," wrote Merrill Lynch analyst Mark Iannotti, who has a neutral rating on the stock. "Enough already."

Iannotti sees "plenty of risk" in the ongoing Shell saga. But he nevertheless feels that investors may have overreacted to the latest news. The stock, which slid 4% as Iannotti penned his report overseas, fell only 8% when the company announced its much larger revision in January.

Stocks of the combined company weathered smaller hits on Wall Street. Royal Dutch slipped 1.7% to $47.51, while Shell fell 1.5% to $40.45 on Thursday.

Goldman Sachs analyst Matthew Lanstone stopped short of recommending the shares on Thursday's weakness.

"We view this latest reserve problem as symptomatic of a company in the middle of an ongoing crisis, unlikely to clear itself in the short term," explained Lanstone, who has an in-line rating on the stock. "While we continue to see value in the shares for the longer term, we cannot see positive catalysts" right now.

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