Shell settles oil reserve claims

energy

Royal Dutch Shell is to pay $352.6m (£178.3m) to settle investors' claims related to its 2004 reserve crisis.
The energy giant shocked investors when it revealed it had overbooked its oil and gas reserves by 20%.

Shell announced it had agreed to the settlement for non-US investors "without admitting any wrongdoing".

It added that the deal now depends on the Amsterdam Court of Appeals declaring the agreement binding for all of the shareholders covered by it.

Under the settlement, Shell said it would also pay administrative costs to institutional investors including ABP and PGGM as well as institutions such as VEB which represent individual shareholders.

Pay-out deal

Under the terms of the deal, Shell said $340.1m would be distributed to investors who bought shares between April 1999 and March 2004.

A further $12.5m would be divided equally between investors who submitted a claim for relief, with $6.5m going to organisations representing individual shareholders.

Shell added it intended to offer the same deal to investors in the US. It will also ask the SEC to distribute to shareholders $120m paid in by Shell in 2004.

"The company has earmarked an additional $96 million payment coming from a $120m penalty fine that Shell has been ordered to pay the SEC over its improper reserve disclosures," according to US securities law firm Grant & Eisenhofer, which represents the investor group and the special purpose foundation.

These additional payments bring the total to approximately $450m.

"This is truly an unprecedented settlement of a large-scale European shareholder dispute," says attorney Jay Eisenhofer with Grant & Eisenhofer.

The 2004 overbooking scandal prompted led to the departure of several top executives, including chairman Sir Philip Watts. The firm was also fined a total of £82.7m by US and UK regulators.

As a result of the controversy Shell also abolished its twin board structure, which investors complained lacked clarity and accountability - factors which, it was argued, had contributed to the reserves scandal.



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