Reply #40: Shell Ratings Are Cut One Level by S&P, Below BP (Update2) [View All]

http://www.bloomberg.com/apps/news?pid=10000102&sid=arwzPvSBX_TE&refer=uk

Feb. 4 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-largest oil company, had its long-term credit rating cut at Standard & Poor's after the company lowered its oil and gas reserves for the fifth time in 13 months.

The rating falls one level to AA from AA+, S&P said in a statement today. Shell's rank is now lower than that of BP Plc, Europe's biggest oil company, and Exxon Mobil Corp. Shell, based in London and The Hague, in April lost its AAA, top-tier standing at S&P, leaving just two investor-owned companies in Europe with such an assessment.

Shell yesterday reduced its estimate of 2003 reserves by 9.8 percent and said its holdings may not rise until next year. Because of the lost reserves, first disclosed in January 2004, Shell paid $151.5 million in U.S. and U.K. fines and dismissed three executives. The U.S. Justice Department is conducting a criminal probe.

The company's oil and gas reserves will last less than nine years at current rates of production, ``a level significantly below that of most oil companies globally,'' S&P's statement said.

Oil and gas reserves are a benchmark for valuing companies, because they form the basis for future production and sales. Exxon Mobil Corp.'s 2003 reserves were 21.2 billion barrels, 64 percent larger than those of Shell.

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