In a joint statement, the boards of the Netherlands-based Royal Dutch and London-based Shell Transport and Trading parent companies said they were proposing to shareholders that the group be unified under ‘one company, one board and one chief executive’.
The new structure – to be called Royal Dutch Shell – will have its primary stock market listing in London, with a secondary listing in Amsterdam and ADRs trading in New York, and will be headquartered and tax-resident in the Netherlands.
The reorganisation of the oil giant’s management structure is being seen by investors as an attempt to restore investor confidence in the wake of damaging disclosures in January that Royal Dutch/Shell had overstated its oil and gas reserves by 20 per cent. This scandal hurt its share prices and led to fines from regulators and senior sackings.
Many investors had argued the old dual-headed structure had lacked transparency and accountability and contributed to the reserves overbooking debacle.
“We shall move from the complex governance and corporate structure that people found difficult to understand – we have been listening hard to what the world had to say,” said Royal Dutch chairman Aad Jacobs.
But the Anglo-Dutch company – the world’s third-biggest oil group – has now said another 900 million barrels of reserves might have to be removed from its 2003 accounts following an extensive audit. This would be the year’s fifth downgrade.
The current Group CEO, Dutchman Jeroen van der Veer, will head the new company. About 200 management jobs will be transferred from Britain to the Dutch headquarters.
Former chairman Sir Philip Watts lost his job over the scandal.
Royal Dutch owns 60 percent of the assets of the current group of companies and Shell Transport and Trading owns 40 percent.
The merged company will preserve the tax advantages of a dual company structure.
Meanwhile, the group’s third-quarter reported net income has more than doubled on the year to $5.4 billion. Earnings on estimate current cost of supplies rose 70 percent to $4.4 billion – topping the average estimate by 6%.
Royal Dutch/Shell said earnings reflected higher hydrocarbon realisations and strong LNG and gas-to-liquids earnings, which offset lower other income in gas & power, and higher downstream earnings in oil products and chemicals.
