U.S. authorities said Wednesday they will not prosecute Anglo-Dutch oil company Royal Dutch Petroleum Company/Shell for overstating its reserves, citing the company's cooperation in a government probe.
Shell has been under a cloud for overstating its proved hydrocarbon reserves as of the end of 2002 by around 23 percent. The company disclosed the overstatement last year.
Accurate disclosure of reserves are important because it reflects expected future income for an oil company and has a direct impact on its share price. Shell had overstated its oil reserves by 4.47 billion barrels.
In a statement, David Kelley, the U.S. Attorney for the southern district of New York, cited the oil company's cooperation with the U.S. government's investigation as well as Shell's settlement with the Securities and Exchange Commission over the filings it made in 2002 and earlier.
Last year, Shell had agreed to pay $120 million to settle fraud charges with the SEC and Kelley also cited this as one of the reasons why it had decided not to prosecute the company.
"Because Shell has cooperated fully with the government's investigation, has implemented substantial remedial efforts to enhance it reserves reporting and compliance, and has paid a $120 million civil penalty to the SEC, the public interest has been sufficiently vindicated," a statement from Kelley's office said.
Shell's reserves scandal, which surfaced in January 2004, stunned financial markets. While some of the resulting investor dissatisfaction was countered by rising oil prices, preventing a sharper fall of its share price, it forced Shell to make top-level push management changes.
Former Chairman Philip Watts, oil and gas chief Walter van de Vijver and Chief Financial Officer Judy Boynton lost their jobs following the scandal.
