Reserves restatement punishes Repsol

Repsol, the Spanish oil giant, was punished by the market yesterday as it
lost a quarter of its market value after cutting its proven reserves by 1.254bn

The reserve cut will reduce 2006 profits by between €170m and €180m. Analysts
were forecasting profits of €3bn for Repsol this year, Reuters

The restatement mirrors a similar restatement by RoyalDutch Shell in 2004.
The Anglo-Dutch group saw its shares fall 8% after cutting its reserves by a
fifth, which cost then finance director Judy Boynton her job.

Boynton, four other directors and Shell’s then auditors PwC and KPMG are
facing a £115bn lawsuit from 26 Dutch pension funds over the reserves
restatement debacle.

Despite the crash in its stock, Repsol chairman Antonio Brufau insisted that
the company is not under financial pressure and would not fill the reserves
shortfall with acquisitions.

‘Our plan at the moment is to grow organically, and we have many
capital-intensive projects. We are not considering any significant acquisition,’
said Brufau.

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