California Public Employees' Retirement System, Sacramento, and Knight Vinke Asset Management today urged Royal Dutch Petroleum Co. and Shell Transport and Trading Co. PLC to have its proved reserves fully audited. "Shell has had the largest part of its reserves reviewed by independent outside consultants this year, and it would be natural and advantageous for Shell to have its proved reserves fully audited," Eric Knight, managing director of Knight Vinke, said in a statement. "If Shell agrees to an external audit of its reserves, this would strongly encourage others in the industry to do likewise and would help to eradicate inconsistencies in the application of the (SEC's) standards … that have undermined the market's confidence in the sector."
The $170.7 billion CalPERS and Knight Vinke "also hope that Shell and its peers will improve disclosure of longer-term reserves that do not yet qualify for 'proved' status but are essential, nevertheless, in determining valuation," according to a statement by the plan and the firm.
CalPERS and Knight Vinke praised Royal Dutch and Shell Transport & Trading "for turning the corner with improved corporate governance — but urged the reorganizing oil giant to lead the oil industry to the high ground of more transparent and meaningful reporting on reserves," their statement said.
CalPERS made a $200 million investment last year in a Knight Vinke fund.