Shell Transport & Trading "hold"

04/05/04 - Dryden Financial

NEW YORK, April 5 (New Ratings) – Analyst Roger Richards of Dryden Funancial maintains his "hold" rating on The Shell Transport & Trading & Co (SHEL).

Shares of Shell Transport & Trading, a UK-based company that owns 40% share of the global energy producer, the Royal Dutch/Shell Group, are currently trading at 361p.

According to Dryden Financial’s research note published this morning, Shell Transport & Trading is not involved in any operational activity and derives most of its income in the form of dividends from its holding in the Royal Dutch/Shell group of companies. Royal Dutch Group has recently announced a downgrade of its proven reserves of oil and gas by 20%, the analyst adds. Royal Dutch has also announced a downward recalculation of its annual reserve replacement ratio for 2003, the analyst mentions.

The company is awaiting the report of an internal audit committee before undertaking any management changes, the analyst states. Royal Dutch Group’s dual management structure has been criticized and is likely to be reviewed in the near future, the analyst says. The group has been underperforming its peers in recent years in terms of its ability to find major new oil and gas reserves, the analyst adds. Royal Dutch Group’s efforts to reduce costs and its portfolio of exploration projects would determine the company’s future growth prospects, Dryden Financial states.

The EPS estimates for 2004 and 2005 are 29.2p and 27p, respectively. The P/E estimates for 2004 and 2005 are 12.4x and 13.3x, respectively.

Dryden Financial maintains its "hold" rating on The Shell Transport & Trading Co.