Royal Dutch Shell PLC (RDSB.LN) eased fears that it risked a repeat its oil reserves crisis of 2004 when it announced Monday that its net reserves at the end of last year were stable.
The Anglo-Dutch oil major said in its annual strategy update that net reserves at the end of last year were 11.9 billion barrels of oil equivalent, unchanged from a year previously, and that it had replaced 109% of its organic reserves. Shell's announcement comes after it delayed the disclosure by six weeks.
Its resources under construction could yield another 1 million barrels of oil equivalent a day, the company said.
The company also said the additional 1 million barrels of oil and gas production a day would stem from investment in some 10 billion barrels of oil equivalent of resources.
It also said that it expects to boost capacity of its oil sands capacity by 60,000 barrels a day, an increase of more than 60% from current levels.
The company also sees over 7 million metric tons a year of new liquefied natural gas capacity, an increase of 50%.
NCB analyst Peter Hutton described the announcement as a "very positive," but estimated that reserves replacement in the company's core group exploration and production companies, which excludes minority stakes, was just 26%, largely due to the loss of control last year in the Sakhalin II project in Russia.
Hutton said the forecast to add 1 million barrels a day of oil and gas output will come at a cost as it "forgot to say how much it will cost them...it will be very punitive for cash flow."
In 2004, Shell revealed it had overstated its proved reserves by about a fifth, a restatement that led to the ousting of then-Chief Executive Philip Watts and an overhaul of the company's corporate structure.
At 0926 GMT, Shell's shares in London were 6 pence higher at 1,694 pence, some 4.7% higher than a year ago, outperforming the FTSE100.