SEC updates its oil and gas disclosure rules
05 Jan 2009
The US SEC has made major changes to its requirements for disclosures of oil and gas reserves. The old rules had been in place for more than 25 years. The revisions permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about volumes (quantities) of reserves.
The new rules also will allow companies to disclose their probable and possible reserves to investors. The Commission's current rules limit disclosure to only proved reserves. Companies will be required to:
- report the independence and qualifications of a reserves preparer or auditor;
- file reports when a third party is relied upon to prepare reserves estimates or conducts a reserves audit; and
- report oil and gas reserves using an average price based upon the prior 12-month period rather than year-end prices. The use of the average price will maximise the comparability of reserves estimates among companies and mitigate the distortion of the estimates that arises when using a single pricing date.
