WASHINGTON (CN) – The Securities and Exchange Commission seeks to change the rules for public disclosures of oil and gas reserves, so investors may have a clearer picture of what companies may be worth.
The proposal updates rules and broadens definitions.
The SEC would permit the use of alternative technologies to establish proven reserves instead of requiring companies to use specific tests. Reserves from non-traditional sources, such as bitumen, coal beds and oil shale, now would be counted as oil and gas producing activities. Probable and possible reserves may also be disclosed, under the proposed rule.
The definition of “proved reserves” states that these reserves are “the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.” “Reasonable certainty” currently is not defined, but would be defined as “much more likely to be achieved than not.”
For reserves to be proved, the project extracting hydrocarbons must have begun or it must be reasonably certain to begin within a reasonable time. This revision is designed to prevent a company from including, in proved reserves, projects in undeveloped areas for which it does not have the intent to develop.
Click the document icon on the front page for details and more new regulations.