SEC looks at modernising reporting rules

Oil and natural gas companies may have to change how they disclose their
reserves for the first time in more than 25 years under proposals being examined
by US regulators.

The Securities and Exchange Commission has drawn up recommendations for
‘updating and modernising’ the financial reporting requirements reflecting the
significant changes in the industry, including improved technology.

‘In the decades since adoption of the current requirements, there
have been tremendous changes in the way reserves are measured and oil and
gas companies do business, which are not yet reflected in our rules,’ said John
White, SEC’s corporation finance director.

The recommended proposals would allow oil and gas companies to provide
investors with additional information about their oil and gas reserves.
Unconventional resources such as oil sands have become more important with
investors focusing on other measures of a companies performance.

The SEC staff’s recommendations were preceded by a concept release issued

last December, soliciting comment on changing reporting requirements. These
included whether the definition of reserves should be revised and whether
third-party verification of reserves should be received.

About 80 comment letters were received supporting updating reporting
requirement to reflect changes in the industry.

Further reading:

Securities & Exchange Commission’s initial suggestions

Comment submission portal

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