Energy Finance

Finally! According to the Securities and Exchange Commission (SEC) website, “The Commission is proposing revisions to its oil and gas reporting requirements which exist in their current form in Regulation S-K and Regulation S-X under the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as Industry Guide 2.

“The revisions are intended to provide investors with a more meaningful and comprehensive understanding of oil and gas reserves, which should help investors evaluate the relative value of oil and gas companies. In the three decades that have passed since adoption of these requirements, there have been significant changes in the oil and gas industry.

“The proposed amendments are designed to modernize and update the oil and gas disclosure requirements to align them with current practices and changes in technology. The proposed amendments would also codify Industry Guide 2 in Regulation S-K, with several additions to, and deletions of, current Industry Guide items. They would further harmonize oil and gas disclosures by foreign private issuers with the proposed disclosures for domestic issuers.”

Translation: We need to reduce speculation in oil and gas trading, which may be falsely inflating prices. Also, we need to show more reserves on the books, again to reduce price. This rule change would allow more unconventional shale gas and tar sands to be booked as reserves, along with more conventional probable and possible reserves. It will also allow companies to use new technology to calculate proven reserves.

A 60-day comment period is now in effect, after which the SEC will take a final vote.

Click on http://www.sec.gov/rules/proposed/2008/33-8935.pdf to view the SEC proposal. 

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