Discoveries

As 2008 closed out, the U.S. Securities and Exchange Commission announced that it had finally updated the reporting requirements for public companies’ oil and gas reserves. It’s been a more than a quarter century since the last revisions to the reporting rules.

The changes are welcome. The new rules allow companies to report probable and possible reserves, in addition to proved reserves. Furthermore, such technologies as 3-D and 4-D seismic and reservoir-simulation modeling can now be used to help determine proved reserves. These enhancements will give investors a fuller picture of a company’s potential.

Another significant change is that oil and gas reserves will be reported using an average price based on the prior 12-month period, rather than year-end prices. In light of the recent wild price swings, this will be particularly helpful to investors in comparing metrics from various companies. 

The new rules are advantageous to investors and companies alike.

–Peggy Williams, Senior Exploration Editor, Oil and Gas Investor

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.