Press Release: SEC Modernizes Oil and Gas Company Reporting Requirements to Provide Investors With More Meaningful and Comprehensive Disclosure (Dec. 29, 2008)
The SEC modernized oil and gas reporting rules on December 29, 2008, to enhance investor transparency by permitting disclosure of probable and possible reserves, requiring 12-month average pricing for reserve estimates, and mandating disclosure of reserves preparer qualifications—without any fraud allegations or enforcement actions.
On December 29, 2008, the SEC unanimously approved updated oil and gas disclosure rules to reflect technological advances and industry changes since the 1970s. The new rules permit companies to report probable and possible reserves, require use of a 12-month average price (instead of year-end prices) for reserve valuations, and mandate disclosure of the independence and qualifications of reserves preparers and third-party auditors. No fraud, fines, or enforcement actions were involved—this was purely a regulatory reform to improve comparability and relevance of disclosures for investors.
On December 29, 2008, the SEC announced the unanimous approval of revised oil and gas reporting requirements to modernize disclosures for investors after more than 25 years without updates. The new rules allow companies to disclose probable and possible reserves, which were previously prohibited, and require the use of a 12-month average price for reserve calculations to improve comparability and reduce distortion from volatile year-end pricing. Companies must now report the qualifications and independence of reserves preparers and file disclosures when relying on third-party auditors for reserve estimates. The SEC emphasized that these changes respond to technological advancements that have improved the reliability of reserve estimation methods. The rule amendments were developed following a Concept Release and public comment period, reflecting a deliberate, transparent regulatory process. No fraud, misconduct, or enforcement actions were alleged or pursued in this initiative. The goal was solely to enhance the quality, relevance, and transparency of financial disclosures for investors evaluating oil and gas companies, not to penalize any entity.
Extracted insights
- person christopher cox
- person commission staff
- agency full text of the adopting release to the sec web site
- person john w. white
- person new disclosure requirements
- person new requirements
- Securities And Exchange Commission approved revisions to modernize oil and gas company reporting requirements
- Securities And Exchange Commission announced unanimous approval of revisions
- Christopher Cox said significant changes in technology limited usefulness of current disclosures
- John W. White added adoption of rule amendments is final phase of long-term initiative
- Commission staff recommended issuance of a Concept Release for public comment
- used public comments to formulate rule amendments
- Commission proposed rule amendments earlier this year
- new disclosure requirements include provisions permitting use of new technologies to determine proved reserves
- new requirements allow companies to disclose probable and possible reserves to investors
- Commission's rules limit disclosure to only proved reserves
- new disclosure requirements require companies to report independence and qualifications of a reserves preparer or auditor
- new disclosure requirements require companies to file reports when a third party is relied upon
- new disclosure requirements require companies to report oil and gas reserves using an average price based upon the prior 12-month period
- use of the average price will maximize comparability of reserves estimates among companies
- use of the average price will mitigate distortion of the estimates
- SEC will post full text of the adopting release to the SEC Web site
SEC Modernizes Oil and Gas Company Reporting Requirements to Provide Investors With More Meaningful and Comprehensive Disclosure FOR IMMEDIATE RELEASE 2008-304 Washington, D.C., Dec. 29, 2008 — The Securities and Exchange Commission today announced that it has unanimously approved revisions to modernize its oil and gas company reporting requirements to help investors evaluate the value of their investments in these companies. “In the more than a quarter century since the SEC last reviewed its rules in this area, there have been significant changes in technology that have increasingly limited the usefulness of current disclosures to the market and investors,” said SEC Chairman Christopher Cox. “These updates to the SEC rules will help ensure more meaningful and comprehensive disclosure of information that, even though it does not appear on a company’s balance sheet, is of significance to investors in making informed investment decisions.” John W. White, the Director of the SEC’s Division of Corporation Finance, added, “The Commission’s adoption of these rule amendments is the final phase of a key, long-term initiative of the Division of Corporation Finance and the Office of the Chief Accountant. These updated rules consider the significant changes that have taken place in the oil and gas industry since the adoption of the original reporting requirements more than 25 years ago.” The Commission staff first recommended the issuance of a Concept Release for public comment. Those public comments were used to formulate the rule amendments that the Commission proposed earlier this year. The new disclosure requirements approved by the Commission include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes. The new requirements also will allow companies to disclose their probable and possible reserves to investors. Currently, the Commission’s rules limit disclosure to only proved reserves. The new disclosure requirements also require companies 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 maximize the comparability of reserves estimates among companies and mitigate the distortion of the estimates that arises when using a single pricing date. * * * The full text of the adopting release concerning these amendments will be posted to the SEC Web site as soon as possible. # # # http://www.sec.gov/news/press/2008/2008-304.htm Home | Previous Page Modified: 12/29/2008
SEC Modernizes Oil and Gas Company Reporting Requirements to Provide Investors With More Meaningful and Comprehensive Disclosure FOR IMMEDIATE RELEASE 2008-304 Washington, D.C., Dec. 29, 2008 — The Securities and Exchange Commission today announced that it has unanimously approved revisions to modernize its oil and gas company reporting requirements to help investors evaluate the value of their investments in these companies. “In the more than a quarter century since the SEC last reviewed its rules in this area, there have been significant changes in technology that have increasingly limited the usefulness of current disclosures to the market and investors,” said SEC Chairman Christopher Cox. “These updates to the SEC rules will help ensure more meaningful and comprehensive disclosure of information that, even though it does not appear on a company’s balance sheet, is of significance to investors in making informed investment decisions.” John W. White, the Director of the SEC’s Division of Corporation Finance, added, “The Commission’s adoption of these rule amendments is the final phase of a key, long-term initiative of the Division of Corporation Finance and the Office of the Chief Accountant. These updated rules consider the significant changes that have taken place in the oil and gas industry since the adoption of the original reporting requirements more than 25 years ago.” The Commission staff first recommended the issuance of a Concept Release for public comment. Those public comments were used to formulate the rule amendments that the Commission proposed earlier this year. The new disclosure requirements approved by the Commission include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes. The new requirements also will allow companies to disclose their probable and possible reserves to investors. Currently, the Commission’s rules limit disclosure to only proved reserves. The new disclosure requirements also require companies 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 maximize the comparability of reserves estimates among companies and mitigate the distortion of the estimates that arises when using a single pricing date. * * * The full text of the adopting release concerning these amendments will be posted to the SEC Web site as soon as possible. # # # http://www.sec.gov/news/press/2008/2008-304.htm Home | Previous Page Modified: 12/29/2008