Alberta securities agency eyes tighter disclosure rules

The Alberta Securities Commission is considering requiring publicly traded oil and gas companies to make broader disclosure of reserves and related information. It was acting on recommendations that an ASC oil and gas task force made last month.


By the OGJ Online Staff

CALGARY, Alta., Feb. 8�The Alberta Securities Commission is considering requiring publicly traded oil and gas companies to make broader disclosure of reserves and related information.

It was acting on recommendations that an ASC oil and gas task force made last month. The panel, created in June 1998, consisted of 27 people representing junior and senior producing companies, reserves evaluators, investment dealers, accounting and legal advisers, and regulators. It was chaired by Henry Lawrie, chief ASC accountant.

Stephen Sibold, ASC chairman, said, "Our initial impression is that the task force recommendations would have a very positive effect on the quality of information available to investors in our capital markets. The recommendations are the product of a tremendous amount of work by knowledgeable and experienced individuals."

He said ASC would act quickly, in cooperation with the other members of the Canadian Securities Administrators, to develop updated, uniform oil and gas disclosure and reporting requirements.

The task force recommended that companies file annual public disclosures of reserves and related information.

It would tighten the definitions of reserves. "Proved reserves" would be defined as actual reserves that equal or exceed the estimated amount nine tenths of the time. "Proved plus probable" would be equal to or exceed the actual amount 50% of the time, and "proved plus probable plus possible" would have at least a 10% probability.

Companies would disclose proved reserves using constant prices and costs, and estimated future net revenue/cash flows for those reserves.

Producers would hire independent reserves evaluators, who would base their audits on government-set standards.

Each year, independent operators would evaluate a company's reserves constituting at least 75% of their estimated future net revenue. That requirement would be phased in over 3 years for producers with more than 100,000 boe/d and the ability to estimate their own reserves.

The task force recommended oil companies' annual reports be clearer and more consistent in matters including their ability and intent to develop reserves, abandonment and reclamation costs, contract terms that would preclude a company from realizing future price increases, and finding and development costs.

ASC is an industry-funded regulatory agency responsible for administering the Alberta Securities Act. Together with other members of the Canadian Securities Administrators, it operates the Canadian Securities Regulatory System.

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