SEC Starts Review Of Reserves Disclosure Rules

The U.S. Securities and Exchange Commission (SEC) announced on Dec. 11 that it is reviewing its oil and gas reserves disclosure rules first issued in 1978.

In a public statement, SEC Commissioner Christopher Cox acknowledged that “the world is a much different place than it was when the Commission adopted our now well-worn reserve disclosure requirements nearly three decades ago.”

There is concern that the current disclosure requirements do not reflect the technological and investment realities of today’s market place. Consequently, the SEC is inviting comments about the public’s interest in revising these disclosure requirements.

The SEC action adds to a growing emphasis on the need to address how oil and gas reserves and resources are defined and represented. This need was obvious during last June’s International Multidisciplinary Conference on Oil and Gas Reserves and Resources held in Washington, D.C., sponsored by AAPG and the Society of Petroleum Engineers with support of the World Petroleum Council, the Society of Petroleum Evaluation Engineers and the United Nations Economic Commission for Europe.

Cox attended an evening reception of the conference, where he spoke informally with attendees.

“One of our goals with this conference was to bring together the professionals who generate reserves and resources numbers with those professionals – such as regulators, accountants, bankers and investors – who use this information,” said Pete Rose, conference co-chair and past-president of AAPG.

“The SEC public comment period provides us with a unique opportunity to continue that engagement by contributing our collective scientific and technical expertise to the rulemaking process,” he added.

The SEC rulemaking process has several phases:

  • The current phase is called a “Concept Release,” where SEC solicits public feedback to 15 questions, outlined in the release, that cover a wide array of topics and concerns.

Responses are critically important to framing the scope and content of any new rule.

  • Based on these responses the SEC is then expected to issue a “Rule Proposal,” which is a detailed, formal, proposed rule that will be open for public comment for 60 days.
  • This leads to issuance of a final rule, which is again open for 60 days of public comment, and then subject to vote by the Commission.

The initial public comment period closes Feb. 19 and AAPG members are invited to participate.

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