SEC publishes proposed rule to modify oil and gas reporting requirements

Abstract

Purpose

The purpose of this paper is to explain the SEC's proposed rule to modify the oil and gas reporting requirements that have been defined heretofore in Rule 4‐10, Regulation S‐X.

Design/methodology/approach

The paper explains the provisions of the existing rule, outlines the SEC's proposed changes (such as allowing companies to disclose reserves using probabilistic methodologies and tightening project maturity requirements for proved reserves), and explains why the proposed rule is an ambitious and overdue step to overhaul the SEC's oil and gas disclosure regime.

Findings

The alert discusses the SEC's proposed new rule that will replace the existing standard for disclosing volumes of oil and gas reserves in SEC filings. The rule applies to all US oil and gas public companies and also foreign oil and gas companies whose shares are traded on US exchanges via American Depositary Receipts (ADRs). Some of the larger non‐US companies affected by this rule change include Royal Dutch Shell, BP, Total, Eni, StatoilHydro, Petrobras, and CNOOC.

Originality/value

The paper shows that the proposed rule will be of interest to oil and gas companies, research analysts at investment banks that publish reports about oil and gas companies, and any firms that engage in proprietary investing in these companies. This rule change has broad interest for many companies. For example, in addition to dozens of oil and gas industry firms, the 80 firms and individuals who commented on the Concept Release that preceded this proposed rule included major financial institutions, rating agencies, and investment banks.

Citation

Goldstein, J.I. and Morse, A.M. (2008), "SEC publishes proposed rule to modify oil and gas reporting requirements", Journal of Investment Compliance, Vol. 9 No. 3, pp. 41-43. https://doi.org/10.1108/15285810810908725