The Securities and Exchange Commission (“SEC”) requires companies whose securities are publicly traded in the U.S. to disclose meaningful financial information such that all investors will have access to certain basic facts about an investment prior to buying it, and so long as they hold it. If your company is engaged in the exploration and production of hydrocarbons, information relating to your activites, revenues and reserves are pertinent to an investor. This pertinent information is conveyed in filings made with the SEC and available to the public.
The SEC reviews the information contained in public filings to monitor the compliance with the applicable disclosure and accounting requirements. For those filings that appear to conflict with the SEC regulations or the applicable accounting standards or the disclosures appear to be materially deficient in explanation or clarity, the SEC issues the filer a comment letter.
For publicly traded oil and gas companies, the SEC regulations governing the estimation and reporting of oil and gas reserves information disclosed in a public filing have changed. On January 14, 2009, the SEC issued the Modernizaiton of Oil and Gas Reporting; Final Rule (“Modernization”) in Vol. 74, No. 9 of the Federal Register. The regulations contained in the Modernization became effective for all filings made with the SEC as of December 31, 2009, or after January 1, 2010.
This presentation examines the comments from the SEC relating to public filings made under the industry’s first reporting cycle ending December 31, 2009.