Not all barrels are created equal: understanding the difference between standards of regulatory disclosure can impact your investment decisions

Abstract

Petroleum industry stakeholders rely on estimates of petroleum reserves and resources as a cornerstone for making informed strategic investment decisions. Whether assessing a property or corporate target in a mergers and acquisitions process, seeking or providing equity or debt financing, developing upstream or downstream projects, engaging in sales contract negotiations or satisfying regulatory disclosure requirements, a clear understanding of the basis of these estimates is critical. Worldwide, several standards of resource estimation are widely accepted (Society of Petroleum Engineers Petroleum Resources Management System (SPE-PRMS), Securities and Exchange Commission (SEC) guidelines and Canadian Oil and Gas Evaluation Handbook (COGEH)) and disclosure requirements depend on the regulatory jurisdiction (i.e. Australia, Australian Stock Exchange (ASX) Listing Rules Chapter 5; USA, SEC Regulation S-K; Canada, NI 51-101). Understanding the differences in these standards is imperative for correctly assessing value, development potential and project risks. Focusing on Australia, the United States of America and Canada, this presentation identifies key differences in these standards, and the potential implications affecting your strategic investment decisions.