The Material Issues Involved in the Discussion Surrounding the Virtues of the SPE/WPC Definition of Proved Oil and Gas Reserves vs. the Corresponding Definition Set Out by United States Securities and Exchange Commission (SEC)

Abstract

Abstract Among the more contentious issues discussed within the oil & gas industry recently are: Are the United States Securities and Exchange Commission (SEC) definitions of Proved oil and gas reserves obsolete, too narrow and/or unrealistic for today's oilfield technology?Are the SPE/WPC definitions of Proved oil and gas reserves much more realistic and responsive to today's comparable reporting needs?Has the meaning of the word ‘Proved' changed over the last twenty-five years?Has the meaning of the expression ‘Reasonable Certainty’ changed over the last twenty-five years? The contention here is that the answers to each of these four questions is ‘No’. This paper advances the idea that there are no material differences between the Proved oil and gas definitions promulgated by the two organizations if the original common cornerstones are honored within the true spirit of the words engaged in those definitions. The allegation that the SEC definitions for Proved oil and gas are in some way out-of-date in terms of the application of modern oilfield technology is examined and found to be without legitimate foundation. The distinctive variation between the two organizations is discussed; the SEC as a regulatory authority with responsibilities for ensuring comparable reporting by listed corporations within its jurisdiction versus the SPE as a Technical Society without such responsibilities or the structure for offering guidance regarding definitional compliance. As the ‘interpretation drift’ in the application of the SPE/WPC Proved reserve definition continues unabated, the search for an International Standard by other organizations (particularly the United Nations) only further complicates the matter. The question is posed as to whether the lack of proactive contributions in this regard from the SPE, as an organization, places the very integrity of the Society's broader reserve definitions at stake. The SPE membership are reminded that very few years ago, the SPE/WPC/AAPG definitions were very credibly put forth for adoption as the essential International Petroleum Industry Standard.