Upstream Oil & Gas Investment; Managing Reserves and Resources to SEC

How oil and gas companies can regain the trust of SEC and the investment community?

There are ways that oil and gas sector can regain the trust of the investment community by improving their financial, reserve and resource reporting to SEC.

J. C Rovillain and Imre Szilagyi see room for improvement in the way E&P report reserves and resource to SEC. Their recent article on this topic been published in Oil & Gas Financial Journal (OGFJ) and has received a fair bit of attention in the community.

Upstream sector within E&P domain is becoming more and more challenging. The challenges include exploration in more complex/remote basins, lower  capital efficiency of development projects, and higher political/country risk of concessions. For an informed investor these challenges translate to higher risk of investing in the E&P sector (see the comparison below).

upstream-strategy-Syd-Nejad

While the sector is working hard to mitigate the risks through better subsurface definition, project development/execution, innovation, restructuring and so on, the authors see an opportunity on the way the industry reports to the SEC and the investment community. The article calls for an upgrade to financial/commercial reporting, granularity, and transparency to the way E&P companies report reserves and resource estimates to SEC to improve the industry’s image and gain investor’s trust. Delays in addressing this can prolong already depressed share performance of the Energy sector comparing to other investment sectors.

Links:

Managing Reserves and Resources, OGFJ

Why Upstream Profit is Going South?

Society of Petroleum Resources Economists on Linkedin

2 comments to “Upstream Oil & Gas Investment; Managing Reserves and Resources to SEC”

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  1. Jim Hubbard says: -#1

    Does anyone know what 2 chapters in the 2011 PRMS Guidlines they are referring to? “Two well-written chapters inside the 2011 PRMS Guidelines are certainly a step in the right direction.”

  2. JC Rovillain says: -#1

    Jim, Thank you for your interest, valid question indeed and my apologies. If my memory serves me right, I was referring to chapters 5 and 6. JC Rovillain (the culprit of this imprecision)

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