Changes in the rules on how energy companies report their reserves, proposed by the U.S. Securities and Exchange Commission on Thursday and favored by the industry, would give investors a clearer picture of a company's oil and natural gas reserves, the SEC said.
The proposal reflects improved technologies and alternative extraction methods, the SEC said. If adopted, it would allow previously excluded resources such as oil sands to be classified as reserves -- one of the changes the industry has sought.
Energy companies could also disclose probable and possible reserves to investors under the proposal. Current rules limit disclosure to only proved reserves.
Another important change would require companies to report oil and gas reserves using an average price based on the prior 12-month period, rather than a year-end price. That would help investors compare companies' reserve estimates and mitigate price distortions, the SEC said.
U.S. oil companies have had difficulty growing their reserve base the last several years, making most of their profits on higher oil prices.
The SEC will finalize oil and gas reporting changes following a 60-day comment period.
reuters
