In October, CSA proposed amendments to two policies that outline the standards of disclosure for issuers involved in oil and gas activities (NI 51-101 and Companion Policy 51-101CP).
It says the amendments would “promote better disclosure of resources other than reserves and associated metrics, while at the same time…increase[ing] flexibility for oil and gas reporting issuers that: report in a variety of different locations worldwide; recover different oil and gas product types; and operate under different regulatory regimes.”
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CSA adds the proposed amendments are also intended to bring NI 51-101 into harmony with proposed changes to the Canadian Oil and Gas Handbook.
The regulator highlights, in its October release, the evaluation of potential amendments to NI 51-101 has been occurring since 2010—in response to its ongoing engagement with oil and gas reporting issuers, independent qualified reserves evaluators and industry. The most recent publication related to NI 51-101 was an update to notice 51-327 (Guidance on Oil and Gas Disclosure) in 2011.
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The purpose of that notice is to provide guidance on:
- issuer and expert responsibilities;
- the disclosure of after-tax net present value of future net revenue;
- the use of Barrel of Oil Equivalents;
- disclosure of well-flow test results; and
- expanded guidance on the evaluation and classification of unconventional hydrocarbons and classification to most specific category of resource.
Now, CSA has proposed eight new amendments to disclosure requirements of oil and gas issuers. These include the use of an alternative resources evaluation system, increased clarification of different product types (such as conventional versus unconventional resources), and clearer explanations of how oil and gas metrics are calculated.
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It says, “The proposed amendments will encourage better disclosure of reserves, and resources other than reserves.” Investors will benefit from greater transparency, though the compliance costs of issuers involved in oil and gas activities will likely rise.
Comments on the proposal must be submitted by January 17, 2014. They can be sent by email or mail to provincial regulatory bodies, which will forward them to CSA. CSA lists 5 questions commenters can answer (see “Request for Comments” section of the release.)
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