ASX Listing Rule changes for oil and gas reporting

The Australian Securities Exchange’s (ASX) latest round of consultation on reserves and resources disclosure by mining and oil and gas companies, released in September 2012, addresses many long recognised gaps in ASX’s listing rules, and guidance notes, in regard to reserves and resources reporting by listed mining and oil and gas exploration and production companies.

The proposed Listing Rule revision is intended to apply from 1 December 2013 and will impact on the reserves and resources reporting obligations of ASX listed mining and oil and gas companies.  Particularly in the small to mid cap contingent.

In regard to oil and gas explorers and producers, the revised reporting framework will consist of following key requirements:

  • Public reporting to accord with Society of Petroleum Engineers – Petroleum Resources Management System (SPE-PRMS) principles.

  • Specific reporting requirements for material disclosures by oil and gas companies in relation to their resource assets. 

  • Greater disclosure of assumptions applied in deriving resource estimates.

  • Detailed disclosure of exploration and drilling information.

  • Disclosure of petroleum reserves for material projects.

  • Disclosure of contingent resources for material projects.

  • Disclosure of prospective resources for material projects.

  • Annual petroleum reserves statement to be included in the annual report. 

  • Quarterly reporting to ASX, for release to the market.

  • Petroleum resources are to be classified in accordance with the scheme for classification in SPE-PRMS (that is, as petroleum reserves, contingent resources or prospective resources) and reported in the most appropriate resource category under that scheme.

From 1 December 2013, oil and gas reserve and resource estimate reporting by listed companies will require sign off by a qualified petroleum reserves and resources evaluator in a similar fashion to the existing requirements imposed on minerals reporting which must be signed off by a Competent Person under Joint Ore Reserves Committee.

To be recognised by ASX as a qualified petroleum reserves and resources evaluator, the person will need to satisfy each of the following criteria:

  • hold a bachelors or advanced degree in petroleum engineering, geology, geophysics or other discipline of engineering or physical science;

  • have a minimum of five years practical experience in petroleum engineering, petroleum production geology or petroleum geology, with at least three years of such experience being in the evaluation and estimation of petroleum reserves, contingent resources and prospective resources; and

  • be a member of good standing of a professional organisation of engineers, geologists or other geoscientists whose professional practice includes petroleum reserves, contingent resources and prospective resources evaluations and/or audits.

The professional organisation must:

  • require members to comply with the professional standards of competence and ethics prescribed by the organisation that are relevant to the estimation, evaluation, review or audit of petroleum reserves, contingent resources and prospective resources data; and

  • have disciplinary powers, including the power to suspend or expel a member.

Lavan Legal comment

ASX listed companies must ensure that they have access to suitably qualified geoscience and engineering professionals (either internally or as advisors) from 1 December 2013.  Those persons must have sufficient qualification and familiarity with the company’s assets to sign-off the company’s announcements relating to petroleum reserves and resources and associated technical matters.

A definitive list of acceptable professional organisations is yet to be published by ASX.  However, the SPE-PRMS is presently supported by the following professional societies:

  • American Association of Petroleum Geologists (AAPG)

  • Society of Petroleum Engineers (SPE)

  • Society of Petroleum Evaluation Engineers

  • World Petroleum Council

Organisations such as SPE and AAPG will likely head up ASX’s approved list when it is released.

We note that there has been some concern already raised that at present few, if any, professional organisations fully satisfy the disciplinary requirements.  We are aware that SPE has already commenced internal discussions in regard to resolving such issues so that it can satisfy the necessary professional organisation requirements and it is anticipated that other professional organisations may need to address similar issues on behalf of their members.