Reserves overbooking: The problem we are finally going to talk about

SPE Economics and Management

Volumn 3, Issue 2, 2011, Pages 68-78

  Olsen, Grant T ^a   Lee, W John ^a   Blasingame, Thomas A ^a  

^a TEXAS A AND M UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

GAS INDUSTRY; PETROLEUM INDUSTRY;

EXPLORATION AND PRODUCTIONS; OIL AND GAS INDUSTRY; OIL AND GAS RESERVES; RESERVES ESTIMATIONS; SECURITIES AND EXCHANGE COMMISSIONS;

PROVEN RESERVES;

EID: 79953827927     PISSN: 21501173     EISSN: None     Source Type: Journal    
DOI: 10.2118/134014-PA     Document Type: Article

References (79)

1. USC Chapter 77-Energy Conservation. 2008. Washington, DC: Office of the Law Revision Counsel, US House of Representatives.
2. Barry, R. 1993. The Management of International Oil Operations. Tulsa, Oklahoma: PennWell Books.
3. Cronquist, C. 2001. Estimation and Classification of Reserves of Crude Oil, Natural Gas, and Condensate. Richardson, Texas: SPE.
4. Darbonne, N. 2009a. Year-End Reserve Rules May Affect M&A Deals as Soon as Now. Oil and Gas Investor (March): 32-36.
5. Darbonne, N. 2009b. 2010 SEC Reserve-Reporting Rules May Affect M&A Deal-Making As Soon As Now. Oil and Gas Investor Blog, 27 January 2009, http://blogs.oilandgasinvestor.com/blog/2009/01/27/2010-sec-reserve-reporting- rules-may-affect-ma-deal-making-as-soon-as-now/.
6. Davis, M. 2004. Reserves Haunt El Paso, Shell. The Street, 20 February 2004, http://www.thestreet.com/story/10144727/reserves-haunt-el-paso-shell.html (downloaded 22 June 2010)
7. Dharan, B.G. 2004a. Prepared testimony for the US House Committee on Financial Services, 108th Congress, Second Session. Improving the Relevance and Reliability of Oil and Gas Reserves Disclosures, 31-50. Hearing, 21 July 2004 (Serial No. 108-105), Shell Games: Corporate Governance and Accounting for Oil and Gas Reserves, http://frwebgate. access, gpo.gov/cgi-bin/getdoc.cgi?dbname= 108- house-hearings&docid=f:96549.pdf (downloaded 14 January 2010).
8. Dharan, B.G. 2004b. Spoken testimony before the US House Committee on Financial Services, 108th Congress, Second Session. Improving the Relevance and Reliability of Oil and Gas Reserves Disclosures, 13-15. Hearing, 21 July 2004 (Serial No. 108-105), Shell Games: Corporate Governance and Accounting for Oil and Gas Reserves, http://frwebgate. access, gpo.gov/cgi-bin/getdoc.cgi?dbname= 108- house-hearings&docid=f:96549.pdf. (downloaded 14 January 2010).
9. Egoy, M. 2008. Shell settles oil reserves-related US lawsuit UPDATE. Forbes, com, 06 March 2008, http://www.forbes.com/feeds/afx/2008/03/06/ afx4740525.html (downloaded 22 June 2010).
10. El Paso Corp. to Review Plan for Production Business Conference Call- Final. 2004b. Fair Disclosure Wire (29 June 2004).
11. El Paso Firemen and Policemen's Pension Fund v. Stone Energy Corporation. 2006. Case 6:05-cv-02088-TLM-MEM, Doc. 61 (W.D. La. 14 June 2006), http://securities.stanford.edu/1035/SGY05-01/2006614- rOlc-O52O88.pdf (downloaded 22 June 2010).
12. El Paso to Review Reserve Revisions Conference Call. 2004a. Fair Disclosure Wire (17 February 2004).
13. Etherington, J.R. 2009. Managing Your Business Using Intergrated PRMS and SEC Standards. Paper SPE 124398 presented at the SPE Annual Technical Conference and Exhibition, New Orleans, 4-7 October, doi: 10.2118/124938-MS.
14. ™ -Notice to Constituents (v 2.0). 2009. Norwalk, Connecticut: FASB. http://asc.fasb.org/imag eRoot/63/6537863.pdf (downloaded 14 January 2010).
15. FASB Accounting Standards Update. Extractive Industries-Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures, No. 2010-03. 2010a. Norwalk, Connecticut: Financial Accounting Series, FASB. http://www.fasb.org/ cs/ContentServer?c=Document-C&pagename= FASB%2FDocument- C%2FDocumentPage&cid=l 176156601659 (downloaded 1 March 2010).
16. Feiten, J.B. 2007. Form 10-KSB for Fiscal Year Ended December 31, 2005 and Form 10-Q for Fiscal Quarters Ended March 31, 2006, June 30, 2006, and September 30, 2006. Comment Letter, American Oil & Gas, Inc, Houston, Texas.
17. Financial Accounting Standards Board (FASB). 2010b. Facts About FASB, http://www.fasb.org/jsp/FASB/Page/Sec tionPage&cid=l 176154526495 (accessed 14 January 2010).
18. Gifis, S.H. 1996. Law Dictionary, fourth edition. Hauppauge, New York: Legal Guides, Barren's Educational Series.
19. Gold, R. 2008. El Paso Ex-Executives Settle Charges Over Reserves. The Wall Street Journal (12 July 2008): B6. http://royaldutchshellplc. com/2008/07/12/el-paso-ex-executives-settle-charges-over-reserves/ (downloaded 22 June 2010).
20. Harrell, D.R. and Gardner, T.L. 2005. Significant Differences in Proved Reserves Estimates Using SPE/WPC Definitions Compared to United States Securities and Exchange Commission Definitions. SPE Res Eval & Eng 8 (6): 520-527. SPE-84145-PA. doi: 10.2118/84145-PA. (Pubitemid 43149910)
21. Harrell, D.R., Hodgin, J.E., and Wagenhofer, T. 2004. Oil and Gas Reserves Estimates: Recurring Mistakes and Errors. Paper SPE 91069 presented at the SPE Annual Technical Conference and Exhibition, Houston, 26-29 September, doi: 10.2118/91069-MS.
22. Hodgin, J. 2009. An Introduction to the US Securities and Exchange Oil and Gas Regulations and the 2008 SEC "Modernization of Oil and Gas Reporting." Presentation given at the 2009 Ryder Scott Reserves Conference, Houston, 8 May.
23. Hodgin, J.E. and Harrell, D.R. 2006. The Selection, Application, and Misapplication of Reservoir Analogs for the Estimation of Petroleum Reserves. Paper SPE 102505 presented at SPE Annual Technical Conference and Exhibition, San Antonio, Texas, USA, 24-27 September, doi: 10.2118/102505-MS.
24. Kopytoff, V. 2004. SEC questions oil giants' reserves. San Francisco Chronicle, 10 April 2004, C-l; SFGate, http://www.sfgate.com/cgi-bin/article. cgi?f=/c/a/2004/04/10/BUGT9632791.DTL (downloaded 22 June 2010).
25. Labaton, S. and Gerth, J. 2004. Justice Dept. Opens Inquiry Into Shell Oil. The New York Times, 17 March 2004, http://www.nytimes. com/2004/03/17/ business/justice-dept-opens-inquiry-into-shell-oil. html?pagewanted=l (downloaded 22 June 2010).
26. Larsen, J., Buckberg, E., and Lev, B. 2008. SEC Settlements: A New Era Post-SOX. Research report, NERA Economic Consulting (10 November 2008), http://www.securitieslitigationtrends.com/SettlementsReport.pdf (downloaded 22 June 2010).
27. Larsen, J., Buckberg, E., and Lev, B. 2009. SEC Settlement Trends: 3Q09 Update. Research report, NERA Economic Consulting (07 December 2009), http://www.nera.com/image/PUB-Settlements-Update-Q3- 1209.pdf (downloaded 22 June 2010).
28. Lee, W.J. 2009. Modernization of the SEC Oil and Gas Reserves Reporting Requirements. SPE Econ & Mgmt 1 (1): 4-10. SPE-123793-PA. doi: 10.2118/123793-PA.
29. Macalister, T. 2004. Chinese disposal will reap $lbn profit for BP. The Guardian, 13 January 2004, http://www.guardian.co.uk/business/2004/ jan/13/china.oilandpetrol (downloaded 22 June 2010).
30. McArthur, J.B. 1996. The Class Action Tool in Oilfield Litigation. The Kansas Law Review 45 (November): 113.
31. McLane, M.A. and Rose, PR. 2001. Reserve Overbooking-The Problem No One Wants to Talk About. Paper SPE 68580 presented at the SPE Hydrocarbon Economics and Evaluation Symposium, Dallas, 2-3 April, doi: 10.2118/68580-MS.
32. Meyer, W.M. and Zorn, R.E. 2004. Issue Spotlight-Oil & Gas Reserves. Presentation, Simmons & Company International (25 February 2010), http://www.simmonsco-intl.com/ (downloaded 22 June 2010).
33. Morehouse, D.F. 1997. The Intricate Puzzle of Oil and Gas "Reserves Growth." Natural Gas Monthly (July), http://www.eia.doe.gov/pub/oiL gas/petroleum/feature-articles/1997/intricate-puzzle-reserves-growth/ mO7fa.pdf (downloaded 18 February 2010).
34. Mouawad, J. 2009. Shell Faces Even More Revamping. The New York Times, 29 June 2009, Bl.
35. Oxley, M.G. 2004. Spoken testimony before the US House Committee on Financial Services, 108"' Congress, Second Session. Opening Statement, 28-29. Hearing, 21 July 2004 (Serial No. 108-105), Shell Games: Corporate Governance and Accounting for Oil and Gas Reserves, http://frwebgate.access.gpo. gov/cgi-bin/getdoc.cgi?dbname= 108-house-hearings&docid=f:96549.pdf (downloaded 14 January 2010).
36. Pennsylvania Employees Retirement System v. Royal Dutch/Shell. 2005. Civ. Action No. 04-374, (D. N.J. 19 September 2005), http://securities. stanford.edu/1029/RD04-01/2005919-r01c-0400374.pdf (downloaded 04 February 2010).
37. Perin, M. 2002. El Paso, Coastal merger produces proved reserves juggling act. Houston Business Journal, 10 November 2002, http://Houston. bizjournals.com/houston/stories/2002/ll/ll/story2.html (accessed 7 February 2010).
38. Plancich, S. and Starykh, S. 2009. Recent Trends in Securities Class Action Litigation: 2009 Mid-Year Update. Research report, NERA Economic Consulting (July 2009), http://www.nera.com/extlmage/ Recent-Trends-Report-07- 09.pdf (downloaded 22 June 2010).
39. Plourd, K. 2008. Energy Firm Settles Overstated Reserves Case. CF0.com, 11 July 2008, http://www.cfo.eom/printable/article.cfm/l 1732458/c- 11730641?f=options (downloaded 07 Februrary 2010).
40. REPSOL YPF SA. 2006. Estimated Reserves Revision. Presentation, Form 6-K, Commission File No. 001-10220, Securities and Exchange Commission, Washington, DC (26 January 2006).
41. Reservations about Reserves. 2004. Rigzone, 13 January 2004, http:// www.rigzone.com/news/article.asp?a-id=10380 (accessed 06 December 2009).
42. Reynolds v. Repsol YPF. 2006. Civ. Action No. l:06-cv-00733-RCC. (S.D.N.Y 1 September 2006), http://securities.stanford.edu/1035/ REP-01/200691-r01c- 06733.pdf (downloaded 7 February 2010).
43. Robertson, D. 2006. SEC Drops Investigation of Watts. The Times, 31 August 2006, http://business.timesonline.co.uk/tol/business/law/arti cle623403.ece (accessed 05 February 2010).
44. Roesle, D. 2007. Reserves Estimation in Accounting and Reporting. Presentation given at the Oklahoma State University Oil & Gas Accounting Conference, Stillwater, Oklahoma, USA, 16 November. http://www. ryderscott.com/OSUOil&GasEnergyConference.ppt (downloaded 22 June 2010).
45. Ryder Scott. 2003. Ryder Scott to present reserves topics at ATCE. Reservoir Solutions 6 (3): 4-5. http://www.ryderscott.com/download/ 903nsltr.pdf (downloaded 5 February 2010).
46. Schaumann, N.B. 2002. Securities Regulation. Chicago, Illinois: Gilbert Law Summaries, The BarBri Group.
47. Schroeder, S.C. 2008. Form 10-K for the Fiscal Year Ended December 31, 2006. Comment Letter, Cabot Oil & Gas, Houston, Texas (1 May 2008).
48. SEC v. El Paso. 2008. Case No. 4:08-cv-02191, Doc. 1, (S.D. Tx, 11 July 2008).
49. SEC v. Royal Dutch Petroleum Co., et al. 2004. Complaint H-04-3359 No. 18844 (S.D. Tx 24 August 2004), http://www.sec.gov/litigation/com plaints/compl8844.pdf (downloaded 4 February 2010).
50. Shell difficulties 'could spread'. 2004. BBC News, 19 March 2004, http://news.bbc.co.Uk/2/hi/business/3551711.stm (downloaded 22 June 2010).
51. Shell settles fraud case for $150M. 2004, CNN/Money.com http://money.cnn.com/2004/08/24/news/international/royaldutchshellsec/ (downloaded 22 June 2010)
52. Shell Transport and Trading Company PLC Conference Call-Final. 2004a. Fair Disclosure Wire (09 January 2004).
53. Shell Transport and Trading Company PLC Earnings Conference Call and Presentation-London-Final. 2004b. Fair Disclosure Wire (05 February 2004).
54. Smith, A.L. and Sheehan C.W. 1997. PDP vs. PUD: Assessing the Risks of Proved Undeveloped Reserve (PUD) Revisions and Writedowns. Heroic! Industry Insights (30 Octoberl997).
55. Snow, N. 2006. Reserves Reporting Dilemma. Oil & Gas Financial Journal (01 March 2006).
56. SPE. 2007. Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information, http://www.spe.org/spe-site/spe/spe/ industry/reserves/ReservesAudi t-Standards-2007.pdf (19 February 2007 revision).
57. SPE/WPC/AAPG/SPEE. 2007. Petroleum Resources Management System- 2007, http://www.spe.org/spe-app/spe/industry/reserves/prms.htm.
58. Spear, N.A. and Lee, R.E.N. 1999. An empirical examination of the reliability of proved reserve quantity data. Petroleum Accounting and Financial Management Journal 18 (2): 1-23.
59. Statement of Financial Accounting Standards No. 69, Disclosures about Oil and Gas Producing Activities, an amendment of FASB Statements 19, 25, 33, and 39. 1982. Norwalk, Connecticut: FASB. http://www.fasb. org/st/summary/stsum69. shtml (Downloaded 10 January 2010).
60. Stichting Shell Reserves Compensation Foundation. 2009. Amsterdam Court of Appeals Declares Shell Settlement Binding. Press Release, The Hague, 29 May 2009, http://www.shellsettlement.com/docs/20090529- press%20release%20amsterdam%20court%20of%20appeals%20de clares%20shell%20settlement%20binding.pdf (downloaded 22 June 2010).
61. Stone Energy Corporation Securities Litigation. 2010. Summary Notice Publication. PRNewswire, 27 January 2010, http://www.prnewswire. com/news-releases/stone-energy-corporation-securities-litigation-82809552.html (downloaded 22 June 2010).
62. Stone Energy Corporation. 2005a. Provides Production and Hurricane Update and Revisions to Reserves. Press Release, Lafayette, Louisiana, USA, 6 October 2005, http://www.stoneenergy.com/pdf/press/2005/ rsvupdatel0-05.pdf (downloaded 22 June 2010).
63. Stone Energy Corporation. 2005b. Announces Restatement of Historical Financial Statements and Provides Third Quarter 2005 Selected Financial Data and Operational Update. Press Release, Lafayette, Louisiana, USA, 8 November 2005, http://www.stoneenergy.com/pdf/press/2005/ 3QT05SelectedDataZ.pdf (downloaded 22 June 2010).
64. Stone Energy Corporation. 2005c. Announces EC Inquiry. Press Release, Lafayette, Louisiana, USA, 10 November 2005, http://www.stoneen-ergy.com/pdf/ press/2005/SECInquiryll-05.pdf (downloaded 22 June 2010).
65. Stone Energy Corporation. 2005d. Announces Findings of Independent Review. Press Release, Lafayette, Louisiana, USA, 5 December 2005, http://www.stoneenergy.com/pdf/press/2005/ReviewFindings.pdf (downloaded 22 June 2010).
66. Stone Energy Corporation.2007 http://www.stoneen ergy.com/pdf/ar/ Stone07AR.pdf Annual Report, downloaded 7 February 2010)
67. Stone Energy Corporation. 2007. 2007 Annual Report, http://www.stoneen ergy.com/pdf/ar/Stone07AR.pdf (downloaded 7 February 2010). Stone Energy Corporation. 2008. Putting the Pieces Together: 2008 Annual Report, http://www.stoneenergy.com/pdf/ar/Stone08AR.pdf (downloaded 7 February 2010).
68. US SEC CF Accounting Staff. 2001. Frequently Requested Accounting and Financial Reporting Interpretations and Guidance-Guidance About Disclosures-F. Issues in the Extractive Industries-3. Definition of Proved Reserves. US SEC Division of Corporation Finance, Washington, DC (31 March 2001), http://www.sec.gov/divisions/corpfin/ guidance/cfactfaq.htm#P279-57537 (accessed 15 February 2010).
69. US SEC. 2004a. SEC Staff to Publicly Release Comment Letters and Responses. Press release 2004-89, US Securities and Exchange Commission, Washington, DC (24 June 2004), http://www.sec.gov/news/ press/2004-89 .htm (accessed 22 June 2010).
70. US SEC. 2004b. Royal Dutch Petroleum Company and the "Shell" Transport and Trading Company, P.L.C. Pay $120 Million to Settle SEC Fraud Case Involving Massive Overstatement of Proved Hydrocarbon Reserves. Press release 2004-116, US Securities and Exchange Commission, Washington, DC (24 August 2004), http://www.sec.gov/news/ press/2004-116.htm (accessed 22 June 2010).
71. US SEC. 2008a. Modernization of the Oil and Gas Reporting Requirements. Conforming version (proposed rule), 17 CFR Parts 210, 229, and 249, [Release Nos. 33-8935; 34-58030; File No. S7-15-08], RIN 3235-AK00, US Securities and Exchange Commission, Washington, DC (27 June 2008), http://www.sec.gov/rules/ proposed/2008/33-8935.pdf.
72. US SEC. 2008b. Comments, Modernization of the Oil and Gas Reporting Requirements. Conforming version (proposed rule), 17 CFR Parts 210, 229 and 249, [Release Nos. 33-8935; 34-58030; File No. S7-15-08], RIN 3235-AK00, US Securities and Exchange Commission, Washington, DC (27 June 2008-06 January 2009), http://www.sec. gov/comments/s7-15-08/s71508.shtml.
73. US SEC. 2008c. Modernization of Oil and Gas Reporting. Conforming version (final), 17 CFR Parts 210, 211, 229, and 249, [Release Nos. 33-8995; 34-59192; FR-78; File No. S7-15-08], RIN 3235-AK00, US Securities and Exchange Commission, Washington, DC (29 December 2008), http://www.sec.gov/rules/final/2008/33-8995. pdf.
74. US SEC. 2008d. SEC Settles Securities Fraud Case With El Paso Corporation, Its Subsidiaries, and Several Former Employees. Litigation Release No. 20642, Accounting and Auditing Enforcement Release No. 2844, US Securities and Exchange Commission, Washington, DC (11 July 2008), http://www.sec.gov/ litigation/litreleases/2008/lr20642. htm. (accessed 22 June 2010).
75. US SEC. 2009b. Putting investors first: 2009 Performance and Accountability Report, http://sec.gov/about/secpar/secpar2009.pdf (downloaded 22 June 2010).
76. US SEC. 2010. The Investor's Advocate: How the SEC Protects Investors, Maintains Integrity, and Facilitates Capital Formation, http://sec. gov/about/whatwedo.shtml (accessed 1 March 2010).
77. Wascak, R. 2004. Oil and Gas Valuation Paper. Memorandum, Federal Accounting Standards Advisory Board (FASAB), Washington, DC (23 September 2004). http://www.fasab.gov/pdffiles/finaloilgaspaper. pdf. (downloaded 22 June 2010).
78. White, T.T. 1964. Handling of Disclosure as to Reserves for the S.B.C. Paper SPE 971 presented at the SPE Annual Fall Meeting, Houston, 11-14 October, doi: 10.2118/971-MS.
79. Wyatt v. El Paso Corporation, et al. 2006. Stipulation and Agreement of Settlement, 02-cv-2717 (S.D. Tx 26 October 2006), http://securities. stanford.edu/1025/EP02-01/20061026-r01s-022717.pdf. (downloaded 07 February 2010).