On December 30, 2010, the Canadian Securities Administrators (“CSA”) published CSA Staff Notice 51-327 Oil and Gas Disclosure: Resources Other Than Reserves Data (“51-327”). On December 30, 2010, the CSA also published Staff Notice 51-324, Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities (the “Glossary”). Both 51-327 and 51-324 became effective immediately.
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) mandates the disclosure of “reserves data”, which is defined in NI 51-101 to include “an estimate of proved reserves and probable reserves”. Disclosure of “resources” not included in reserves data is not required under NI 51-101. Although this disclosure is optional, the CSA have seen a significant increase in the disclosure of possible reserves and other resource classes, especially for unconventional resources.
The disclosure of resources other than reserves data must be consistent with all applicable securities laws including, but not limited to, the principles and specific requirements and restrictions of NI 51-101. For example, a reporting issuer must not make misleading or untrue statements, or omit any fact from its disclosure that would prevent a statement from being misleading.
51-327 provides guidance on recurring issues that the CSA have found in their review of reporting issuers’ disclosure of resources other than reserves data.
Specifically, 51-327 provides guidance about:
- disclosure of stand-alone possible reserves;
- aggregation of estimates for several properties;
- partially risked prospective resources;
- use of the term “best estimate”;
- technology under development for contingent resources;
- classification to the most specific class and category of resource; and
- criteria for classification of unconventional hydrocarbons as discovered petroleum initially-in-place.
The CSA considers that it may be misleading for reporting issuers to disclose resources other than reserves data without providing some context to that data. 51-327 includes sample cautionary statements to assist reporting issuers in providing that context. A reporting issuer may use cautionary language other than that recommended in 51-327.
Part 1 of the Glossary explains much of the terminology used in NI 51-101 and its accompanying documents. It is provided only as a convenience to users of NI 51-101, to assist them in better understanding the purpose and application of NI 51-101. Part 2 of the Glossary focuses on the definition of reserves and is derived from Section 5 of Volume 1 of the COGE Handbook.