Handling Of Disclosure As To Reserves For The S.B.C.
Authors: White Tell T. 
Published: December 2007

White, Tell T., Member AIME, U.S. Securities and Exchange Commission, Washington, D.C.

This paper is to be presented at the 39th Annual Fall Meeting of the Society of Petroleum Engineers on Oct. 11–14, 1964, in Houston, Tex., and at the California Regional Meeting, in Los Angeles, Calif. on Nov. 5–6, 1964, and is considered the property of the Society of Petroleum Engineers. Permission to publish is hereby restricted to an abstract of not more than 300 words, with no illustrations, unless the paper is specifically released to the press by the Editor of JOURNAL OF PETROLEUM TECHNOLOGY or the Executive Secretary. Such abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in JOURNAL OF PETROLEUM TECHNOLOGY or SOCIETY OF PETROLEUM ENGINEERS JOURNAL is granted on request, providing proper credit is given that publication and the original presentation of the paper.

Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and considered for publication in one of the two SPE magazines with the paper.

The purpose of this paper is to present certain factors which appear important in making full and fair disclosure to the general public concerning oil and gas properties. These observations are my own and may not necessarily represent those of the Commission.

There may be involved an offering of new securities of existing companies; the request of a company seeking approval of its stockholders to sell or purchase the assets of another company either for cash or an exchange of securities along with authority to issue such new securities; and requests for listing securities for trading on a stock exchange, or for such other purposes as are covered by various acts administered by the Commission.

Furthermore, it should be understood that these comments would not apply to reports, prepared for inter-company use or for clients regularly engaged in the production of oil and gas but which would not be used in the sale of securities to the public, since such reports may be written or qualified in such a manner as to serve their purposes but might well be misleading to persons not so familiar with the various problems in the production of oil and gas.

In general, there should be a reasonable, temperate presentation based on known facts without too much emphasis quantitatively on what is hoped can be done. Otherwise, the opinion eventually presented might be that of the author with the most vivid imagination. Even though some may feel I am only interested in low estimations of reserves, neither an estimation too low nor one too high is my goal. A reasonable interpretation of the information is what is desired.

Registrants have the same responsibility not to understate the reserves and additional qualitative possibilities, when they are asking their stockholders in a proxy statement to sell their properties, as they have to not overstate the prospects when offering new securities to the public. It is felt that when a company flies a proxy statement asking approval of a sale, the information as to reserves should not be less optimistic than the disclosures made in a registration statement filed by the buyer. The stockholders and prospective purchasers are entitled to approximately the same information in each instance.

Probably the most complex problem at this time is the handling of secondary reserves. Until the operation has had response for may be a year or two, it is often difficult to come even close to a reasonable answer.