Not All Barrels Are Created Equal
Distinctions in regulatory standards that impact investments
Petroleum industry stakeholders rely on estimates of petroleum reserves and resources as a cornerstone for making informed strategic investment decisions. Whether assessing a property or corporate target in an M&A process, seeking or providing equity/debt financing, developing projects, engaging in sales contract negotiations or satisfying regulatory disclosure requirements, a clear understanding of the basis of these estimates is critical. Worldwide, several standards of resource estimation are widely accepted. Understanding the differences in these standards is imperative for correctly assessing value, development potential, and project risks.
A review of the standards used in the three largest petroleum securities markets globally reveals intricacies and differences in both the fundamental objectives and associated reporting requirements.