SEC Presses Oil Companies on Reserves

Billiton Ltd. and ConocoPhillips have joined Exxon Mobil Corp. and Anadarko PetroleumCorp. in agreeing to detail how much of their fuel is crude rather than liquids derived from natural gas.

September 17, 2013

NEW YORK – With crude prices hovering around $100 a barrel and the prices of other liquid fuels falling, the Securities and Exchanges Commission has requested U.S. oil companies to disclose how much of their reserves consist of oil rather than less valuable liquids like propane, the Wall Street Journal reports

Accordingly and after prodding from regulators, Billiton Ltd. and ConocoPhillips have joined Exxon Mobil Corp. and Anadarko PetroleumCorp. in agreeing to detail how much of their fuel is crude rather than liquids derived from natural gas.

"One of the things we often are not seeing is separate disclosure of natural-gas liquids," said John Hodgin, a petroleum engineer with the SEC.

According to the WSJ, the SEC has queried at least 14 companies since 2010, including seven in the past year. Eight have agreed to provide more disclosure.

Analysts said that when energy companies combine reserves of oil with liquid gases, it can make it more difficult for investors to gauge profitability.

"Breaking out NGLs from crude oil will become of more interest to investors," said Pavel Molchanov, an energy analyst at Raymond James.

The SEC's push follows passage of a 2008 rule that requires energy companies to report the different fuels they produce in material amounts. The WSJ found that the agency typically insists on more disclosure when liquid gases comprise 6% or more of a company’s production or reserves.

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