SPE Economics & Management
Volume 3, Number 2, April 2011, pp. 68-78

SPE-134014-PA

Reserves Overbooking: The Problem We're Finally Going to Talk About

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DOI  More information 10.2118/134014-PA http://dx.doi.org/10.2118/134014-PA

Citation

  • Olsen, G.T., Lee, J., and Blasingame, T.A. 2011. Reserves Overbooking: The Problem We Are Finally Going To Talk About. SPE Econ & Mgmt  3 (2): 68-78. SPE-1304014-PA. doi: 10.2118/1304014-PA.

Discipline Categories

  • 3.1 Asset and Portfolio Management
  • 3.4.1 Ethics
  • 6.7 Reserves Evaluation

Keywords

  • reserves, SEC filing, ethics

Summary

Oil and gas reserves estimates that honor disclosure requirements of the US Securities and Exchange Commission (SEC) are critically important in the international oil and gas industry. Unfortunately, a number of exploration and production (E&P) companies have allegedly overstated and subsequently written down certain reserves volumes in recent years. In some cases, the consequences have been quite adverse. We document some of these cases of reserves overstatements and summarize the consequences. Reserves write downs are of obvious interest to numerous groups involved in the reserves estimation process and outcome, including estimators, managers, investors, creditors, and regulators. The magnitude and nature of recent overstatement cases, relative unfamiliarity with the SEC's inner workings, and the SEC's new reserves-reporting requirements increase the need to examine critically reserves disclosures and reserves overstatements.

© 2011. Society of Petroleum Engineers

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History

  • Original manuscript received: 25 June 2010
  • Meeting paper published: 21 September 2010
  • Manuscript approved: 24 September 2010
  • Published online: 7 April 2011
  • Version of record: 7 April 2011