(February 5, 2010) - In an effort to assist smaller companies with the new reporting and disclosure requirements under the final rule Modernization of Oil and Gas Reporting (Regulation S-K and Regulation S-X), the Securities and Exchange Commission (SEC) issued a small entity compliance guide on oil and gas reporting.

To view the guide, click here.

Briefly the new rules include:

Changes to Oil and Gas Definitions in Rule 4-10 of Regulation S-X
Description of the new oil and gas definitions in Rule 4-10 of Regulation S-X:

• Average price
• First-of-the month pricing
• Reliable Technologies
• Nontraditional Resources
• Eliminate “Certainty” Test
• Supporting definitions

Consolidation of Disclosure Requirement in Subpart 1200
The rules contain a new Subpart 1200 in Regulation S-K which consolidates industry-specific disclosure requirements for oil and gas companies currently found in Item 102 of Regulation S-K and Industry Guide 2. The new subpart contains the following disclosure items:

• Item 1201 – General instructions
• Item 1202 – Reserves
• Item 1203 – Proved undeveloped Reserves (PUDs)
• Item 1204 – Production
• Item 1205 – Drilling
• Item 1206 – Present activities
• Item 1207 – Delivery commitments
• Item 1208 – Oil and gas properties, wells, operations, and acreage

Other significant Issues

• MD&A Guidance
• Ceiling Test Limitation for Capitalized Cost under Full Cost Method
• Accounting Treatment and No Retroactive Revision

For more information, contact Megan McFarland, Audit Partner & National Energy Practice Area Leader at mmcfarland@heincpa.com or 972.458.2296.

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