In a bid to protect investors from companies overestimating their reserves, the Australian Securities Exchange (ASX) is planning to amend the reporting requirements for oil and gas companies under the Listing Rules.

The changes aim to address the lack of an industry code for hydrocarbon reporting, which, according to some critics, means mining companies have too much discretion when it comes to reporting under the current regime. The proposed amendments will see the introduction of separate and specialised hydrocarbon industry codes (such as those listed below) under a system of standardised reporting, similar to what exists for reporting mineral resources and ore reserves under the JORC Code.

Proposed changes to ASX Listing Rules

The proposed amendments centre on introducing a new Listing Rule allowing companies to adopt industry standards to prepare their hydrocarbon reserves and resources reports.

Under the proposed changes, the following will apply:

• Reports will need to be prepared by a person who satisfies the professional qualification requirements prescribed under identified industry standards.
• Companies will be required to address the following in their reports:
  
  o Whether the report complies with identified industry standards; and
  
  o The standard or methodology applied in preparing the report.
• The applicable industry standards are identified as follows:
  
  o The Petroleum Resources Management System endorsed by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC), American Association of Petroleum Geologists (AAPG) and Society of Petroleum Evaluation Engineers (SPEE);
  
  o The Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve Information as approved by the Board of the SPE; and
  
  o Rule 4-10 of Regulation S-X of the US Securities Exchange Act of 1934 (accounting rules providing for the form and preparation of financial statements).

ASX intends to undertake industry consultation on the introduction of standardised reporting in mid-2010.

For more information on the proposed changes and their impact on reporting requirements, please contact HopgoodGanim’s Corporate Advisory and Governance or Resources and Energy team.

Michele Muscillo, Partner
Martin Klapper, Partner