CSA Provides Guidance for Disclosure of Abandonment and Reclamation Costs in NI 51-101
On November 5, 2015, the CSA published Staff Notice 51-345 Disclosure of Abandonment and Reclamation Costs in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities and Related Forms, which summarizes certain disclosure requirements in recently amended NI 51-101 Standards of Disclosure for Oil and Gas Activities and related forms.
This notice will assist reporting issuers and their independent qualified reserves evaluators or auditors in preparing compliant oil and gas disclosure and is particularly timely as many reporting issuers engaged in oil and gas activities have December 31 financial year-ends and are currently preparing their annual oil and gas disclosure.
With the amendments that were effective July 1, 2015, definitions for future net revenue and abandonment and reclamation costs were added to section 1.1 of NI 51-101.
- Future net revenue: A forecast of revenue, estimated using forecast prices and costs or constant prices and costs, arising from the anticipated development and production of resources, net of the associated royalties, operating costs, development costs and abandonment and reclamation costs.
- Abandonment and reclamation costs: All costs associated with the process of restoring a reporting issuer’s property that has been disturbed by oil and gas activities to a standard imposed by applicable government or regulatory authorities.
Item 2.1(2) of Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information mandates disclosure of future net revenue. Disclosure is required in aggregate by country and product type for the reserves categories specified in Item 2.1(1). Item 2.1(3) details specific disclosure of abandonment and reclamation costs. New Part 7 of Form 51-101F1 provides requirements regarding the optional disclosure of resources other than reserves.
Form 51-101F1 requires additional disclosure concerning significant abandonment and reclamation costs. In particular, Item 5.2 addresses instances where these costs affect particular components of reserves data and Item 6.2.1, in situations where they have affected or are reasonably expected to affect activities on properties with no attributed reserves.
The notice reminds reporting issuers and their independent qualified reserves evaluators or auditors of their responsibilities, as described in Form 51-101F3 and Form 51-101F2, respectively.