Oil and gas disclosure requirements and new issues: NI 51-101 sets standards

David Elliot - Sep 2011

National Instrument 51-101 (NI 51-101), which governs the disclosure of oil and gas activities for securities regulatory purposes in Canada, was implemented in 2003, with additional guidance provided in a Companion Policy and in Canadian Securities Administrators (CSA) staff notices. Amendments to NI 51-101 were made in 2003, 2007 and 2010 and, as a result of the ongoing significant changes in the oil and gas industry, further amendments are under consideration, possibly for the end of 2012.

Oil and gas resource classification

Oil and gas resource classes that may be disclosed are:

  • Reserves, which are discovered and commercially viable to
  • Contingent resources, which are discovered but cannot be produced because of one or more contingent factors, such as economic or legal factors or lack of access to
  • Prospective resources, which are not yet discovered but are an estimate of what might be recovered if a discovery is

The uncertainty in each of these resource classes is captured by categorizing the estimates as low, best and high, where P90 indicates that there is at least a 90 per cent probability of recovering more than the estimated volume (e.g., of Proved reserves); P50 indicates that there is a 50 per cent probability of recovering more (or less), etc.

National Instrument 51-101

NI 51-101 covers all public disclosure on oil and gas activities, including news releases and corporate presentations, with requirements:

  • To use the technical standards for evaluations provided by the Canadian Oil and Gas Evaluation Handbook (COGEH).
  • For annual filings based on evaluations or audits by independent qualified reserves evaluators or auditors (of at least 75 per cent of the 10 per cent discounted net present value of the Proved and Probable reserves) with mandatory disclosure of Proved and Probable reserves evaluated using forecast prices and costs. Optional disclosure may be made of evaluations using constant prices and costs, and of other resource classes.

The annual filings consist of the following forms:

  • F1, which contains details of reserves and resources and considerable additional information on a company’s activities.
  • F2, on which the independent qualified reserves evaluator or auditor signs off on the work that they have carried out.
  • F3, which is signed by two directors and two officers of the company to indicate that they have carried out due diligence on the preparation of the filing.
  • F4, which is required only if any of the information required in the F1, F2, and/or F3 forms has been included in a company’s annual information form instead of being filed separately. It replaces the previous requirement to file a news release to this effect.

The Alberta Securities Commission (ASC) Petroleum Department has an active oil and gas disclosure review program that includes prospectuses, annual filings and also the technical reports on which these are based. The results of these reviews can be found in the ASC Annual Oil and Gas Report on the ASC website.

New developments

There have been significant developments in the oil and gas industry in recent years, with greatly increased activity on so-called “unconventional” resources: coal bed methane, bitumen, shale gas and some initial signs of activity on shale oil. The technology that has led to the increased activity on shale gas, long horizontal wells and multi-stage fracturing is now also being applied to poor quality “conventional” oil and gas reservoirs.

The ASC continues to review the oil and gas disclosure requirements in light of these changes and to work with industry on the development of the technical guidelines for their evaluation.

The views expressed in this article are those of the author and do not necessarily represent the views of the ASC.


David Elliot is the chief petroleum advisor in the Corporate Finance Division of the Alberta Securities Commission. He recently stepped down as manager of the Petroleum Department and is now working part time in an advisory role.