9/2009: Listing requirements and disclosure requirements for oil and natural gas companies

1 Introduction

Oslo Børs hereby publishes a revised set of guidelines and requirements for the reporting of reserves by oil and natural gas companies. The guidelines are set out in the enclosed document, which is referred to as the “Oil Circular” or the “Circular”. This new Circular replaces Circular 2/2007.

The Circular provides:

1. An explanation of the specific listing requirements that apply to oil and natural gas companies applying for listing on Oslo Børs or Oslo Axess, and an expansion of the scope of these requirements;
2. A revised interpretation of the provisions on deferred disclosure of inside information in connection with the publication of exploration results; and
3. More detailed guidelines for the disclosure requirements and guidelines in respect of exploration drilling, hydrocarbon reserves and contingent resources for oil and natural gas companies currently listed on Oslo Børs or Oslo Axess, including the introduction of a requirement for publication of an Annual Statement of Reserves.

A draft version of the Circular was distributed to oil and natural gas companies listed on Oslo Børs or on Oslo Axess and to other interested parties on 16 June 2009 as part of a consultation process. Oslo Børs received a lot of input, which has to a large degree been incorporated in the final version of the rules and guidelines.

2 Listing requirements

Oslo Børs introduced on 1 January 2008 a duty for minerals companies – including oil and natural gas companies – to produce a reserves report with an expert’s opinion in connection with an application for admission to listing on Oslo Børs or Oslo Axess, cf. Section 3.4, third paragraph, item 31 of the Listing Rules for Oslo Børs and Section 3.4 third paragraph, item 30 of the Oslo Axess Listing Rules.

A change to the Listing Rules approved on 15 December 2009 extends the scope of this duty to include companies that only carry out exploration for oil, gas or other mineral resources, cf. Section 2 of the Circular. This means that the scope of the listing requirements for oil and natural gas companies is brought into line with the scope of the reporting duties of companies already listed, cf. Section 4 below.

This change will come into effect on 1 January 2010. The change will therefore apply to companies that submit an application for admission to listing on or after this date, and the new requirement will be applied for the first time to admission applications considered by the Board of Directors of Oslo Børs at its meeting in February 2010.

3 Publication of exploration results – deferred disclosure

In the previous Oil Circular 2/2007, Oslo Børs took the position that oil and natural gas companies that carry out drilling of exploration and appraisal wells would be entitled to defer disclosure of the exploration results in anticipation of pre-clearance of press statements by the Norwegian Petroleum Directorate, cf. Section 5-3 of the Securities Trading Act.

Following a further review, including communications with the Norwegian Petroleum Directorate, Oslo Børs has revised its opinion in this respect. Oslo Børs now takes the view that companies as a starting point cannot defer the disclosure of exploration results that represent inside information solely on the basis that the Petroleum Directorate is to provide pre-clearance of the press statement.

Oslo Børs explains its views in Section 3 of the Circular.

4 Requirements for routine reporting of reserves – Annual Statement of Reserves

Oslo Børs amended the Continuing Obligations on 15 December 2009 to introduce a requirement for oil and natural gas companies to publish an Annual Statement of Reserves (“ASR”), cf. new Section 3.8 and Section 4 of the Circular. Such reporting has, until now, only been a recommendation, cf. Circular 2/2007.

This change comes into force from 1 January 2010. Companies will therefore be required to publish in 2010 an ASR for 2009. However, Oslo Børs will focus in 2010 on providing advice and guidance for companies in the implementation phase, rather than on the enforcement of the requirements and imposition of sanctions.

The requirement to publish an ASR will apply to all oil and gas companies as more specifically defined in the Circular. It will also, in principle, apply to exploration companies.

Companies that are subject to similar requirements to publish a reserves report as a result of their listing on other exchanges or regulated marketplaces will be able to satisfy the requirements by publishing such reports as a substitute for an ASR.

The ASR must be published no later than at the time of publication of the annual report. Companies that prepare and publish an official reserves report in accordance with equivalent reserve reporting regulations as mentioned above must publish this report within the timetable that applies under the regulations in question.

The ASR must include reserves presented in a table format, while resources should not be presented in a table format. Reporting of contingent resources is optional. Contingent resources may be quantified in the management discussion and analysis if this is considered to be relevant information. For prospects, leads, resources under evaluation and resources whose development is considered unlikely based on current conditions, no quantitative information should be disclosed.

The ASR should also include a narrative (management discussion and analysis or “MD&A”) with key assumptions, and, as a general rule, confirmation by an independent expert. The Circular provides more detailed requirements for the qualifications and independence of such an expert. Since these requirements have not previously been communicated to market participants, Oslo Børs may, upon application, grant exemptions from this requirement for the first such report a company publishes.

If the company’s own reserve estimates for a field differ substantially from the reserve estimates made public by the operator of the field, the deviation should be explained to the extent possible.

The Circular includes an account of classification systems used for reserves and resources, formats for estimates and reports, etc. In addition, the Circular incorporates the updated definitions from SPE PRMS (SPE/WPC/AAPG/SPEE Petroleum Resources Management System – PRMS). Recipients are asked to note that while the SPE PRMS definitions are used in the Circular when discussing reserves, resources and other key concepts, this does not in any way preclude companies from using other classification systems.

Kind regards
Oslo Børs ASA