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ASC 932-235-50 provides guidance on calculating and disclosing the standardized measure for discounted future net cash flows, and the changes in such standardized measure. This guidance also requires the presentation of a rollforward of net quantities of an entity’s proved oil and gas reserves, among other disclosures. Specifically, the SEC staff has commented on:
  • disclosures that improperly exclude certain required line items within the standardized measure;
  • outliers or significant changes in amounts included in the disclosure of the standardized measure (or why there is no change based on other disclosures in the filing); and
  • disclosures that do not explain material changes in items presented in the reconciliation of reserve quantities, including the changes in total proved reserves attributed to extensions and discoveries.
Comment Examples
Guidance references
  • Revise your disclosure to explain the changes in your total proved reserves for each line item shown in the reconciliation, other than production, during each of the periods presented. Your revised disclosure should separately identify and quantify each factor, including offsetting factors, such that the change to each line item is fully explained. In particular, disclosure relating to revisions in previous estimates should indicate the extent to which changes were caused by economic factors, such as costs and commodity prices, well performance, uneconomic proved undeveloped locations, or the removal of proved undeveloped locations due to changes in a previously adopted development plan. Refer to FASB ASC 932-235-50-5.
  • We note your disclosure of changes in the standardized measure of discounted cash flows includes an adjustment for "Changes in timing and other." Provide us with a description of the nature of this adjustment. Refer to FASB ASC 932-235-50-5 and ASC 932-235-50-36.
  • Expand the discussion accompanying the presentation of the standardized measure to clarify, if true, that future cash flows take into account the estimated abandonment costs for your proved properties. If the abandonment costs, including such costs related to your proved undeveloped locations, have not been included, tell us why a revision in the estimated future net cash flows is not necessary. Refer to FASB ASC 932-235-50-36.
  • The combined change in the net quantities of proved reserves attributed to extensions and discoveries appears to be significantly greater than the corresponding change in the net quantities of proved undeveloped reserves for each of the last three fiscal years presented. Expand the discussion of the changes in your total proved reserves attributed to extensions and discoveries to explain the reason(s) for this difference. Refer to FASB ASC 932-235-50-5.
  • Expand the tabular disclosure of your proved reserves to present the net quantities of proved developed and proved undeveloped reserves, by individual product type, at the beginning of the first period presented in the reserves reconciliation. Refer to FASB ASC 932-235-50-4.

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