BCN 2003/37 - Adoption of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities [BCN - Lapsed]

Concurrently Published:

• 51-101 - Standards of Disclosure for Oil and Gas Activities [NI - Rescinded]
• 51-101CP - Standards of Disclosure for Oil and Gas Activities [CP - Rescinded]
• 51-101F1 - Statement of Reserves Data and Other Oil and Gas Information [F - Rescinded]
• 51-101F2 - Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor [F - Rescinded]

Canadian Securities Administrators Notice

Implementation of National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities

Repeal of National Policy Statement No. 2-B
and Other Consequential Amendments

September 26, 2003

NEW OIL AND GAS DISCLOSURE STANDARDS IMPLEMENTED

Canadian Securities Administrators (“CSA”) members outside Québec have implemented new standards of disclosure for reporting issuers engaged in upstream oil and gas activities. The new standards are substantially similar to those published by the CSA for comment early this year.

The Commission des valeurs mobilières du Québec (“CVMQ”) will consider adopting the new standards later this year. In the interim, CVMQ staff will consider favourably requests for exemptive relief from requirements of Québec securities legislation pertaining to evaluation reports and oil and gas disclosure by Québec issuers who wish to comply with the new standards.

The first public filings applying the new standards will be required in 2004, containing information as at the end of the financial year that ends on, or includes, December 31, 2003. See “Timing and Transition” below.

1. Substance and Purpose
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) establishes a regime of continuous disclosure for reporting issuers engaged in exploring for, developing or producing oil or gas. NI 51-101 is accompanied by:
· Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information
(“Form 1”);
· Form 51-101F2 Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor (“Form 2”);
· Form 51-101F3 Report of Management and Directors on Oil and Gas Disclosure
(“Form 3”) This form is not required in British Columbia.; and
· Companion Policy 51-101CP (the “Companion Policy”).

NI 51-101, Forms 1, 2 and 3 and the Companion Policy are together referred to in this Notice as the “Instrument”.

The purpose of the Instrument is to enhance the quality, consistency, timeliness and comparability of public disclosure by reporting issuers concerning their upstream oil and gas activities.

The new disclosure standards are designed to enhance investor confidence in Canadian capital markets and facilitate the raising of new capital by oil and gas reporting issuers. The CSA are of the view that information about oil and gas reserves and activities is essential to enable investors to make informed investment decisions concerning securities of upstream oil and gas issuers. We believe that investors and capital markets are entitled to information that:
· reflects the conclusions of qualified professionals applying consistent standards;
· is given appropriate attention by management and directors;
· is provided on a regular basis; and
· is presented in a manner that facilitates comparison among reporting issuers and over time.

To accomplish these objectives, the Instrument establishes disclosure standards and procedures somewhat akin to those long applied to financial disclosure. It prescribes standards for the preparation and disclosure of oil and gas reserves and related estimates, requires the annual public filing of certain of those estimates and other information pertaining to oil and gas activities, and specifies responsibilities of corporate directors.

The Instrument supplements disclosure requirements that apply to reporting issuers generally. It will replace National Policy Statement No. 2-B Guide for Engineers and Geologists Submitting Oil and Gas Reports to Canadian Provincial Securities Administrators (“NP 2-B”).

The Instrument is being published concurrently with this Notice and can be found on websites of CSA members, including the following:

2. Implementation of NI 51-101 and Repeal of NP 2-B
In most CSA jurisdictions, NI 51-101 is being implemented as a rule or commission regulation, effective on September 30, 2003. In some jurisdictions, it will be implemented as a policy or code. Ultimately, if the Instrument is adopted in Québec, it will be a regulation of the CVMQ. Consult the website of the CVMQ at www.cvmq.com for the status of the Instrument in Québec.

In conjunction with the implementation of the Instrument, NP 2-B is being repealed and consequential amendments are being made to other national, multilateral and local securities legislation and policies. See “Consequential Amendments to Other Instruments” below.

3. Summary of the Instrument
Consistent with CSA practice, mandatory elements of the Instrument are set out in NI 51-101 and in Forms 1, 2 and 3. Form 1 prescribes the reserves data and other information to be filed by a reporting issuer each year (as a free-standing filing or in its annual information form (“AIF”), pursuant to sections 2.1 and 2.3 of NI 51-101). Form 1 also contains instructions to assist preparers. Forms 2 and 3 prescribe the content of the accompanying reports of the independent qualified reserves evaluator or auditor and of management and directors. Form 3, the report of management and directors, is not required in British Columbia...

For complete text of CSA Notice view PDF linked above.