National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101) requires reporting issuers in Canada engaged in oil and gas activities to report, on an annual basis, estimated quantities of their reserves and related future net revenue using forecast prices and costs. On December 30, 2010, new amendments adopted by the Canadian Securities Administrators (CSA) came into effect revising NI 51-101 and its related forms and companion policy (the Amendments). The Amendments reflect the CSA’s on-going efforts to ensure that public disclosure of resource reporting in Canada remains trustworthy, accurate, and reliable.

The Amendments adopted by the CSA are not a fundamental overhaul of NI 51-101 but rather intend to clarify existing provisions, codify existing staff guidelines, and enhance disclosure of reserves and resources other than reserves. The most significant amendments introduced are not novel and for the most part codify Staff Notice 51-327 – Oil and Gas Disclosure: Resources other than Reserves Data (Staff Notice 51-327). Reporting issuers should be advised that in addition to enhanced disclosure requirements, the forms for 51-101F1, 51-101F2, 51-101F3, and 51-101F4 have all been amended and the most recent forms must be used for disclosure purposes.

All reporting issuers will be required to comply with the Amendments, as applicable, in public disclosures made on or after December 30, 2010. In light of the Alberta Securities Commission continuing its practice of ongoing review of oil and gas continuous disclosure, the Amendments should be reviewed carefully by all issuers in preparing any public disclosure for 2011.

The principle revisions to NI 51-101 contained in the Amendments are summarised as follows.


Disclosure of High-Case Estimates of Reserves and of Resources other than Reserves

Pursuant to Staff Notice 51-327, the Amendments now codify the prohibition of the reporting of a High estimate of recoverability without also concurrently disclosing of both Low and Best-Case estimates. This is intended to alleviate confusion for investors that may not recognize that the High estimate may not act as the best measure of the volume of resources that will actually be recovered from the operations and may in reality overstate those resources beyond the expected range of outcomes. The Amendments will also require that where disclosure is made of proved + probable + possible reserves, corresponding estimates of proved and proved + probable reserves or proved and probable reserves will be required. The intent of this revision is to minimize the potential for investors to be misled by the presence of a large volume of possible reserves aggregated with lower number of proved reserves. This intent is mimicked in the next revision reviewed.

Restricted Disclosure: Summation of Resource Categories

The Amendments require that if a reporting issuer discloses anticipated results from resources which are not currently classified as reserves, the issuer must assign the estimates to the most specific subcategories of resources possible as set forth in the COGE Handbook. Once a category of disclosure has been selected, in an effort to provide more meaningful and consistent disclosure and to prevent the misleading disclosure that can result from the aggregation of different resource categories, each of which has a different chance of commerciality, the Amendments impose an prohibition on the summation of any estimated quantity or value of two or more of the following:

Reserves (whether proved, probable or possible);  

Contingent resources;  

Prospective resources;  

The Unrecoverable Portion of Discovered Petroleum Initially-in-Place;  

The Unrecoverable Portion of Undiscovered Petroleum Initially-in-Place;  

Discovered Petroleum Initially-in-Place; and  

Undiscovered Petroleum Initially-in-Place.  

A limited exception permits the disclosure of total petroleum initially-in-place, discovered petroleum initially-in-place, or undiscovered petroleum initially-in-place, provided that proximate to this disclosure the issuer includes estimates of each of the underlying resource categories that comprise such combined estimates and why such category is the most specific category that it can assign to its resources. Should an issuer rely on this exception, the issuer must also include a prescribed cautionary statement.


Above and beyond the codification of certain provisions of Staff Notice 51-327, the Amendments are also intended to introduce more comprehensive disclosure, decrease the cost of compliance and address certain inconsistencies in NI 51-101. Such amendments include:

Changes to Signing Requirements

The Amendments have revised the execution requirements for Form 51-101F3 – Report of Management and Directors on Oil and Gas Disclosure to permit the form to be signed by the Chief Executive Officer (the CEO) and any other officer (whereas the requirement previously was for a signature of the CEO and another senior officer).

Supplemental Disclosure using Constant Prices and Costs

As it existed prior to December 2007, NI 51-101 required reporting issuers to annually provide reserves data based on both constant and forecast prices and costs. Amendments in December 2007, however, stated that reporting issuers were only required to provide reserves data based on forecast prices and costs, with the option to provide constant case information as voluntary supplemental disclosure. The Amendments maintain this option, though the CSA has recognized the practice of issuers that have been using Form 51-101F1 – Statement of Reserves Data and Other Oil and Gas Information (51-101F1) as a guide for voluntary supplemental disclosure concerning resources other than reserves. The Amendments now clarify that the use of constant prices and costs as a basis for supplementary disclosure based upon the disclosure template is a permissible practice not only for reserves, but also for resources other than reserves. For greater certainty the Amendments also have defined a constant price as the price at which the issuer is legally bound to supply the product. If there is no such legal commitment in place, the constant price is defined as the unweighted average of the first-day-of-the-month price of the product for each of the 12 months preceding the effective date of the disclosure. Recognizing that the most likely supplementary requirements that Canadian reporting issuers are attempting to address for the benefit of their shareholders are those of the Securities and Exchange Commission, the Amendments define constant prices and costs consistent with the calculation of constant prices under current U.S. SEC standards. Despite this harmonization, the CSA maintains its aim is not to align Canadian disclosure requirements with US disclosure requirements.

Supplemental Reporting of Reserves and Other Oil and Gas Information

Although reporting issuers are mandated to provide a summary of their reserves and other oil and gas information in the specified form annually, issuers have since the adoption of NI 51-101 for a variety of reasons, routinely filed incremental oil and gas disclosure reports at different periods.

The Amendments recognize this practice as acceptable, however such a practice does not satisfy the annual filing obligation.

Significant Factors and Uncertainties Relevant to Properties with No Attributed Reserves

NI 51-101 has always required oil and gas issuers to identify and discuss those factors and uncertainties that might affect components of the reserves data being disclosed. Similar provisions for factors and uncertainties as they relate to properties that have no attributed reserves however have not up to now been mandated. The Amendments require an oil and gas issuer to identify and discuss significant economic factors or significant uncertainties that affect the anticipated development or production activities on properties with no attributed reserves. Examples of information that could warrant disclosure under this amendment include unusually high expected development costs or operating costs, or the need to build a major pipeline or other major facility before production can begin.

Filing of Form 51-101F4 in lieu of News Release

NI 51-101 has historically required that issuers file a news release upon filing the annual reserves disclosure. Pursuant to the Amendments, oil and gas issuers who use the existing provision allowing for an issuer to incorporate their annual reserves disclosure in an Annual Information Form (AIF) need not issue a press release so long as they file the newly prescribed notice NI 51-101F4 – Notice of Filing of 51-101F1 Information along with their AIF on SEDAR.

Stratigraphic Test Wells

When disclosing Exploration and Development Activities in 51-101F1, oil and gas issuers must now disclose any stratigraphic test wells completed in their most recent financial year in addition to any completed oil wells, gas wells and service wells.