SEC staff issues acctg. guidelines for oil cos.

WASHINGTON (AP) - To help energy companies meet a requirement of providing more detailed information to investors when reporting oil and natural gas reserves, federal regulators issued new accounting guidelines Friday.

Reserves are an oil company's most valuable asset and a critical indicator of its long-term financial prospects. Any reduction in their estimated size is a concern for investors.

The revised guidelines from the chief accountant's office at the Securities and Exchange Commission include changes in the price used to determine the size of oil and gas reserves. They also allow unconventional methods for extracting oil and gas from oil sands or shale to be included in companies' accounting as oil producing activities.

The SEC approved rules in December to update reporting requirements for oil and gas reserves that were more than 25 years old to reflect technological changes in how oil companies determine their proven reserves. They allow companies, for example, to use new technologies to determine proven oil and gas reserves provided the technologies have been shown to lead to reliable assessments.

Companies also are allowed to disclose their probable and possible reserves to investors; previously disclosure was limited to proved reserves.

A spokesman for the American Petroleum Institute, the industry's trade association, had no immediate comment Friday.

In August 2004, the SEC fined Royal Dutch/Shell Group $120 million - one of the largest penalties against a company in an accounting case - in connection with the overstatement of oil and gas reserves. The Anglo-Dutch oil giant's disclosure that year of reserve inflation stunned shareholders and the oil industry, and led to the dismissal of several top executives. The company did not admit or deny wrongdoing in agreeing to pay the civil fine.