Guidance on abandonment and reclamation costs published for oil and gas issuers

November 9, 2015

The Canadian Securities Administrators (CSA) have published CSA Staff Notice 51-345 Disclosure of Abandonment and Reclamation Costs in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities and Related Forms (CSA Staff Notice 51-345).  CSA Staff Notice 51-345 reminds reporting issuers in the oil and gas industry that publicly disclosed estimates of future net revenue must be stated net of abandonment and reclamation costs.

On July 1, 2015 certain amendments were made to National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) to add definitions for "future net revenue" and "abandonment and reclamation costs".  According to the definition of "future net revenue" it should be stated "net of the associated royalties, operating costs, development costs and abandonment and reclamation costs".  "Abandonment and reclamation costs" are defined as "all costs associated with the process of restoring a reporting issuer’s property that has been disturbed by oil and gas activities to a standard imposed by applicable government or regulatory authorities".

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