Canada: The ASC's 2018 Oil And Gas Review Reflects Troubled Times In The Industry

  • On December 17, 2018, the Alberta Securities Commission ("the ASC") released its annual oil and gas review ("the 2018 Review").
  • The review delineates the key areas of disclosure identified over calendar 2018 as needing improvement and highlighting future disclosure modifications necessitated by amendments made to the Canadian Oil and Gas Evaluation Handbook ("the COGE Handbook") in 2018.
  • Tangentially, and dishearteningly, the 2018 Review also highlights the staggering decline in the number of oil and gas reporting issuers principally regulated by the ASC amidst increasing regulatory and political uncertainty and environmental and social scrutiny of oil and gas development.

Highlights of the Review

Juniors hardest hit

The total number of reporting oil and gas issuers regulated by the ASC is now just over half the amount in 2012, and the brunt of this decline has been borne by junior companies producing less than 10,000 BOE/day.1 While in 2014 juniors constituted 80 per cent of reporting issuers, they currently make up only 65 per cent.

Consolidation and efficiencies

However, in contrast with 2017, which saw declines in the number of reporting issuers mainly due to receiverships and bankruptcies, 2018 has been a year of industry consolidation undertaken by a limited number of larger industry players.

Additionally, the industry has continued to shift in focus towards more costly and complex horizontal and multi-stage hydraulic stimulations meant to maximize existing extraction capability. 2018 observed continued sizeable improvements in well-life extension and improved recovery techniques. At the same time exploration continues to remain effectively flat, with the ASC noting negligible overall exploration with discoveries disclosed by only four seniors, two intermediates and six juniors.

Areas of concern for the ASC

Economic factors over the past year have unsurprisingly resulted in negative adjustments for all reporting issuers.

In part reflective of these changing industry dynamics, the ASC has noted a number of continuing and emerging areas of concern with the disclosure of reporting issuers. In particular, the ASC noted issues in 2018 regarding:

  • Failures to disclose differentiated development plans for proved and probable undeveloped reserves, factors potentially impacting project commerciality, and adequate reasons for deferral beyond periods stipulated in the COGE Handbook2.
  • Disclosures of undifferentiated information combining both unproved and proved properties. Additionally, the ASC noted continued omissions and generic disclosures of gross and net areas owned by reporting issuers based on the proportion of their respective working interests, and of expiring exploration, development and exploitation rights;
  • Inaccurate reporting of reserve reconciliations. Issues included inadequate disclosures with respect to mismatched opening and closing balances, negative volumes for some reserve change categories, erroneous technical revisions and reserves acquisitions, incorrect production volumes, omitted or inconsistent units of measurement, the use of incorrect reserve change categories and a failure to properly explain the disclosures of each reserve category; and
  • Inadequate or erroneous disclosures when reporting issuers ceased oil and gas activities. Issues included failures to file the required notice at all, or on time, filing a notice when the reporting issuer did not cease engagement in oil and gas activities, and failures to update disclosure and issuer profiles on SEDAR to reflect the ceasing of oil and gas activities.

Reclamation costs

Additionally, reflecting the tumult of political and legal forces in the oil and gas industry in the past year, the ASC has once again provided explanations of the proper method to account for abandonment and reclamation costs, a topic which has gained increased importance following the Alberta Court of Appeal's decision in Redwater, previously discussed here. The implications of the Redwater decision have recently been highlighted by concerns over the size of reclamation liability estimates arising from news reports in October, and the Alberta Energy Regulator's August announcement that it intends to adopt a more stringent approach to shifting reclamation liabilities following the announcement of Sequoia Resources Corp. to cease operations in early 2018. Understandably, the disclosure of reclamation liabilities is likely to remain a top consideration for reporting issuers heading into 2019.

"Ghost barrels"

Finally, in response to recent discussions regarding "ghost barrels" resulting from unused space in transportation infrastructure, the ASC has provided a discussion of the disclosure expectations around forward transportation contracts, noting in particular that reporting issuers must disclose the size of excess and unused transportation space, the expected duration of the unused space, and the value associated with that space where reporting issuers do not maintain proved total reserves necessary to satisfy forward agreements.

Looking Ahead

In conclusion, the 2018 ASC Oil and Gas Review attempts to address a number of ongoing issues while also providing reporting issuers with the information they require to minimize risk and address uncertainty in response to a changing industry dynamic and the headwinds of unpredictable external forces. Such guidance is critical in the face of expected continued uncertainty in 2019.


1 A reduction from 302 reporting issuers in 2012 to 152 in 2018.

2 Five years absent appropriate justification with adequate explanation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions