As per the SPE “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” (2019), “QREs and QRAs must (i) examine and interpret the available data necessary to estimate or audit Reserves information, (ii) perform tests and consider all matters necessary to evaluate the sufficiency of the database, and (iii) make calculations and estimates and apply any tests and standards necessary to estimate or audit Reserves and other Reserves information.”

Reserves audits serve important objectives. Audits provide an entity with an objective opinion regarding the reasonableness of their internally-derived reserves estimates and the methodologies that were applied. An audit may also highlight the need for additional, supportive information or recommend review of assumptions used in the internal estimates. Opinions may be provided regarding the entity’s internal processes and data control or security (a “process review”). Reserves categories and resources classification also may be tested through the audit procedure to ensure compliance with PRMS guidelines and/or SEC regulations.

Audits need not be performed for the client’s entire portfolio. Audit opinion letters may be prepared for client-defined major reserves revisions occurring over the last fiscal year, although it is recommended that an “entity Reserves audit” (per the SPE “Standards”) be conducted first for at least 80% of the client’s reserves.

As part of an international petroleum consulting firm in the early 1980s, Mr. Vanorsdale supervised the annual audit of the domestic U.S. reserves of Cities Service Oil & Gas, now part of Occidental Petroleum. In the 1990s/early 2000s, he conducted reserves audits for clients including Texaco and Unocal (both now part of Chevron). He has also coordinated and/or participated in numerous data room presentations over a 40-year period. Mr. Vanorsdale’s own reserves evaluation estimates have been audited by the major third-party petroleum engineering consulting firms and found to be technically sound with no material difference between the assessments.