Report: Oil, gas companies could be using public lands to pad bottom line at expense of taxpayers

Washington, D.C. August 29, 2018 – Oil and gas companies could be using America’s public lands to pad their own bottom lines at the expense of U.S. taxpayers, according to a new report from the Center for American Progress.

While nearly 26 million acres of federal land were leased to oil and gas developers as of 2017, less than half of that land was producing any oil or gas. The report suggests there may be a perverse incentive for a company to sit on undeveloped land: It can carry the subsurface reserves as assets on its balance sheets to improve its overall financial health.

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CAP analyzed financial reports for publicly traded oil and gas companies from 2006 to 2017 and determined that changes in Securities and Exchange Commission (SEC) reporting policies have allowed oil and gas companies to increase their booked reserves over time. This is thanks to an expansion of acceptable reporting standards for proved undeveloped reserves assets that have yet to be drilled for production.

The report shows that not only do booked undeveloped reserves serve as a statistically reliable indicator of a company’s overall market value, but also that this link actually increased immediately following the 2008 change in SEC reporting standards. At the same time, companies included in this report nearly doubled their reported undeveloped reserve volumes within just five years of the new regulations taking effect.

“This data shows that the current regulatory model for oil and gas leasing is inadequate,” said Mark DeSantis, the report’s author. “It allows these companies to benefit from undeveloped resources at the expense of public lands that are being poorly managed for future generations.”

Read the report: “Oil and Gas Companies Gain by Stockpiling America’s Federal Land” by Mark K. DeSantis.