This publication is designed to help energy and mining companies better understand the SEC staff’s recent focus areas and hot topics. Our analysis included SEC staff comments posted on the SEC’s EDGAR website between July 1, 2016 and June 30, 2017 related to Forms 10-Q and 10-K. Those comments covered a broad range of topics that are important to the energy and mining sector. Where appropriate, we also analyzed the primary energy sub-sectors (upstream, downstream, midstream and oilfield services).
Upstream activities continued to be a focus area for the staff in 2017, representing 24% of the overall comments. It should be noted there is an upstream element to several other topical areas within our Top 10 list (e.g., impairments and MD&A), however, this section primarily focuses on comments related to the development of proved reserves, third-party engineer reports, required supplemental disclosures, and accounting methods utilized to account for oil and gas reserves.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is a critical component of registrants’ communications with investors and continues to garner its share of SEC staff comments. The key objectives of MD&A are to provide a narrative explanation of the financial statements that enables investors to see the company through the eyes of management, to offer context to the financial statements, and to provide information that allows investors to assess the likelihood that past performance is indicative of future performance. Consistent with previous years, the majority of MD&A comments related to improving the quality of disclosures to meet the overall objectives of MD&A rather than meeting the specific technical requirements of Regulations S-K