The Israel Securities Authority on Monday presented its new reporting rules for oil and gas exploration companies. Securities Authority Corporation Finance Department director Shirel Guttman-Amira presented the new rules in a special briefing.The ISA wants to prevent the flood of incomprehensible announcements and to increase the transparency of the oil and gas exploration partnerships to their investors. The ISA said the document was a preliminary draft that was being submitted for public comments, after which the final draft would be written and submitted.“We discussed whether to require the publication of data that was not yet precise and includes a degree of subjectivity, but the discussion was between some uncertainty in reports and trading based on rumors,” Guttman-Amira said.“Between the two choices, we preferred the mandatory obligation of reporting, even if there is still a degree of uncertainty.”“At the core of the guidelines is the Petroleum Resources Management System [PRMS], which is used by the global oil and gas industry, including in the US and Canada,” she said.The ISA made minor adjustments to the PRMS model, but the new rules fully rely on its precise definitions and forbid notices to the TASE that do not use the model’s definitions.In addition to the requirement to use the PRMS model, the ISA has ordered that the discovery of oil resources be made at the project level, in contrast to the US and Canada, where it is permissible to announces reserves according to segments at the state level, or by type of petroleum.The ISA’s guidelines divide oil resources or wells into two main categories: prospective resources (before the drilling of an exploratory well) and conditional resources or reserves (after the drilling of an exploratory well). All announcements after drilling of an exploratory well will now be required to use PRMS language, as defined by the ISA. For stages preceding the drilling of an exploratory well, the ISA recognizes that it is sometimes necessary to make a quantitative report about prospective resources, “despite the subjective nature of this kind of information.”In addition, oil and gas exploration partnerships will be required to include in their announcements a warning that the information therein is only an assessment. An announcement will also include an opinion on the reserves available to the partnership and an opinion on the conditional or prospective resources, provided that it has a material effect on the type, quantity or other critical aspects of the well.The ISA said it recognizes that application of the PRMS model would not solve all the industry’s problems. “It should be noted that evaluations based on the model include a degree of subjectivity,” the document says.The PRMS model is based on a three-tiered statistical model: 1P, 2P and 3P. 1P includes data on the number of barrels of oil with a 90 percent chance of production; 2P has a 50% chance of production; and 3P has a 10% chance of production. Givot Olam Oil Exploration LP used these classifications in its latest report on the Meged 5 well.By requiring oil and gas exploration partnerships to use the PRMS model, the ISA seeks to provide credible and comparable information about the statistical chances of each project’s success.To eliminate the lack of uniformity and clarity in announcements, the ISA has also set up a disclosure and announcement oversight mechanism comprising several key elements.First, partnerships will be required to use certified professionals. Second, evaluations must be independent of the partnership, and the writing and presentation of the evaluation report will be based on accepted methodologies.Additional rules include the disclosure of quantitative and qualitative parameters used for calculating sizes variables and economic projections, and a declaration by management on compliance in the preparation of the resources evaluations.The ISA intends to apply the recommendations immediately after receiving comments from the public over the next few weeks.“The objective is to apply this immediately in prospectuses and in upcoming reports published by March 2011,” Guttman-Amira said.