Ryder Scott Company Petroleum Consultants December-February 1999, Vol. 1, No. 2, Story 3

Newsletter

Study: 2 our of 3 producers use consultants for year-end work
Ryder Scott again most listed engineering consultant in the Arthur Andersen survey of latest corporate annual reports

In the recently published Arthur Andersen survey of 1997 annual reports, two out of every three producers used independent engineering consultants to prepare their year-end petroleum-reserves reports. This year, the annual survey compiled information from 213 publicly owned oil and gas companies listed on U.S. stock exchanges. The companies from the United States and various other countries reported their reserves in accordance with U.S. Securities and Exchange Commission guidelines.

Once again this year, Ryder Scott retained its top position as the most listed independent engineer of record for preparing year-end reports. In the Reserve Engineer section of the independent survey, Ryder Scott was listed in 34 annual reports, followed by 21 listings for the No. 2 consultant and 10 listings each for the Nos. 3, 4 and 5 firms.

This year, 209 of the 213 producers indicated they used either independent or internal engineers while four did not disclose that information. Of those 209 companies, 140 used engineering firms (67 percent). Last year, 136 of 186 companies used independent engineers (73 percent).

In the latest Arthur Andersen survey, independent engineers were listed in 66 percent of the annual reports vs. 60 percent in the prior year’s study. However, the difference is statistically insignificant because of the large "not disclosed" category in 1996 annual reports.

The 6 percent drop in the use of engineering firms is not statistically significant because of the large "unknown" factor for last year’s survey when 42 companies or 18 percent did not disclose that information. In comparison, this year’s results may be more accurate because a much smaller number of producers, less than 2 percent, failed to publish reserve-engineer information.

Generally, the largest companies in terms of total assets, such as Exxon, Mobil and Chevron, used internal engineering staffs for annual reporting. However, Ryder Scott did year-end work for three of the largest 25 companies as ranked by total assets in the latest "OGJ200," an Oil & Gas Journal list of the largest 200 publicly traded U.S. oil and gas producers. Those Ryder Scott clients are Union Pacific Resources Group Inc. (No. 20), Pennzoil Co. (No. 22) and Apache Corp. (No. 23).

Ryder Scott’s number of listings held level from
the prior year when it was also listed in 34 annual
reports. In year-end 1995 and 1994, the firm was
listed 29 times and 27 times, respectively.

Each of those years, Ryder Scott led the rest of the field as measured by the number of public companies that published reserves estimates attributed to independent evaluations. In summary, as the best available marketplace barometer, the Arthur Andersen survey indicates that Ryder Scott is used more often than any other consulting firm in the world for preparing year-end reserve estimates in accordance with U.S. SEC guidelines.

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