The Competent Persons Report (CPR)
The Auditing and Certification of Resources (Prospective or Contingent) (Exploring or Appraising) or Reserves (ready for, or already in Production) that are in the Companies’ Portfolio is performed through an independent Audit and the drafting of what is called a CPR: A Competent Person’s Report. This Report is required for the Company as one of the components of a Prospectus or Admission documentation as part of regulatory filings in the following cases: If there are Initial Public Offerings (IPO), in case of a merger/acquisition/takeover or to support any other fund-raising initiatives towards Financial Institutes or Banks. This to comply to stock exchange rules, or to justify a Production Plan (Preliminary, Initial, or Final, or Extensions) towards stakeholders, or, in some cases, for QMS, Auditing, and internal decision-making processes for the sake of Investment Protection and Due Diligence.
For specifications regarding the CPR we refer to the following reference documentation:
The ESMA (European Securities and Markets Authority) Update of the CESR (Committee of European Securities Regulators) Recommendations regarding the consistent implementation of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive, (March 20, 2013): (ESMA/2013/319)
Which can be downloaded using the following links:
https://www.esma.europa.eu/document/consistent-implementation-commission-regulation-ec-no-8092004-implementing-prospectus
https://www.esma.europa.eu/sites/default/files/library/2015/11/11_81.pdf
https://www.esma.europa.eu/sites/default/files/library/2015/11/2013-319.pdf
The Experts that are qualified and officially allowed to issue such a CPR need to satisfy a series of conditions:
(1) Professionally qualified and a Good Standing possibly with an affiliation to reputed International Associations (SPE, AAPG, EAGE),
(2) A minimum of 5 to 10 but preferably 20+ years’ experience,
(3) Independent of the Company and of any interested Stakeholder of the Company,
(4) Remunerated by Fee, not on success of the qualification, and
(5) Engaged by the Company, but with the care of the investors and stakeholders.
The CPR should contain a minimum amount of information which is in many cases dictated by regulators: Legal overview (licences, expiry dates, obligations), geological overview, Resources and Reserves estimates, evaluation of reserves (optional), environmental and facilities description, history of production/expenditures (minimum 3 years), infrastructure (power, water, supply, HSE), maps, plans, diagrams, and special factors. The reporting standards to follow are the SPE PRMS, COGEH (Canadian), Norwegian (NPD) system, depending on the necessities and requirements. Reserves estimates should be supported by economic evaluation, including factors such as Post Tax Net Present Value (NPV) using costs, prices, effective dates, FOREX, and sensitivity analyses on these factors. In some cases, site visits are necessary to evaluate the surface situation.
In the geological overview a multidisciplinary approach is needed of Geology, Geophysics, Petrophysics, Reservoir Engineering, Production Engineering, Facility Engineering and O&G Economy.
Details of the procedures for Auditing, Certification, Portfolio ranking, risking, and all other activities involved can be found in various handbooks, manuals and guides and are all integrated in the OCRE Geoscience Services Best Practice Management System.
The Leadership staff of OCRE Geoscience Services (OGS) is competent and qualified to issue CPR’s which are officially accepted by banks and financial institutes, and has, during its 25-40 years of O&G activity, managed projects in numerous occasions where this was required, the necessary studies and evaluations were conducted, and the CPR’s were issued.
They have been part of working groups of SPE that establish the PRMS regulations, and OCRE Geoscience Services is also Editor of the Best Practices Management System (BPMS) that established the numerical criteria to arrive at a correct portfolio evaluation and certification, as is also reflected in more detail in the OGS Services Catalogue.