Less than half of 26 million acres of federal land leased to oil and gas companies is being used, prompting concerns that energy firms are using leases to inflate assets and therefore profits at the expense of American taxpayers, the Center for American Progress (CAP) said in a new report on Wednesday.
WASHINGTON (Pakistan Point News / Sputnik - 29th August, 2018) Less than half of 26 million acres of Federal land leased to oil and gas companies is being used, prompting concerns that energy firms are using leases to inflate assets and therefore profits at the expense of American taxpayers, the Center for American Progress (CAP) said in a new report on Wednesday.
"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," CAP said in a press release announcing the publication of the report.
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 release explained.
CAP based the report on an analysis of 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.
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, according to the release.
