Comment Text:
The $ 20 million requirement of tangible net equity for energy firms that allows such companies to include oil, gas, and other petroleum or hydrocarbon assets "in the ground" as part of their tangible net equity is vague and easily subject to manipulation because: (1) the amount or size of proven/proved or recoverable oil reserves is directly related or tied to the price of crude oil and the reserves therefore fluctuate monthly or quarterly as they increase or decrease as the price of crude oil goes up or down; (2) petroleum engineers routinely disagree on the amount and type of proven reserves, especially as to "proven developed" and "proven undeveloped" reserves; (3) evolving and improved technology constantly increases the life and recoverable size of oil fields; and, (4) petroleum reserves can be easily mortgaged or pledged and subdivided and assigned or sold off without anyone being immediately aware of the financial impact of such transactions and these transactions include the creation and sale or assignment of an infinite variety of fractional or undivided interests with varying rights, including overriding royalties and other interests, that can greatly impair or impact the value of energy reserves once these mineral interests are assigned or sold off.
