CPG Professional Standards & Competencies 3 — Questions and Answers
Question 1: Which document provides the primary framework for petroleum reserves classification and reporting used by CPG practitioners in the US?
- SEC Regulation S-K
- SPE-PRMS (Petroleum Resources Management System) (Correct answer)
- FASB ASC 932
- API Manual of Petroleum Measurement Standards
Correct answer: SPE-PRMS (Petroleum Resources Management System)
The SPE-PRMS provides the internationally recognized technical framework for classifying and reporting petroleum resources and reserves.
Question 2: A CPG signs a reserves report prepared entirely by a subordinate without reviewing the technical work. This violates which professional standard?
- Continuing education requirements
- The principle of responsible charge (Correct answer)
- Non-disclosure agreements
- Environmental reporting protocols
Correct answer: The principle of responsible charge
Responsible charge requires that a signing professional have direct knowledge and oversight of the technical work being certified.
Question 3: In CPG practice, what is the appropriate handling of proprietary subsurface data received from a client?
- It may be shared with other clients working in the same basin
- It must be kept confidential and used only for the client's authorized purposes (Correct answer)
- It can be published in academic journals after one year
- It may be retained indefinitely for the geologist's personal database
Correct answer: It must be kept confidential and used only for the client's authorized purposes
Proprietary client data must be kept strictly confidential and used only for the purposes authorized by the client.
Question 4: What is the minimum work experience requirement for CPG certification through AAPG?
- 3 years of geoscience experience
- 5 years of petroleum geoscience experience (Correct answer)
- 7 years with a BS, or 5 years with an MS
- 10 years in the petroleum industry
Correct answer: 5 years of petroleum geoscience experience
AAPG requires a minimum of 5 years of petroleum geoscience experience for CPG certification.
Question 5: A CPG's client instructs her to reclassify Probable Reserves as Proved to improve the company's balance sheet. What should she do?
- Comply if the client provides a written directive
- Refuse and explain that reserves classification must follow technical standards (Correct answer)
- Reclassify but add a footnote disclaimer
- Transfer the project to another geologist
Correct answer: Refuse and explain that reserves classification must follow technical standards
Reserves classification must be based on technical criteria; a CPG cannot reclassify reserves to achieve financial reporting outcomes.
Question 6: Which of the following is NOT a valid reason for a CPG to withdraw from an engagement?
- Discovery that the client intends to use the report fraudulently
- Being asked to perform work outside the CPG's area of expertise
- The client requests a second opinion from another expert (Correct answer)
- Irreconcilable conflict between professional judgment and client demands
Correct answer: The client requests a second opinion from another expert
A client seeking a second opinion is a legitimate business decision and does not constitute grounds for professional withdrawal.
Question 7: Which type of uncertainty is most relevant when estimating proved reserves under SEC rules?
- Geopolitical risk in host countries
- Reasonable certainty based on existing economic conditions (Correct answer)
- Long-term commodity price forecasting uncertainty
- Climate change impact on future demand
Correct answer: Reasonable certainty based on existing economic conditions
SEC proved reserves require 'reasonable certainty' based on existing economic conditions and established technology at the effective date of the estimate.
CPG Professional Standards & Competencies 3
Which document provides the primary framework for petroleum reserves classification and reporting used by CPG practitioners in the US?