Subject: File No. s7-29-07
From: Dan R. Kelly, CPA
Affiliation: Accountant

February 18, 2008

I just saw this posting today, so my comments are brief.
1. Yes. The rules-based approach should be replaced by a principles-based rule. I believe that more disclosure about the future production capability of the entity is better for comparison to alternatives. Given equal levels of proved reserves under current SEC rules, investors would much rather invest in companies with significant unproved reserves, production from coalbeds, shales and tar sands that are economically viable. Although this information is available from other sources in some cases, they should all be allowed and disclosed in the 10K.
2. Yes. The system proposed by SPE seems adequate and fair, if attested to by independent reserve engineers.
3. Yes see above.
4. Yes. If oil or gas is being produced from the tar sands, etc. it should be allowed based on estimated production rates. If the reserves are documented based on siesmic data, that must be disclosed and the extent of persuasive evidence fully described.
5. No. The basis for claiming the reserves should be disclosed starting with the most compelling evidence down to the least authoritative, with logical breaks in categories for proved vs. unproved. This will let the informed investor make better choices between alternative investments.
6. Yes. Reasonable rules used by the industry and lenders would be enough.
7. Yes. Time held as undeveloped would be good information to evaluate the true intentions of the firm reporting these reserves.
8. Economic producibility is a good standard. Disclosure of what constitutes economic producibility in the footnotes would be beneficial.
9. Existing operating conditions is a good standard. Disclosure of what the existing operating conditions are for the company in the footnotes would be beneficial.
10. The sales price should be disclosed using NYMEX, then adjusted to the local basis (market) in their area of production. (I'm sure many companies will give the SEC their perspective on this.)
11, 12 13. Yes. See item #1 #2 above.
14. Use a principles-based rule that requires full disclosure for methods of technology used to claim reserves. See point 5 above.
15. The attestation of a third party expert in the field has value in the process. A copy of the attestation letter could be required as an exhibit to 10K.

Thank you for this opportunity to comment.