What Is a Competent Person’s Report (CPR) and Why Does It Matter for Energy Companies
On This Topic
- What is a Competent Person’s Report (CPR)?
- Which Regulations and Reporting Standards Govern a Competent Person’s Report?
- What Standards and Qualifications Are Required for a Competent Person’s Report?
- How Is a Competent Person’s Report Prepared?
- How Do Competent Person’s Reports Differ Across International Stock Exchanges?
- Why Choose Sproule ERCE for Competent Person’s Reports?
- How Is a Competent Person’s Report Used in an IPO or Prospectus?
- How Are Competent Person’s Reports Used in Reserve-Based Lending (RBL)?
- How Does Sproule ERCE Support Energy Companies with Competent Person’s Reports?
What is a Competent Person’s Report (CPR)?
A Competent Person’s Report (“CPR”) is an independent reserves and resources report for a company’s oil, gas, or mining assets. The term CPR applies to reports that are used on the London Stock Exchange (“LSE”) and other European Exchanges governed by the European Securities and Markets Authority (“ESMA”) regulations.
A CPR must be part of the prospectus or admission documents released during an Initial Public Offering (“IPO”). It is also used to support other public fundraising efforts, like bond issues, and is relied upon by banks, accounting firms, and financial sponsors when raising capital or carrying out mergers and acquisitions (“M&A”).
Which Regulations and Reporting Standards Govern a Competent Person’s Report?
The content of a CPR is governed by specific regulatory bodies, the most commonly referenced and broadly applicable being the European Union agency responsible for overseeing and coordinating financial market regulations across EU member states, as well as the domestic regulator in the United Kingdom.
- ESMA published updates to previous recommendations and new guidelines on disclosure requirements for standard issuers between 2013 and 2020 (ESMA/2011/81, ESMA/2013/319 and ESMA32-382-1138). However, for “specialist issuers” such as mineral companies, the ESMA update of the CESR recommendations, revised on 23 March 2011, remains the primary regulatory guidance document.
- The LSE published the AIM Note for Mining and Oil and Gas companies in 2009, with a revision referenced as effective June 2009 and updated on 21 July 2019. However, the 2009 Note is understood to remain the principal operative guidance and key document for the sector within the AIM context.
What Standards and Qualifications Are Required for a Competent Person’s Report?
A CPR must be prepared in accordance with an appropriate reserves and resources standard as specified by the particular exchange. Examples of this include SPE-PRMS and COGEH. For the purposes of a CPR, a Competent Person (“CP”) is someone who:
- Is professionally qualified and a member in good standing of an appropriate recognised professional association.
- Has at least five years of relevant experience in the estimation, assessment and evaluation of the type of oil and gas assets under consideration.
- Is independent of the company, its directors, senior management and advisers.
- Is not remunerated by way of a fee dependent on the findings of the CPR.
- Is not a sole practitioner.
How Is a Competent Person’s Report Prepared?
For a CPR (or any reserves and resources report), the Competent Person and team require multi-disciplinary geological, engineering and financial data to conduct evaluations of reserves and resources.
This data may include, but is not limited to:
- Geological maps
- Seismic surveys
- Production and pressure data
- Petrophysical information
- Development plans, cost estimates
- Details of marketing arrangements
Why Does the Effective Date Matter?
An effective date is assigned to the CPR in accordance with the standards; setting a specific date allows referring to a “snapshot in time” up to which all data and assumptions are considered current and valid. This allows, for example, reporting the remaining resource volumes with respect to this date, and setting the point in time from which all future cash flows are discounted back to determine their present value.
As per ESMA and AIM guidance, the CPR must have been issued no more than six months prior to the prospectus date.
Typical Sections of a Competent Person’s Report
Typically, the content of a CPR should cover, as a minimum:
- Executive summary
- Table of contents
- Introduction
- Overview of the region, location and assets
- Reserves & resources (separately disclosed)
- Other assets
- Conclusions
- Qualifications and basis of opinion
- Appendices – Glossary and definitions of any terms used
How Do Competent Person’s Reports Differ Across International Stock Exchanges?
Sproule ERCE has experience in preparing CPRs for the following European stock exchanges:
- UK – LSE & AIM
- Norway – Oslo
- Sweden – Nasdaq Stockholm (formerly Stockholm Stock Exchange)
Sproule ERCE also prepares reserves and resources reports for other exchanges worldwide but, strictly speaking, these are not CPRs as other report naming conventions are used.
For example:
- In Canada, a Qualified Reserves Auditor or Evaluator prepares a Reserves and Resources Report.
- In Singapore, the term Qualified Person’s Report is used.
- In Australia, a Competent Person is required to prepare a technical report, but this is not referred to specifically as a CPR (although in practice the term is used).
Why Choose Sproule ERCE for Competent Person’s Reports?
Throughout decades of practice, Sproule ERCE has built a reputation for preparing reliable and compliant asset evaluations, valued by the investment community seeking to partner with experienced evaluators. The credibility of Sproule ERCE’s CPRs has its foundation in our understanding of the report requirements and implications. Sproule ERCE is committed to preparing unbiased evaluations, including key facts, transparency and detail on material issues, comprehensive disclosure and relevancy. The ultimate goal is investor protection, enabling an informed decision-making process while guaranteeing regulatory compliance for the issuer.
How Is a Competent Person’s Report Used in an IPO or Prospectus?
An example of CPR prepared by Sproule ERCE for re-admission purposes was in the publication of the prospectus in connection with the acquisition of Mobil Producing Nigeria Unlimited (“MPNU”) by Seplat Energy Plc. The transaction involved the acquisition of the entire issued share capital of MPNU for a final cash consideration of $672 million.
Seplat 2024 Prospectus
Sproule ERCE had previously prepared a Competent Person’s Report and certified 2P oil and gas reserves attributable to MPNO, along with 2C liquids resources and 2C gas resources, as of a specified effective date.
During the preparation of the prospectus for public disclosure, Sproule ERCE’s role was, and would typically be, that of verifying the appropriateness of the summarization, ensuring correct extraction of information, and providing an overall review as Competent Person.
As stated by the regulations, the ‘front end’ of the admission document must provide a balanced view of all of the information contained within the rest of the document, presented as not to be misleading. In this context, Sproule ERCE’s focus is on potential omissions or misrepresentations of the material issues related to the mineral properties.
Any information drawn from the CPR and used elsewhere in the admission document must be taken directly and presented fairly; our CP then provides written confirmation that the presentation is accurate, balanced and consistent with the CPR. Sproule ERCE, acting as the Competent Person, then reviews the information contained elsewhere in the admission document which relates to information contained in the CPR and confirms in writing to the applicant and Nominated Adviser that the information presented is accurate, balanced and complete and not inconsistent with the CPR.
Supporting Documentation Used During Transactions
Instruments, common in corporate finance, M&A, and oil & gas transactions, are available to execute the process, by the means of legal or professional letters. These can include:
- Reliance Letters: Which give comfort to a buyer, lender, or investor that they can rely on the professional report or opinion in making decisions.
- Reserves Engineer Letters: Providing references to the independent assessment of oil and gas reserves.
- Bring Down Letters: Issued closer to the closing date of a transaction to “bring down” the representations, warranties, or reports from an earlier date, confirming no material changes.
How Are Competent Person’s Reports Used in Reserve-Based Lending (RBL)?
Over time, many have come to view a CPR as an independent assessment beyond regulatory filings, often using the term interchangeably with independent evaluation reports for non-filing purposes, primarily in lending contexts.
In the oil and gas industry, financing options include mezzanine debt, second lien loans, high-yield bonds, and more complex structures like, for example, volumetric production payments. Sproule ERCE has been active in this domain for decades and supports lenders with traditional Reserves Based Lending (“RBL”) and on alternative financing (private credit or off-take finance).
In the RBL space, still the primary source of senior capital for exploration and production (“E&P”) companies, revolving credit facilities are secured by a borrower’s oil and gas reserves. The borrowing base—the maximum credit available—is periodically determined based on the value of the reserves, with repayment funded from oil and gas sales.
Lenders calculate the borrowing base using the net present value (“NPV”) of projected future revenue, and Sproule ERCE supports this with independent technical estimates of recoverable reserves, production rates, forecasted prices, and capital and operating costs.
Why Independent Reserves Evaluations Matter During Borrowing Base Redeterminations
In these assignments, Sproule ERCE places particular emphasis on risks and events occurring during the predefined intervals when a lender reassesses the borrowing base under an RBL. During redetermination, independent estimates may be updated or reviewed to ensure that asset valuations and collateral remain accurate. This process helps protect both the lender and borrower by ensuring the loan limit reflects current asset values, particularly if market conditions or reserve levels have changed.
How Does Sproule ERCE Support Energy Companies with Competent Person’s Reports?
Sproule ERCE empowers energy companies and financial stakeholders to make confident, strategic decisions in a rapidly evolving energy system. Our multidisciplinary team of engineers, geoscientists, economists, and operational specialists brings deep, real-world expertise to deliver fit-for-purpose technical, commercial, and operational analysis that drives value, manages risk, and supports sustainable, long-term profitability.
From asset valuation, M&A support, and regulatory reporting to portfolio optimization and field-level operations, we provide integrated solutions that solve today’s challenges—and anticipate tomorrows. With deep expertise, real-world insight, and relentless curiosity, we help clients navigate complexity, unlock opportunities, and shape the energy future. Contact Sproule ERCE to explore how our trusted reserves and reservoir expertise can unlock greater value in your energy assets.
