Frackers' Reports on Oil Reserves Differ for Investors and Regulators

Lee Tillman, chief executive officer of Marathon Oil, told investors last month that the company was sitting atop the equivalent of 4.3 billion barrels of oil in its U.S. shale acreage. That’s 5.5 times higher than the number Marathon reported to federal regulators.

Providing different numbers to regulators and investors is standard practice in the shale industry. The U.S. Securities and Exchange Commission has strict rules for how drillers calculate reserves. No such guidelines apply to companies when they calculate their resource potential—a less conservative estimate of their assets that drillers emphasize when pitching investors. Drillers also cite the higher forecasts when they lobby lawmakers to lift the 39-year-old ban on exporting crude oil, arguing that the U.S. has plenty and should be able to sell it on world markets.