National Instrument 51-101 of the Canadian Securities Administrators, effective September 30, 2003, lays down disclosure requirements for Canadian oil and gas firms. These requirements include:

Proved reserve quantities, defined as reserves that can be estimated with a high degree of certainty (operationalized as at least 90% probability) to be recoverable.

Probable reserve quantities, defined as additional reserves such that there is at least a 50% probability that the amounts actually recovered will exceed the sum of estimated proved and probable reserves.

Future net revenues from proved reserves and changes therein, discounted at 10% and undiscounted, using i) year-end prices and costs ii) forecasted prices and costs Future net revenues from probable reserves, discounted at 5%, 10%, 15%, and 20%, and undiscounted, using forecasted prices and costs. In addition, reserves data must be verified by an independent qualified reserves evalu- ator or auditor and reviewed by the board of directors.

Required

a. Evaluate the relevance of National Instrument 51-101 disclosures in comparison to those of SFAS In your answer, include consideration of whether or not discounting expected future receipts at various rates (rather than at 10% as per SFAS 69) adds to relevance.

b. Evaluate the reliability of National Instrument 51-101 disclosures in comparison to those of SFAS 69

c. In its AIF, Western Oil Sands states "The estimated future net revenues contained in the following tables do not necessarily represent the fair market value of the Corporation's reserves. There is no assurance that the forecast price and cost assump- tions contained in the... reserves report will be attained and variances could be mate- rial." Give reasons why the company gives this disclaimer.

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Reproduced below in Table 2.5 are portions of the NI 51-101 disclosure of Western Oil Sands Inc., from its 2006 Annual Information Form (AIF). Table 2.5 Net Present Values of Future Net Revenue Based on Forecast Prices and Costs Before Deducting Income Taxes Discounted At After Deducting Income Taxes Discounted At 0% (MMS) 5% 10% 15% (MMS) (MMS) (MMS) 20% (MMS) 5% 0% 10% 15% 20% (MMS) (MMS) (MMS) (MMS) (MMS) Proved Developed Producing 7,684 4,561 3,049 2,239 1,762 5,819 3,569 2,470 1,873 1,515 Proved Developed Non-producing 281 196 127 80 49 192 131 81 47 25 Proved Undeveloped 4,699 Total Proved 12,663 1,059 (220) 5,816 2,957 Total Probable 3,554 1,616 912 (706) 1,613 607 (898) 3,292 617 (343) (718) 913 9,303 4,317 2,208 1,201 451 2,510 1,158 669 459 (871) 668 352 Total Proved Plus Probable 16,217 7,432 3,868 2,220 1,365 11,813 5,475 2,877 1,660 1,020 Reconciliation of Changes in Net Present Values of Future Net Revenue Discounted at 10% Based on Constant Prices and Costs The following table sets forth changes between future net revenue estimates attributable to net proved reserves as at December 31, 2006, against such reserves as at December 31, 2005: Estimated Future Net Revenue at December 31, 2005 Sales and Transfers of Oil and Gas Produced. Net of Production Costs and Royalties Net Change in Prices. Production Costs and Royalties Related to Future Production Changes in Previously Estimated Development Costs Incurred During the Period Changes in Estimated Future Development Costs Extensions and Improved Recovery Discoveries (MMS) 2,575 (339) (232) 66 (256) 507