Canadian oil and gas investors face significant uncertainty regarding the decommissioning liabilities that appear on the financial statements of major companies. Both the overall scale of those liabilities and how they are portrayed on balance sheets are subject to differences in interpretation that have significant impacts on shareholder equity. The industry has a financial incentive to downplay such liabilities. Auditors are supposed to stress test significant material assumptions on behalf of investors, but there is no evidence they do so on this matter.
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