The Securities and Exchange Commission (SEC) is taking a broad look at oil and natural gas companies’ reserve accounting practices, sparked largely by recent disclosures of Royal Dutch/Shell Group and El Paso Corp. that they inflated their proven reserves.

The existence of the wide-ranging inquiry was revealed in a Wall Street Journal article Thursday, which SEC spokesman John Heine told Daily GPI was essentially factual.

He declined to say whether producers, other than Royal Dutch/Shell and El Paso, will receive inquiries about their reserve accounting practices from the SEC’s enforcement division.

“I can’t speculate at all what is going to happen in any particular industry,” Heine said. “I don’t have any advice for them [energy producers].”

The Independent Petroleum Association of America, which represents independent producers, plans to alert its members about the shift in SEC policy, which is causing the agency to examine entire industries for the sins of a few, said spokesman Jeff Eshelman.

In a major departure from its past practice, the SEC is opening broad investigations into entire industries and sectors when a red flag goes up at a single company — even if there is no proof of industrywide wrongdoing, the WSJ reported.

In addition to producers’ reserve accounting practices, the agency also is reportedly examining executive compensation in the high-technology sector, accounting practices in the videogame and food-service businesses and derivatives transactions used to hedge or potentially disguise stock sales by corporate insiders, the newspaper said.

Known within the agency as “wildcatting” — the oil industry’s term for drilling in unproven areas — the practice is part of the SEC’s attempt to aggressively anticipate and possibly head off problems before they erupt into full-scale scandals, sources said.

Critics contend that companies who have done nothing wrong would be unfairly swept up into these inquiries. The SEC “is not doing fishing expeditions,” Heine countered. “It’s important to keep this in mind.”

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