Attached files
| file | filename |
|---|---|
| 10-K - FORM 10-K - APACHE OFFSHORE INVESTMENT PARTNERSHIP | h69813e10vk.htm |
| EX-31.2 - EX-31.2 - APACHE OFFSHORE INVESTMENT PARTNERSHIP | h69813exv31w2.htm |
| EX-31.1 - EX-31.1 - APACHE OFFSHORE INVESTMENT PARTNERSHIP | h69813exv31w1.htm |
| EX-23.1 - EX-23.1 - APACHE OFFSHORE INVESTMENT PARTNERSHIP | h69813exv23w1.htm |
| EX-32.1 - EX-32.1 - APACHE OFFSHORE INVESTMENT PARTNERSHIP | h69813exv32w1.htm |
Exhibit 99.1
Apache Corporation
Estimated
Future Reserves and Income
Attributable to Certain
Leasehold and Royalty Interests
In the
Shell Offshore Venture
SEC Parameters
As of
December 31, 2009
| /s/ Jennifer A. Fitzgerald | /s/ Michael F. Stell | |
| Jennifer A. Fitzgerald, P.E. | Michael F. Stell, P.E. | |
| TBPE License No. 100572 | TBPE License No. 56416 | |
| Senior Petroleum Engineer | Managing Senior Vice President |
RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580
TBPE Firm Registration No. F-1580
| [Seal] | [Seal] |
February 5, 2010
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
Gentlemen:
At your request, we have prepared an estimate of the proved reserves, future production, and
income attributable to certain leasehold and royalty interests in the Shell Offshore Venture as of
December 31, 2009. The subject properties are located in the federal waters offshore Louisiana and
Texas. The reserves and income data were estimated based on the definitions and disclosure
guidelines contained in the United States Securities and Exchange Commission Title 17, Code of
Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009
in the Federal Register (SEC regulations). The results of our third party study, completed on
February 1, 2010, are presented herein. The properties reviewed by Ryder Scott represent 100
percent of the total net proved liquid hydrocarbon reserves and 100 percent of the total net proved
gas reserves of Shell Offshore Venture for Apache Corporation (Apache).
The estimated reserves and future net income amounts presented in this report, as of December
31, 2009 are related to hydrocarbon prices. Apache furnished the hydrocarbon prices used in the
preparation of this report, which are based on the average prices during the 12-month period prior
to the ending date of the period covered in this report, determined as unweighted arithmetic
averages of the prices in effect on the first-day-of-the-month for each month within such period,
unless prices were defined by contractual arrangements as required by the SEC regulations. Actual
future prices may vary significantly from the prices required by SEC regulations; therefore,
volumes of reserves actually recovered and the amounts of income actually received may differ
significantly from the estimated quantities presented in this report. The results of this study
are summarized below.
SEC PARAMETERS
Apache Corporation
Estimated Net Reserves and Income Data
Certain Leasehold and Royalty Interests in the
Shell Offshore Venture
Apache Corporation
Estimated Net Reserves and Income Data
Certain Leasehold and Royalty Interests in the
Shell Offshore Venture
| As of December 31, 2009 | ||||||||||||||||
| Proved | ||||||||||||||||
| Developed | Total | |||||||||||||||
| Producing | Non-Producing | Undeveloped | Proved | |||||||||||||
Net Remaining Reserves |
||||||||||||||||
Oil/Condensate — Barrels |
108,792 | 449,269 | 14 | 558,075 | ||||||||||||
Plant Products — Barrels |
14,367 | 80,416 | 0 | 94,783 | ||||||||||||
Gas — MMCF |
832 | 1,866 | 123 | 2,821 | ||||||||||||
Income Data |
||||||||||||||||
Future Gross Revenue |
$ | 10,247,622 | $ | 37,183,453 | $ | 492,491 | $ | 47,923,566 | ||||||||
Deductions |
6,319,463 | 9,117,946 | 474,005 | 15,911,414 | ||||||||||||
Future Net Income (FNI) |
$ | 3,928,159 | $ | 28,065,507 | $ | 18,486 | $ | 32,012,152 | ||||||||
Discounted FNI @ 10% |
$ | 5,172,756 | $ | 11,837,952 | -$2,579 | $ | 17,008,129 | |||||||||
| 1200, 530 8TH AVENUE, S.W. | CALGARY, ALBERTA T2P 3S8 | TEL (403) 262-2799 | FAX (403) 262-2790 | |||
| 621 17TH STREET, SUITE 1550 | DENVER, COLORADO 80293-1501 | TEL (303) 623-9147 | FAX (303) 623-4258 |
Apache Corporation
February 5, 2010
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February 5, 2010
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Liquid hydrocarbons are expressed in standard 42 gallon barrels. All gas volumes are
reported on an “as-sold basis” expressed in millions of cubic feet (MMCF) at the official
temperature and pressure bases of 60° Fahrenheit and 14.73 psia.
The estimates of the reserves, future production, and income attributable to properties in
this report were prepared using the economic software package AriesTM System Petroleum
Economic Evaluation Software, a copyrighted program of Halliburton. The program was used solely at
the request of Apache. Ryder Scott has found this program to be generally acceptable, but notes
that certain summaries and calculations may vary due to rounding and may not exactly match the sum
of the properties being summarized. Furthermore, one line economic summaries may vary slightly
from the more detailed cash flow projections of the same properties, also due to rounding. The
rounding differences are not material.
The future gross revenue is after the deduction of production taxes. The deductions
incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs,
development costs, transportations costs (shown as other), and certain abandonment costs net of
salvage. The future net income is before the deduction of state and federal income taxes and
general administrative overhead, and has not been adjusted for outstanding loans that may exist nor
does it include any adjustment for cash on hand or undistributed income.
Liquid hydrocarbon reserves account for approximately 77 percent of the total future gross
revenue from proved reserves and gas reserves account for the remaining 23 percent of total future
gross revenue from proved reserves.
The discounted future net income shown above was calculated using a discount rate of 10
percent per annum compounded monthly. Future net income was discounted at four other discount
rates, which were also compounded monthly. These results are shown in summary form as follows.
| Discounted Future Net Income | ||
| As of December 31, 2009 | ||
| Discount Rate | Total | |
| Percent | Proved | |
5 |
$22,548,809 | |
15 |
$13,584,496 | |
20 |
$11,342,199 | |
25 |
$ 9,790,525 |
The results shown above are presented for your information and should not be construed as
our estimate of fair market value.
Reserves Included in This Report
The proved reserves included herein conform to the definitions as set forth in the Securities
and Exchange Commission’s Regulations Part 210.4-10 (a). An abridged version of the SEC reserves
definitions from 210.4-10(a) entitled “Petroleum Reserves Definitions” is included as an attachment
to this report.
Apache Corporation
February 5, 2010
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February 5, 2010
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The various reserve status categories are defined in the attachment to this report entitled
“Petroleum Reserves Definitions.” The developed proved non-producing reserves included herein
consist of the shut-in and behind pipe categories.
No attempt was made to quantify or otherwise account for any accumulated gas production
imbalances that may exist. The gas volumes included herein do not attribute gas consumed in
operations as reserves.
While it may reasonably be anticipated that the future prices received for the sale of
production and the operating costs and other costs relating to such production may also increase or
decrease from existing levels, such changes were, in accordance with rules adopted by the SEC,
omitted from consideration in making this evaluation.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically
producible from a given date forward. The reserves included herein were estimated using
deterministic methods and presented as incremental quantities.
The reserves and income quantities attributable to the different reserve classifications that
are included herein have not been adjusted to reflect these varying degrees of risk associated with
them and thus are not comparable. Moreover, estimates of reserves may increase or decrease as a
result of future operations, effects of regulation by governmental agencies or geopolitical risks.
As a result, the estimates of oil and gas reserves have an intrinsic uncertainty. The reserves
included in this report are therefore estimates only and should not be construed as being exact
quantities. They may or may not be actually recovered, and if recovered, the revenues therefrom
and the actual costs related thereto could be more or less than the estimated amounts.
The estimates of reserves presented herein were based upon a detailed study of the properties
in which Apache owns an interest; however, we have not made any field examination of the
properties. No consideration was given in this report to potential environmental liabilities that
may exist nor were any costs included for potential liability to restore and clean up damages, if
any, caused by past operating practices.
Estimates of Reserves
The reserves for the properties included herein were estimated by performance methods or the
volumetric method. In general, reserves attributable to producing wells were estimated by
performance methods such as decline curve analysis and material balance, which utilized
extrapolations of historical production and pressure data available through November, 2009 in those
cases where such data were considered to be definitive. In certain cases, producing reserves were
estimated by the volumetric method where there were inadequate historical performance data to
establish a definitive trend and where the use of production performance data as a basis for the
reserve estimates was considered to be inappropriate. Reserves attributable to proved
non-producing and undeveloped reserves included herein were estimated by the volumetric method
which utilized all pertinent well and seismic data available through December, 2009.
To estimate economically recoverable oil and gas reserves and related future net cash flows,
we consider many factors and assumptions including, but not limited to, the use of reservoir
parameters derived from geological, geophysical and engineering data which cannot be measured
directly,
Apache Corporation
February 5, 2010
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February 5, 2010
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economic criteria based on current costs and SEC pricing requirements, and forecasts of future
production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be
demonstrated to be economically producible based on existing economic conditions including the
prices and costs at which economic producibility from a reservoir is to be determined as of the
effective date of the report. Apache has informed us that they have furnished us all of the
accounts, records, geological and engineering data, and reports and other data required for this
investigation. In preparing our forecast of future production and income, we have relied upon data
furnished by Apache with respect to property interests owned, production and well tests from
examined wells, normal direct costs of operating the wells or leases, other costs such as
transportation and/or processing fees, ad valorem and production taxes, recompletion and
development costs, abandonment costs after salvage, product prices based on the SEC regulations,
geological structural and isochore maps, well logs, core analyses, and pressure measurements.
Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an
independent verification of the data supplied by Apache.
Future Production Rates
Our forecasts of future production rates are based on historical performance from wells now on
production. Test data and other related information were used to estimate the anticipated initial
production rates for those wells or locations that are not currently producing. If no production
decline trend has been established, future production rates were held constant, or adjusted for the
effects of curtailment where appropriate, until a decline in ability to produce was anticipated.
An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has
been established, this trend was used as the basis for estimating future production rates. For
reserves not yet on production, sales were estimated to commence at an anticipated date furnished
by Apache.
The future production rates from wells now on production may be more or less than estimated
because of changes in market demand or allowables set by regulatory bodies. Wells or locations
that are not currently producing may start producing earlier or later than anticipated in our
estimates.
Hydrocarbon Prices
As previously stated, the hydrocarbon prices furnished by Apache and used herein are based on
SEC price parameters using the average prices during the 12-month period prior to the ending date
of the period covered in this report, determined as the unweighted arithmetic averages of the
prices in effect on the first-day-of-the-month for each month within such period, unless prices
were defined by contractual arrangements. For hydrocarbon products sold under contract, the
contract prices including fixed and determinable escalations, exclusive of inflation adjustments,
were used until expiration of the contract. Upon contract expiration, the prices were adjusted to
the 12-month unweighted arithmetic average as previously described. Product prices which were
actually used for each property reflect adjustment for gravity, quality, local conditions, and/or
distance from market.
The effects of derivative instruments designated as price hedges of oil and gas quantities are
not reflected in our individual property evaluations.
Costs
Operating costs for the leases and wells in this report are based on the operating expense
reports of Apache and include only those costs directly applicable to the leases or wells. The
operating
Apache Corporation
February 5, 2010
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February 5, 2010
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costs include a portion of general and administrative costs allocated directly to the leases and
wells. When applicable for operated properties, the operating costs include an appropriate level of
corporate general administrative and overhead costs. The operating costs for non-operated
properties include the COPAS overhead costs that are allocated directly to the leases and wells
under terms of operating agreements. No deduction was made for loan repayments, interest expenses,
or exploration and development prepayments that were not charged directly to the leases or wells.
Development costs were furnished to us by Apache and are based on authorizations for
expenditure for the proposed work or actual costs for similar projects. The estimated net cost of
abandonment after salvage was included for properties where abandonment costs net of salvage were
significant. The estimates of the net abandonment costs furnished by Apache were accepted without
independent verification.
Because of the direct relationship between volumes of proved undeveloped reserves and
development plans, we include in the proved undeveloped category only reserves assigned to
undeveloped locations that we have been assured will definitely be drilled. Apache has assured us
of their intent and ability to proceed with the development activities included in this report, and
that they are not aware of any legal, regulatory or political obstacles that would significantly
alter their plans.
Current costs used by Apache were held constant throughout the life of the properties.
Standards of Independence and Professional Qualification
Ryder Scott is an independent petroleum engineering consulting firm that has been providing
petroleum consulting services throughout the world for over seventy years. Ryder Scott is employee
owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We
have over eighty engineers and geoscientists on our permanent staff. By virtue of the size of our
firm and the large number of clients for which we provide services, no single client or job
represents a material portion of our annual revenue. We do not serve as officers or directors of
any publicly traded oil and gas company and are separate and independent from the operating and
investment decision-making process of our clients. This allows us to bring the highest level of
independence and objectivity to each engagement for our services.
Ryder Scott actively participates in industry related professional societies and organizes an
annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of
our staff have authored or co-authored technical papers on the subject of reserves related topics.
We encourage our staff to maintain and enhance their professional skills by actively participating
in ongoing continuing education.
Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and
geoscientists have received professional accreditation in the form of a registered or certified
professional engineer’s license or a registered or certified professional geoscientist’s license,
or the equivalent thereof, from an appropriate governmental authority or a recognized
self-regulating professional organization.
We are independent petroleum engineers with respect to Apache. Neither we nor any of our
employees have any interest in the subject properties, and neither the employment to do this work
nor the compensation is contingent on our estimates of reserves for the properties which were
reviewed.
Apache Corporation
February 5, 2010
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February 5, 2010
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The professional qualifications of the undersigned, the technical person primarily responsible
for reviewing and approving the reserves information discussed in this report, are included as an
attachment to this letter.
Terms of Usage
This report was prepared for the exclusive use and sole benefit of Apache Corporation and may
not be put to other use without our prior written consent for such use. The data and work papers
used in the preparation of this report are available for examination by authorized parties in our
offices. Please contact us if we can be of further service.
| Very truly yours, RYDER SCOTT COMPANY, L.P. TBPE Firm Registration No. F-1580 |
||||
| /s/ Jennifer A. Fitzgerald | ||||
| Jennifer A. Fitzgerald, P.E. | ||||
| TBPE License No. 100572 Senior Petroluem Engineer |
||||
| /s/ Michael F. Stell | ||||
| Michael F. Stell, P.E. | ||||
| TBPE License No. 56416 Managing Senior Vice President |
||||
JAF/sm
Professional Qualifications of Primary Technical Person
The conclusions presented in this report are the result of technical analysis conducted by teams of
geoscientists and engineers from Ryder Scott Company, L.P. Mr. Michael F. Stell was the primary
technical person responsible for overseeing the estimate of the reserves, future production and
income.
Mr. Stell, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1992, is a Managing Senior
Vice President and also serves as an Engineering Group Leader responsible for coordinating and
supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies
worldwide. Before joining Ryder Scott, Mr. Stell served in a number of engineering positions with
Shell Oil Company and Landmark Concurrent Solutions. For more information regarding Mr. Stell’s
geographic and job specific experience, please refer to the Ryder Scott Company website at
http://www.ryderscott.com/Experience/Employees.php.
Mr. Stell earned a Bachelor of Science degree in Chemical Engineering from Purdue University in
1979 and a Master of Science Degree in Chemical Engineering from the University of California,
Berkeley, in 1981. He is a registered Professional Engineer in the State of Texas. He is also a
member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.
In addition to gaining experience and competency through prior work experience, the Texas Board of
Professional Engineers requires a minimum of 15 hours of continuing education annually, including
at least one hour in the area of professional ethics, which Mr. Stell fulfills. As part of his
2009 continuing education hours, Mr. Stell attended an internally presented 13 hours of formalized
training as well as a day-long public forum relating to the definitions and disclosure guidelines
contained in the United States Securities and Exchange Commission Title 17, Code of Federal
Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the
Federal Register. Mr. Stell attended an additional 15 hours of formalized in-house training as
well as an additional five hours of formalized external training during 2009 covering such topics
as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience
and petroleum economics evaluation methods, procedures and software and ethics for consultants.
Based on his educational background, professional training and almost 30 years of practical
experience in the estimation and evaluation of petroleum reserves, Mr. Stell has attained the
professional qualifications for a Reserves Estimator and Reserves Auditor set forth in Article III
of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information”
promulgated by the Society of Petroleum Engineers as of February 19, 2007.
PETROLEUM RESERVES DEFINITIONS
As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
PREAMBLE
On January 14, 2009, the United States Securities and Exchange Commission (“the Commission”)
published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of
National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting;
Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation
S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and
amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas
Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be
referred to herein collectively as the “SEC Regulations”. The SEC Regulations take effect with all
filings made with the United States Securities and Exchange Commission as of December 31, 2009, or
after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal
Regulations, Regulation S-X Part 210, Rule 4-10 (a) for the complete definitions, as the following
definitions, descriptions and explanations rely wholly or in part on excerpts from the original
document (direct passages excerpted from the aforementioned SEC document are denoted in italics
herein).
Reserves are those quantities of petroleum which are anticipated to be commercially recovered
from known accumulations from a given date forward under defined conditions. All reserve estimates
involve some degree of uncertainty. The uncertainty depends chiefly on the amount of reliable
geologic and engineering data available at the time of the estimate and the interpretation of these
data. The relative degree of uncertainty may be conveyed by placing reserves into one of two
principal classifications, either proved or unproved. Unproved reserves are less certain to be
recovered than proved reserves and may be further sub-classified as probable and possible reserves
to denote progressively increasing uncertainty in their recoverability. Under the SEC Regulations
as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated
quantities of probable or possible oil and gas reserves in documents publicly filed with the
Commission. The SEC Regulations continue to prohibit disclosure of estimates of oil and gas
resources other than reserves and any estimated values of such resources in any document publicly
filed with the Commission unless such information is required to be disclosed in the document by
foreign or state law as noted in §229.102 (5).
Reserves estimates will generally be revised as additional geologic or engineering data become
available or as economic conditions change.
Reserves may be attributed to either natural energy or improved recovery methods. Improved
recovery methods include all methods for supplementing natural energy or altering natural forces in
the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance,
cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible
displacement fluids. Other improved recovery methods may be developed in the future as petroleum
technology continues to evolve.
PETROLEUM RESERVES DEFINITIONS
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Page 2
RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §229.4-10(a) (26) defines reserves as
follows:
Reserves. Reserves are estimated remaining quantities of oil and gas and related substances
anticipated to be economically producible, as of a given date, by application of development
projects to known accumulations. In addition, there must exist, or there must be a reasonable
expectation that there will exist, the legal right to produce or a revenue interest in the
production, installed means of delivering oil and gas or related substances to market, and all
permits and financing required to implement the project.
Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated
by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as
economically producible. Reserves should not be assigned to areas that are clearly separated from
a known accumulation by a non-productive reservoir (i.e., absence of reservoir,
structurally low reservoir, or negative test results). Such areas may contain prospective
resources (i.e., potentially recoverable resources from undiscovered accumulations).
PROVED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §229.4-10(a) (22) defines proved oil and gas
reserves as follows:
Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas,
which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty
to be economically producible—from a given date forward, from known reservoirs, and under existing
economic conditions, operating methods, and government regulations—prior to the time at which
contracts providing the right to operate expire, unless evidence indicates that renewal is
reasonably certain, regardless of whether deterministic or probabilistic methods are used for the
estimation. The project to extract the hydrocarbons must have commenced or the operator must be
reasonably certain that it will commence the project within a reasonable time.
| (i) | The area of the reservoir considered as proved includes: |
| (A) | The area identified by drilling and limited by fluid contacts, if any, and | ||
| (B) | Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data. |
| (ii) | In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty. | ||
| (iii) | Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. |
PETROLEUM RESERVES DEFINITIONS
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Page 3
| (iv) | Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: |
| (A) | Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and | ||
| (B) | The project has been approved for development by all necessary parties and entities, including governmental entities. |
| (v) | Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. |
[Remainder of this page is left blank intentionally]
RESERVES STATUS DEFINITIONS AND GUIDELINES
As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
and
PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE),
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE),
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
Reserves status categories define the development and producing status of wells and
reservoirs.
DEVELOPED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §229.4-10(a) (6) defines developed oil and
gas reserves as follows:
Developed oil and gas reserves are reserves of any category that can be expected to be
recovered:
| (i) | Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and | ||
| (ii) | Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. |
Developed Producing (SPE-PRMS Definitions)
While not a requirement for disclosure under the SEC regulations, developed oil and
gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as
Producing or Non-Producing.
| Developed Producing Reserves | ||
| Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate. | ||
| Improved recovery reserves are considered producing only after the improved recovery project is in operation. | ||
| Developed Non-Producing | ||
| Developed Non-Producing Reserves include shut-in and behind-pipe reserves. |
RESERVES STATUS DEFINITIONS AND GUIDELINES
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| Shut-In | ||
| Shut-in Reserves are expected to be recovered from: |
| (1) | completion intervals which are open at the time of the estimate but which have not yet started producing; | ||
| (2) | wells which were shut-in for market conditions or pipeline connections; or | ||
| (3) | wells not capable of production for mechanical reasons. |
| Behind-Pipe | ||
| Behind-pipe Reserves are expected to be recovered from zones in existing wells which will require additional completion work or future re-completion prior to start of production. | ||
| In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well. |
UNDEVELOPED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §229.4-10(a) (31) defines undeveloped oil
and gas reserves as follows:
| Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. |
| (i) | Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. | ||
| (ii) | Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time. | ||
| (iii) | Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty. |