A reserve reporting statement contains valuable data that publicly traded US exploration and production companies are mandated to file with the US Securities & Exchange Commission. It is a declaration of the remaining quantities of oil and natural gas reserves based on a given date. It measures an oil and gas company's reportable reserves in terms of proved, probable, and possible of their current assets.
According to the SEC final rule, proved reserves are defined as "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."
Reserve reporting's purpose
Oil and gas assets that are produced through existing means are constantly depleting. Therefore, a company must update its reserve report annually to take the depletion rate into account. The longevity and earnings sustainability of those existing assets are important facts to understand the strength of the company in relation to future earnings.
Reserve reporting exposes the tactics and financial confidence of the company and its future. Determining future capital budgets, cash flow, and investment choices are all based on the confidence it has in its current oil and gas assets. It also can support future investors' ability to equate the economics of comparing existing plays to one another and can calculate the return on their investment.
Reserve reporting must follow strict guidelines and can be very subjective. Both the SEC and the Financial Accounting Standards Board provide rules and definitions that companies must adhere to in quantifying their oil and gas reserves. Many large E&Ps have comprehensive SEC-compliant internal policies and committees that oversee the purpose and reporting of proved reserves. A team of geologists, reservoir engineers, and senior management along with third-party petroleum engineering consulting firms review annually the business assets to follow the SEC guidelines.
Mercer Capital, a business valuation and financial advisory firm, believes that a "reserve report is a project-specific forecast, if the project is large enough, it can, for all intents and purposes, become a company forecast." Forecasts are a vital part of any organization and an internal vision to help guide or influence future goals.
OGJ coverage
Oil & Gas Journal will use these reserve disclosure statements to reveal how US E&Ps' yearend reserves will fare in the OGJ 150/100 annual special report. The report ranks US production of both oil and gas as well as any production outside of the US. Rankings for reserves in both oil and gas also are included, both US and worldwide.
In addition, the special report focuses on companies that are based outside of the US. Though some data for reserves and production are spotty for some companies, the report showcases major producing players throughout the world. Financial data coupled with the reserves statements provide very informative tools for the investor or company executives in making future investment decisions.
OGJ expertly produces another special report that showcases reserves for every producing oil and gas country in the world. The extensive, cumulative report considers any extensions, additions, or revisions to a country's reserve base and the depletion rate of production for the current year. The Worldwide Report is cited numerously in outside articles when referencing reserve information for the world.
Laura Bell-Hammer | Statistics Editor
Laura Bell-Hammer has been the Statistics Editor for the Oil & Gas Journal since 1994. She was the Survey Editor for two years prior to her current position with OGJ. While working with OGJ, she also was a contributing editor for Oil & Gas Financial Journal. Before joining OGJ, she worked for Vintage Petroleum in Tulsa, gaining her oil and gas industry knowledge.
