Repsol YPF cuts oil and gas reserves estimate by 25%

By OGJ editors
HOUSTON, Jan. 27 -- Spain's Repsol YPF SA has cut its estimate for proved oil and gas reserves by 1.254 billion boe, a 25% reduction from the yearend 2004 estimate it reported last year.

Repsol YPF cited "changes in the legal and contractual framework" of governments of countries in which it operates, blaming Bolivia's new hydrocarbon law for more than half of the cuts and also noting the conversion of production contracts to joint ventures in Venezuela.

In a move representing 41% of its reserves cut, the company also lowered estimates for its fields in Argentina based on field evaluations and doubts about concession extensions assumed in earlier disclosures.

Repsol YPF's yearend 2004 reserves estimate of 4.926 billion boe included 1.683 billion bbl of liquids.

Natural gas accounts for 71% of the total revisions. That puts Repsol YPF's proved reserves at 65% natural gas and 35% hydrocarbon liquids at the end of 2005.

The revisions are expected to generate an asset impairment charge of less than �50 million. Repsol YPF expects 2005 earnings to be consistent with results for the first three quarters.

An independent review into the circumstances of the revisions is being conducted by the company's audit committee, which was assigned last April the oversight responsibility for reserves control.

The changes
Repsol YPF officials attributed 658.6 million boe of its reserves cut to contractual changes in Bolivia.

The hydrocarbon law adopted last year by Bolivia adds a 32% tax at the wellhead to the existing 18% royalty on production by foreign companies, creates uncertainty about implementing regulations, and tightens restrictions on the company's ability to sell oil and gas, Repsol YPF said.

The company also lowered its estimates of hydrocarbons in place for San Alberto and Sabalo fields and said, "There is inadequate legal certainty to support a commitment to new investment in these fields." It cut the fields' reserves by 526.7 million boe.

For Bolivia's Yapacani, Vibora, and Sirari fields, the company trimmed reserves by 75.1 million boe, saying the new law forced it to suspend planned investments in a gas treatment plant, a pipeline expansion, and other infrastructure. It lowered its estimate of reserves in Rio Grande and nearby fields by 61.1 million boe because of a disappointing production response to workovers.

In Venezuela last year, the government required private companies with independent production contracts to form JVs with Petroleos de Venezuela SA that will give the state oil company majority control of affected projects.

The 32 operating agreements were signed in 1990-97, when Venezuela's petroleum industry, nationalized in 1976, was reopened to private and foreign capital. The objective at the time—when the price of crude was below $10/bbl—was to increase production by low-priority oil fields that had been closed because of their location or states of depletion and which PDVSA had no plans to reactivate.

Although the final terms of the JVs are still being negotiated, Repsol YPF reduced the reserves estimate for its Venezuelan fields by 58.6 million boe. Of that, 52.4 million boe reflects the change in its working interests, mostly in Mene Grande and Quiamare la Ceiba fields.

Argentine cuts
Adjustments to Repsol YPF's reserves in Argentina totaled 509.3 million boe.

The company cut its reserves estimate for Argentina's Loma La Lata field by 251.8 million boe on the basis of pressure declines in 2004 and 2005 indicating that less of the estimated initial gas in place can be recovered. For the yearend 2004 disclosure, it had cut the estimate by 72.6 million boe.

Also in Argentina, Repsol YPF cut reserves estimated for Chihuido de la Sierra Negra oil field by 38.5 million boe because of disappointing production and by a further 35 million boe because of uncertainty about extension of the concession contract.

A material-balance analysis based on new static-pressure observations prompted Repsol YPF to lower its estimate of initial gas in place for Argentina's Ramos field and its reserves estimate by 36.5 million boe.

And the company cut its reserves estimate for Aguada Toledo and Sierra Barrosa fields by 22.7 million boe based on reevaluation of the gas cap. The area is used for underground gas storage during the Argentine summer.

In Algeria, Repsol YPF lowered reserves of Tin Fouye Tabankort field by 17.7 million boe because of high yearend prices lowered its volumetric entitlements under a production-sharing contract.

Related Articles

Husky, CNOOC start gas production at Liuhua 34-2 field

12/15/2014 Husky Energy Inc. and China National Offshore Oil Corp. Ltd. reported the start of natural gas production at the Liuhua 34-2 gas field in the South...

Security takes center stage

12/15/2014

Thwarting terrorists, repelling pirates, and routing organized crime: sounds like themes of familiar, big-budget Hollywood movies.

Study finds small subset of wells accounts for most methane emissions

12/15/2014 A small subset of natural gas wells are responsible for most methane emissions from US natural gas production, said a study from the University of ...

US Forest Service takes no stance on fracturing in national forest

12/12/2014

The US Forest Service has dropped a proposal that would have banned hydraulic fracturing in the George Washington National Forest.

Frac ban exemption made in Broomfield

12/12/2014 A Colorado District Court judge has ruled that a hydraulic fracturing ban in Broomfield, Colo., does not apply to an operator that entered into an ...

OSHA seeks to limit silica exposure for oil workers, Proposed rules target frac sand mining, fracturing

12/12/2014 The rapid growth in oil and gas production from shale and tight oil formations in the US is generating a boom in a related industry: frac sand. San...

Study links methane contamination in water wells to poor well construction-not fracing-in Marcellus

12/12/2014 A new study found that fugitive gas contamination at eight clusters of water wells in the Marcellus and Barnett shale regions might be linked to we...

Weak crude prices could threaten Bakken production growth

12/12/2014 Bakken shale production set another record in August, but weakening crude prices and flaring reduction efforts threatened to temper production grow...

Husky reports start of steam operations at Sunrise oil sands project

12/12/2014

Husky Energy, Calgary, reported the start of steam operations at the in situ Sunrise Oil Sands Project in northeastern Alberta.

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected