Oil companies turn in mixed reserves results in 2005

April 10, 2006
Oil companies as a group had mixed results in the replacement of oil and gas reserves in 2005.

Oil companies as a group had mixed results in the replacement of oil and gas reserves in 2005.

ExxonMobil Corp., ConocoPhillips, Williams Cos. Inc., Occidental Petroleum Corp., and Santos Ltd. were among companies reporting increased reserves.

Companies that did not replace production last year include Royal Dutch Shell PLC and Total SA, filings with the US Securities & Exchange Commission show.

Shell reported a 2005 net addition (excluding royalty-type commitments paid in-kind) of 575 million boe to proved developed reserves and a net addition of 101 million boe to proved undeveloped reserves before production.

In total worldwide proved reserves, Shell reported 11.47 billion boe for 2005-7.761 billion boe for group companies and 3.705 billion boe for equity-accounted investments.

This compared with 11.82 billion boe for 2004 and 12.98 billion boe for 2003. All of Shell’s statistics exclude the Athabasca oil sands project.

Total said SEC requirements that companies base estimates on commodity prices on the last day of the year lowered its proved reserves by 220 million boe in 2005.

The French oil company booked 11.1 billion boe in both 2005 and 2004.

Ron Harrell, advisor to the Ryder Scott Co. LP board and chairman emeritus, said the latest reserves disclosures produced no major surprises.

The SEC requires the unaudited disclosure of proved reserves in annual financial statements. Companies increasingly are informing investors about probable reserves and future projects.

St. Mary Land & Exploration Co., Denver, on Jan. 26 said in a news release that its estimated proved oil and gas reserves as of Dec. 31, 2005, were 794.5 bcf of gas equivalent compared with 658.6 bcf for yearend 2004.

In addition, St. Mary estimates probable reserves of 495 bcf equivalent and possible reserves of 1.168 tcf for a total of 2.5 tcf as of Dec. 31, 2005.

Here’s a company-by-company rundown of reserves disclosures:

ExxonMobil

ExxonMobil said additions to its worldwide proved oil and gas reserves totaled 1.7 billion boe in 2005, excluding the effects of the 1-day pricing rules.

Production totaled 1.5 billion boe in 2005-917 million bbl of liquids and 3.7 tcf of gas. On a 1-day basis, total proved reserves additions in 2005 were 2.2 billion boe.

The use of one-day prices in reserves estimate is not relevant to investment or managerial decisions, ExxonMobil said.

ConocoPhillips

ConocoPhillips reported preliminary net additions to proved oil and gas reserves of 1.553 billion boe for 2005, bringing total reserves to 9.4 billion boe. Production last year totaled 675 million boe.

The reserves additions reflected an increase in the company’s interest in OAO Lukoil to 16.1% at yearend, its return to Libya, and extensions and discoveries in Qatar, the US, and the Asia-Pacific region.

Williams

Williams, Tulsa, reported US proved reserves of 3.4 tcf of natural gas equivalent as of Dec. 31, 2005, compared with 3 tcf at yearend 2004. More than 99% of the total is gas.

Non-US proved reserves, 65% crude oil and liquids, increased to 37 million boe in 2005 from 36 million boe in 2004.

The company reported its total worldwide reserves in gas equivalent: 3.6 tcf.

Williams attributed most of its US reserves additions to drilling and increased well density in the Piceance basin and drilling in the Powder River basin and other basins. Williams also acquired interests in the Fort Worth basin in 2005.

The company’s drilling added 603 bcf of gas equivalent in net reserves during 2005, compared with 451 bcf in 2004 and 408 bcf in 2003.

Average production from domestic and international interests was 662 MMcfd of gas equivalent, compared with 564 MMcfd for 2004. Production from US interests increased to 612 MMcfd of gas equivalent in 2005 from 519 MMcfd in 2004.

Occidental

Oxy reported additions to proved reserve from all sources of 380 million boe in 2005, when production totaled 199 million boe.

The company’s consolidated reserves-to-production index, assuming production at the 2005 level, was 13.4 years as of Dec. 31, 2005.

Oxy’s worldwide proved reserves totaled 2.66 billion boe at yearend 2005, compared with 2.49 billion boe at yearend 2004.

Following completion of the Vintage Petroleum Inc. acquisition, Oxy’s consolidated pro-forma proved reserves, excluding 72 million boe of Vintage reserves held for sale, came to 3.01 billion boe (OGJ, Nov. 21, 2005, p. 35).

Oxy executives plan to increase production by 5-7%/year for 5 years. The company’s base production outlook for 2010 is 700,000-785,000 boe/d.

Growth is expected to come from Argentina assets acquired from Vintage, the Dolphin gas project in Qatar and the UAE, the Mukhaizna enhanced oil recovery project in Oman, and from Libya.

Santos

Santos added 122 million boe to proved oil and gas reserves through exploration, appraisal, revisions, and acquisitions in 2005.

After production of 56 million boe, reserves increased to 414 million boe from 348 million boe at the end of 2004. Santos expects production of 60-61 million boe in 2006 and 62-63 million boe in 2007.

Santos last year acquired Basin Oil Pty. Ltd. from joint venture partner OMV Petroleum Pty. Ltd. of the UK, adding 2.1 million boe of reserves in Australia’s Cooper basin.

Revisions to reserves in the company’s existing Cooper basin fields added 16.8 million boe.

Transmeridian

Transmeridian Exploration Inc. reported 72.9 million bbl of net proved oil reserves as of Dec. 31, 2005, compared with 26.8 million bbl for yearend 2004.

The increase stemmed primarily from Transmeridian’s acquisition of the 50% interest it did not already own in Kazakh subsidiary JSC CaspiNeftTME from Bramex Management Inc. in late 2005.

Transmeridian also acquired a 10% carried interest in South Alibek field in Kazakhstan from Kornerstone Investment Group Ltd. CaspiNeftTME operates South Alibek field.

In drilling activity, Transmeridian completed two development wells last year.

The Houston independent targets Caspian region fields. Its main project is boosting South Alibek field production, which averaged 1,300 b/d of oil in the quarter ended June 30, 2005 (OGJ Online, Aug. 11, 2005).