Refocused E&P increases Amoco reserves

Amoco Corp.'s sharpened focus in worldwide oil and gas exploration and production is paying off.

For the third straight year, its E&P campaign in 1995 added more reserves than the company produced.

Amoco expects that when final calculations are made in February, it will book a 1995 energy equivalent production replacement of about 125%.

That excludes the effect of producing property trades. The replacement rate is estimated at about 138% when production purchases and sales are included.

Amoco expects it will replace more than 141% of the gas and 128% of the liquids it produced last year, including property trades.

The 1995 replacement rate, including property trades, covers industry's first report of booking of oil reserves in the Caspian Sea. Those reserves, treated as a purchase, are associated with Amoco's 17% interest in a production contract signed with the Azerbaijan government covering three Caspian fields.

Amoco produced a net 656,000 b/d of crude oil and natural gas liquids and 4.244 bcfd of gas in 1995.

Changed focus

Amoco's production replacement trend is the direct result of changes the company made to its E&P strategy in the early 1990s, said L. Richard Flury, executive vice-president of E&P. The key was narrowing the focus of its worldwide efforts.

Amoco is exploring and producing in about 25 countries today, down from a high of more than 100 in the late 1980s.

Flury said, "We decided we were going to concentrate on select geographic areas where there were active petroleum basins with potential for a great deal of oil and gas still to be found. We are extremely pleased with the results to date and attribute this success to the great job our people have done executing our strategy."

Most of the 1995 reserve additions-about 69%-were from discoveries and extensions, led by efforts off Trinidad, in Canada, Argentina, and Port Hudson, La. The company also added substantial reserves-about 20% of total additions-through improved recovery methods, mainly in the Norwegian North Sea, Canada, and Offshore Trinidad.

A further breakout of Amoco's 1995 reserve replacement reflects an emphasis in committing more resources to projects outside North America. Grassroots production replacement outside North America is estimated at 225%, or 254% including property purchases and sales. Amoco estimates it will replace 75% of its production in North America, or 70% when property trades are included.

Amoco's success in 1995 follows an "extremely successful" 1994 program in which the company replaced its production by 133%, or 128% including sales and purchases. In 1993, the company replaced 101% of its production, or 89% including property changes.

Flury said, "Our strategy is on course, and the results it has produced the last 3 years suggest we have built a foundation for future reserves growth."

Drilling success

Flury also attributed Amoco's E&P performance to an effort to improve its drilling success rate.

"We're applying state of the art seismic technology and spending more time and money in rigorous technical analysis to get a better understanding of what we're going to drill before we drill," Flury said. "As a result, our wildcat success rate is above 30%, which puts us in the upper tier of the industry."

The company also lowered its finding and development costs as a result of its refocused E&P strategy.

Amoco estimated its worldwide cost of reserve additions at $4.50/bbl of oil equivalent for 1993-95. That excludes property trades.

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