References
Q: What information is needed to provide a job cost estimate?
A: For cost estimate purposes names and location of license areas, fields, and structures are provided at your discretion.
Reserves Estimate:
- Area of property subject to estimate
- Number of fields within property
For each field:
- Area
- Balance reserves (A, B, C1)
- Project status data
- Number of development targets
- Number of reservoirs
- Total well stock (producing, exploratory, shut-in, etc.)
Resources Estimate:
- Work region overview
- Region’s resource base
- Area of license block subject to estimate
- Data on exploration work performed as for date of estimate (including number of seismic lines, availability of 3D seismics)
- Data on identified prospects (availability of structure passports)
Fair Market Value Estimate:
Performed at customer’s request in addition to reserves and resources estimates. No extra data are required.
Q: What is international audit of oil and gas reserves?
A: International audit of oil and gas reserves is categorization of reserves by probability of their profitable recovery in compliance with the requirements of the U.S. Securities and Exchange Commission, the Society of Petroleum Engineers, Inc. and the World Petroleum Congress.
Q: What is the purpose of reserves audit?
A: Oil and gas reserves audit is a part of general audit of oil and gas producing companies performed with the purpose of defining capitalization and fair market value as well as hypothecation value of companies when they raise funds and place IPOs.
Q: What is the main outcome of international reserves audit?
A: The main outcome of international reserves audit is estimation of proved reserves (i.e. reserves with a probability of profitable recovery at current oil prices and operating expenses of not less than 90%), and of expected discounted cash flow obtained from development of such reserves. International financial institutions consider oil and gas companies’ applications for loans only on security of proved reserves. The same category of reserves determines companies’ capitalization and IPO prices.
Q: Are there any differences between Russian and international reserves classifications?
A: Analysis of a sample dataset comprising 290 reservoirs of 50 West Siberian fields taken from Miller and Lents’s database showed that the category of proved (Western classification) reserves covered from 95% to 100% of total reserves of Russian categories A, B and C. As to category C taken separately, share of its reserves which can be categorized as Proved amounts to 70-75%. These are average values since in certain cases not more than 30% of reserves of Russian category C can be categorized as Proved. International audit of proved reserves takes into account multiple economic and legal parameters. Therefore, many reservoirs or their parts cannot be included in Proved category. For instance, if a client’s interest in a given reservoir is 20% then the amount of proved reserves of such client is factored by 0.2.
Q: Is international reserve audit an obligatory requirement in accordance with Russian law?
A: No, it is not, though oil and gas companies who order international audit of their reserves on an annual basis have much wider access to financing from international lending institutions. Besides, international reserves audit is an obligatory procedure for a company to go public under regulations of a particular stock exchange.
Q: Where can information on rules and procedure of international reserves audit be found and what input data are required for audit?
A: For detailed information on procedure of international oil and gas reserves audit and required documents please contact NEFTEGAZKONSULT by telephone: +7 (495) 748-17-17 or e-mail at: info@ngkonsult.ru