Reserves: Those quantities of oil and natural 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. The project to extract the hydrocarbons
must have commenced, or the operator must be reasonably certain
that it will commence the project, within a reasonable time. The
area of the reservoir considered as proved includes (i) the area
identified by drilling and limited by fluid contacts, if any, and
(ii) adjacent undrilled portions of the reservoir that can, with
reasonable certainty, be judged to be continuous with it and to
contain economically producible oil or natural gas on the basis of
available geoscience and engineering data. In the absence of data
on fluid contacts, proved quantities in a reservoir are limited by
the lowest known hydrocarbons, as seen in a well penetration,
unless geoscience, engineering or performance data and reliable
technology establishes a lower contact with reasonable certainty.
Where direct observation from well penetrations has defined a
highest known oil elevation and the potential exists for an
associated natural gas cap, proved oil reserves may be assigned in
the structurally higher portions of the reservoir only if
geoscience, engineering, or performance data and reliable
technology establish the higher contact with reasonable certainty.
Reserves which can be produced economically through application of
improved recovery techniques (including fluid injection) are
included in the proved classification when (i) successful testing
by a pilot project in an area of the reservoir with properties no
more favorable than in the reservoir as a whole, the operation of
an installed program in the reservoir, or an analogous reservoir or
other evidence using reliable technology establishes the reasonable
certainty of the engineering analysis on which the project or
program was based; and (ii) the project has been approved for
development by all necessary parties and entities, including
governmental entities. Existing economic conditions include prices
and costs at which economic producibility from a reservoir is to be
determined. The price used is the average price during the
twelve-month period prior to the ending date of the period covered
by the report, determined as an unweighted arithmetic average of
the first-day-of-the-month price for each month within such period,
unless prices are defined by contractual arrangements, excluding
escalations based upon future conditions.
Price: The cash market price less all expected quality,
transportation and demand adjustments.
Technology: Reliable technology is a grouping of one or more
technologies (including computational methods) that has been field
tested and has been demonstrated to provide reasonably certain
results with consistency and repeatability in the formation being
evaluated or in an analogous formation.
Reserves are estimated remaining quantities of oil and natural gas
and related substances anticipated to be economically producible,
as of a given date, by application of development projects to known
accumulations. In addition, there must exist, or there must be a
reasonable expectation that there will exist, the legal right to
produce or a revenue interest in the production, installed means of
delivering oil and natural gas or related substances to market and
all permits and financing required to implement the project.
Reserves should not be assigned to adjacent reservoirs isolated by
major, potentially sealing, faults until those reservoirs are
penetrated and evaluated as economically producible. Reserves
should not be assigned to areas that are clearly separated from a
known accumulation by a non-productive reservoir (i.e., absence of
reservoir, structurally low reservoir or negative test results).
Such areas may contain prospective resources (i.e., potentially
recoverable resources from undiscovered accumulations).
A porous and permeable underground formation containing a natural
accumulation of producible oil and/or natural gas that is confined
by impermeable rock or water barriers and is individual and
separate from other reserves.
Resources are quantities of oil and natural gas estimated to exist
in naturally occurring accumulations. A portion of the resources
may be estimated to be recoverable and another portion may be
considered unrecoverable. Resources include both discovered and
U.S. Securities and Exchange Commission
Interest: An interest in an oil and natural gas lease that
gives the owner of the interest the right to drill for and produce
oil and natural gas on the leased acreage and requires the owner to
pay a share of the costs of drilling and production operations.
Operations on a producing well to restore or increase