|Proved Reserves of Crude Oil
||Proved reserves of crude oil as of December 31 of the report year are the estimated
quantities of all liquids defined as crude oil, which geological and engineering data
demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions.
Reservoirs are considered proved if economic producibility is supported by actual production
or conclusive formation test (drill stem or wire line), or if economic producibility is
supported by core analyses and/or electric or other log interpretations.
The area of an oil reservoir considered proved includes: (1) that portion delineated by
drilling and defined by gas -- oil and/or gas -- water contacts, if any; and (2) the
immediately adjoining portions not yet drilled, but which can be reasonably judged as
economically productive on the basis of available geological and engineering data. In the
absence of information on fluid contacts, the lowest known structural occurrence of
hydrocarbons is considered to be the lower proved limit of the reservoir.
Volumes of crude oil placed in underground storage are not to be considered proved
Reserves of crude oil which can be produced economically through application of improved
recovery techniques (such as fluid injection) are included in the "proved" classification
when successful testing by a pilot project, or the operation of an installed program in
the reservoir, provides support for the engineering analysis on which the project or program
Estimates of proved crude oil reserves do not include the following: (1) oil that may
become available from known reservoirs but is reported separately as "indicated additional
reserves"; (2) natural gas liquids (including lease condensate); (3) oil, the recovery
of which is subject to reasonable doubt because of uncertainty as to geology, reservoir
characteristics, or economic factors; (4) oil that may occur in undrilled prospects; and
(5) oil that may be recovered from oil shales, coal, gilsonite, and other such sources.
It is necessary that production, gathering or transportation facilities be installed or
operative for a reservoir to be considered proved.