BP Alone Among Oil Majors Was Able To Replace Reserves Depleted In 2007 - Globe & Mail

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EVENT: Crude oil hit a record $119.90 (U.S.) dollars per barrel, as Saudi Arabia warned of “limited capacity” in global oil production.

SIGNIFICANCE: Major oil companies need to replace their reserves. Yet alternative reserves reporting standards present very different pictures of their position. Poor organic reserves replacement reflects a more competitive investment environment.

ANALYSIS: Reduced oil stocks provide a smaller buffer against short-term supply shocks, increasing price volatility. Saudi Arabian Oil Minister Ali Naimi yesterday said that lack of spare oil production capacity globally threatened energy security and ever-higher prices. International oil companies (IOCs) are naturally keen to replace oil and natural gas liquids reserves. They can do so through: acquisition – buying companies and assimilating their proved reserves; or organic growth – including revisions to existing reserves estimates based on new information, extensions to existing reserves, new discoveries and improved oil recovery rates.

Yet with the exception of BP, IOCs in 2007 failed to replace reserves, according to U.S. Securities and Exchange Commission definitions of proved reserves: ExxonMobil. ExxonMobil ended 2007 with proved reserves totalling 22.7 billion barrels of oil equivalent (boe, a unit of energy companies use to combine oil and natural gas reserves).

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http://www.theglobeandmail.com/servlet/story/RTGAM.20080425.woxfordanal0428/BNStory/energy/home

Handy company-by-company breakdown at link.