Conocophillips Announces 2004 Reserve Replacement Of 206 Percent
Posted: 23 February 2005
Reserve replacement of 65 percent, excluding sales and acquisitions
ConocoPhillips announced preliminary net additions of 1.246 billion barrels of oil equivalent (BOE), including equity affiliates, to its proved reserve base during 2004. The company's reserve replacement ratio was 206 percent, based on 605 million BOE of production, bringing ConocoPhillips' total reserve base to 8.5 billion BOE, excluding 0.3 billion barrels associated with the company's Canadian Syncrude operations. The U.S. Securities and Exchange Commission (SEC) regulations define the company's Syncrude operations as mining related; therefore, these operations are not reported as part of its conventional oil and gas proved reserves base.
Total reserve additions, including revisions, improved recovery, purchases, and extensions and discoveries, were 1.286 billion BOE. Statement of Financial Accounting Standards No. 69 (SFAS 69) Costs Incurred for the year is expected to be $6.639 billion. This includes ConocoPhillips' estimate of the impacts of the joint announcement of ConocoPhillips and LUKOIL to form a broad-based strategic alliance. At the end of 2004, ConocoPhillips owned 10 percent of LUKOIL. The estimated amounts associated with LUKOIL related to reserve acquisitions and SFAS 69 Costs Incurred were 0.894 billion BOE and $2.036 billion, respectively.
Excluding sales and acquisitions, ConocoPhillips' reserve replacement ratio was 65 percent. Consistent with the company's practice and in accordance with Securities and Exchange Commission guidelines to use year-end prices for reserve estimates, due to unusually low year-end Canadian bitumen values, the company recorded a negative revision of proved crude oil reserves for the Surmont project. However, before application of this negative revision, the company's reserve replacement ratio, excluding sales and acquisitions, would have been 101 percent.
"We continue to believe Surmont is an economic project that adds value to our integrated asset base, and we are proceeding with development," said Bill Berry, executive vice president of Exploration and Production.
"ConocoPhillips' legacy projects also helped contribute to the reserve additions. We are focused on replacing reserves at a competitive finding and development cost. In 2004, we advanced several key projects that positively impacted the company's reserves, including projects in the Caspian Sea , North Sea , Alaska and Indonesia ."
The Bohai Bay Phase II development received government sanction in early 2005, and consistent with the company's practice is not included in the 2004 results reflected above.
Posted by Editor Pipeline Magazine
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