Oil and gas reserves and resource quantification

Oil and gas reserves denote discovered quantities of crude oil and natural gas (oil or gas fields) that can be profitably produced/recovered from an approved development. Oil and gas reserves tied to approved operational plans filed on the day of reserves reporting are also sensitive to fluctuating global market pricing. The remaining resource estimates (after the reserves have been accounted) are likely sub-commercial and may still be under appraisal with the potential to be technically recoverable once commercially established. Natural gas is frequently associated with oil directly and gas reserves are commonly quoted in barrels of oil equivalent (BoE). Consequently, both oil and gas reserves, as well as resource estimates, follow the same reporting guidelines, and are referred to collectively hereinafter as oil & gas. Detailed classification schemes have been devized by industry specialists to quantify volumes of oil and gas accumulated underground (known as "subsurface"). These schemes provide management and investors with the means to make quantitative and relative comparisons between assets, before underwriting the significant cost of exploring for, developing and extracting those accumulations. Classification schemes are used to categorize the uncertainty in volume estimates of the recoverable oil and gas and the chance that they exist in reality (or risk that they do not) depending on the resource maturity. Potential subsurface oil and gas accumulations identified during exploration are classified and reported as prospective resources. Resources are re-classified as reserves following appraisal, at the point when a sufficient accumulation of commercial oil and/or gas are proven by drilling, with authorized and funded development plans to begin production within a recommended five years. Reserve estimates are required by authorities and companies, and are primarily made to support operational or investment decision-making by companies or organisations involved in the business of developing and producing oil and gas.