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Page added on August 26, 2017

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New Study Shows Stanching of Decline in Oil Reserves

Production

With the release of Ernst & Young’s (EY) 2017 US oil and gas reserves study, the services firm hosted a presentation in which a panel of its analysts discussed trends among independent, large independent, and integrated companies within the industry. Along with oil and gas reserves, the panel examined trends in capital expenditures (Capex) for exploration and development activities as well as other performance metrics.

A key takeaway from the EY study was that prices are trending lower than in recent history and volatility in price is somewhat subdued. Capex totaled USD 85.7 billion, 27% lower than 2015 and 57% lower than 2014. The study claimed that the oil price has stabilized at a “new normal,” and that this stabilization has helped limit the flow of ratings downgrades and reserve revisions from 2015 to 2016. The US Energy Information Administration (EIA) expects the country to see a 4% growth in oil production in 2017.

Fig.1—EY’s study showed a slight drop in exploration Capex from 2012 to 2016 and a dramatic drop in development Capex from its peak in 2014.

Fig. 1 shows the exploration and development spend in the US by the 50 largest companies based on 2016 US end-of-year oil and gas reserve estimates from 2012 to 2016. James Bowie, senior manager of the financial advisory assurance services group at EY, said there was a significant drop in Capex and the number of net wells drilled: exploratory wells saw a 15% drop, from 1,005 in 2015 to 859 last year, and developmental wells saw a 51% drop from 10,579 in 2015 to 5,194 last year. The study concluded that growth in proved and unproved property acquisition costs was more than offset by significant reductions

Bowie said companies were being more strategic in how they’re developing reserves, placing a greater emphasis on areas where they can see immediate return. In some cases, he said, companies are delaying the development of various assets until they see stronger signs of economic recovery. But despite the drop in activity, he said there was a positive story behind the numbers, namely that capital expenditure dollars are going farther as US producers become more efficient in unconventional drilling and as oilfield service companies see an increase in pressure on prices.

“Even though we’re seeing that decline in Capex for development, that doesn’t necessarily mean that we’re going to see a corresponding decline in production, because each of those developing Capex dollars is going farther than it did last year,” Bowie said.

Herb Listen, EY US oil and gas assurance leader and moderator of the discussion, said that while some Capex reduction is due to an increase in operational efficiency, service companies had still felt significant downward pricing pressure that is not sustainable over the long term. As a result, industry should expect to see further consolidation. Mitch Fane called the merger between Baker Hughes and GE Oil and Gas last month a “transformational” deal in that regard.

“I think a lot of other oilfield service companies were waiting for that [deal] to clear the market, and then they could react from there,” said Fane, southwest region energy leader in transaction advisory services at EY. “We’ve seen an uptick in activity and interest with all the other players in the market trying to figure out how to react and move forward. I would expect that that’s another bit of a renaissance there where some of the stronger players will come out and they’ll be more efficient in the market, which in turn should help a lot of upstream clients that we work with moving forward from a pricing and efficiency standpoint.”

Fig.2—Revenues and net income from the 50 largest companies regressed to the mean in 2016 after a significant decrease the previous year.

Fig. 2 shows revenue and income from exploration and production activities from 2012 to 2016. The totals are shown on two bases: the lines represent an absolute number while the bars represent a per barrel basis, which Bowie said helps analysts see trends in terms of an overall price decline.

The decline in oil price drove the drop in revenue from 2014 to 2015. Bowie said the drop noted in Fig. 2 was a “double whammy,” in that these drops led to a drop in price expectations, which led to reserve revisions and subsequent impairment of assets. In 2016, EY saw a significant reduction in the number of impairments, which caused revenue and income to revert to the mean. Bowie said that, while not ideal, this reversion is a positive sign.

“Unfortunately, it is still a net loss, so that is why we talk about this being less bad but still not good,” Bowie said. “But we’re starting to head back in the right direction.”

Oil reserves showed a modest decline of 2% in 2016 as extensions and discoveries helped offset a 3% drop in production, while substantially lower downward revisions were recorded compared to 2015. Oil reserves were 24.4 billion bbl in 2015 compared to 23.9 billion bbl in 2016. End-of-year gas reserves dropped by 1% in 2016 to 149 Tcf, compared to a 21% drop in 2015 that was largely due to significant downward reserve revisions.

SPE



20 Comments on "New Study Shows Stanching of Decline in Oil Reserves"

  1. MASTERMIND on Sat, 26th Aug 2017 1:14 pm 

    Conventional Oil Peaked in 2006 –IEA-NATURE
    http://imgur.com/a/uCz7V
    https://www.scientificamerican.com/article/has-peak-oil-already-happened/

    New Oil discoveries by scientists have been declining since 1965 and last year was the lowest in history –IEA
    http://imgur.com/a/W60yn

    We have been draining our oil reserves by consuming more oil than we discover since the 1980’s -ASPO
    http://imgur.com/a/uJ0Rg

    Saudi Arabian oil reserves are overstated by 40% – Wikileaks
    https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

    International Energy Agency Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Aramco CEO believes world oil shortage coming despite U.S. shale boom
    http://www.foxbusiness.com/markets/2017/07/10/saudi-aramco-ceo-believes-oil-shortage-coming-despite-u-s-shale-boom.html

    UAE warns of world oil shortages ahead by 2020 due to industry spending cuts
    http://www.arabianindustry.com/oil-gas/news/2016/nov/6/more-spending-cuts-as-uae-predicts-oil-shortages-5531344/

    Halliburton says oil will Spike due to oil shortages by 2020 After $2 Trillion in Industry Cuts
    https://www.bloomberg.com/news/articles/2017-07-12/halliburton-sees-2020-oil-spike-after-industry-cuts-2-trillion

    Wood Mackenzie warns of oil supply crunch and world oil shortages around 2020
    http://oilprice.com/Energy/Crude-Oil/The-Next-Oil-Price-Spike-May-Cripple-The-Industry.html

    HSBC Global Bank warns 80% of the worlds conventional fields are declining and world oil shortages by 2020
    https://www.research.hsbc.com/R/24/vzchQwb

    UBS Global Bank warns of industry slowdown and world Oil Shortages by 2020
    http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12136886/Oil-slowdown-to-trigger-supply-crisis-by-2020-warns-bank.html

    MarketWatch : Why investors’ should brace for a devastating oil shortage ahead around 2020
    http://www.marketwatch.com/story/why-investors-should-brace-for-a-devastating-oil-shock-ahead-2017-07-03

    German Government (leaked) Peak Oil study concludes: oil is used directly or indirectly in the production of 90% of all industrial goods, so a shortage of oil would collapse the world economy & world governments/democracies
    http://www.spiegel.de/international/germany/peak-oil-and-the-german-government-military-study-warns-of-a-potentially-drastic-oil-crisis-a-715138.html

    The Oil Age may come to an end for a shortage of oil. -Saudi Oil Minister Sheikh Yamani

  2. MASTERMIND on Sat, 26th Aug 2017 1:14 pm 

    Conventional Oil Peaked in 2006 –IEA-NATURE
    http://imgur.com/a/uCz7V
    https://www.scientificamerican.com/article/has-peak-oil-already-happened/

    New Oil discoveries by scientists have been declining since 1965 and last year was the lowest in history –IEA
    http://imgur.com/a/W60yn

    We have been draining our oil reserves by consuming more oil than we discover since the 1980’s -ASPO
    http://imgur.com/a/uJ0Rg

    Saudi Arabian oil reserves are overstated by 40% – Wikileaks
    https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

    International Energy Agency Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Aramco CEO believes world oil shortage coming despite U.S. shale boom
    http://www.foxbusiness.com/markets/2017/07/10/saudi-aramco-ceo-believes-oil-shortage-coming-despite-u-s-shale-boom.html

    UAE warns of world oil shortages ahead by 2020 due to industry spending cuts
    http://www.arabianindustry.com/oil-gas/news/2016/nov/6/more-spending-cuts-as-uae-predicts-oil-shortages-5531344/

    Halliburton says oil will Spike due to oil shortages by 2020 After $2 Trillion in Industry Cuts
    https://www.bloomberg.com/news/articles/2017-07-12/halliburton-sees-2020-oil-spike-after-industry-cuts-2-trillion

    Wood Mackenzie warns of oil supply crunch and world oil shortages around 2020
    http://oilprice.com/Energy/Crude-Oil/The-Next-Oil-Price-Spike-May-Cripple-The-Industry.html

    HSBC Global Bank warns 80% of the worlds conventional fields are declining and world oil shortages by 2020
    https://www.research.hsbc.com/R/24/vzchQwb

    UBS Global Bank warns of industry slowdown and world Oil Shortages by 2020
    http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12136886/Oil-slowdown-to-trigger-supply-crisis-by-2020-warns-bank.html

    MarketWatch : Why investors’ should brace for a devastating oil shortage ahead around 2020
    http://www.marketwatch.com/story/why-investors-should-brace-for-a-devastating-oil-shock-ahead-2017-07-03

    German Government (leaked) Peak Oil study concludes: oil is used directly or indirectly in the production of 90% of all industrial goods, so a shortage of oil would collapse the world economy & world governments/democracies
    http://www.spiegel.de/international/germany/peak-oil-and-the-german-government-military-study-warns-of-a-potentially-drastic-oil-crisis-a-715138.html

    The Oil Age may come to an end for a shortage of oil. -Saudi Oil Minister Sheikh Yamani

    Storm’s coming!

  3. MASTERMIND on Sat, 26th Aug 2017 3:37 pm 

    The collapse will be fast and will happen at the speed of technology

  4. Go Speed Racer on Sat, 26th Aug 2017 5:41 pm 

    What is a Stanching.
    I know what is a stenching.
    That’s what we got, when Trump won.

  5. paultard on Sat, 26th Aug 2017 6:10 pm 

    hello guys. just donated to the red cross for harvey recovery.

  6. Boat on Sat, 26th Aug 2017 6:30 pm 

    paultard,

    I have been doing that for decades. Just $10 per event but maybe 7-12 events per year. I know it’s not much but if 4 billion people did the same…….

  7. Harquebus on Sat, 26th Aug 2017 7:22 pm 

    Charities are proof positive that governments are failing in their duties and obligations.

  8. Boat on Sat, 26th Aug 2017 8:00 pm 

    Harquebus on Sat, 26th Aug 2017 7:22 pm

    Does it say that in the constitution? Which founding father document says the government is responsible for the poor.

  9. Go Speed Racer on Sat, 26th Aug 2017 8:15 pm 

    Everyone there is a major flood or earthquake,
    anywhere in the country, everybody should
    donate $20 to me. It’s not much, but if everybody
    would donate, it would multiply into a substantial
    sum that would make a big difference.

  10. Makati1 on Sat, 26th Aug 2017 11:16 pm 

    “Americans are very slow to escape from the false reality in which they live. Americans are a thoroughly brainwashed people who hold tightly to their false life within The Matrix.”

    http://www.zerohedge.com/news/2017-08-26/paul-craig-roberts-there-conspiracy-and-its-against-american-people

    “If liberty continues to exist on earth, it will not be in the Western world. It will be in Russia and China, countries that emerged out of the opposite and know the value of liberty, and it will be in those South American countries, such as Venezuela, Ecuador, and Bolivia that fight for their sovereignty against American oppression.”

  11. Makati1 on Sat, 26th Aug 2017 11:21 pm 

    BTW: The American Red Cross is a scam. Only a small percentage of the fool’s donations actually go to help the needy. How do I know? Well, the last time I checked, the Red Cross office in Harrisburg, PA was in a multi-million dollar mansion on Front street, subject to flooding, when it could have been in any of many cheap office spaces available. Just the upkeep would have cost tens of thousands of dollar per year. I stopped feeding the pigs, that were/are living off of the suckers, decades ago.

  12. Makati1 on Sat, 26th Aug 2017 11:24 pm 

    “All The Countries America Has Invaded… In One Map”

    http://www.zerohedge.com/news/2017-08-26/all-countries-america-has-invaded-one-map

    The spread of American terrorism continues…

  13. Davy on Sun, 27th Aug 2017 6:12 am 

    “If liberty continues to exist on earth, it will not be in the Western world. It will be in Russia and China, countries that emerged out of the opposite and know the value of liberty

    LMFAO, I agree the US is no longer free like it once was but please makat, you are off in the deep end of dumbass.

  14. paultard on Sun, 27th Aug 2017 8:47 am 

    as an ex paultard yes paper please is becoming more frequent in the USA but elsewhere in the world paper please is the norm with shoot to kill.

    What liberty?

  15. Makati1 on Sun, 27th Aug 2017 9:10 am 

    “Congress Quietly Passed A Bill Allowing Warrant-less Searches of Homes – Only 1% Opposed It”
    “Gone With The Wind Banned From Memphis Theater”
    “Paul Craig Roberts: “There Is A Conspiracy… And It’s Against The American People”” The Great Leveling.
    “Matt Taibbi: Media Is The Real Villain (For Creating A World Dumb Enough For Trump)”
    “Grant Williams: “History Is About To Repeat Itself Again… And It Might Get Ugly””
    “”It Was A Setup” – Organizers Cancel San Francisco “Freedom Rally” ”
    “Philly AntiFa ‘Cell’ Calls For All-Out Revolution, Demands “Gender Abolition”, “Expropriate Land From Rich””
    “Violent “Color Revolution” in America? Attempted Overthrow of Trump? Threatens to Shred Fabric of American Society” I believe purple is the color for the FSA.
    “Orwell 1984: Looking for the Thought Police? Try Looking in the Mirror.”
    “The Structure of Power in American Society: A Military Junta is Now Ruling the United States”
    “Exploring the Shadows of America’s Security State”

    The Fascist Police State is coming out of the closet. LOL

  16. Cloggie on Sun, 27th Aug 2017 10:47 am 

    “All The Countries America Has Invaded… In One Map”
    http://www.zerohedge.com/news/2017-08-26/all-countries-america-has-invaded-one-map

    They forgot to add to the map: Italy, Holland, Belgium, France, Denmark, Norway.

    All tasty prey for the US empire.

    I know that the official reading is “liberation”, but somehow they forgot to leave after the liberation. Until today.

    You can say what you want about the 1940-Germans, but they would never have contemplated giving the European cities away to the third world. You’ve got to give them that.

    And then there is that unanswered questions as WHY? the Germans invaded Poland, Norway, Benelux and France.

    The Americans claim because the Germans wanted to conquer the world.

    Strange that, normally nationalists try to keep “the world” out. Only communists want to conquer the world. Like the Soviets and Americans… but Germans?!

  17. Apneaman on Sun, 27th Aug 2017 1:04 pm 

    Clog, that map only includes real countries.

    And the only thing I would give to the Germans is another round of heavy carpet bombing.

    clog will go down in history as the biggest SOUR grape of all time. You lost retard. The surrender was in 1945 – the year you were born. Still bellyaching. What’s that like clog? What’s it like to spend your entire fucking life bitching about having your ass whooped and never doing a damn thing about it? What have you done about it hair clog? Nothing but bitch and moan for over 70 years while simultaneously living a life of more privilege, opportunity, security and ease than 99.99% of all humans who ever existed or will.

  18. Cloggie on Sun, 27th Aug 2017 3:13 pm 

    Clog, that map only includes real countries.

    I can’t believe my luck, the apneafool is biting!

    And the only thing I would give to the Germans is another round of heavy carpet bombing.

    I know, but that is not going to happen, war is now coming your way.

    https://www.youtube.com/watch?v=8hFRLbFaJEw

    Additionally you are going to lose your most important colony. In Germany another 1989 is rapidly approaching:

    http://www.pi-news.net/angela-merkel-ausgebuht-in-ost-und-west/

    EVERY DAY she is booed EVERYWHERE she comes in her campaign.

    clog will go down in history as the biggest SOUR grape of all time. You lost retard. The surrender was in 1945 – the year you were born.

    No you idiot, I’m having a good time, because I’m ATTACKING you, not whining. I’m making short shrift with your WW2-lies and there is nothing you can do about it because you are defenseless. Yes I agree that Europe lost, but that was 1945. In life nothing is final, certainly not in geopolitics. What I am explaining here will soon be general knowledge, worldwide.

    Look who we have got here, a new video, from the #1 architect of WW2, one of your tribe:

    [part 1]

  19. Cloggie on Sun, 27th Aug 2017 3:13 pm 

    https://www.youtube.com/watch?v=SuVLsdyQfIk

    It is september 1940. He used to be US ambassador in Paris, but you know, circumstances had changed a little in July, so he had to bring his kosher ass in safety to ostensible “neutral peace-loving Amurrica”.

    At 0:25 the f* suggests that the Germans “marched through Belgium” unprovoked. In reality it had been the French who prepared to march through Belgium first, to attack the Germans via Holland. After all, it had been the French who had declared war on Germany, not the other way around. A few hours after the Germans crossed the Dutch border, the French already arrived in the Zeeland province. Von Ribbentrop was entirely correct in his justification of the invasion:

    http://photobucket.com/gallery/user/Lisa_Simpson/media/bWVkaWFJZDo3NTExODM2OQ==/?ref=

    The Jewish warmonger is succesfully inciting the neutral but naive Americans to go to war against a country that had done nothing against them. Mr Bullitt already owns America and now he wants his Americans to go and fetch the Mother Civilization as well for his tribe, so that they and his brethren in the USSR will own the planet (meanwhile Joe Stalin was discretely removing the Jews in the USSR from power, but that’s another story). Bullitt has the nerve to suggest that if the Americans won’t enter the war with the British, the Germans will come to America and conquer that country. Global GDP distribution 1940:

    US 29%
    USSR 13%
    UK 11%
    France 5%
    (Total 56%)

    Germany 11%

    A child can see that what he says is bunk.
    But now payback time has arrived.
    America is on the brink of civil in a conflict that can’t be resolved. The stinking West (US + colonies) is losing everywhere.lol
    Russia just defeated the West in Syria. And China will soon eclipse the US and has every motive to start WW3 themselves soon (to capture Australia and NZ).

    In the next Nuremberg tribunal it won’t be the Germans at the dock, but instead thoese responsible for communism and its horrors, for the destruction of American cities as a consequence of mass immigration, for 9/11, for Syria. It is going to be a slow, painful death.

    Mazzeltov!

    [part 2]

  20. Makati1 on Sun, 27th Aug 2017 4:00 pm 

    Cloggie, The US is getting their own color revolution brought to them by the same Soros and company as in Ukraine, etc. I think the color is Purple. A fitting color as it is the same as bruises. Although, I see more red than purple in its future. Blood? No. Well, yes. But I was also thinking of Debt. Red ink. A Greatest Depression.

    Americans only know the US version/fictional world war history. You know, where the US is the sole cause of the defeat of Germany and the winner of every battle. Ditto for Japan where they only won because they were able to decode the Japanese messages, after over 20 years of trying, and had their two carriers away from Pearl Harbor on that fateful day. Had they lost those carriers, the Pacific war may have ended differently.

    Revisionism is now changing the US’ own history as they take down statues, change names and contemplate blowing up Mount Rushmore. Insanity rules in America today.

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