Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

biggest reserve revision in history of oil industry

Discuss research and forecasts regarding hydrocarbon depletion.

biggest reserve revision in history of oil industry

Unread postby dohboi » Tue 01 Nov 2016, 14:03:28

http://priceofoil.org/2016/10/31/exxon- ... mans-land/

Exxon “Enters No Man’s Land”

Something significant happened on Friday that warrants more than just a few column inches in a newspaper.

With the most divisive Presidential election in US history just days away from concluding, it is easy to understand why more is not being made of the news, but just to tell you something seismic happened on Friday last week.

The world’s largest listed oil company, Exxon, announced that it was going to have to cut its reported proved reserves by just under a fifth – by 19 per cent.

It would be the biggest reserve revision in the history of the oil industry. ..
User avatar
dohboi
Harmless Drudge
Harmless Drudge
 
Posts: 18450
Joined: Mon 05 Dec 2005, 03:00:00

Re: biggest reserve revision in history of oil industry

Unread postby onlooker » Tue 01 Nov 2016, 14:08:02

Still waiting for KSA to do something similar
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10510
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: biggest reserve revision in history of oil industry

Unread postby Plantagenet » Tue 01 Nov 2016, 14:39:30

onlooker wrote:Still waiting for KSA to do something similar


KSA isn't a publicly traded company in the US, so they don't have to play by SEC rules. If the KSA plan to sell shares in their oil biz goes ahead, they will have to reveal what their reserves really are if they want to list in the USA.

Exxon won't the be first US oil company to have to write down the value of their oil reserves----EVERY publicly traded US oil company will have to write their reserves. For companies that are heavily indebted, like the new Shale oil companies, this may tip them into bankruptcy.

Their reserves and other assets just aren't worth what they've been saying they are worth. And to make matters worse for the oil companies, the oil glut isn't over and the price of oil looks like it is probably headed back down to $40/bbl --- if it goes much lower they'll have to write down their write downs.

cheers!
hall of shame
People who buy new cars and then cry crocodile tears over climate change. The manufacture of a typical new car emits ca. 16 tons of CO2 and a new EV is actually much worse since the battery also has to be manufactured, resulting in a total carbon footprint of ca. 30 tons of CO2
User avatar
Plantagenet
Expert
Expert
 
Posts: 22665
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: biggest reserve revision in history of oil industry

Unread postby Tanada » Tue 01 Nov 2016, 14:50:33

Isn't this because the yearly average sale price for 2016 is about $20/bbl lower than it was in 2015? I believe the SEC requires reserves be recalculated annually based on average price?
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
User avatar
Tanada
Site Admin
Site Admin
 
Posts: 15509
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: biggest reserve revision in history of oil industry

Unread postby ROCKMAN » Tue 01 Nov 2016, 15:04:59

A little perspective, please:

"With 22.2 billion barrels of proved oil and gas reserves at year-end 2004, ExxonMobil's reserve life at current production rates is approximately 14 years."

"At year-end 2015, ExxonMobil's proved reserves totaled 24.8 billion oil-equivalent barrels. ExxonMobil’s reserves life at current production rates is 16 years."

2004 - Proved reserves: 22.2 billion bbls eq. with a 14 year life
2015 - Proved reserves: 24.8 billion bbls eq. with a 16 year life


Yeah, let's cry a f*cking river for XOM. LOL.

And let's not forget that XOM, with $52 BILLION on hand, is in a great position to acquire a huge amount of proved PRODUCING reserves at a lower price then they've been able to for about a decade.


Such a joke: like a company cutting their price on widgets from $2 each to $1. Now their widget inventory is only worth half of what it was. And still making a $0.20 profit on each widget sold for $1.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11219
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: biggest reserve revision in history of oil industry

Unread postby onlooker » Tue 01 Nov 2016, 15:11:23

Tanada wrote:Isn't this because the yearly average sale price for 2016 is about $20/bbl lower than it was in 2015? I believe the SEC requires reserves be recalculated annually based on average price?

Well if this is the case then that is not a good portend for the shale/fracking companies as the lower oil price should weaken the financial position of these companies as recoverable reserves should be revised down
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10510
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: biggest reserve revision in history of oil industry

Unread postby ROCKMAN » Tue 01 Nov 2016, 15:19:20

T - The SEC rules:

Every year, oil and gas companies are required by the Securities Exchange Commission (SEC) to report their proved oil and gas reserves. By reporting these reserves, companies give their investors a meaningful understanding of the resources the company controls that it believes it could economically produce, establishing the size of the company’s reserves.

As the calendar year comes to an end, bringing with it the annual reserves determination, companies are preparing to see their proved reserves affected by the dramatic decrease in prices from last year. The SEC price deck, against which companies compare their well economics to book their reserves, is set by an average price of the first day of every month of the year. The SEC price deck set at year-end 2014 for 2015 was $94.99 per barrel for crude oil, while companies were able to book gas reserves at $4.35 per MMBtu, even as both commodities’ prices dropped precipitously.

From 2006 to 2008, the SEC determined the price deck by taking the price from the last day of the preceding year. This methodology was changed following 2008, when the SEC began using the average price from the first day of each month to determine the price deck. The new system created buffers in downcycles, like the one seen in 2008, as well as the most recent one at the end of 2014.

The SEC price deck for 2016 will not have the benefit of a substantial buffer from $100+ per barrel oil, however. Using the average price for the first day of the month from January to September, and then extending September’s price out for the last three months of the year, EnerCom® determined a base-case for the 2016 SEC price deck at $50.46, or 47% lower than the price deck for 2015."
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11219
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: biggest reserve revision in history of oil industry

Unread postby StarvingLion » Tue 01 Nov 2016, 15:22:16

The presently occuring deflationary collapse of the Pyramid of Ponzi results in anything US $ based headed for imminent bankruptcy.

Anything priced in US $ is now collapsing due to no collateral, little wonder we are seeing reserve revisions when expensive to extract oil no longer counts as reserves but reverts back to resources.

A fraudulent Facebook "economy" is what it is: FRAUD.
Cog: "Please Help Me!"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1458
Joined: Sat 03 Aug 2013, 17:59:17

Re: biggest reserve revision in history of oil industry

Unread postby onlooker » Tue 01 Nov 2016, 15:37:42

Wow so Rock, we are looking at a year to year drop of roughly 50 percent. Does the proven or economically recoverable reserve tally closely match the fluctuations in price? Meaning can we expect to see many of these companies revise their reserve count a similar 50 percent less?
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10510
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: biggest reserve revision in history of oil industry

Unread postby ROCKMAN » Tue 01 Nov 2016, 15:47:40

Looker - "Does the proven or economically recoverable reserve tally closely match the fluctuations in price?" Every US publicly traded oil company has to follow the same SEC pricing. But remember we are talking about two different numbers: the number of bbls economically recoverable at that SEC price and the $ value of those reserves at that price. That exact dynamic will vary somewhat from company to company. IOW Company A may have 70% of its previous number of bbls in ground uneconomic at the SEC price while Company B has only 30% uneconomic at that price.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11219
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: biggest reserve revision in history of oil industry

Unread postby Outcast_Searcher » Tue 01 Nov 2016, 17:14:37

onlooker wrote:
Tanada wrote:Isn't this because the yearly average sale price for 2016 is about $20/bbl lower than it was in 2015? I believe the SEC requires reserves be recalculated annually based on average price?

Well if this is the case then that is not a good portend for the shale/fracking companies as the lower oil price should weaken the financial position of these companies as recoverable reserves should be revised down

Ah, the doomers.

If oil prices are high, then "no one can afford it" and we're all doomed short term.

So you'd think if oil prices are low, which is good for business and the consumer (ex the oil patch), then that would be good news.

But no, then the doomers ignore that, and claim "oil producers will go bankrupt en masse, so we're all doomed".

As though:

1). Oil consumption wasn't highly correlated with economic growth, globally.

2). Low oil prices weren't generally helpful to overall economic growth.

3). Those oil reserves are going anywhere. (They'll just wait for higher prices and/or stronger economic hands to produces it, when the price warrants it, re profitability).

4). And as always, there are no viable alternatives. (But wait, the real world progress and news on the EV says that increasingly, there ARE viable alternatives. Which, I'm sure, the doomers will now insist is more bad news).

If the short term doomer crowd, led in spirit and general content by the almost always wrong zerohedge had a decent track record, it would be one thing.

But given the track record, why is it that these frequent pronouncements of gloom and doom should have us trembling in fear again? I forget.

...

Meanwhile, I eagerly wait seeing the new PHEV models and the Bolt on the road and at car dealers in 2017. (And maybe my driveway, depending on how much dealers are willing to dicker).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 7126
Joined: Sat 27 Jun 2009, 20:26:42

Re: biggest reserve revision in history of oil industry

Unread postby onlooker » Tue 01 Nov 2016, 17:48:27

Ah the naive anti doomers. First off Reserves are going somewhere, they are being depleted duh. Second, to scale up Alternatives you need a viable well functioning Economy and Oil Industry, something quickly disappearing. This brings up the main point being why are oil prices low? Well while normally low oil prices are good not if they are steadily weakening the Oil Industry which in turn is going to weaken the General Economy. As the General Economy weakens it will weaken the Oil Industry. So both reinforcing each other in a vicious downward cycle. Because Oil is the preeminent resource that fuels Economic activity. Well that vicious cycle has already begun. But of course that goes over the head of skeptical naive deniers
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10510
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: biggest reserve revision in history of oil industry

Unread postby StarvingLion » Tue 01 Nov 2016, 17:52:36

Wave goodbye to Outcast_Serfer,...he's headed to the 0.14 cent/hr widget factory powered by shale gas along with BW.
Cog: "Please Help Me!"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1458
Joined: Sat 03 Aug 2013, 17:59:17

Re: biggest reserve revision in history of oil industry

Unread postby StarvingLion » Tue 01 Nov 2016, 17:59:10

onlooker wrote:Ah the naive anti doomers. First off Reserves are going somewhere, they are being depleted duh. Second, to scale up Alternatives you need a viable well functioning Economy and Oil Industry, something quickly disappearing. This brings up the main point being why are oil prices low? Well while normally low oil prices are good not if they are steadily weakening the Oil Industry which in turn is going to weaken the General Economy. As the General Economy weakens it will weaken the Oil Industry. So both reinforcing each other in a vicious downward cycle. Because Oil is the preeminent resource that fuels Economic activity. Well that vicious cycle has already begun. But of course that goes over the head of skeptical naive deniers


Price of oil at $1 couldn't stimulate the Scamerica Fraud Economy cause there is none (oil or industry):

Import poverty, Outsource industry, Gawk at small screen with Facebook morons.

Thats suicide....lets all hop aboard BW's Suicide Cult Tour Bus and drive off the nearest cliff....ahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh....
Cog: "Please Help Me!"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1458
Joined: Sat 03 Aug 2013, 17:59:17

Re: biggest reserve revision in history of oil industry

Unread postby kublikhan » Tue 01 Nov 2016, 18:19:07

onlooker wrote:while normally low oil prices are good not if they are steadily weakening the Oil Industry which in turn is going to weaken the General Economy. As the General Economy weakens it will weaken the Oil Industry. So both reinforcing each other in a vicious downward cycle.
The drag on the US economy from the oil sector is offset by the stimulatory effects of lower oil prices on consumer spending. Far from the two feeding each other in a downward spiral, the net effects of low oil prices on a slowing oil patch and stimulated consumer spending is effectively zero.

We explore the effect on U.S. real GDP growth of the sharp decline in the global price of crude oil. Our analysis suggests that this decline produced a stimulus of about 0.7 percentage points of real GDP growth by raising private real consumption and an additional stimulus of 0.04 percentage points reflecting a shrinking petroleum trade deficit. This stimulating effect, however, has been largely offset by a reduction in real investment by the oil sector more than twice as large as that following the 1986 oil price decline. Hence, the net stimulus since June 2014 has been effectively zero.

The authors find that lower oil prices were passed on to the consumer and that consumers did spend their windfall income, raising real GDP by about 0.7 percent since June 2014. However, this stimulus to real GDP growth was largely offset by a simultaneous reduction in real nonresidential investment, reducing real GDP by 0.6 percent.
Lower oil prices and the U.S. economy
The oil barrel is half-full.
User avatar
kublikhan
Master Prognosticator
Master Prognosticator
 
Posts: 4517
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: biggest reserve revision in history of oil industry

Unread postby StarvingLion » Tue 01 Nov 2016, 18:45:32

onlooker, look, peakoilbarrel.com has turned into another climate change site.

Climate Change during an Energy Transition
226 Comments

Open Thread- Petroleum Oct 28, 2016
49 Comments

Petroleum is off-topic (open thread) on a petroleum site.

All those broke Marxist retards are peddling the climate change religion to find a source of tax revenue and the already bankrupt oil/gas industry is the target. Bankrupt morons desperately trying to bankrupt an already bankrupt industry in a bankrupt empire.

Don't worry, Scamerica still has the F-35 Flop. It works great at the hobby store in kit model form.
Cog: "Please Help Me!"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1458
Joined: Sat 03 Aug 2013, 17:59:17

Re: biggest reserve revision in history of oil industry

Unread postby StarvingLion » Tue 01 Nov 2016, 18:56:17

Oil industry exploration success went right into the gutter the moment they brought in all those phd computational marxists who have no foundational knowledge.

These shit companies are loaded with astrology gurus (oil price forecasters).

There could be a lot of oil out there and nobody would even know it.
Cog: "Please Help Me!"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1458
Joined: Sat 03 Aug 2013, 17:59:17

Re: biggest reserve revision in history of oil industry

Unread postby onlooker » Tue 01 Nov 2016, 19:35:10

Haha Starve. All that carbon tax baloney and analytics amounts too nothing as you aptly stated, everything and everyone is broke. They just pretend to not be and are fooling the fools
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10510
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: biggest reserve revision in history of oil industry

Unread postby AdamB » Tue 01 Nov 2016, 21:47:11

dohboi wrote:http://priceofoil.org/2016/10/31/exxon-enters-no-mans-land/

Exxon “Enters No Man’s Land”

Something significant happened on Friday that warrants more than just a few column inches in a newspaper.

With the most divisive Presidential election in US history just days away from concluding, it is easy to understand why more is not being made of the news, but just to tell you something seismic happened on Friday last week.

The world’s largest listed oil company, Exxon, announced that it was going to have to cut its reported proved reserves by just under a fifth – by 19 per cent.

It would be the biggest reserve revision in the history of the oil industry. ..


Reserves are an economically based probabilistic estimate, and have an elasticity to price just as supply does. The good news is that the oil and gas didn't go anywhere..it will sit...as it has for millions of years...and quietly wait until it moves from the resource to reserve category once again.

Unless of course Amy Jaffe is right, and peak demand drives a permanent stake through the heart of ever increasing demand, and then we will have found a way to save the world from unneeded CO2 emissions.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 4632
Joined: Mon 28 Dec 2015, 16:10:26

Re: biggest reserve revision in history of oil industry

Unread postby AdamB » Tue 01 Nov 2016, 21:57:30

onlooker wrote:Still waiting for KSA to do something similar


There is no requirement that it must. No need for any private company to report reserve estimates, even if they have calculated them down to 3 significant digits, and modify them daily.

I was once involved in a company evaluation project that calculated the value of very asset the company owned. All the information on price paths, hedging, changes in assumptions of decline for shale wells or modified production profile for a field based on the CO2 break through that very afternoon, daily sales to refineries, sales from company refineries, sales at the distributors, taxes and insurance costs, number of employees, each and every modification and change that happened that day went in. And then every night, the most recent value, from CIB to reserve asset values, liabilities, expected outlays over the next quarter and projected CIB and even estimates of financial statements of the company were calculated and sitting on the CEO's desk in the morning. Took all night to run the program. Was great fun.

But those numbers were never published, because it wasn't required. And the value moved around quite a bit. So XOM had to finally bit the bullet and downgrade? Cool. The cure for low oil prices is working exactly on schedule.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 4632
Joined: Mon 28 Dec 2015, 16:10:26

Next

Return to Peak oil studies, reports & models

Who is online

Users browsing this forum: No registered users and 0 guests