PETROLEUM RESERVES DEFINITIONS

Reserves derived under these definitions rely on the integrity, skill, and judgment of the

evaluator and are affected by the geological complexity, stage of development, degree of

depletion of the reservoirs, and amount of available data. Use of these definitions should

sharpen the distinction between the various classifications and provide more consistent

reserves reporting.

Reserves are those quantities of petroleum which are anticipated to be commercially

recovered from known accumulations from a given date forward. All reserve estimates

involve some degree of uncertainty. The uncertainty depends chiefly on the amount of

reliable geologic and engineering data available at the time of the estimate and the

interpretation of these data. The relative degree of uncertainty may be conveyed by

placing reserves into one of two principal classifications, either proved or unproved.

Unproved reserves are less certain to be recovered than proved reserves and may be

further sub-classified as probable and possible reserves to denote progressively increasing

uncertainty in their recoverability.

The intent of the Society of Petroleum Engineers (SPE) and World Petroleum Council

(WPC, formerly World Petroleum Congresses) in approving additional classifications

beyond proved reserves is to facilitate consistency among professionals using such terms.

In presenting these definitions, neither organization is recommending public disclosure of

reserves classified as unproved. Public disclosure of the quantities classified as unproved

reserves is left to the discretion of the countries or companies involved.

Estimation of reserves is done under conditions of uncertainty. The method of estimation

is called deterministic if a single best estimate of reserves is made based on known

geological, engineering, and economic data. The method of estimation is called

probabilistic when the known geological, engineering, and economic data are used to

generate a range of estimates and their associated probabilities. Identifying reserves as

proved, probable, and possible has been the most frequent classification method and

gives an indication of the probability of recovery. Because of potential differences in

uncertainty, caution should be exercised when aggregating reserves of different

classifications.

Reserves estimates will generally be revised as additional geologic or engineering data

becomes available or as economic conditions change. Reserves do not include quantities

of petroleum being held in inventory, and may be reduced for usage or processing losses

if required for financial reporting.

Reserves may be attributed to either natural energy or improved recovery methods.

Improved recovery methods include all methods for supplementing natural energy or

altering natural forces in the reservoir to increase ultimate recovery. Examples of such

methods are pressure maintenance, cycling, waterflooding, thermal methods, chemical

flooding, and the use of miscible and immiscible displacement fluids. Other improved

recovery methods may be developed in the future as petroleum technology continues to

evolve.