What is a reserve report oil and gas?
A reserve report is prepared by petroleum engineers and estimates the remaining quantities of oil and gas (reserves) expected to be recovered from existing properties. Reserve reports provide information regarding the expected future pre-tax net cash flows that would be produced from the various categories of reserves.
What are examples of oil reserves?
Oil reserves are the amount of crude oil a country or region has that can be reasonably extracted. The top three countries in the world by oil reserves are Venezuela, Saudi Arabia, and Canada.
How do you evaluate oil and gas reserves?
Oil and gas reserves can be based on pre-tax or after-tax cash flows. Pre-tax cash flows make reserve values more comparable as tax rates vary by location. When using pre-tax cash flows, we use a pre-tax cost of debt and pre-tax cost of equity to develop a WACC.
What is the standardized measure of oil and gas?
SMOG
The FASB’s ASC 932 requires a similar standardized measure for the value of proved reserves called SMOG (standardized measure of oil and gas). SMOG is calculated with the same methodology as PV-10 but deducts income taxes whereas PV-10 does not.
What is smog in oil and gas?
SMOG reporting is the combination of a reconciliation rolling the quantity of oil, gas and NGLs from year to year, a tax-effected present value of the reserves and a 12-component reconciliation of that value from the prior year to the current year that companies are required to do for their annual reporting.
What is reserve answer?
A reserve is a retained earnings secured by a company to strengthen a company’s financial position, clear debt & credits, buy fixed assets, company expansion, legal requirements, investment and other plans. Reserve funds do not have any legal restrictions so that the company can use it for any purpose.
How is oil made 3 steps?
The Three Stages of Refining. Crude oil needs to be processed before it can be used (See Close-Up: “Why Crude Oil Needs to be Refined”). Three major types of operation are performed to refine the oil into finished products: separation, conversion and treating.
How oil reserves are found?
Today, petroleum is found in vast underground reservoirs where ancient seas were located. Petroleum reservoirs can be found beneath land or the ocean floor. Their crude oil is extracted with giant drilling machines.
How do you value gas reserves?
For financial reporting purposes, the primary method for valuing reserves is the income approach via the discounted cash flow method, whereas unevaluated acreage is typically valued using the market approach via the comparable transaction method.
How is NAV calculated in oil and gas?
In the context of a mutual fund, NAV is also equal to the price per share. To find a mutual fund’s NAV, take assets less liabilities and divide by the total number of shares.
How is oil and gas measured?
(1) Oil production is measured and reported in barrels, or “bbl.” Production rates are typically reported in terms of barrels per day, which may be abbreviated in several different ways, including bpd, b/d and bbl/d. This measurement converts gas production to oil production on an energy-equivalent basis.
How is gas measured?
Gas is sometimes measured in cubic feet at a temperature of 60 degrees Fahrenheit and an atmospheric pressure of 14.7 pounds per square inch. Gas production from wells is discussed in terms of thousands or millions of cubic feet (Mcf and MMcf). Resources and reserves are calculated in trillions of cubic feet (Tcf).
What is Strategic Petroleum Reserve?
Strategic Petroleum Reserve (United States) The Strategic Petroleum Reserve (SPR) is an emergency fuel storage of petroleum maintained underground in Louisiana and Texas by the United States Department of Energy (DOE).
What do oil reserves mean?
Oil reserves are an estimate of the amount of crude oil located in a particular economic region . Oil reserves must have the potential of being extracted under current technological constraints. For example, oil pools situated in unattainable depths would not be considered part of the nation’s reserves. Nov 18 2019
What is the definition of an oil reserve?
Oil Reserves Definition. Oil Reserves refers to an estimate of the amount of crude oil located in a region. Oil reserves must have the possibility of being extracted with existing technologies.