OAO LUKOIL
finished an evaluation and independent audit of its oil and gas reserves, as
they stand on January 1, 2010.
The audit
results by Miller and Lents, a US firm, suggest that the Company’s
proved hydrocarbon reserves as of January 1, 2010 came to 17.5 billion barrels
of oil equivalent, including 13.7 billion barrels of oil and 22.9 trillion cubic
feet of gas.
The
evaluation was performed in accordance with the US Securities and Exchange
Commission (SEC) standards until the economic limit of commercial production is
reached. The Company resolved to undergo reserves evaluation according to the
SEC standards to provide better transparency and compatibility of its reserves
data compared with that of its competitors.
The
evaluation was performed with consideration of the changes in the field
development plans approved by the Company’s Board of Directors on November 19,
2009 as part of the Company’s Strategic Development Program for
2010-2019.
In
accordance with the SEC rules, there has to be an approved development plan as a
requirement to book undeveloped reserves as proved. This plan must set the start
of field operations within a five-year period, if there are no other factors
that would explain a later commissioning. Considering the changes introduced
into development plans and their commissioning dates, the Company transferred
1.8 billion barrels of oil equivalent from the category of proved reserves into
lower reserve categories and into resources. The Company expects that these
volumes will be returned into the proved reserves category as their development
start date draws nearer or some new technologies are
applied.
In 2009,
proved reserves were extended due to geological exploration, production drilling
and acquisitions, and totaled 782 million barrels of oil equivalent, which was
95% of the Company’s annual production volume. Of the 782 million barrels,
geological exploration and production drilling accounted for 617 million barrels
of oil equivalent, while acquisitions accounted for the remaining portion of 165
million barrels of oil equivalent.
The main
2009 acquisition was the buy-out of 46% of the equity interest in the LUKARCO
B.V. joint venture. This joint venture owns 5% of the TengizChevroil joint
venture which is developing the Tengiz and Korolevskoye fields in
Kazakhstan. As a result of the
transaction, the Company’s proved reserves increased by 102 million barrels of
oil and 130 billion cubic feet of gas.
In
summary, in terms of proved hydrocarbon reserves volume LUKOIL retains its
leading positions among the Russian and international companies.
LUKOIL
Group Oil and Gas Reserves
|
As
of January 1, 2010 |
Oil |
Gas |
Oil + gas* |
|
|
million
barrels |
billion
cubic feet |
million
barrels of oil equivalent |
|
Proved
reserves |
13,696 |
22,850 |
17,504 |
|
including: |
|
|
|
|
Developed
reserves |
8,827 |
7,795 |
10,126 |
|
Undeveloped
reserves |
4,868 |
15,055 |
7,377 |
|
Probable
reserves |
7,293 |
15,163 |
9,820 |
|
Possible
reserves |
3,683 |
8,226 |
5,054 |
*Conversion ratio from cubic feet to barrels:
Estimates
of Future Cash Flows from Proved Reserves
Development
|
As
of January 1, 2010, million USD |
Proved |
Probable |
Possible |
|
Future
cash flows from sales of oil and gas |
431,107 |
227,750 |
119,150 |
|
Future
production and development cost |
283,017 |
162,283 |
94,934 |
|
Future
undiscounted cash flows (before income tax) |
148,090 |
65,467 |
24,216 |
|
Effect
of discounting (10% p.a.) |
88,674 |
55,717 |
22,086 |
|
Future
discounted net cash flows (before income tax) |
59,416 |
9,750 |
2,130 |
