OAO LUKOIL Oil and Gas Reserves
|As of January 1, 2006||Oil||Gas||Oil + gas*|
|Million barrels||Billion cubic feet||Million boe|
*1 barrel of oil equivalent = 6,000 cubic feet of natural gas
Estimates of Future Cash Flows from Proved Reserves Development
|As of January 1, 2006||Million USD|
|Future cash flows from sales of oil and gas||408,598|
|Future production and development cost||214,272|
|Future undiscounted cash flows (before income tax)||194,326|
|Effect of discounting (10% p.a.)||120,187|
|Future discounted net cash flows (before income tax)||74,139|
The evaluation of the reserves of OAO LUKOIL was performed in compliance with the US Society of Petroleum Engineers (SPE) requirements. The proved reserves included those volumes which are recoverable up to and past license expiry dates.
The Company's total reserves in all categories constitute 100% net reserves owned by the consolidated subsidiaries and net share in appropriate reserves of affiliates.
The main factors behind the growth of the reserves are:
- Additions to reserves as a result of exploration activity carried out in the regions where the Company traditionally operates;
- Acquisition of Nelson Resources Limited;
- Increase of the share in ZAO SeverTEK up to 100%;
- Acquisition of 66% stock of OOO Geoilbent;
- Revision of the previous estimates using renewed or updated geological and development information.
In 2005, the Company added considerably the probable and possible reserves thus increasing the eventual compensation of the proved reserves. Consolidated growth in the specified reserves was 30% in 2005. Major additions were due to the opening of Filanovsky field and acquisition of OAO Primorieneftegaz.
Exploration remains a top priority in the Company's development. In 2005, the Company compensated completely the hydrocarbons production due to the exploration. The approved Strategic development program of LUKOIL Group for 2005-2014 provides for complete compensation of the hydrocarbons production with the reserves additions at the competitive cost level.