Exxon Lowers Proved Reserve Estimates -- Update
February 22 2017 - 8:22PM
Dow Jones News
By Lynn Cook
Extremely low energy prices during 2016 forced Exxon Mobil Corp.
on Wednesday to lower its estimate of proved oil and gas reserves
in the ground that the company controls.
The Irving, Texas, energy company, which had warned late last
year that it might have to take reserves off its books due to lower
prices, said it had to shave off nearly 15%, or 3.3 billion barrels
of oil equivalent, from its proved reserves when compared with
2015.
Exxon managed to replace only 65% of the oil and gas it pumped
out of the ground in 2016 with new discoveries last year. This
marks the second year in a row that Exxon has failed to fully
replace the fuel that it pulled from the ground. It now has
reserves of 20 billion barrels of oil equivalent.
Using new discoveries to hit 100% reserve replacement is a
milestone that Exxon met consistently for more than two decades
until 2015. By comparison, Exxon's top U.S. rival, Chevron Corp.,
said it replaced 95% of the reserves it produced during 2016, after
replacing 107% of the oil and gas it pumped during 2015.
Most of the reserves that Exxon is taking off its books are in
Canada's oil sands region and weren't profitable at recent prices.
The company continues to produce oil at its Kearl oil sands project
in Alberta.
The reserve changes stem from rules enforced by the U.S.
Securities and Exchange Commission, which call for companies to
take oil reserves off their books if they aren't profitable at
existing prices or can no longer be included as part of five-year
development plans.
"These revisions are not expected to affect the operation of the
underlying projects or to alter the company's outlook for future
production volumes," the company said
So far this year prices have been higher than in the beginning
months of 2016, a signal that some of the lost reserves could be
recognized again in future years, the company said.
Exxon recently said it continues to operate its Kearl oil sands
mine in Alberta and will continue to develop Canadian prospects in
the future.
Those reserves could be added back to Exxon's proved total if
prices rise, costs fall or its operations improve.
The company's reserve picture would have been worse had it not
been for 1 billion barrels of oil equivalent in new finds in the
U.S., Kazakhstan, Papua New Guinea, Indonesia and Norway during
2016.
Write to Lynn Cook at lynn.cook@wsj.com
(END) Dow Jones Newswires
February 22, 2017 20:07 ET (01:07 GMT)
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