Investing in Energy: A Primer on the Economics of the Energy Industry

Concluding Thoughts

Reserves are more than a scorecard in the oil and gas industry. Reserves are one of the end games. The goal is to continually increase reserves at or exceeding the pace of the current year of production. In other words, a company wants to replace a barrel of production with a new barrel that was discovered. This is one of the most significant challenges in the industry today. Given that the majority of the reserves are owned by national oil companies, the situation becomes increasingly more difficult for IOCs to keep building the reserve base. Finally, I would encourage interested readers to visit the SPE and SEC's websites for complete guidance and definitions. The complexity associated with defining reserves cannot be underestimated. ...