Public company proved oil and natural gas reserves were mostly unchanged in 2023

In-brief analysis

August 12, 2024

Data source: Evaluate Energy

Global proved crude oil and natural gas reserves held by 175 publicly traded global exploration and production (E&P) companies increased by 2.0 billion barrels of oil equivalent (BOE) in 2023, or about 1%, according to data from the companies' annual financial reports.

Proved reserves are estimated volumes of hydrocarbon resources that an analysis of geologic and engineering data demonstrates with reasonable certainty are recoverable under existing economic and operating conditions. Company assessments of their proved reserves of crude oil and natural gas change from year to year because of:

We analyzed the published financial reports that 175 domestic and international companies provided to a securities regulator like the U.S. Securities and Exchange Commission and that were collected by Evaluate Energy. Our conclusions do not represent the entire global E&P sector because the data do not include private companies, which do not publish financial reports.

We estimate the 175 companies included in this analysis accounted for about half of the petroleum production by non-OPEC sources in 2023. Although many of these companies have global operations, some are state-affiliated national oil companies with reserves and operations concentrated in their home countries, including Mexico, China, and Brazil. The top 20 companies accounted for 67% of the 237 billion BOE in proved oil and natural gas reserves held at the end of 2023.

Typically, companies add the most reserves through spending on exploration and development, leading to proved reserve additions via extensions, discoveries, and improved recovery. Companies draw down their proved reserves by producing oil and natural gas and selling them to refineries or end users.

The companies added 14.9 billion BOE from improved recovery, extensions, and discoveries. They also added 7.6 billion BOE via purchases of proved reserves and 3.4 billion BOE from upward revisions. Combined, these increases were enough to cover decreases from property sales and the 21.2 billion BOE used for production. Sales of 2.5 billion BOE in 2023 were about 50% less than the 10-year (2013-22) average and well below increased sales in 2022 caused by some companies divesting from assets in Russia.

Data source: Evaluate Energy

Companies can increase their proved reserves in two ways:

• Additions that create new proved reserves from improved recovery, extensions, and discoveries, called organic proved reserve additions
• Purchased additions that come from transfers between companies and do not create new proved reserves

Costs incurred for organic proved reserve additions in 2023 increased 15% in real terms year over year because of higher development costs. We define costs incurred for organic proved reserve additions to be exploration costs, development costs, and unproved reserve acquisitions. Unproved reserves include technically recoverable resources that have less certainty in being recoverable under existing prices and costs. Unproved reserves include probable and possible reserves, with probable meaning the company estimates the reserves have a 50% probability of being economically extracted and possible meaning the reserves have a 10% probability.

Broken down regionally, 38% of costs incurred for organic proved reserve additions were spent by the companies on operations in the United States; 20% in the Asia Pacific, Russia, and Central Asia region; 15% in Latin America; and 10% in Canada.

Year-over-year changes in costs incurred varied across regions, increasing around 20% in the United States and Latin America and increasing around 10% in Canada. Costs incurred remained flat in the Asia Pacific, Russia, and Central Asia region. Overall, costs incurred in developing assets accounted for nearly 90% of the total increase in these companies' exploration and development costs incurred to add proved reserves.

Purchases of unproved reserves, which we include in exploration and development spending, made by the companies were over 60% below the 10-year (2013-22) average, which helped to offset higher development costs. Despite increased spending in 2023, organic proved reserve additions by these companies declined 8% compared with 2022, indicating an increase in the cost per barrel.

Data source: Evaluate Energy
Note: Includes purchases of unproved reserves. Associate company spending represents affiliates in which a company holds an equity stake.

The cost incurred for each additional barrel of oil equivalent of organic proved reserves is known as the finding cost. The 2023 world weighted average shows finding costs for these companies increased 24% in real terms from 2022 to $20.06/BOE. Despite the increase, finding costs remained less than the 2014-22 average of $22.50/BOE and 45% less than the finding costs of 2014.

Data source: Evaluate Energy
Note: Finding costs are exploration costs, development costs, and costs incurred acquiring unproved reserves per BOE of organic proved reserve additions.

To examine regional finding costs, we averaged results from these companies over three years because the timing of expenditures and the formal reporting of changes to proved reserves can differ.

From 2021 to 2023, compared with 2018 to 2020 and 2015 to 2017, three-year average real finding costs decreased in the United States; Canada; and the Asia Pacific, Russia, and Central Asia region. These regions also have the lowest finding costs per barrel compared with Latin America, the Middle East, Africa, and Europe. Finding costs in Latin America increased on average compared with the 2018-20 average but remained lower in real terms than the 2015-17 average. Average finding costs for operations in Europe, the Middle East, and Africa increased markedly, although these regions only account for a small share of the proved reserve additions by these companies. In the Middle East, many assets are held by state-owned companies and are not included in this analysis.

Data source: Evaluate Energy
Note: Finding costs are exploration costs, development costs, and costs incurred acquiring unproved reserves per BOE of organic proved reserve additions. Chart excludes other world and associates.

You can find more analysis of global trends in our annual Financial Review. In April, we issued our annual U.S. crude oil and natural gas proved reserves report. This report provides a more detailed analysis of proved reserves in the United States and includes a larger sample of both publicly traded and privately owned U.S. producers, covering about 90% of proved reserves of oil and 93% of proved reserves of natural gas at the national level.

Principal contributor: Alexander de Keyserling

Tags: crude oil, oil/petroleum, liquid fuels, natural gas, reserves

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