Statoil's proved reserves are estimated and presented in accordance with Securities and Exchange Commission (SEC) Rule 4-10 (a) of Regulation S-X, revised as of January 2009, and relevant Compliance and Disclosure Interpretations (C&DI) and Staff Accounting Bulletins, as issued by the SEC staff. For additional information, see Critical accounting judgements and key sources of estimation uncertainty; Key sources of estimation uncertainty; Proved oil and gas reserves in note 2 Significant accounting policies to the consolidated financial statements. For further details on proved reserves, see also note 34 - Supplementary oil and gas information - to the consolidated financial statements.
Changes in proved reserves estimates are most commonly the result of revisions of estimates due to observed production performance, extensions of proved areas through drilling activities, or the inclusion of proved reserves in new discoveries through the sanctioning of development projects. These are sources of additions to proved reserves that are the result of continuous business processes and can be expected to continue to add reserves at some level in the future.
Proved reserves can also be added or subtracted through the acquisition or disposal of assets. Changes in proved reserves can also be due to factors outside management control, such as changes in oil and gas prices. While higher oil and gas prices normally allow more oil and gas to be recovered from the accumulations, Statoil will generally receive smaller quantities of oil and gas under production sharing agreements (PSAs) and similar contracts. These changes are included in the revisions category in the table below.
The principles for booking of proved gas reserves are limited to contracted gas sales or gas with access to a robust gas market.
In Norway, we recognise reserves as proved when a development plan is submitted, since there is reasonable certainty that such a plan will be approved by the regulatory authorities. Outside Norway, reserves are generally booked as proved when regulatory approval is received, or when such approval is imminent. Reserves from new discoveries, upward revisions of reserves and purchases of proved reserves are expected to contribute to maintaining proved reserves in future years.
Approximately 87% of our proved reserves are located in politically stable countries within the Organisation for Economic Co-operation and Development (OECD). Norway is by far the most important contributor in this category, followed by the United States of America (USA), Canada, Ireland and the United Kingdom (UK).
10% of our total proved reserves are related to production sharing contracts (PSCs) in non-OECD countries such as Angola, Algeria, Nigeria and Libya in Africa, Azerbaijan and Russia. Other non-OECD reserves are related to concessions in Brazil and Venezuela, representing approximately 3% of our total proved reserves and included in proved reserves in the Americas.
Significant additions to our proved reserves in 2011 were:
- The most important new contribution to our proved reserves was the acquisition of Brigham Exploration Company in late 2011, adding 122 million boe of purchased proved reserves.
- Added proved reserves related to approval of development plans for new field developments were mainly in Norway in 2011, where several new field development projects have been sanctioned. The main contributors are the Hild and Skuld fields. However, this category also includes the Hibernia South Extension development in Canada, which was sanctioned and started producing in 2011, and the Big Foot field in the USA.
- Further drilling in the Marcellus and Eagle Ford shale plays in the USA increased the proved reserves in 2011, and these additions are presented as extensions.
- Production experience, further drilling and improved recovery contributed positively to the revision of proved reserves in 2011, most significantly for several of our Norwegian fields in production, adding 364 million boe in total.
New discoveries with proved reserves booked in 2011 are all expected to start production within a period of five years.
More details relating to changes in proved reserves can be found under separate descriptions by geographical area below.
Summary of proved oil and gas reserves as of 31 December 2011
||Proved reserves |
||Oil and NGL
||Total oil and gas |
|Eurasia excluding Norway
|Total Developed proved reserves
|Eurasia excluding Norway
|Total Undeveloped proved reserves
|Total proved reserves
Our proved reserves of bitumen in the Americas are included as oil in the table above as they represent less than 4% of our proved reserves, which is regarded as immaterial.
Basis for equivalents as presented in the section Terms and definitions .
The reserves replacement ratio is defined as the sum of additions and revisions of proved reserves, divided by produced volumes in any given period. The following table presents the changes in reserves in each category relating to the reserve replacement ratio for the years 2011, 2010 and 2009.
||For the year ended 31 December|
|Revisions and improved recovery
|Extensions and discoveries
|Purchase of petroleum-in-place
|Sales of petroleum-in-place
|Total reserve additions
|Net change in proved reserves
The reserves replacement ratio increased to 1.17 in 2011 from 0.87 in 2010. The increase in the reserves replacement ratio in 2011 is mainly due to large positive revisions, as well as the Brigham acquisition and increased ownership interests in the Norwegian fields Gudrun, Snøhvit and Valemon in 2011. The 2011 reserves replacement, excluding purchases and sales of petroleum in place, is 1.01. The average replacement ratio for the last three years was 0.92, including purchases and sales.
||For the year ended 31 December |
|Reserves replacement ratio (including purchases and sales)
The usefulness of the reserves replacement ratio is limited by the volatility of oil prices, the influence of oil and gas prices on PSA reserve booking, sensitivity related to the timing of project sanctions, and the time lag between exploration expenditure and the booking of reserves.
Proved reserves in Norway
A total of 4,165 million boe is recognised as proved reserves in 63 fields and field development projects on the Norwegian continental shelf (NCS), representing 77% of our total proved reserves. Of these, 52 fields and field areas are currently in production, 45 of which are operated by Statoil. Several new field development projects sanctioned during 2011 are adding new proved reserves categorised as extensions and discoveries. Production experience, further drilling and improved recovery on several of our producing fields in Norway also contributed positively to the revisions of the proved reserves in 2011. This includes decisions to invest in the upgrading of drilling facilities or installation of facilities for compression on fields such as Snorre, Njord and Åsgard.
Of the proved reserves on the NCS, 3,175 million boe or 76% are proved developed reserves. 67% of the total proved reserves are gas reserves, related to large offshore gas fields such as Troll, Ormen Lange, Snøhvit, Kvitebjørn, Oseberg, Visund and Tyrihans.
In the North Sea, five new field developments were sanctioned during 2011 and are carrying proved reserves for the first time: Hild, Stjerne, Svalin, Visund North and Vigdis North-East, all except Hild operated by Statoil. Increased equity interests in the ongoing field development projects Gudrun and Valemon added new proved reserves categorised as purchase of petroleum in place.
In the Norwegian Sea, development plans have been approved for the Hyme and Skuld projects, adding new proved reserves as extensions and discoveries.
In the Barents Sea, Statoil's ownership interest in the Snøhvit field has increased, adding new proved reserves categorised as purchase of petroleum in place.
The 2011 reserves replacement ratio for the NCS was 1.03, including purchases and sales.
Proved reserves in Eurasia, excluding Norway
In this area we have proved reserves of 222 million boe related to six fields in the countries Azerbaijan, Russia, Ireland and the United Kingdom. Eurasia excluding Norway represents 4% of our total proved reserves, Azerbaijan being the main contributor with the Shah Deniz and Azeri-Chirag-Gunashli fields. All fields are producing, except for the Corrib field in Ireland, which is still under development and anticipated to start production in 2014 at the earliest. We do not carry proved reserves at year end 2011 related to our interest in the Jupiter field in the United Kingdom, as this is likely to permanently close down production in the near future.
An insignificant amount of reserves in Iran related to production entitlement following our previous activities in this country is included and no reserves related to Iraq are included.
Of the proved reserves in Eurasia, 168 million boe or 76% are proved developed reserves. 51% of the total proved reserves in this area are oil reserves and 49% are gas reserves.
Proved reserves in Africa
We recognise proved reserves of 390 million boe related to 21 fields and field developments in several West and North African countries; Algeria, Angola, Libya and Nigeria. Angola is the major contributor to the proved reserves in this area, with 16 of the 21 fields.
All fields are in production in Algeria and Nigeria. Production from the Mabruq and Murzuq fields in Libya was stopped in February 2011 due to political unrest in the country, but has now resumed.
In Angola we have proved reserves in four blocks; Block 4, Block 15, Block 17 and Block 31, with production from all blocks except Block 31. Four discoveries in Block 17 , called the CLOV project, and two discoveries in Block 15, Clochas and Mavacola, are under development. In Block 31, all four discoveries in the PSVM project are under development.
Of the total proved reserves in Africa, 272 million boe or 70% are proved developed reserves. 80% of the total proved reserves in this area are oil reserves and 20% are gas reserves.
Proved reserves in the Americas
In North and South America, we have proved reserves equal to 650 million boe in a total of 19 fields and field development projects. This represents 12% of our total proved reserves. Fourteen of these fields are located in the United States (USA), four in Canada and two in South America. The most important new contribution to our reserves is the Bakken asset, from the acquisition of Brigham Exploration Company in late 2011, adding 122 million boe of proved reserves. These are primarily reserves in the Bakken and Three Fork tight oil plays in the Williston basin, located principally in the state of North Dakota in the USA.
In the USA, six out of ten fields in the Gulf of Mexico and the onshore tight reservoir assets Marcellus, Eagle Ford, Bakken and Three Forks are all in production. In the Gulf of Mexico, field development is ongoing at Caesar Tonga, Big Foot, Jack and St. Malo. The Big Foot development is carrying economic proved reserves for the first time from 2011. Further drilling in the Marcellus and Eagle Ford assets has increased the proved reserves in 2011, and these additions are expressed as extensions.
The Hibernia South Extension field off the coast of Canada was sanctioned and started production during 2011, and it is carrying proved reserves for the first time. In Canada, proved reserves are related both to offshore field developments and to the Leismer Demonstration Project in our oil sands leases in Alberta.
In 2010, we announced the sales of a 40% interest in the Peregrino field in Brazil and a 40% interest in the oil sands leases in Alberta, Canada. These sales have now been approved and the effect on the 2011 proved reserves statement is 66 million boe sale of reserves-in-place.