Proved reserves Definition & Meaning | Energy Term | CSIMarket
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Proved reserves

Energy Term

Proved reserves refer to the estimated amount of hydrocarbons that can be recovered from a known reservoir using current technology and industry practices. These reserves have a high degree of certainty, with a likelihood of at least 90% that they can be recovered under existing economic and operating conditions.

Proved reserves are a critical measure of the value of companies involved in the energy industry, as they provide an indication of the amount of oil and gas that can be extracted from existing fields. This information is used to make investment decisions, determine the value of assets, and forecast future production levels for exploration and development projects.

In general, proved reserves are broken down into two categories: oil reserves and gas reserves. Oil reserves are further divided into crude oil and natural gas liquids (NGLs), while gas reserves are categorized by the type of gas (conventional or unconventional).

Proved reserves are calculated using a combination of geological information, well data, and production history, among other factors. The techniques used to estimate reserves vary depending on the type of hydrocarbon, location, and size of the reservoir. The United States Securities and Exchange Commission (SEC) has established guidelines for how companies report their reserves, which helps to ensure consistency and accuracy across the industry.

Overall, proved reserves play a significant role in the energy industry, helping to guide investment decisions, inform resource planning, and improve supply and demand forecasts.


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