What is a Reserve Report?
A reserve report is filed by companies in the oil and gas industry. It estimates remaining quantities of oil and gas (reserves) expected to be recovered from existing properties.
How Does a Reserve Report Work?
The Securities Exchange Commission (SEC) mandates reserve reporting requirements for the industry.
Oil and gas companies report reserves in categories based on a minimum estimated percentage probability of eventual recovery and production, as follows: proved (90% probable), probable (50% probable), and possible (10% probable).
Proved reserves are required to be reported and reflect "reasonable certainty" of recovery. Proven reserves must be further categorized as developed (from existing wells) or undeveloped.
Why Does a Reserve Report Matter?
Since oil and gas are depleting assets (meaning they get used up), it's important for a company to accurately report the longevity and earnings sustainability of existing assets. A company with strong reserves relative to the industry bodes well for future earnings and vice versa.
Reserves are particularly important with royalty trusts because they cannot acquire additional properties and earnings will diminish as the oil and gas depletes.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
The world of investing is large, complex, and intimidating. But many of those convoluted formulas...
Read More →
Cars are supposed to give us freedom, but you really have to wonder sometimes when you add up the costs of owning one. Luckily, owning a car doesn't have to feel like an unnecessary indulgence --...
Read More →
Several years ago, the federal government rolled out legislation meant to keep Americans from stashing their cash overseas. In 2010, the...
Read More →
The image that a lot folks get in their heads when they hear the term "employee stock options"...
Read More →
It's a shame that more people don't invest in income-producing real estate, because it's one of the most powerful ways middle-class folks can generate...
Read More →
