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Reserves Certification

Rely on proven technical and commercial expertise to help your organization communicate corporate performance, increase stakeholder confidence, secure financing, and execute corporate strategy. As trusted advisors, Sproule understands how reserves and resource evaluations provide an essential piece of the equity narrative presented to the investment community. We are committed to providing insightful, accurate, and on-budget evaluations for clients across the world.

Our expertise helps clients reduce risk in regulatory reporting requirements and asset valuations; financing; acquisitions; portfolio strategy; exploration; field development; and infrastructure. IOCs, NOCs, Independents, financial stakeholders, and regulatory authorities recognize Sproule’s consultants as being among the most authoritative in the industry.

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Reserves Evaluation

Sproule applies globally recognized classification systems to estimate the commercially recoverable volumes of petroleum from known accumulations of oil and gas.

The reserves are the commercially recoverable portion of the petroleum accumulation(s) and are classified as proved, probable or possible based on the level of uncertainty within the estimates. Proved reserves are a conservative estimate of the ultimate recoverable oil and gas. This estimate is deemed to be 90 percent likely to be met or exceeded if using probabilistic methods or a high degree of certainty of recovery if using a deterministic approach. Probable and possible reserves are estimates that are higher in volume but are less likely to be met or exceeded.

Depending on the oil or gas field, Sproule’s evaluation team can include geologists, petroleum engineers, geophysicists, petrophysicists and economists. The evaluation process uses one or more of several techniques.

  • Analogy: comparing reservoirs with geologic or performance similarities (generally used in exploration and initial field development)
  • Volumetrics: usually used early in the life of the field
  • Production history and well performance (very useful once enough production data has been generated)
  • Mathematical modelling: including reservoir simulation and material balance methods (best used in a mature field that has generated ample data)

Sometimes the team uses a comprehensive range of geological and engineering data. In other cases, only well performance data are necessary.

Once Sproule has developed production forecasts and reserves estimates, we generate cash flow analyses under different price scenarios to help determine discounted net present values, rates of return on investment and commercial uncertainty.

Sproule provides reserves certification that discloses petroleum reserves, forecasted future production profiles and cash flows at the asset or company level. This is an official document authorized by licensed Sproule petroleum geoscientists or engineers, as an independent third-party.


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Reserves Audit

A Sproule reserves audit is an authoritative assessment of an existing reserves estimate.

It examines whether appropriate methods were used to conduct the evaluation and whether the estimate is credible. The audit reviews all technical and commercial aspects of a company’s reserves and resources. It examines field and well data, as well as the geological and reservoir engineering approaches used to estimate the reserves. It also tests the classification of the reserves and resources against specific definitions (for example: proved, probable and possible).

 

Resource Assessments

The unprecedented growth of resource plays across North America has created new demands on evaluation. Vast reservoirs stretching hundreds of kilometres cannot be assessed by reserves alone. Investors need a clear picture of the asset’s upside. Determining an asset’s real value – including reserves, contingent resources, and prospective resources – is critical. In resources assessments, Sproule starts by delineating the resource and assessing the total petroleum initially-in-place (PIIP) volumes. Then, we apply methods such as analogues, volumetrics, type curves, and material balance to determine recoverable volumes and recovery factors.

We also analyze commercial risk in bringing volumes to market – including factors such as recovery technologies; economics; regulatory, social, political and environmental issues; corporate commitment and timing of production and development; infrastructure; and access to markets.

This thorough analysis lets Sproule deliver risked and un-risked understandings of the opportunity.


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Competent Person’s Reports (CPRs)

A Competent Person’s Report is an independent technical report that delivers an impartial and credible appraisal of a company’s oil and gas assets to ensure investors are well-informed.

Many stock exchanges and regulators demand a CPR from a company that is preparing for a significant transaction such as a merger, takeover, large acquisition, or an initial public offering (IPO). The CPR’s effective date should be no more than six months before the major transaction.

Sproule is experienced in developing CPRs that comply not only with SEC and TSX requirements but also, with the demands of regulators in Hong Kong, Australia and other parts of the world.

Global Expertise

No matter where your asset is, Sproule can deliver an authoritative evaluation.

Sproule adheres to the regulatory requirements of stock exchanges in the US, Canada, Hong Kong, Australia, and other countries.

Globally, Sproule uses the Petroleum Resources Management System (SPE-PRMS) to guide our processes. The Society of Petroleum Engineers endorses this system; the World Petroleum Council; the American Association of Petroleum Geologists; the American Association of Petroleum Geophysicists; the Society of Petroleum Evaluation Engineers; and other professional engineering and geoscience organizations. In Canada, we rely on the Canadian Oil and Gas Evaluation Handbook (COGEH).

Global Expertise

No matter where your asset is, Sproule can deliver an authoritative evaluation.

Sproule adheres to the regulatory requirements of stock exchanges in the US, Canada, Hong Kong, Australia, and other countries.

Globally, Sproule uses the Petroleum Resources Management System (SPE-PRMS) to guide our processes. The Society of Petroleum Engineers endorses this system; the World Petroleum Council; the American Association of Petroleum Geologists; the American Association of Petroleum Geophysicists; the Society of Petroleum Evaluation Engineers; and other professional engineering and geoscience organizations. In Canada, we rely on the Canadian Oil and Gas Evaluation Handbook (COGEH).

Our experts have a deep understanding of industry standards. They are also regularly engaged in enhancing and redefining these standards through global organizations such as the Society of Petroleum Evaluation Engineers and the Society of Petroleum Engineers.

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Reserves Evaluation to Support your Business

Regulatory Reporting Requirements and Asset Valuation 
Reserves are a significant component of a company’s financial statement and can affect impairments. Publicly traded companies follow established rules and guidelines to protect investors for how companies are financially assessed, and report their assets and cash flow. Governments may also regulate reporting to support the development and modification of legislation and policies aimed at enhancing business confidence and securing investment.

Financing
Trustworthy reserves reports are crucial for attracting investment. Independent third-party reserves validation from a credible firm with a globally established track record mitigates risk for investors. This enhances trust and improves the likelihood of investment. Governments can attract foreign energy investment while protecting national interests, communities and the environment.

Reserves Evaluation to Support your Business

Regulatory Reporting Requirements and Asset Valuation 
Reserves are a significant component of a company’s financial statement and can affect impairments. Publicly traded companies follow established rules and guidelines to protect investors for how companies are financially assessed, and report their assets and cash flow. Governments may also regulate reporting to support the development and modification of legislation and policies aimed at enhancing business confidence and securing investment.

Financing
Trustworthy reserves reports are crucial for attracting investment. Independent third-party reserves validation from a credible firm with a globally established track record mitigates risk for investors. This enhances trust and improves the likelihood of investment. Governments can attract foreign energy investment while protecting national interests, communities and the environment.

Mergers and Acquisitions 
Sound valuations underpin strategic M&A decisions. Access to trustworthy information – competent and independent valuations – limits risk for the company and its stakeholders. Having a consistent benchmark to assess opportunities is critical for success and continued portfolio optimization.

Portfolio Strategy 
Maintaining consistent and fair reserves reporting practices helps E&P companies maintain stakeholder confidence and supports portfolio and corporate decisions. A focused and disciplined approach to project and portfolio management enhances performance and lays a strong foundation for long-term growth. Pipeline companies also rely on this information to determine whether new pipelines, extensions or expansions are needed and what the potential upside of an opportunity may mean in terms of supply and demand.

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Steven Golko, P.Eng.
Senior Vice President, Consulting Services

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