The value of every oil company rests primarily on the number of barrels in a company’s proved reserves. Ideally, through exploration and acquisitions an oil company wants to replace the number of barrels it produced in a year with new barrels of proved reserves. Exxon Mobil Corp. (NYSE: XOM) has pulled off this trick for 18 consecutive years.
The world’s largest non-government oil company replaced 107% of its 2011 production by adding 1.8 billion oil-equivalent barrels to its proved reserves last year. The company’s total proved reserves amount to 24.9 billion oil-equivalent barrels. By definition, proved reserves are those that are economically recoverable with 90% certainty.
Here’s Exxon’s summary of its replacement totals:
Asset sales in 2011 reduced proved reserves by 141 million oil-equivalent barrels. Liquid additions totaled 1.4 billion oil-equivalent barrels for a 166 percent replacement ratio and gas additions totaled 0.4 billion oil-equivalent barrels for a 49 percent replacement ratio.
Exxon’s proved reserves are split nearly evenly, with 49% liquids and 51% natural gas.
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