This paper discusses the relationship between the reserves management and corporate planning components of a company's business processes, and the techniques that can be implemented to facilitate better decision making and more accurate reporting.
Reserves and resources management and corporate planning are related in two major aspects:
Reserve volumes and replacement ratios are important key performance indicators (KPIs) for most corporations. As such, decisions regarding corporate planning should take the reserve volumes, as well as the resource volumes that may become reserves in the future, into consideration.
Once these corporate plans have been made, the reserves volumes (both current and projected) should reflect the impact of the corporate plan, for example, volume changes from acquisitions, divestitures, and exploration and development plans.
A changing reserves profile might have impacts on financial aspects of the business such as contracts, loans, and other accounting items. Using the reserves forecast in these calculations instead of the static, current reserves volumes would result in more accurate calculations and an improved planning process.
In order to model changes in reserves volumes over time, a stage gate type of process can be used. As certain events occur in the development plan, for example project approval, capital expenditure, or production start, this process would flag a predetermined change in the categorization of certain volumes. If the projected reserves volumes do not meet the corporate goals, a review of the corporate strategy may be needed.
Knowing the reserve and resource volume profile expected in the future is important for supporting better decision making today. This is especially true when considering volumes that, although they can not be reported as proved reserves today, may well be ready for reporting as proved reserves in the future. This is relevant whether or not a company is required to report its reserves to a regulatory body, for example, The Security Exchange Commission (SEC), as all stakeholders have an interest in understanding the status and certainty of a company’s resources.
Companies that employ robust planning techniques and integrate hydrocarbon maturation into their planning process should be able to clearly demonstrate their improved planning efficiency and are likely to deliver improved financial results.