JSC КаzМunaiGas Exploration Production is pleased to announce the result of the verification of reserves at 31 December 2011 and 2012 in the Ozenmunaigas, Embamunaigas and Ural Oil and Gas (50% ownership) fields.
In summary, KMG EP will continue to use the reserves assessment made by Miller and Lents Ltd. (“M&L”) as of 31 December 2012 and the reserves assessment made by Gaffney, Cline & Associates (“GCA”) as of 31 December 2011 as final assessments. The estimation of the Company’s reserves at 31 December 2013, announced on 11 April 2014, is unaffected by this review.
As announced on 18 October 2013, given significant differences in KMG EP reserves estimations made by “M&L”and “GCA”, the Board of Directors of KMG EP resolved to work with a third party reserves consultant to provide an independent estimation of reserves for the years ended 31 December 2011 and 2012. DeGolyer and MacNaughton Corporation (“D&M”) was appointed to that role and the result of their work is set out below.
Reserves at 31 December 2011
The material differences in reserve assessments by D&M, compared to the assessments by GCA were as follows:
- 1Р reserves were 112.2 million tonnes (812.8 million barrels) which was 47% higher (or 35.9 million tonnes);
- 2Р reserves were 145.7 million tonnes (1.05 bn barrels) which was 35% lower (or 80.1 million tonnes); and
- 3Р reserves were estimated at 199.1 million tonnes (1.4 bn barrels) which was 25% lower (or 67.7 million tonnes).
The principal reasons for the discrepancies between the two estimates are:
- 1P: D&M’s estimation includes reserves up to the end of the cost-effective field life (2012 – 2063, 52 years) whereas GCA’s estimation is up to the end of the contract term (2012 – 2021, 10 years max); and
- 2P and 3P: the estimation made by D&M was based on mapped in-place reserves and on methods to improve development, whereas the estimation made by GCA was based on production trends based on historical data with increased production levels from Ozenmunaigas.
Reserves at 31 December 2012
The material differences in estimations identified by D&M, compared to the assessment by M&L, were as follows:
- 1Р reserves were 112.2 million tonnes (818.7 million barrels) which is 3.9% lower (or 4.5 million tonnes);
- 2Р reserves were 146.7 million tonnes (1.07 bn barrels) which is 0.8% lower (or 1.2 million tonnes); and
- 3Р reserves were 201.1 million tonnes (1.4 bn barrels) which is 9.6% higher (or 17.6 million tonnes).
D&M and M&L applied a similar approach to estimate reserves:
A decline trend was identified for each field horizon; and
Reserve volume was determined based on duration of productive life of a field.