Oil and Gas Producing Activities and Syncrude Operations (Unaudited)


The following oil and gas information is provided in accordance with the FASB Statement No. 69 Disclosures about Oil and Gas Producing Activities. It also includes information relating to our interest in Syncrude as it produces a crude oil product similar to our oil and gas activities even though these operations are considered mining activities under SEC regulations.

A. Reserve Quantity Information

Our net proved reserves and changes in those reserves for our conventional operations (excluding Syncrude) are disclosed below. The net proved reserves represent management’s best estimate of proved oil and gas reserves after royalties. Reserve estimates for each property are prepared internally each year, and at least 80% of the reserves (including Syncrude) have been assessed by independent qualified reserves consultants.

Estimates of crude oil and gas proved reserves are determined through analysis of geological and engineering data, and demonstrate reasonable certainty that they are recoverable from known reservoirs under economic and operating conditions that existed at year end. See Critical Accounting Estimates for a description of our oil and gas and mining reserves estimation process.

Enlarge
 Download

 

Total

Yemen1

Canada

United States

United Kingdom

Other Countries3

Conventional oil and bitumen are in mmbbls and natural gas is in bcf

Oil

Gas

Oil

Oil

Gas

Bitu-
men2

Oil

Gas

Oil

Gas

Oil

1

Under the terms of the Masila and the Block 51 production sharing contracts, production is divided into cost recovery oil and profit oil. Cost recovery oil provides for the recovery of all our costs and those of our partners. Remaining production is profit oil, which is shared between the partners and the Government of Yemen based on production rates, with the partners’ share ranging from 20% to 33%. The Government’s share of profit oil represents its royalty interest and an amount for income taxes payable in Yemen. Yemen’s net proved reserves have been determined using the economic interest method and include our share of future cost recovery and profit oil after the Government’s royalty interest, but before reserves relating to income taxes payable. Under this method, reported reserves will increase as oil prices decrease (and vice versa) as the barrels necessary to achieve cost recovery change with prevailing oil prices. Production includes volumes used for fuel.

2

Represents bitumen reserves from the insitu recovery of Canadian oil sands, rather than upgraded synthetic crude oil reserves to be sold.

3

Represents reserves in Nigeria and Colombia.

4

Proved oil and gas reserves are the estimated quantities of natural gas, crude oil, condensate and natural gas liquids that geological and engineering data demonstrate with reasonable certainty can be recovered in future years from known reservoirs under existing economic and operating conditions. Reserves are considered “proved” if they can be produced economically, as demonstrated by either actual production or conclusive formation test.

5

Proved developed oil and gas reserves are expected to be recovered through existing wells with existing equipment and operating methods.

Proved Developed and Undeveloped Reserves4

 

 

 

 

 

 

 

 

 

 

 

December 31, 2005

304

532

59

50

305

–

41

215

143

12

11

Extensions and Discoveries

52

89

1

1

54

–

2

26

23

9

25

Purchases of Reserves
in Place

–

1

–

–

1

–

–

–

–

–

–

Sales of Reserves
in Place

–

–

–

–

–

–

–

–

–

–

–

Revisions – Technical

2

(4)

(7)

(3)

(3)

–

(8)

(10)

19

9

1

Revisions – Economic

229

(12)

4

6

(10)

219

–

(2)

–

–

–

Production

(38)

(74)

(19)

(6)

(33)

–

(5)

(34)

(6)

(7)

(2)

December 31, 2006

549

532

38

48

314

219

30

195

179

23

35

Extensions and Discoveries

13

51

1

1

31

–

1

18

10

2

–

Purchases of Reserves
in Place

3

42

–

–

1

–

2

41

1

–

–

Sales of Reserves
in Place

–

(10)

–

–

–

–

–

(10)

–

–

–

Revisions – Technical

53

–

–

(1)

11

19

(4)

(19)

39

8

–

Revisions – Economic

–

(11)

(2)

4

(4)

(4)

(2)

(5)

4

(2)

–

Production

(57)

(72)

(14)

(5)

(35)

–

(6)

(31)

(30)

(6)

(2)

December 31, 2007

561

532

23

47

318

234

21

189

203

25

33

Extensions and Discoveries

26

39

1

1

34

19

–

5

5

–

–

Purchases of Reserves
in Place

–

–

–

–

–

–

–

–

–

–

–

Sales of Reserves
in Place

–

–

–

–

–

–

–

–

–

–

–

Revisions – Technical

20

40

6

(3)

54

–

2

(14)

17

–

(2)

Revisions – Economic

(3)

(21)

2

(19)

(16)

31

(3)

(5)

(16)

–

2

Production

(60)

(71)

(12)

(4)

(40)

(2)

(3)

(24)

(37)

(7)

(2)

December 31, 2008

544

519

20

22

350

282

17

151

172

18

31

 

 

 

 

 

 

 

 

 

 

 

 

Proved Developed Reserves5

 

 

 

 

 

 

 

 

 

 

 

December 31, 2006

286

460

33

44

287

40

28

161

131

12

10

December 31, 2007

281

423

22

44

293

40

17

114

151

16

7

December 31, 2008

244

464

19

22

329

52

12

124

133

11

6

Our net proved reserves and changes in those reserves for our Syncrude operations are disclosed below. Additional disclosures required by SEC Industry Guide 7 are in chapter Syncrude Mining Operations. The net proved reserves represent management’s best estimate of proved synthetic reserves after royalties.

Estimates of Syncrude’s synthetic crude oil reserves are based on detailed geological and engineering assessments of the bitumen volume in-place, the mining plan, historical extraction recovery and upgrading yield factors, installed plant operating capacity and operating approval limits. The in-place volume, depth and grade are established through extensive and closely spaced core drilling density of less than 500 metres. In accordance with the approved mining plan, there are an estimated 2 billion tons of economically extractable oil sands in the Mildred Lake North Mine, with an average bitumen grade of 10.3 weight percent. The Aurora North Mine contains an estimated 4.6 million tons of economically extractable oil sands at an average bitumen grade of 11.1 weight percent. Aurora South Lease 31 contains measured economically extractable oil sands of 3.8 billion tons at an average bitumen grade of 10.8 weight percent.

  Download

 

Synthetic Crude Oil

(millions of barrels)

Mildred Lake1

Aurora2

Total

1

Leases 17 and 22.

2

Leases 10, 12, 31 and 34.

December 31, 2005

47

217

264

Extensions and Discoveries

–

11

11

Revision – Economic

1

4

5

Production

(3)

(3)

(6)

December 31, 2006

45

229

274

Extensions and Discoveries

–

7

7

Revision – Economic

–

(7)

(7)

Production

(3)

(4)

(7)

December 31, 2007

42

225

267

Extensions and Discoveries

–

7

7

Revision – Economic

11

17

28

Production

(4)

(3)

(7)

December 31, 2008

49

246

295

B. Capitalized Costs (excluding Syncrude operations)

  Download

(Cdn$ millions)

Proved Properties

Unproved Properties

Accumulated DD&A

Capitalized Costs

December 31, 2008

 

 

 

 

  Yemen

2,808

–

(2,610)

198

  Canada

5,087

1,067

(2,179)

3,975

  United States

4,152

246

(2,702)

1,696

  United Kingdom

5,954

578

(2,159)

4,373

  Other Countries

509

45

(113)

441

  Total Capitalized Costs

18,510

1,936

(9,763)

10,683

December 31, 2007

 

 

 

 

  Yemen

2,178

–

(1,950)

228

  Canada

4,364

734

(1,990)

3,108

  United States

2,931

138

(1,765)

1,304

  United Kingdom

4,318

405

(908)

3,815

  Other Countries

105

158

(77)

186

  Total Capitalized Costs

13,896

1,435

(6,690)

8,641

December 31, 2006

 

 

 

 

  Yemen

2,404

–

(2,128)

276

  Canada

3,787

227

(1,467)

2,547

  United States

2,768

121

(1,445)

1,444

  United Kingdom

4,325

385

(432)

4,278

  Other Countries

99

150

(78)

171

  Total Capitalized Costs

13,383

883

(5,550)

8,716

C. Costs Incurred (excluding Syncrude operations)

  Download

 

 

Oil and Gas

(Cdn$ millions)

Total
Oil and Gas

Yemen

Canada

United
States

United Kingdom

Other

Year Ended
December 31, 2008

 

 

 

 

 

 

Property Acquisition Costs

 

 

 

 

 

 

Proved

22

–

22

–

–

–

Unproved

69

–

6

63

–

–

Exploration Costs

650

9

222

132

157

130

Development Costs

1,795

92

717

251

545

190

Asset Retirement Costs

188

–

25

153

10

–

Total Costs Incurred

2,724

101

992

599

712

320

Year Ended
December 31, 2007

 

 

 

 

 

 

Property Acquisition Costs

 

 

 

 

 

 

Proved

151

–

1

104

46

–

Unproved

59

–

34

24

1

–

Exploration Costs

637

15

93

311

128

90

Development Costs

1,817

124

675

414

551

53

Asset Retirement Costs

169

6

48

30

85

–

Total Costs Incurred

2,833

145

851

883

811

143

Year Ended
December 31, 2006

 

 

 

 

 

 

Property Acquisition Costs

 

 

 

 

 

 

Proved

13

–

12

–

1

–

Unproved

125

–

105

19

1

–

Exploration Costs

514

37

74

242

71

90

Development Costs

2,051

145

884

399

595

28

Asset Retirement Costs

69

4

5

4

56

–

Total Costs Incurred

2,772

186

1,080

664

724

118

D. Results of Operations for Producing Activities (excluding Syncrude operations)

  Download

 

 

Oil and Gas

(Cdn$ millions)

Total
Oil and Gas

Yemen

Canada

United
States

United Kingdom

Other Countries

Year Ended
December 31, 2008

 

 

 

 

 

 

Net Sales

6,186

1,093

656

665

3,580

192

Production Costs

715

176

182

94

253

10

Exploration Expense

402

5

79

109

86

123

Depreciation, Depletion, Amortization and Impairment

1,859

160

208

475

999

17

Other Expenses (Income)

75

(10)

29

37

6

13

 

3,135

762

158

(50)

2,236

29

Income Tax Provision (Recovery)

1,412

264

45

(19)

1,126

(4)

Results of Operations

1,723

498

113

(31)

1,110

33

Year Ended
December 31, 2007

 

 

 

 

 

 

Net Sales

4,576

1,086

441

616

2,285

148

Production Costs

668

171

175

102

212

8

Exploration Expense

326

5

27

134

69

91

Depreciation, Depletion, Amortization and Impairment

1,627

213

166

641

599

8

Other Expenses (Income)

100

(8)

66

38

(36)

40

 

1,855

705

7

(299)

1,441

1

Income Tax Provision (Recovery)

859

248

2

(103)

712

–

Results of Operations

996

457

5

(196)

729

1

Year Ended
December 31, 2006

 

 

 

 

 

 

Net Sales

3,032

1,328

459

629

477

139

Production Costs

491

151

146

106

80

8

Exploration Expense

362

4

26

214

46

72

Depreciation, Depletion, Amortization and Impairment

1,011

327

162

296

216

10

Other Expenses (Income)

71

15

106

(23)

(71)

44

 

1,097

831

19

36

206

5

Income Tax Provision

687

289

6

13

378

1

Results of Operations

410

542

13

23

(172)

4

E. Standardized Measure of Discounted Future Net Cash Flows and Changes Therein (excluding Syncrude operations)

The following disclosure is based on estimates of net proved reserves (excluding Syncrude) and the period during which they are expected to be produced. Future cash inflows are computed by applying year-end prices to our after royalty share of estimated annual future production from proved oil and gas reserves (excluding Syncrude operations). Future development and production costs to be incurred in producing and further developing the proved reserves are based on year-end cost indicators. Future income taxes are computed by applying year-end statutory tax rates. These rates reflect allowable deductions and tax credits, and are applied to the estimated pre-tax future net cash flows.

Discounted future net cash flows are calculated using 10% mid-period discount factors. The calculations assume the continuation of existing economic, operating and contractual conditions. However, such arbitrary assumptions have not proved to be the case in the past. Other assumptions could give rise to substantially different results.

We believe this information does not in any way reflect the current economic value of our oil and gas producing properties or the present value of their estimated future cash flows as:

  • no economic value is attributed to probable and possible reserves;
  • use of a 10% discount rate is arbitrary; and
  • prices change constantly from year-end levels.
  Download

(Cdn$ millions)

Total

Yemen

Canada

United
States

United Kingdom

Other Countries

December 31, 2008

 

 

 

 

 

 

Future Cash Inflows

25,305

904

12,260

1,809

8,753

1,579

Future Production Costs

10,847

424

6,619

765

2,616

423

Future Development Costs

3,008

51

1,488

33

564

872

Future Dismantlement and Site Restoration Costs, Net

1,421

20

332

446

558

65

Future Income Tax

2,653

141

–

–

2,467

45

Future Net Cash Flows

7,376

268

3,821

565

2,548

174

10% Discount Factor

2,953

24

1,988

84

505

352

Standardized Measure

4,423

244

1,833

481

2,043

(178)

 

 

 

 

 

 

 

December 31, 2007

 

 

 

 

 

 

Future Cash Inflows

43,888

1,952

17,365

3,207

17,977

3,387

Future Production Costs

11,988

468

7,229

539

3,347

405

Future Development Costs

3,229

22

957

328

778

1,144

Future Dismantlement and Site Restoration Costs, Net

1,143

16

273

197

595

62

Future Income Tax

8,793

452

1,135

437

6,589

180

Future Net Cash Flows

18,735

994

7,771

1,706

6,668

1,596

10% Discount Factor

7,606

111

4,236

441

1,561

1,257

Standardized Measure

11,129

883

3,535

1,265

5,107

339

 

 

 

 

 

 

 

December 31, 2006

 

 

 

 

 

 

Future Cash Inflows

32,247

2,330

12,678

3,151

11,437

2,651

Future Production Costs

9,523

606

5,615

791

2,236

275

Future Development Costs

3,190

115

1,156

332

891

696

Future Dismantlement and Site Restoration Costs, Net

1,006

11

289

197

471

38

Future Income Tax

5,204

489

753

450

3,308

204

Future Net Cash Flows

13,324

1,109

4,865

1,381

4,531

1,438

10% Discount Factor

4,951

106

2,484

321

970

1,070

Standardized Measure

8,373

1,003

2,381

1,060

3,561

368

Changes in the Standardized Measure of Discounted Future Net Cash Flows

The following are the principal sources of change in the standardized measure of discounted future net cash flows:

  Download

(Cdn$ millions)

2008

2007

2006

Beginning of Year

11,129

8,373

8,042

Sales and Transfers of Oil and Gas Produced,
Net of Production Costs

(4,387)

(3,010)

(2,291)

Net Changes in Prices and Production Costs Related to Future Production

(9,756)

3,385

(1,065)

Extensions, Discoveries and Improved Recovery, Less Related Costs

376

758

695

Changes in Estimated Future Development and Dismantlement Costs

(676)

(443)

(692)

Previous Estimated Future Development and Dismantlement Costs Incurred During the Period

1,343

1,102

1,048

Revisions of Previous Quantity Estimates

615

2,189

1,936

Accretion of Discount

1,730

1,191

1,117

Purchases of Reserves in Place

–

272

2

Sales of Reserves in Place

–

(49)

(2)

Net Change in Income Taxes

4,049

(2,639)

(417)

End of Year

4,423

11,129

8,373

Imprint  |  Privacy and Legal

Services

Chart Generator

Create your own PDF