Reserve estimates in this report are internally prepared. Refer to the section on Critical Accounting Estimates — Oil and Gas Accounting — Reserves Determination for a description of our reserves process. As described therein, we have at least 80% of our oil and gas reserve estimates either evaluated or audited annually by independent qualified reserves consultants. The nature and scope of the independent evaluations and audits is determined by agreement between us and the engineering firm. Independent assessments for other companies may, therefore, be different.
The following provides an overview of the nature and scope of the independent evaluations and audits that we have performed. An independent evaluation is a process whereby we request a third-party engineering firm to prepare an estimate of our reserves by assessing and interpreting all available data on a reservoir. An independent audit is a process whereby we request a third-party engineering firm to prepare an estimate of our reserves by reviewing our estimates, supporting working papers and other data as necessary. The primary difference is that an auditor reviews our work and estimate in preparing their estimate whereas an evaluator uses the reservoir data to prepare their estimate.
In each case, we request their estimate be prepared using standard geological and engineering methods generally accepted by the petroleum industry. Generally accepted methods for estimating reserves include volumetric calculations, material balance techniques, production and pressure decline curve analysis, analogy with similar reservoirs, and reservoir simulation. The method or combination of methods used is based on their professional judgement and experience. In preparing their estimates, they obtain information from us with respect to property interests, production from such properties, current costs of operations, expected future development and abandonment costs, year-end prices, agreements relating to current and future operations and sale of production, and various other information and data. They may rely on the information without independent verification. However, if in the course of their evaluation they question the validity or sufficiency of any information, we request that they not rely on such information until they satisfactorily resolve their questions or independently verify such information. We do not place any limitations on the work to be performed. Upon completion of their work, the independent evaluator or auditor issues an opinion as to whether our estimate of the proved reserves for that portfolio of properties is, in aggregate, reasonable relative to the criteria set forth in SEC Rule 4-10(a)(2) of Regulation S-X. These rules define proved reserves as the estimated quantities of oil and gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.
Our estimate may differ from the independent evaluators and auditors as they apply their professional judgement and experience, which may result in applying different estimating methods or interpreting data differently than us. We believe our estimate for a portfolio of properties is reasonable when it is, in aggregate, within 10% of the estimate of the independent evaluator or auditor.
We engaged DeGolyer and MacNaughton (D&M) to evaluate 100% of our reserves before royalties (100% after royalties) for the United Kingdom, Yemen Masila, Yemen Block 51 and Nigeria. A separate opinion was provided on each of these four areas. D&M provided an opinion on each of the areas that the proved reserves estimate prepared by us is, in aggregate, reasonable when compared to their estimate which was prepared in accordance with current SEC Rules.
We engaged McDaniel & Associates Consultants Ltd. (McDaniel) to evaluate 99% of our Canadian conventional, CBM and bitumen reserves before royalties (99% after royalties) and to audit 100% of our Syncrude mining reserves before royalties (100% after royalties). The properties were selected by management and reviewed with the Reserves Review Committee of the Board. All material properties were selected. McDaniel provided their opinions that the proved reserves estimates prepared by us are, in aggregate, reasonable when compared to their estimates which were prepared in accordance with current SEC Rules.
We engaged Ryder Scott Company (Ryder Scott) to evaluate 92% of our US Gulf of Mexico shelf and deep water reserves before royalties (92% after royalties). The properties were selected by management and reviewed with the Reserves Review Committee of the Board. All material properties were selected. Ryder Scott provided an opinion that the difference between their estimate and ours is within the range of reasonable differences and that the estimates have been prepared in accordance with current SEC Rules. In prior years, we engaged William M. Cobb & Associates Inc. to evaluate our deep water reserves. The Reserves Review Committee of the Board was satisfied that the change in evaluator was not the result of a dispute with management.
