Question for those in Oil & Gas industry (liquid% & r/p ratio)

Hi guys,

I'm doing a comp and i'm wondering how I can calculate the percent of the reserve liquids?

Is reserve liquids = proved reserve NGL? or is it NGL + gas / oil


Also did i calculate this R/P ratio correctly?

Proved Reserves = 100 MMBOE
Daily Production = 20,000 Boe/d

= 100,000,000 / ( 20,000 * 365 ) = 13.7 years

thanks in advance

 

It depends on how you are quantifying your gas reserves. If you are assuming total gross gas, then no, you do not include your NGL reserves. But if you are assuming a total gross SHRUNK gas, then yes, you can include your NGL reserves.

If you give somebody a reserves number that is made up of oil, gross pre-shrunk (pre ngl processing) gas and ngls...you would basically be inflating your total reserve number.

 

shrink is the term for the % of gas you lose through processing out NGLs from your gas. It can vary depending on reservoirs.

Example - you have 1 BCF of total gross gas. However, your NGL yield shrink is equivalent to 20%. Using this, you then have 0.8 BCF of gross gas and 0.2 BCF of NGLs. If you have a yield of 100,000 BBL of NGL per BCF, you then have 20,000 BBLS of NGL reserves.

 

PNGE is correct. In order to transport gas, you must first process your gas stream to fit pipeline specs (most gas is transported via pipe). Separating the liquids (and stripping out other impurities) will cause your gas stream to shrink, leaving you with (for ease of conversation) methane in one hand and NGL's in the other... Scientifically its a bit above my head but the actual shrinkage of the gas stream is a function of the heating content (BTU'S) of the hydrocarbons being processed.

Search GPM for another helpful measure of NGL content in gas stream.

 

The situation you described in the first question (large reserve base, declining/flat production) would indicate that the assets are mature. Production grows as more and more wells are drilled, but once a company's acreage has been drilled up and there are few/no wells left to drill, there will be a lot of PDP reserves and declining production. A younger asset base would be growing production as the acreage is drilled and proved reserves are added. Wells last as long as 40 years, so even if you have completely drilled up all of your acreage, you will still have production for years to come.

The only real way to tell how mature a company's asset base is is to look at how much acreage they have and how many drilling locations they have left. Sometimes this info is disclosed in earnings calls or presentations but a lot of the time it will be a judgement call.

 

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