Exxon Mobil Corporation (NYSE:XOM) reported that it had added 1.5 billion barrels of oil equivalent to its proved reserves in 2008. That amount is equal to 103% of the company’s production for the year, and 110% of production excluding asset sales.
Nearly all the addition, 1.1 billion barrels, comes from an oil sands project in Canada. Exxon’s ten-year average replacement ratio is 110%, and its total oil and natural gas proved reserves base stands at 22.8 billion barrels of oil equivalent. Including probable reserves and “other discovered resources that are expected to be ultimately recovered,” Exxon added a total of 2.2 billion barrels to its resource base in 2008.
The fact that half the increase comes from the oil sands should prove cautionary. At current crude prices, a barrel of oil from the oil sands is only barely profitable. Unless crude prices rise to the $70-$80/barrel range, counting on the oil sands is definitely chancy.
One final point: Exxon’s reserves are the largest of any privately held company, but they pale in comparison to the reserves of the largest national oil companies. And there is no longer any realistic chance that Exxon or any other private company will get a share of those reserves.
Exxon shares are trading down about 3% in early trading this morning.
Paul Ausick
February 17, 2009
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