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TOT » Topics » Sensitivity to oil and gas prices

This excerpt taken from the TOT 20-F filed Apr 3, 2009.

Sensitivity to oil and gas prices

Changes in the year-end price results in non-proportionate inverse changes in proved reserves associated with production sharing and buyback agreements (which represent approximately 32% of TOTAL’s reserves as of December 31, 2008). Under such contracts, TOTAL is entitled to a portion of the production, the sale of which is meant to cover expenses incurred by the Group. As oil prices increase, fewer barrels are necessary to cover the same amount of expenses. Moreover, the number of barrels retrievable under these contracts may vary according to criteria such as cumulative production, the rate of return on investment or the income-cumulative expenses ratio. This decrease is partly offset by an extension of the duration over which fields can be produced economically. However, the increase in reserves due to extended field life resulting from higher prices is generally less than the decrease in reserves under production sharing or buyback agreements due to such higher prices. As a result, higher year-end prices lead to a decrease in TOTAL’s reserves.


 

The table below sets forth the amount of TOTAL’s worldwide proved reserves (including both developed and undeveloped) as of the dates indicated.

 

TOTAL’s proved reserves(a)(b)    Liquids (Mb)   Natural Gas (Bcf)   Total (Mboe)

December 31, 2006

    6,471   25,539   11,120

Change from December 31, 2005

    (1.8%)   3.2%   0.1%

December 31, 2007

    5,778   25,730   10,449

Change from December 31, 2006

    (10.7%)   0.7%   (6.0%)

December 31, 2008

    5,695   26,218   10,458

Change from December 31, 2007

    (1.4%)   1.9%   0%

 

(a) Includes TOTAL’s proportionate share of the proved reserves of equity affiliates and of two companies accounted for under the cost method. See “Supplemental oil and gas information (unaudited)”.
(b) Proved reserves as of December 31, 2008, were calculated based on a Brent crude price of $36.55/b, proved reserves as of December 31, 2007, were calculated based on a Brent crude price of $93.72/b and proved reserves as of December 31, 2006, were calculated based on a Brent crude price of $58.93/b, pursuant to Rule 4-10 of Regulation S-X.

 

This excerpt taken from the TOT 20-F filed Apr 2, 2008.

Sensitivity to oil and gas prices

An increase in the year-end price results in a non-proportionate decrease of proved reserves associated

with production sharing and buyback agreements (which represent approximately 30% of TOTAL’s reserves as of December 31, 2007). In accordance with such contracts, TOTAL is entitled to a portion of the production, the sale of which should cover expenses incurred by the Group. The higher the prices, the lower the number of barrels necessary to cover the same amount of expenses. Moreover, the number of barrels retrievable under these contracts may vary according to criteria such as combined-production, the investment-return rate or the return on combined-expenses ratio. This decrease is partly offset by an extension of the duration over which fields can be produced economically. However, the increase in reserves due to extensions is smaller than the decrease in reserves under production sharing or buyback agreements. For such reason, a higher year-end price generally imparts a decrease in TOTAL’s reserves.


 

The table below sets forth the amount of TOTAL’s worldwide proved reserves (including both developed and undeveloped) as of the dates indicated.

 

TOTAL’s proved reserves(a)(b)   Liquids (Mb)   Natural Gas (Bcf)   Total (Mboe)

December 31, 2005

   6,592   24,750   11,106

Change from December 31, 2004

   (5.9%)   8.6%   (0.4%)

December 31, 2006

   6,471   25,539   11,120

Change from December 31, 2005

   (1.8%)   3.2%   0.1%

December 31, 2007

   5,778   25,730   10,449

Change from December 31, 2006

   (10.7%)   0.7%   (6.0%)

 

(a) Includes TOTAL’s proportionate share of the proved reserves of equity affiliates and of two companies accounted for by the cost method. See “Supplemental Oil and Gas Information (Unaudited)”.
(b) Proved reserves as of December 31, 2007 are calculated based on a Brent crude price of $93.72./b, proved reserves as of December 31, 2006 are calculated based on a Brent crude price of $58.93/b and proved reserves as of December 31, 2005 are calculated based on a Brent crude price of $58.21/b, pursuant to Rule 4-10 of Regulation S-X.

 

EXCERPTS ON THIS PAGE:

20-F
Apr 3, 2009
20-F
Apr 2, 2008

RELATED TOPICS for TOT:

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