NVDA gained a massive 197% since our AI first added it in November - is it time to sell? 🤔Read more

UPDATE 1-ConocoPhillips revises down over 1 bln bbls of oil sands reserves

Published 2017-02-21, 06:22 p/m
© Reuters.  UPDATE 1-ConocoPhillips revises down over 1 bln bbls of oil sands reserves
TTEF
-
XOM
-
COP
-
FE
-
CL
-
CVE
-
IMO
-

(Adds comment from analyst, Cenovus)

By Nia Williams

CALGARY, Alberta, Feb 21 (Reuters) - ConocoPhillips (NYSE:COP) Corp COP.N has revised down over a billion barrels of oil sands reserves because of low global crude prices, a company filing showed on Tuesday, the latest sign that some of Canada's vast hydrocarbon potential may be left untapped.

The U.S. oil major said developed and undeveloped reserves of bitumen - the heavy viscous oil found in northern Alberta's remote oil sands - totalled 1.2 billion barrels at the end of 2016, down from 2.4 billion barrels at the end of 2015.

"Revisions, primarily in the oil sands, decreased proved undeveloped reserves due to lower prices," the filing said.

The numbers in the U.S. Securities Exchange Commission (SEC)document provide a detailed breakdown of the global reserves cut Conoco announced in quarterly results in early February, when it debooked 1.75 billion barrels of oil equivalent of reserves. Hirshberg, Conoco's executive vice president for production, drilling and projects, told investors on the quarterly call the company expects to rebook the reserves if current prices hold.

Likewise Martin King, an analyst with GMP FirstEnergy (NYSE:FE) in Calgary, said the debooking likely had more to do with SEC rules requiring companies to evaluate economic reserves at year-end.

But the fact that the oil sands make up 70 percent of the reduction underlines how much of Canada's resources are uneconomic in a weaker oil environment.

"They (the oil sands) are at the upper end of the cost curve," said Judith Dwarkin, chief economist at RS Energy Group in Calgary. "It may or may not speak to future similar events from other producers."

Calgary-based Imperial Oil IMO.TO , which is majority-owned by Exxon Mobil (NYSE:XOM) XOM.N debooked 2.6 billion barrels of reserves at its Kearl and Cold Lake oil sands projects in January.

ConocoPhillips made the reserve reductions at the Surmont, Foster Creek, Christina Lake and Narrow Lakes projects.

Surmont is operated by ConocoPhillips and a joint venture with Total E&P Canada, a unit of Total SA TOTF.PA , and the other three are joint ventures run by Cenovus Energy CVE.TO .

Total also debooked undeveloped reserves at Surmont according to SEC rules but Cenovus, which reports to Canadian securities authorities, reported its total proved reserves including non-oil sands operations rising 5 percent in 2016 versus a year earlier.

Cenovus did not immediately reply to requests for comment.

The oil sands have some of the highest full-cycle breakeven costs in the world, with new thermal projects needing U.S. crude prices around $60 a barrel.

The benchmark West Texas Intermediate crude futures contract CLc1 settled at $54.33 a barrel on Tuesday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.