Reserves Certifications
A reserves certification is an official document—signed and stamped by a third-party, licensed petroleum engineer or geologist—that discloses petroleum reserves, estimated future production profiles and cash flows. A consultant estimates petroleum reserves through a reserves evaluation process. Clients present independent reserves certifications to E&P companies, management, governments, including regulatory authorities, as well as to banks, law firms, courts, trustees, accountants and arbiters.
Uses for Independent Reserves Certifications
- Periodic regulatory filings, initial public offerings
- Submissions to government, ministerial agencies and national oil companies
- Declarations of commerciality
- Loan covenants, borrowing-base determinations and redeterminations
- Potential financial transactions, including acquisitions, divestitures and mergers
- Restructuring, bankruptcies, liquidations
- Estate and tax planning
- Legal filings, affidavits/exhibits, expert witness testimony
- Redeterminations and unitizations
Ryder Scott issues independent reserves certifications considered to be consistently reliable by the financial community at large, including commercial, investment, development and mezzanine banks as well as private investment groups. The Ryder Scott certification also serves as an essential resource in screening and due-diligence reviews of potential acquisitions, divestitures and mergers. For producers, the Ryder Scott independent certification helps mitigate risks in committing capital for acquisitions, exploration, field development, redevelopment, infrastructure and refinancing. Publicly listed oil and gas companies that file and disclose reserves with market regulators rely on Ryder Scott certifications for compliance to the rules.
The conclusions of a Ryder Scott certification are embodied in a “Green Book” reserves report considered to be a highly reliable measure of value. In a reserves certification, we estimate oil and gas in-place quantities and reserves, future production and income attributable to interests in the subject oil and gas fields. The certification is not limited to but may include resources and reserves definitions and pricing assumptions, tables of ranked properties and wells and summaries of gross and net reserves, income data, including discounted net present values, and initial basic data. Other information includes field and lease projections as well as tables on well data, reservoir data, reserves calculations and reserves and income data. In some cases, where needed, the evaluation includes geological descriptions with supporting maps.
The industry term, “certification,” can be misleading. The oil and gas industry offers no guarantees or warranties. Reserves certifications are best estimates and estimates by their nature, are uncertain. No evaluator, including the most highly skilled geologists and engineers, can eliminate technical uncertainty in estimates or risk in field development projects.