uploads///CRC Q Proved Reserves

Why California Resources’ Proved Reserves Lowered in 2015

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Sep. 26 2016, Updated 8:05 a.m. ET

California Resources’ proved reserves

As of December 31, 2015, California Resources’ (CRC) proved reserves totaled ~644 MMboe (million barrels of oil equivalent), a decrease of ~124 MMboe from December 31, 2014. California Resources attributed the decrease in estimated proved reserves to depressed commodity prices. In 2015, CRC recorded negative price-related revisions of ~153 MMboe to its proved reserves.

Now, the majority (~70%) of California Resources’ proved reserves are located in the San Joaquin Basin in California.

As of December 31, 2015, ~75% of California Resources’ proved reserves are PD (proved developed) and ~25% are PUD (proved undeveloped). As of December 31, 2015, ~72% of California Resources’ proved reserves consisted of crude oil, ~19% of natural gas, and ~9% of natural gas liquids.

According to CRC’s 2015 annual report, the discounted value of its reserve base at the end of 2015 was ~$4 billion.

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California Resources’ reserve replacement ratio

California Resources’ reserve replacement ratio also fell significantly in 2015. California Resources’ reserve replacement ratio in 2015 was -114%. The reserve replacement ratio indicates the number of barrels of oil equivalent a company adds to its reserve base in relation to the amount of oil and gas it produces.

According to California Resources’ 2015 annual report, the changes from year-end 2014 estimated proved reserves to year-end 2015 estimated proved reserves included:

  • drilling additions and extensions of ~36 MMboe (attributed to CRC’s capital program)
  • positive performance revisions of ~45 MMboe
  • property acquisitions of ~6 MMboe. 

These additions were offset by yearly production of ~58 MMboe and net downward price revisions of ~153 MMboe.

Other upstream companies

As of December 31, 2015, other upstream companies like Denbury Resources (DNR), Pioneer Natural Resources (PXD), and Devon Energy (DVN) have proved reserves of ~289 MMboe, ~664 MMboe, and ~2,180 MMboe, respectively. The Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas–related equities from the S&P 500.

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