Shell Petroleum Exploration and Production 1980 to 1997: Reserves Analysis and Key Financial Statistics in Money and in Real Terms

Abstract

An analysis of Shell's petroleum exploration activities over an eighteen year period is presented Key findings include;

- the cost of finding oil decreased by a factor of four over the period 1981 to 1997.

- revision to oil reserves have shown no trend

- improved recovery estimates of oil reserves have shown no trend

- well analysis shows that whilst in 1980 only one exploration well in four was successful, in 1997 more exploration wells were productive than dry. There is now only a few per cent chance that a development well will be dry compared with a 5 to 10 percent chance of a dry development well in the early 1980s.

- depreciation depletion and amortisation (DDA) changes on Shell's reserves have increased substantially in money and in real terms over the last eighteen years. DDA changes are now sometimes equal to capex whilst in 1980 they were only 30 per cent of capex.

- from 1982 to 1997, capex per b.o.e. reserves has increased by 60 per cent in real terms.

- for crude oil and NGLs, Shell has dropped the reserves to production (RIP) ratio from 13 years in the 1980s to 11 years since 1994.

- production costs for oil and gas have fallen from $11.0 per b.o.e. in 1981 to $2.9 per b.o.e.£. in 1997. whilst the net proceeds (selling price of crude oil and natural gas) have fallen from $48.6 b.o.e. in 1981 to $17.0 b.o.e. in 1997, net earnings (profits after tax and all expenses) have fallen from $7.1 b.o.e. in 1980 to $3.5 b.o.e. in 1997 both expressed in (1997) real US$ terms.