ARCO Achieves Outstanding Reserve Replacement Performance in 1997

Strategic Insights -

ARCO, a leading energy company, announced in February 1998 that it replaced 164% of its 1997 worldwide oil and gas production with new reserves, adding 600 million barrels of oil equivalent at an average cost of $4.45 per barrel. This impressive reserve replacement is a testament to the company's upstream businesses' outstanding performance, with all major oil and gas operations contributing to the total.

Notable reserve additions include 264 million barrels of oil equivalent to international reserves, primarily from the Shearwater gas condensate field in the United Kingdom North Sea. In the United States, Alaska contributed 152 million barrels of additional reserves, representing 100% replacement of its 1997 production. ARCO also added significant reserves in other regions, including the Gulf of Mexico, Gulf Coast, and Mid-Continent.

Key Takeaways:

  • ARCO replaced 164% of its 1997 worldwide oil and gas production with new reserves, adding 600 million barrels of oil equivalent at an average cost of $4.45 per barrel.
  • International reserves grew by 318%, driven by notable additions from the Shearwater gas condensate field in the United Kingdom North Sea, Tengiz oil field in Kazakhstan, and Ashtart oil field offshore Tunisia.
  • ARCO's major U.S. oil and gas operations met their growth goals, with an overall average reserve replacement of 119%, primarily driven by Alaska's 100% replacement of its 1997 production.
  • Exploration success, lower operating costs, enhanced oil recovery efforts, and reservoir management contributed to successful reserve replacement in Alaska.
  • Vastar Resources, Inc., in which ARCO holds an 82.2% interest, replaced 154% of its reserves, adding 113 million barrels of oil equivalent.
  • Finding, development, and acquisition costs totaled $2.68 billion in 1997, a 39% increase from $1.92 billion in 1996.

Statistics:

  • 164%: ARCO's reserve replacement ratio in 1997
  • 600 million barrels: Oil equivalent reserves added in 1997
  • $4.45: Average cost per barrel of added reserves
  • 318%: International reserve replacement ratio
  • 264 million barrels: Oil equivalent reserves added internationally
  • 152 million barrels: Reserve addition in Alaska
  • 100%: Reserve replacement ratio in Alaska
  • $2.68 billion: Finding, development, and acquisition costs in 1997
  • 39%: Increase in finding, development, and acquisition costs from 1996 to 1997
  • 4.1 billion barrels: Total reserves at year-end 1997
  • 3.9 billion barrels: Total reserves at year-end 1996

Sources:

  • ARCO, "ARCO Announces Reserve Replacement and Production Results for 1997" (February 5, 1998)
  • ARCO, "1997 Annual Report" (February 26, 1997)