Reserves Replacement Down to 75%

Major oil companies burned through reserves in 2015 replacing only an average of 75% with new reserves. The Wall Street Journal analysis shows that reserve replacement for major oil companies was the lowest in over a decade. ExxonMobil replaced only 67% of production in 2015, a worrying statistic for investors. The valuation of oil companies stock is based heavily on booked oil and gas reserves. While the 2015 performance may impact long-term return for shareholders, it also reflects a change in policy. Companies used the reserves in 2015 to compensate for low oil prices. Company strategies are shifting from risky high-profit projects to “putting their dollars into the more secure prospect of boosting production from existing fields.”