Probable Reserves

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DEFINITION of 'Probable Reserves'

After an oil exploration firm conducts a seismic survey of a piece of land, it obtains the proven and probable reserves in that area. Probable reserves are those which have a 50% chance of being present. For example if an oil company believes that there is descent chance of a successful drilling operation, they would classify those reserves as "probable."

INVESTOPEDIA EXPLAINS 'Probable Reserves'

If a reserve is considered probable, only 50% of the expected recovery amount is factored into the total reserve. Oil companies are often valued based on a PP (proven+probable) reserve ratio basis. Probable reserves vary from possible reserves, which only have a 10% chance of full extraction.

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RELATED FAQS
  1. How does an oil and gas company measure and state their reserves?

    Oil and gas companies measure reserves using data collected from geologic and seismic surveys and with engineering studies ... Read Full Answer >>
  2. What is the difference between proven and probable reserves in the oil and gas sector?

    In the oil and gas sector, proven reserves have a reasonable certainty of being recovered, while probable reserves have a ... Read Full Answer >>
  3. How do the costs of oil sands producers compare to traditional drillers?

    The oil sands of Canada are some of the most expensive crude oil assets in the world to produce. Each asset type, such as ... Read Full Answer >>
  4. Do all oil companies received the quoted price of West Texas Intermediate for their ...

    The quoted, or spot, price of West Texas Intermediate, or WTI, crude oil is just one of several benchmark oil prices. The ... Read Full Answer >>
  5. How do the average costs compare for the different types of oil drilling rigs?

    Average costs vary widely between different types of oil rigs, starting at around $20 million and ranging as high as close ... Read Full Answer >>
  6. How long does it take an oil and gas producer to go from drilling to production?

    Depending on the depth of drilling required and the type of drilling method used, a standard oil well can commonly advance ... Read Full Answer >>
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