Probable Reserves

AAA

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.

RELATED TERMS
  1. Possible Reserves

    An estimate of the amount of oil or natural gas reserves that ...
  2. Proven Reserves

    After an oil exploration firm conducts a seismic survey on a ...
  3. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  4. West Texas Intermediate - WTI

    Light, sweet crude oil commonly referred to as "oil" in the Western ...
  5. Peak Oil

    A hypothetical date referring to the world's peak crude oil production, ...
  6. Barrels Per Day - B/D

    A measure of oil output, represented by the number of barrels ...
Related Articles
  1. Fundamental Analysis

    The Green Marketing Machine

    Don't let corporations greenwash their dirty laundry. Learn how to spot a phony.
  2. Investing Basics

    Adapt To A Bear Market

    Learn how your portfolio should evolve to suit bear market conditions.
  3. Home & Auto

    5 Investment Risks Created By Global Warming

    Climate-change deniers and believers alike would be wise to prepare for the worst.
  4. Economics

    Peak Oil: What To Do When The Wells Run Dry

    Find out how to invest and protect your investments in this slippery sector.
  5. Economics

    Trust In Utilities

    Even in times of economic turmoil, utilities can be a good investment.
  6. Forex Education

    Natural Gas Industry: An Investment Guide

    Investors looking into this industry are faced with a confusing amount of information. We explain the important concepts and terms.
  7. Options & Futures

    Peak Oil: Problems And Possibilities

    Learn a little more about the "non" part of this nonrenewable resource.
  8. Active Trading Fundamentals

    Where And How To Trade Energy Stocks

    Energy futures set a high bar to entry for individual traders and investors, redirecting exposure into sector equities and exchange-traded funds.
  9. Professionals

    Is it Safe to Invest in MLPs Again?

    The best bet right now for investors seeking to play a rebound in the price of oil may very well be ETFs that invest in energy MLPs.
  10. Options & Futures

    Forecast Of Oil Production by Country in 2015

    Supply is still ahead of demand and looks to stay ahead for most of 2015. Until production noticeably weakens, that situation is unlikely to change.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center