Probable Reserves


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."

BREAKING DOWN '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.

  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. Barrels Per Day - B/D

    A measure of oil output, represented by the number of barrels ...
  5. West Texas Intermediate - WTI

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

    A hypothetical date referring to the world's peak crude oil production, ...
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  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 >>
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    In the oil and gas sector, proven reserves have a reasonable certainty of being recovered, while probable reserves have a ... Read Full Answer >>
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