Proven Reserves

AAA

DEFINITION of 'Proven Reserves'

After an oil exploration firm conducts a seismic survey on a piece of land, it obtains the proven and probable reserves in that area. Proven reserves are those which have an over 90% chance of being present. For example if a oil company believes that there is good chance of a successful drilling operation, they would classify those reserves as "proven."

INVESTOPEDIA EXPLAINS 'Proven Reserves'

If a reserve is considered to be proven, this does not guarantee a successful operation. After the total reserves of a piece of land are determined, the oil company makes a decision whether or not to pursue drilling. The initial seismic test is considered a sunk cost.


Total Reserves = Proven + Probable (unproven)


RELATED TERMS
  1. 3P

    The total amount of reserves that a company estimates having ...
  2. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
  3. Hubbert Curve

    A statistical theory of oil production that states that the rate ...
  4. Probable Reserves

    After an oil exploration firm conducts a seismic survey of a ...
  5. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  6. Barrels Per Day - B/D

    A measure of oil output, represented by the number of barrels ...
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 are commodity spot prices different than futures prices?

    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>
  4. How do commodity spot prices indicate future price movements?

    Commodity spot prices indicate future price movements because commodity futures prices are calculated using spot prices. ... Read Full Answer >>
  5. Where did market to market (MTM) accounting come from?

    Mark to market accounting has been around in concept since the stock market began; however, it was not officially part of ... Read Full Answer >>
  6. Why is market to market (MTM) accounting considered controversial?

    Mark to market accounting has been an integral component of generally accepted accounting principles (GAAP) in the United ... Read Full Answer >>
Related Articles
  1. Home & Auto

    The Getty Oil Takeover Fiasco

    It was the largest takeover in history and one of the most dramatic. Learn all about the fate of Getty Oil.
  2. Forex Strategies

    Canada's Commodity Currency: Oil And The Loonie

    When the price of oil goes up, don't worry about how much gas is going to cost - get even by making a play on the Canadian dollar.
  3. Retirement

    Money Market Mayhem: The Reserve Fund Meltdown

    This event serves as a stark reminder to investors about understanding their portfolios.
  4. Budgeting

    Understanding Oil Industry Terminology

    The drillers are just one aspect of the oil & gas industry, and by knowing some details of their role, you'll be better suited to make investment decisions.
  5. Mutual Funds & ETFs

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  6. Budgeting

    The Adverse Effects of Cheap Gas

    While low gas prices are welcomed, smart budgeters must anticipate future price hikes and consider the impact of low gas prices on investments and taxes.
  7. Chart Advisor

    3 Ways To Trade The Bounce In Coal

    News from the Supreme Court has caused active traders to turn their attention to the coal markets. We'll take a look at how to trade the bounce.
  8. Investing Basics

    What Does Spot Price Mean?

    Spot price is the current price at which a security may be bought or sold.
  9. Investing Basics

    What Does a Clearing House Do?

    A clearing house is a third-party agency or separate entity that acts as a go-between for buyers and sellers in financial markets.
  10. Savings

    Do Oil Prices Affect The Auto Industry?

    Based on an understanding of complementary and substitute goods, the American auto industry is exhibiting expected effects from the recent plunge in the price of oil.

You May Also Like

Hot Definitions
  1. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  2. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  3. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  4. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  5. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  6. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!