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. Sweet Crude

    A type of oil that meets certain content requirements, including ...
RELATED FAQS
  1. How can an investor make money from a decline in the electronics sector?

    Speculation methods, such as short selling, futures contracts and put options, offer investors a way to make money from a ... Read Full Answer >>
  2. If oil producers run out of room to store oil, will the price of gasoline plummet?

    The price of gasoline would plummet if oil producers run out of room to store oil. However, running out of room to store ... Read Full Answer >>
  3. How can an investor profit from a decline in the aerospace sector?

    Several forms of speculation enable investors to profit from a decline in the aerospace sector. Short selling aerospace stock ... Read Full Answer >>
  4. How can traders use contango to take advantage of the storage shortage for crude ...

    Traders with access to physical oil and storage can make substantial profits in a contango market. Other traders may seek ... Read Full Answer >>
  5. How can I profit from a decline in the drugs sector?

    Profit from a decline in the drugs sector by short selling or by purchasing futures contracts or put options. Investors use ... Read Full Answer >>
  6. What other precious metals are there beyond gold and silver?

    Besides gold and silver, the other precious metals are platinum, palladium, ruthenium, rhodium, osmium, rhenium, germanium, ... 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. Investing Basics

    Explaining the Spot Rate

    The spot rate is the immediate purchase price posted on exchanges for purchasing commodities, currency and securities.
  7. Personal Finance

    Weak Oil, Sanctions' Bite, Mean Misery for Russia

    Low oil prices, coupled with crippling sanctions, will mean Russia will suffer declining growth and vicious inflation for at least the next two years.
  8. Forex Education

    For Now, a Future Without Putin Seems Unlikely

    Putin's actions have alienated the West and led to harsh economic sanctions against his country, but his favorability remains high at home.
  9. Entrepreneurship

    How To Profit From Solar Energy

    Once regarded as too expensive and inefficient, solar energy is now becoming a more viable option for consumers and businesses alike.
  10. Chart Advisor

    Bullish Traders Are Turning To Rare Earth Metals

    Companies that explore and or process rare metals are of specific interest to traders because of strong moves in a couple of the sector’s key players.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center