Reserves to Production Ratio

DEFINITION of 'Reserves to Production Ratio'

A ratio indicating the remaining lifespan of a natural resource. This ratio is expressed in terms of years, and is used in forecasting the future availability of a resource to determine project life, income, employment etc. While applicable to all natural resources, it is primarily used in the oil and gas industry.

RPR = amount of known resource
amount used per year

BREAKING DOWN 'Reserves to Production Ratio'

Usage of a resource per year can be calculated, or estimated, to quite an accurate number. However, reserve quantity of a resource can only be estimated. It is imperative for investors to take into account the possibility of new technology, new discoveries or misevaluation by involved parties.

RELATED TERMS
  1. Natural Capital

    A reference to the stock of natural resources, such as water ...
  2. Common Resource

    A resource, such as water or pasture, that provides users with ...
  3. Recoverable Reserves

    A term used in natural resource industries to describe the amount ...
  4. Renewable Resource

    A substance of economic value that can be replaced or replenished ...
  5. Energy Resources Conservation Board ...

    An agency of the government of Alberta responsible for the regulation ...
  6. Nonrenewable Resource

    A resource of economic value that cannot be readily replaced ...
Related Articles
  1. Mutual Funds & ETFs

    Natural Resources ETF: IGE or GNR?

    Explore a comparison between IGE and GNR, and learn about the differences between the two ETFs, and their top holdings and sector allocations.
  2. Stock Analysis

    Canadian Natural Resources - Light Oil Properties

    Canadian Natural Resources plans to develop a number of light oil opportunities across its portfolio in 2011.
  3. 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.
  4. Economics

    What is a Nonrenewable Resource?

    A nonrenewable resource is a natural resource that once consumed cannot be readily replaced.
  5. Technical Indicators

    Key Financial Ratios to Analyze Oil Companies

    Learn about key financial ratios investors will want to use when analyzing oil companies, and what these ratios say about the future prospects for companies.
  6. Stock Analysis

    MDU Resources Analyst Day Review

    MDU Resources Analyst Day
  7. Stock Analysis

    QEP Resources Makes Push Into Liquids

    QEP Resources has lined up a number of promising oil and liquids plays that will help the company transition away from natural gas.
  8. Stock Analysis

    EOG Resources Continues The Oil Quest

    EOG Resources continued its quest to move away from natural gas during the third quarter of 2010, as the company spent capital in oil and liquids plays in the United States.
  9. Economics

    Scarcity

    Scarcity is the basic economic problem that arises because people have unlimited wants, but resources are limited. Because of scarcity, various economic decisions must be made to allocate resources ...
  10. Trading Strategies

    Key Ratios For Analyzing Oil And Gas Stocks: Introduction

    Oil and gas exploration and production (E&P) companies are unique from a valuation standpoint. Because of this, investors need to focus on a different subset of ratios to analyze the growth ...
RELATED FAQS
  1. How does horizontal integration allow companies to share resources?

    Learn how horizontal integrations allows companies to share resources. Understand specific examples of horizontal integrations ... Read Answer >>
  2. How do I use ratios to perform a financial analysis?

    Learn which ratios are used in fundamental analysis. Find out how analysts measure company performance and financial health ... Read Answer >>
  3. What role does ratio analysis play in valuing a company?

    Learn about the role of ratio analysis in determining company value, including some of the most common ratios used by modern ... Read Answer >>
  4. What inputs are considered to be factors of production?

    Learn what the economic term "factors of production" means, what the four categories of factors of production are and what ... Read Answer >>
  5. Which consumer goods do Americans buy the most of?

    Explore the various factors that influence estimations of a tangible asset's useful life, as well as standard estimations ... Read Answer >>
  6. How does the risk of investing in the oil and gas sector compare to the broader market?

    Learn how the oil and gas sector has risk both with the broader market and the price of oil and gas, and understand how correlation ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center