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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Cogito Ergo Sum who wrote (15515)12/5/2002 2:54:07 PM
From: Sharp_End_Of_Drill  Read Replies (3) of 206182
 
Kastel,

>>>Very good point. Growing reserves / depletion will bear closer watching going forward. Thanks for that reminder<<<

I think what tommy is saying is really the opposite. The trusts are taking over fields from oil companies and just producing them, rather than exploring for more fields or boosting the production of existing fields by things like infill drilling or enhanced production projects. If that's the case, then reserves will be decreasing.

Depletion would also decrease in that situation. The highest depletion is always on the newests wells, they rapidly blow down at the start of their lives. The curve has a very high slope in the beginning and then flattens towards the end, but the economics would shut the well down long before the curve really flattened out. Lower exploration drilling and fewer new wells would lower depletion rates.

I think the net effect of what he is saying is the same though, with the present course we will have lower production going forward which is bullish.

Sharp
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