ElM, I don't think it's Bre-X level fraud. It's more like accounting massaging to make the figures look better. Worldcom put expenses in the capital column, erring on the side of one way of calculating results. Reservoir management and measurement isn't an exact science.
A reservoir might seem to have reserves of a certain capacity at expected flow rates and a few years later things might be going better or worse than expected. If a company wanted to make their reserves appear bigger than they probably are, it's a matter of slipping the significant figures one way or the other.
A 20% variation seems quite possible to massage out of the numbers.
Say BP wants to have a hugely strong balance sheet for a major acquisition, say to buy Shell, then financing would depend on expected future cash flows which would be a function of reservoir stocks.
In oil field joint venture negotiations or in other dealings, massaging reservoir capacity up would be in one party or another's interests.
At current oil prices, coal, gas, noocular, wind, photovoltaics, heavy crudes, insulation and other conservation measures, biomass and other tricks of the trade are reducing oil's share of the energy industry. At $40 a barrel, competition would really kick in.
Mqurice |
