Occidental Petroleum 2014 Annual Report Download - page 136

Occidental Petroleum Corporation
January 30, 2015
Page 4
Reserves Process Review Procedure
Certain technical personnel responsible for the preparation of Occidental’s proved reserves estimates presented the data,
methods and procedures used in 1) estimating the reserves volumes as of December 31, 2014; 2) documenting the changes in
reserves from prior estimates; 3) preparing the economic evaluations associated with the estimated December 31, 2014 reserves;
and 4) determining the reserves classifications for each of the subject properties reviewed. We consulted with these technical
personnel and had access to their workpapers and supporting data in the course of our review. Furthermore, if in the course of our
examination something came to our attention which brought into question the appropriateness of the methodologies employed, the
adequacy of the data relied upon or the documentation of the reserves estimation process, additional clarification was requested
from Occidental until we had satisfactorily resolved our questions relating thereto.
Methodology and Procedure Employed by Occidental for Estimating Reserves
The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the
quantities of recoverable oil and gas and the second determination results in the estimation of the uncertainty associated with those
estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part
210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain analytical
procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods; (2)
volumetric-based methods; and (3) analogy. These methods may be used singularly or in combination by the reserves evaluator in
the process of estimating the quantities of reserves. Reserves evaluators must select the method or combination of methods
which in their professional judgment is most appropriate given the nature and amount of reliable geoscience and engineering data
available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated and
the stage of development or producing maturity of the property.
The proved reserves for the properties that we reviewed were estimated by performance methods, analogy, reservoir
modeling or a combination of methods. Approximately 23 percent of the proved reserves attributable to producing wells or
reservoirs for the properties reviewed were estimated by performance methods using decline curve analysis and/or material
balance which utilized extrapolations of historical production and pressure data in those cases where such data were considered to
be definitive. The remaining 77 percent of the proved reserves attributable to the producing wells for the properties reviewed were
estimated by a combination of methods including type curves supported by analogs and reservoir modeling to 1) estimate those
reserves where there were inadequate historical performance data to establish a definitive producing trend and 2) estimate the
incremental reserves attributable to enhanced/improved oil recovery. The data used by Occidental in their analysis of the proved
reserves for the producing properties reviewed by us was considered sufficient for the purpose thereof.
Approximately 2 percent of the proved developed non-producing reserves were estimated by performance methods using
analogy to prior established decline trends. The remaining 98 percent of the proved developed non-producing reserves and all of
the proved undeveloped reserves were estimated by a combination of methods including volumetrics and type curves supported
by analogs and reservoir modeling as noted above. The data used by Occidental in their analysis of the non-producing and
undeveloped reserves for the properties reviewed by us was considered sufficient for the purpose thereof.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS