Novatek announced that independent petroleum engineers, DeGolyer and MacNaughton (D&M), have completed their comprehensive reserve appraisals of the Company’s oil and gas reserves as of December 31, 2008. The Company added approximately 504 million barrels of oil equivalent (boe) of proved reserves under SEC1 standards, inclusive of 2008 production, and produced approximately 219 million boe2 during the year.
Estimated total proved reserves (according to SEC standards) as of December 31, 2008 increased to 4,963 million boe from 4,678 million boe as of year-end 2007. Total proved reserves of natural gas increased from 653 billion cubic meters (bcm) in 2007 to 690 bcm in 2008, an increase of 67 bcm, inclusive of 2008 production. The growth in proved reserves was mainly attributable to the drilling of new horizontal wells at the Yurkharovskoye and Sterkhovoye fields combined with discoveries of the new deposits at the Yurkharovskoye and Khancheyskoye fields.
In 2008, on a barrel of oil equivalent basis, Novatek replaced 230 percent of its production volumes from the appraised fields under the SEC standards, and at year-end 2008, the Company's reserve to production ratio (or R/P ratio) remained at 23 years. The Company's reserve replacement rate for natural gas was 220 percent while maintaining an R/P ratio of approximately 23 years.
Under the Petroleum Resources Management System (PRMS3) reserve reporting methodology, the Company's proved reserves increased by 474 million boe, inclusive of 2008 production, and totaled 5,354 million boe while proved plus probable reserves totaled 7,498 million boe as of December 31, 2008. The Company's 2008 total net proved plus probable reserves declined slightly, as compared to 2007, due to a decrease in probable natural gas reserves.
OAO Novatek is Russia's largest independent gas producer and the second-largest natural gas producer in Russia.
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