Supplementary Data
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149
We are currently in the process of finalizing the initial accounting for this transaction and provisional fair value measurementsConocoPhillips
will be made in the first quarter of 2021.We mayadjust the measurements in subsequent periods,up to one year from the acquisition date as we identifyadditional information to complete the necessaryanalysis.2021 10-K
Oil and Gas Operations
(Unaudited)
In accordance with FASB
ASC Topic
932, “Extractive Activities—Oil and Gas,”
and regulations of the SEC,
we are
making certain supplemental disclosures
about our oil and gas exploration and
production
production operations.
These disclosures include information about
our
our consolidated oil and gas activities and our proportionate
share
ofof our equity affiliates’ oil and gas
activities in our operating
segments.
As a result, amounts reported as
equityequity affiliates in Oil and Gas Operations
may differ from
those shown in the
individual segment disclosures
reportedreported elsewhere in this report.
Our disclosures by geographic
area include the
U.S., Canada, Europe, Asia
Pacific/MiddlePacific/Middle East (inclusive of equity affiliates)
,
and Africa.
As required by current authoritative
guidelines,
guidelines, the estimated future date
when an asset will be permanently
shutshut down for economic reasons is based on
historical
historical 12-month
first-of-month average
prices and current
estimated date when production
will
will end affects the amount of estimated
reserves.
Therefore, as
prices and cost
levels change from year to year,
the estimate of proved
reserves
reserves also changes.
Generally,
our
proved reserves
decrease as prices decline and increase
as prices rise.
Our proved reserves include estimated
quantities
quantities related to PSCs, which are
reported under the “economic
interest” method, as well as variable-royalty
regimes,
regimes, and are subject to fluctuations
in commodity
prices,
recoverable operating
expenses and capital
costs.
If costs remain stable, reserve quantities
attributable to
recovery of costs will change inversely
to changes
in commodity prices.
For example, if prices increase, then
ourour applicable reserve quantities would decline.
At December 31,
2020,2021, approximately
64 percent of our total
provedproved reserves were under PSCs, located
in our
Asia Pacific/Middle East geographic
reporting
reporting area, and
85 percent of our
total proved reserves
were under
a variable-royalty
a variable-royalty regime, located in our Canada
geographic
geographicreporting area.
Reserves Governance
The recording and reporting of proved
reserves
reserves are governed by criteria
established by regulations
of the SEC
andand FASB.
Proved reserves are those
quantities of oil
and gas, which, by analysis
of geoscience and
engineering data,
can be estimated with reasonable
certainty
certainty to be economically producible—from
a
a given date
forward,fromforward, from known reservoirs, and under existing
economic conditions, operating methods,
and government
regulations—priorregulations—prior to the time at which contracts
providing
providing the right to operate expire, unless
evidence
indicates renewal is
reasonably certain, regardless
of whether deterministic or probabilistic
methods are used
project to extract the hydrocarbons
must
must have commenced or the operator
must be
reasonably certain it will
commence the project
within a reasonable time.
Proved reserves are further classified
as either
developed or undeveloped.
Proved developed reserves are
provedproved reserves that can be expected to
be recovered
through existing
through existing wells with existing equipment
and
operatingoperating methods, or in which the cost of the required
equipment
equipment is relatively minor compared
with the cost
of a new well,
and through installed extraction
equipment and infrastructure operational
at the time of the
reserves estimate if
the extraction is by means not
involving
involving a well.
Proved undeveloped reserves are
proved
recovered from new
wells
wells on undrilled acreage, or from existing
wells
wells where a
relatively major expenditure
is
required for recompletion.
Reserves
Reserves on undrilled acreage are limited
to those
to thosedirectly offsetting development
spacing areas that
are reasonably
are reasonably certain of production when drilled,
unless evidence provided
unlessevidence provided by reliable
technologies exists
that establishes
that establishes reasonable certainty of economic
