Forecasting Reserves Replacement Ratio RRR: A Method for Benchmarking the Ability of the Company to Mature Projects and Reduce Uncertainty
Abstract Reserves Replacement Ratio (RRR) has been used as a Key Performance Indicator(KPI) for monitoring the ability of IOCs toreplace their reserves through time.It provides valuable information about the expected long-term viability of the company and its ability to move forward with new projects.If this remains an important metric for investors and operators alike, it isworth understanding the key parameters behind this KPI. Howshould we realistically expect the RRR to behave in the futureWhat does it tell about the reserves and resources of the operator The objective of this document is to investigate how a widely underused KPI can be analyzed and forecasted based on previous reserves and business plan submissions. We suggest a methodto provide teams with relevant and realistic RRR, that canbe expected based on the company portfolio. This method was developed by reviewing the Reserves &Resources in hundreds of reservoirs for all projects,including No Further Activity (NFA) cases and all future developmentprojects. Based on the future profiles,the evaluation of the RRRwas forecasted for 10 years. The forecasts are being reviewed year on year to ensure that teams are provided with realistic KPIs based on hard data rather than biased expectations. TheRRR is computed using (i) the amount of reserves added during the year, divided by (ii) the production of the company during the same year. This paper will focus on the reserves changes from one year to another, considering that reserves addition (orreduction), comes from two main sources: