Proven Reserves
Categories: Accounting
Every gas company’s favorite words: proven reserves. Reserves in general refer to some natural resource that’s yet to be extracted...oftentimes oil and natural gas. Proven reserves, when talking about oil and natural gas, are reserves the company is 90%+ sure they’ll be able to extract...90%+ sure it’s there, and that it’s a doable job given the technology, terrain, and all that jazz.
If reserves aren’t proven reserves, they’re probably “probable reserves.” In the oil biz, probable means 50% - 89%. Lower than 50% likelihood of extraction are “possible reserves.” Out of proven, probable, and possible, proven is the most surefire.
The more proven reserves a company has staked a claim on, the better they look to investors, and more stable they probably are (assuming that the guesstimates are accurate).
