Probable reserve Definition / Meaning
Probable reserves are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In the standardized classification system maintained by the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG), and the Society of Petroleum Evaluation Engineers (SPEE), probable reserves represent the second most certain category of recoverable hydrocarbons. They carry a 50% confidence level (P50) that the actual recovered volume will equal or exceed the estimate, provided that a well-defined development plan exists and the project is commercially viable. Probable reserves are an essential component of a company’s asset base because they indicate upside potential beyond proved reserves and are often used in financial disclosures, project financing, and corporate strategic planning.
Definition and Classification
Probable reserves are classified as ‘unproved’ and sit between proved reserves (90% confidence, P90) and possible reserves (10% confidence, P10). They are frequently referred to as ‘2P’ when summed with proved reserves (Proved + Probable = 2P). To be categorized as probable, a reservoir must have sufficient data to indicate that recovery is likely but not yet certain. Common scenarios that lead to probable classification include:
- Reserves in formations that appear productive based on well logs and core analysis but have not been fully delineated by drilling.
- Reserves behind pipe or behind casing in existing wells where additional completion or stimulation is planned but not yet performed.
- Reserves from improved recovery techniques (e.g., waterflood, gas injection) that have been successfully applied in analogous reservoirs but not yet implemented in the subject reservoir.
- Reserves in fault blocks or structural compartments that are interpreted to be connected to proved areas but lack direct pressure or production evidence.
Comparison with Proved and Possible Reserves
The following table summarizes the key differences among the three deterministic reserve categories:
| Category | Confidence Level | Typical Terminology | Recovery Likelihood |
|---|---|---|---|
| Proved (1P) | 90% (P90) | Proved developed / undeveloped | At least 90% chance of recovery |
| Probable (2P) | 50% (P50) | Probable | More likely than not (>50%) |
| Possible (3P) | 10% (P10) | Possible | Significant but less than 50% chance |
Note that ‘2P’ and ‘3P’ refer to cumulative totals (Proved+Probable and Proved+Probable+Possible, respectively).
Estimation Methods
Engineers use a variety of deterministic and probabilistic methods to estimate probable reserves. The most common approaches include:
- Volumetric Method: Using geologic maps, net pay thickness, porosity, water saturation, and formation volume factor to calculate oil or gas in place, then applying a recovery factor adjusted for uncertainty.
- Material Balance: Using pressure-production data to infer reservoir size and drive mechanisms, often requiring assumptions about aquifer support or gas cap expansion.
- Decline Curve Analysis: Extrapolating production trends from wells that have already demonstrated productivity, but with adjustments for future infill drilling or stimulation.
- Reservoir Simulation: Building dynamic models that match historical performance and forecast future recovery under various development scenarios; probable reserves are assigned when simulation runs indicate a high probability of achieving the forecast.
Economic and Regulatory Context
Probable reserves are not booked solely on technical grounds; they must also satisfy commercial criteria. The operator must demonstrate a reasonable expectation that the project will be developed and that the hydrocarbons will be produced and sold profitably. Regulatory bodies such as the U.S. Securities and Exchange Commission (SEC) have specific rules governing the disclosure of probable reserves in financial filings. Under SEC rules, companies may disclose probable reserves as supplementary information, but they cannot include them in the standardized measure of discounted future net cash flows. Internationally, the SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS) provides the most widely adopted guidelines.
Usage Example
Usage Example: In its annual reserve report, XYZ Oil Company reported 250 million barrels of proved reserves and an additional 80 million barrels of probable reserves, giving a total 2P (proved plus probable) of 330 million barrels. The probable portion included reserves from infill drilling locations and from a waterflood project that had been pilot-tested but not yet fully implemented.