Big oil firms struggle to find new reserves

Big U.S. oil firms more than matched the oil and gas they pumped last year with new finds, while European rivals failed to do so, but the underlying performance of both reinforced fears the industry is short of attractive exploration opportunities.

U.S. oil firms mainly relied on acquisitions to achieve large reserves additions in 2005, and Europeans may have to follow their lead in future if they want to halt an erosion of their asset bases.

“Unless new exploration acreage comes up with impressive discoveries, we anticipate that companies will have to acquire conventional reserves … The (negative) exploration trend in the industry has not recovered enough during 2005,” Sandford Bernstein said in a research note.

Investment bank Lehman Brothers estimates that excluding acquisitions, the top U.S. and European oil and gas firms achieved a reserve replacement rate of only 82 percent.

Financial Express