Summary
Equity redetermination is most commonly encountered where a straddling field
is developed as a discrete entity through a process of unitization. It is
enacted through evaluation procedures that prescribe the technical methodology
for requantifying different license shares, or tract participations, in a field
unit as more data become available. The formulation of these procedures usually
takes place at unitization--it is based on appraisal data--and, therefore, it
is guided by simplified perceptions of reservoir character. For this reason,
many such technical procedures have been found to be lacking when they are
applied later at the equity redetermination stage. These shortcomings can take
the form of ambiguous wording, misleading definitions, technically
inappropriate specifications, contradictory prescription, or simply a lack of
sufficient detail to render the intended process meaningful. They have impeded
the determination of revised tract participations by triggering interlicense
disagreements that might otherwise have been avoided.
With the objective of reducing this unhelpful impact, experience of
redetermination situations is used to illustrate the nature and consequences of
poorly constructed procedures for the recomputation of tract participations.
The analysis is then flipped to generate a framework of key elements of
technical procedures together with indications of how they are best
implemented. These matters form the basis for a high-level set of protocols for
a more efficient and effective redetermination of equity that would avoid the
previously encountered shortcomings. The protocols encompass the proper
incorporation of data character, a sound technical basis for redetermination, a
balance between under- and over-prescription, an auditable deterministic ethos,
and adherence to good international petroleum practice. They constitute
recommendations for a better approach to the compilation of fit-for-purpose
evaluation procedures within those unitization agreements that make provision
for a future redetermination of equity. The recommendations are equally
applicable to domestic and international unitizations. The principal benefit
lies in an enhanced efficiency of the equity-redetermination process, which
feeds through to a greater collective asset value.
© 2011. Society of Petroleum Engineers
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History
- Original manuscript received:
24 July 2011
- Meeting paper published:
21 September 2011
- Manuscript approved:
24 September 2011
- Published online:
12 October 2011
- Version of record:
14 November 2011
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