Phillips Petroleum Co. reported last week that it replaced1,128% of its 2000 worldwide oil and natural gas production at anaverage preliminary finding-and-development (FD) cost of $2.39/Boe.Subtracting acquisitions and sales, the company still replaced 515%of its 2000 worldwide production.

The reason for the discrepancy between the two percentages canprimarily be attributed to Phillips’ Arco Alaska acquisition inApril, as well as the booking of reserves for its Hamaca heavy oilfield in Venezuela. Without the two items, Phillips said its 2000reserve replacement would only be 152%.

The Alaskan purchase helped the company to increase itsworldwide proved reserves to 5.02 billion Boe for 2000, more thandouble 1999’s level of 2.23 billion Boe. Of that, Phillips uppedits proved natural gas reserves from 6.4 Tcf in 1999 to 8.5 Tcf for2000.

Phillips also produced 566 Bcf of natural gas worldwide in 2000,compared to 516 Bcf for 1999. The company reported Natural gascomprises 28% of the company’s worldwide proved reserves and 34% ofits U.S. proved reserves, which is a far cry from what the companyposted in 1999. In 1999, Phillips said gas comprised 48% of itsproved reserves worldwide and 70% of its U.S. reserves.

Through its acquisitions the company almost doubled itsworldwide proved reserves in natural gas liquids (NGL). NGLreserves rose from 207 million bbl to 409 million bbl from 1999 to2000.

“With the acquisition of our Alaskan assets, we doubled ourreserves in a single stroke,” said Dodd DeCamp, senior vicepresident of worldwide exploration. “Looking forward, we havecommitted 8% of Phillips’ 2001 capital budget to worldwideexploration activities. We believe our drilling program for 2001— including promising plays in the Atlantic Margin andKazakhstan, as well as additional exploration prospects in China’sBohai Bay — can yield additional long-life reserves, supportingour strategy to build on our portfolio of legacy assets.”

The company said its worldwide hydrocarbon production increasedin 2000 to 271.3 million BOE, up from 182 million BOE in 1999.Phillips also attributed the increase to the Alaskan acquisitionand new production from the Alpine field in Alaska.

In the United States, Phillips replaced 1,442% of its reservesat a preliminary average cost of $2.75/Boe. In the lower 48 states,the company replaced 186% of its production at an average cost of$3.36 per Boe, and replaced 137% excluding acquisitions.

From 1996 through 2000, the company’s five-year averageproduction replacement equaled 376%, while preliminary FD costsaveraged $3.24/Boe. Phillips said its three-year average productionreplacement equaled 529%, while FD costs averaged $2.94/Boe.

Alex Steis

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