Phillips Replaces 1,128% Of 2000 Production

Phillips Petroleum Co. reported last week that it replaced 1,128% of its 2000 worldwide oil and natural gas production at an average 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 can primarily be attributed to Phillips' Arco Alaska acquisition in April, as well as the booking of reserves for its Hamaca heavy oil field in Venezuela. Without the two items, Phillips said its 2000 reserve replacement would only be 152%.

The Alaskan purchase helped the company to increase its worldwide proved reserves to 5.02 billion Boe for 2000, more than double 1999's level of 2.23 billion Boe. Of that, Phillips upped its proved natural gas reserves from 6.4 Tcf in 1999 to 8.5 Tcf for 2000.

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

Through its acquisitions the company almost doubled its worldwide proved reserves in natural gas liquids (NGL). NGL reserves rose from 207 million bbl to 409 million bbl from 1999 to 2000.

"With the acquisition of our Alaskan assets, we doubled our reserves in a single stroke," said Dodd DeCamp, senior vice president of worldwide exploration. "Looking forward, we have committed 8% of Phillips' 2001 capital budget to worldwide exploration activities. We believe our drilling program for 2001 --- including promising plays in the Atlantic Margin and Kazakhstan, as well as additional exploration prospects in China's Bohai Bay --- can yield additional long-life reserves, supporting our strategy to build on our portfolio of legacy assets."

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

In the United States, Phillips replaced 1,442% of its reserves at 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 average production replacement equaled 376%, while preliminary FD costs averaged $3.24/Boe. Phillips said its three-year average production replacement equaled 529%, while FD costs averaged $2.94/Boe.

Alex Steis

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