EnCana, ConocoPhillips release positive reports on their 2004 reserves additions on Tuesday. During a year when several of their peers were forced to significantly revise downward their reserves estimates, ConocoPhillips said it posted a 65% reserve replacement ratio and EnCana’s proved gas reserves jumped 24%.

Smaller independent Magnum Hunter, which is being bought by Denver-based Cimarex, said its 2004 year-end total proved reserves of 1.01 Tcfe were up 20% over the 838.4 Bcfe reported a year earlier. Magnum Hunter added 248.6 Bcfe of total proved reserves during 2004 from all sources, which replaced 309% of its 80.4 Bcfe in production.

“Our company was again successful at ‘bucking the trend’ throughout our industry by growing its proved reserves over 20% to an important milestone of just over 1 Tcfe,” said Magnum Hunter CEO Gary C. Evans. “We were able to replace over 300% of our production and grew daily oil and gas production by 10% in 2004. More important, though, is how this success should continue to augment the growth profile of the new combined corporate structure of Cimarex Energy and Magnum Hunter when the merger of our two companies is completed this year” (see Daily GPI, Jan. 27).

ConocoPhillips announced preliminary net reserve additions in 2004 of 1.246 billion boe, including equity affiliates. The company’s reserve replacement ratio was 206%, based on 605 million boe of production, bringing its total reserve base to 8.5 billion boe, excluding 0.3 billion bbl associated with its Canadian Syncrude operations. Excluding sales and acquisitions, ConocoPhillips’ reserve replacement ratio was 65%.

“We are focused on replacing reserves at competitive finding and development cost,” said Bill Berry, executive vice president of ConocoPhillips’ exploration and production unit. “In 2004, we advanced several key projects that positively impacted the company’s reserves, including projects in the Caspian Sea, North Sea, Alaska and Indonesia.”

Due to unusually low year-end Canadian bitumen values, the company recorded a negative revision of proved crude oil reserves for its Surmont project. “We continue to believe Surmont is an economic project that adds value to our integrated asset base, and we are proceeding with development,” Berry said. EnCana Corp. said its proved gas reserves increased 24% to 10.5 Tcf and the company’s daily gas sales increased 17% to 3 Bcf/d. Organic gas production replacement was 204%. When acquisitions and divestitures are included, EnCana’s gas production replacement was 286%, meaning that the company added more than 3 Tcf of proved reserves compared to the 1.1 Tcf produced in 2004.

EnCana’s total reserve additions, net of acquisitions and divestitures, were 3.2 Tcfe, excluding the downward bitumen reserves revision based on year-end pricing announced Feb. 1.

“Our natural gas resource plays continue to deliver strong growth in production and reserves,” said CEO Gwyn Morgan. “During the past year, we undertook several major steps in sharpening our strategic focus on North American unconventional resources. The acquisition of Tom Brown, Inc. and the sale of our U.K. North Sea assets were major strides in accomplishing that objective.

“With the addition of 2.2 Tcf of proved reserves through the drill bit plus another 0.9 Tcf of net reserve additions through acquisitions and divestitures, we have grown the underlying value of the company and net asset value of each share.”

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