Coming off of a fourth quarter in which it achieved its targeted annual production rate growth of 17%, Phillips Petroleum Co. added 433 MMboe, net of sales, to its worldwide proved reserves in 2001, replacing 135% of its 2001 worldwide oil and gas production.

From 1997 through 2001, the company reported that its five-year-average production replacement equaled 359%, while finding-and-development costs averaged $3.39/boe. The company’s three-year-average production replacement equaled 478%, while finding-and-development costs averaged $3/boe. Phillips said that both the three-and five-year replacement figures were significantly impacted by the company’s 2000 acquisition of ARCO’s Alaskan assets.

The company said that its average 2001 finding-and-development cost, at $5.97/boe, reflects Phillips’ ongoing commitment to build its legacy asset positions. The number includes exploration costs, as well as significant development expenditures for the company’s worldwide legacy projects.

“We have dramatically improved the success rate and materiality level of our exploration program due to a clearer focus on lower risk prospects in fewer, better areas,” said Dodd DeCamp, senior vice president of worldwide exploration. “This past year was outstanding for us, with exploration and appraisal successes in Alaska, China, Kazakhstan, the Lower 48 states, the Barents Sea, and the North Sea. Overall, we completed 42 exploration and appraisal wells with a success rate of 62%, up from 45% in 2000 and 38% in 1999.”

Phillips’ hydrocarbon production increased in 2001 to 321 MMboe, up from 271 MMboe in 2000. Even with the additional production, Phillips more than replaced these volumes, increasing its worldwide proved reserves 2.3% to 5.13 billion boe in 2001, up from 5.02 billion boe in 2000. Crude oil and natural gas reserves each increased 3%, while worldwide proved reserves of natural gas liquids decreased 6%. Phillips’ proved reserve-to-current-production ratio is 16 years.

Phillips replaced 99% of its reserves produced in the United States at an average cost of $5.15/boe. In the Lower 48, Phillips replaced 128% of its production at an average cost of $5.08/boe. The company replaced 214% of its non-U.S. production at an average finding-and-development cost of $6.80/boe.

“Our 2002 exploration drilling program will concentrate primarily on four very promising areas: deepwater offshore Angola, the northern Caspian Sea, Alaska, and the Atlantic Margin of northwest Europe,” said DeCamp. “We are confident that our exploration program will continue to provide long-life reserves, supporting our strategy to build on our legacy assets.”

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