Big Oil…A Subsidiary of Banksters?

Millions of barrels of untapped oil that U.S. shale drillers
discovered during the boom years are about to disappear from their
inventories.

Six years ago, the industry pushed the Securities and Exchange
Commission to make it easier for companies to claim proved reserves for
wells that wouldn’t be drilled for years. Some prospects considered
sure-things when crude was $95 a barrel are money losers at today’s $60.
When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels
from their books.

**Now the stakes are higher. Of all the proved reserves of oil and
natural gas liquids found by the 44 companies since 2008, more than half
-- 5.4 billion barrels out of the 9.7 billion -- is attributed to wells
that don’t exist yet, according to data compiled by Bloomberg.**

“We’re going to see a lot of proved undeveloped reserves get vaporized,�
said Ed Hirs, a managing director at Houston-based Hillhouse Resources
LLC, an independent energy company, who also teaches energy economics at
the University of Houston. “It could easily be 10 or 20 years before
some of these wells get drilled if prices stay at these levels.�

The shale boom has pushed U.S. oil production to the highest in more
than 40 years and slashed the country’s reliance on imported fuel. The
untapped resources are viewed by investors and lenders as a sign of a
company’s growth potential, and helped the industry attract more than
$230 billion in bonds, loans and share sales since the end of 2008.

While undrilled prospects have always been part of oil companies’
inventories, they’ve become a much larger share since the SEC changed
the rules. Undeveloped properties account for 43 percent of proved
reserves for the 44 companies, the data show, up from 26 percent at the
end of 2008.

The SEC limits proved reserves to those resources that companies are
reasonably certain can be profitably extracted with existing technology.
The estimates are based on prices, geology, engineering and the
historical performance of similar wells.

Fracking pioneers such as Devon Energy Corp. and Chesapeake Energy
Corp., both based in Oklahoma City, were among the oil and natural gas
producers that lobbied to make it easier to book undeveloped reserves.
Before the rule changed, untapped wells typically needed to be close to
a producing property.

Much more at:

http://tinyurl.com/mnwotpj

Perhaps the oil companies can bundle up these vaporous unproved reserves
and coventure a junk oil sales effort with the banksters!