Business overview
Exploration & Production - Upstream
2
Exploration & Production
Exploration and development
Reserves
The definitions used for proved, proved developed and proved
undeveloped oil and gas reserves are in accordance with the
applicable U.S. Securities & Exchange Commission (SEC)
regulation, Rule 4-10 of Regulation S-X. Proved reserves are
estimated using geological and engineering data to determine with
reasonable certainty whether the crude oil or natural gas in known
reservoirs is recoverable under existing economic and operating
conditions.
TOTAL’s Upstream segment aims at continuing to combine long-
term growth and profitability at the levels of the best in the industry.
TOTAL evaluates exploration opportunities based on a variety of
geological, technical, political and economic factors (including taxes
and licence terms), and on projected oil and gas prices. Discoveries
and extensions of existing discoveries accounted for approximately
6
0% of the 2,445 Mboe added to the Upstream segment’s proved
reserves during the three-year period ended December 31, 2007
before deducting production and sales of reserves in place and
This process involves making subjective judgments. Consequently,
estimates of reserves are not exact measurements and are subject
to revision.
(
adding any acquisitions of reserves in place during this period). The
remaining 40% comes from revisions.
The estimation of proved reserves is controlled by the Group
through established validation guidelines. Reserves evaluations are
established annually by senior level geoscience and engineering
professionals (assisted by a central reserves group with significant
technical experience) including reviews with and validation by senior
management.
TOTAL continued to follow an active exploration program in 2007,
with exploration investments of consolidated subsidiaries amounting
to 1,233 M€ (including unproved property acquisition costs). The
main exploration investments were made in Nigeria, Angola, the UK,
Norway, Libya, Congo, Australia, Venezuela, China, Indonesia,
Canada, Brunei, Algeria, the United States, Mauritania, Yemen,
Kazakhstan, Brasil, Azerbaijan and Thailand. In 2006, TOTAL’s
exploration investments amounted to 1,214 M€ (including unproved
property acquisition costs, excluding the acquisition of an interest in
the Ichthys LNG project in Australia), mostly in Nigeria, the UK,
Angola, the United States, Libya, Venezuela, Norway, Algeria,
Congo, Kazakhstan, Canada, Indonesia, Australia, Argentina,
Cameroon, Mauritania, Gabon, China, Azerbaijan and Thailand. In
The reserves estimation process demands:
Š
internal peer reviews of technical evaluations to ensure that the
SEC definitions and guidance are followed, and
Š
a requirement that management makes significant funding
commitments towards the development of the reserves prior to
booking.
2
005, TOTAL’s exploration investments amounted to 644 M€,
essentially in Nigeria, Angola, the UK, Norway, Congo, the United
States, Libya, Algeria, Argentina, Kazakhstan, Colombia, Indonesia
and the Netherlands.
TOTAL’s oil and gas reserves are assessed annually, considering, in
particular, levels of production, field reassessment, additional
reserves from discoveries and acquisitions, disposal of reserves and
other economic factors. Unless otherwise indicated, any reference
to TOTAL’s proved reserves, proved developed reserves, proved
undeveloped reserves and production reflect the Group’s entire
share of such reserves or such production. TOTAL’s worldwide
proved reserves include the proved reserves of its consolidated
subsidiaries as well as its proportionate share of the proved
reserves of equity affiliates and of two companies accounted for by
the cost method. For further information concerning changes in
TOTAL’s proved reserves as of December 31, 2007, 2006 and
2005, see “Supplemental Oil and Gas Information (Unaudited)”,
included herein beginning on page 231.
The Group’s consolidated Exploration & Production subsidiaries’
development expenditures amounted to 7 B€ in 2007, primarily in
Angola, Norway, Nigeria, Kazakhstan, Congo, the UK, Indonesia,
Gabon, Canada, Qatar, Venezuela and the United States. In 2006,
development expenditures amounted to 6 B€ (including shares in
the Ichthys LNG project in Australia), predominantly in Norway,
Angola, Nigeria, Kazakhstan, Indonesia, Congo, Yemen, Qatar, the
UK, Canada, Australia, the United States, Venezuela, Azerbaijan and
Gabon. Development expenditures for 2005 amounted to
approximately 5 B€ and were carried out principally in Norway,
Angola, Nigeria, Kazakhstan, Indonesia, the UK, Qatar, Congo,
Azerbaijan, Gabon, Canada and Yemen.
Rule 4-10 of Regulation S-X requires that the appraisal of reserves
be based on the economic environment and operating conditions
existing at year end. Reserves at year-end 2007 have been
determined based on the Brent price on December 31, 2007
($93.72/b).
As of December 31, 2007, TOTAL’s combined proved reserves of
crude oil and natural gas were 10,449 Mboe (52% of which were
proved developed reserves). Liquids represented approximately
5
5% of these reserves and natural gas the remaining 45%. These
reserves are located primarily in Europe (Norway, the UK, the
Netherlands, Italy and France), Africa (Nigeria, Angola, Congo,
Gabon, Libya, Algeria and Cameroon), Asia/Far East
TOTAL • 9
