Reviewed by Aug 26, 2020| Updated on
Proven reserves are the number of natural resources that a company expects to extract from a given reserve. They are established based on geological and engineering data through seismic testing and exploratory drilling.
Proven reserves, also known as proved reserves, have a probability of 90% or more of being present they may also be economically viable for extraction in current conditions. In the oil industry, proven reserves are also referred to as P1 or P90. It also takes into account the technology used for extraction, regional regulations, and market conditions.
Understanding Proven Reserves
More significant gains and losses are noticed over time than the increase in proven reserves from truly new discoveries. If an investor has no data on the probable reserves, proven reserves can suddenly change in a number of different situations. For example, consider a company has a large number of probable reserves. If they figure out an extraction technology, probable reserves become proven reserves.