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Oil reserve life and the influence of crude oil prices: An analysis of Texas reserves

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  • Apergis, Nicholas
  • Ewing, Bradley T.
  • Payne, James E.

Abstract

Oil producing exploration and production companies generate revenue from reserves which, from any given well, are depleting over time. The reserve life index measures how long reserves would last at the current production rate if there were no additions to reserves. In this study, we examine the time series behavior of the reserve life index for each of the twelve onshore oil producing districts in Texas. Specifically, we model the relationship between reserve life and the real price of oil within a nonlinear ARDL framework. Among the results, we find evidence of both long-run and short-run asymmetries in the response of reserve life to increases/decreases in real oil prices. Further, the magnitude of the effect is greater for positive changes in real oil prices than for negative changes in real oil prices. The findings are important to operators, investors and policymakers interested in sustainability.

Suggested Citation

  • Apergis, Nicholas & Ewing, Bradley T. & Payne, James E., 2016. "Oil reserve life and the influence of crude oil prices: An analysis of Texas reserves," Energy Economics, Elsevier, vol. 55(C), pages 266-271.
    • Handle: RePEc:eee:eneeco:v:55:y:2016:i:c:p:266-271
    DOI: 10.1016/j.eneco.2016.02.009
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    References listed on IDEAS

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    Cited by:

    1. Apergis, Nicholas & Ewing, Bradley T. & Payne, James E., 2021. "The asymmetric relationship of oil prices and production on drilling rig trajectory," Resources Policy, Elsevier, vol. 71(C).
    2. Jamil, Faisal, 2024. "Empirical analysis of investment in Pakistan’s upstream sector," Resources Policy, Elsevier, vol. 88(C).
    3. Pastor, Daniel J. & Ewing, Bradley T., 2022. "Exploding DUCs? Identifying periods of mild explosivity in the time series behavior of drilled but uncompleted wells," Energy, Elsevier, vol. 254(PB).
    4. Ewing, Bradley T. & Thompson, Mark A., 2016. "The role of reserves and production in the market capitalization of oil and gas companies," Energy Policy, Elsevier, vol. 98(C), pages 576-581.

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    More about this item

    Keywords

    Oil reserves; Oil production; Crude oil prices; Reserve life; Time series analysis; Persistence;
    All these keywords.

    JEL classification:

    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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