Registration document 2007 - Total.com
Registration document 2007 - Total.com
Registration document 2007 - Total.com
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Exploration & Production<br />
Exploration and development<br />
TOTAL’s Upstream segment intends to continue to <strong>com</strong>bine<br />
long-term growth and profitability at the levels of the best in the<br />
industry.<br />
TOTAL evaluates exploration opportunities based on a variety of<br />
geological, technical, political and economic factors (including<br />
taxes and licence terms), as well as on projected oil and gas<br />
prices. Discoveries and extensions of existing discoveries<br />
accounted for approximately 77% of the 2,460 Mboe added to<br />
the Upstream segment’s proved reserves during the three-year<br />
period ended December 31, 2006 (before deducting production<br />
and sales of reserves in place and adding any acquisitions of<br />
reserves in place during this period). The remaining 23% <strong>com</strong>es<br />
from revisions.<br />
TOTAL continued to follow an active exploration program in<br />
2006, with exploration investments of consolidated subsidiaries<br />
amounting to 1,214 M€ (including unproved property acquisition<br />
costs, excluding the acquisition of an interest in the Ichthys<br />
project in Australia). The principal exploration investments were<br />
made in Nigeria, the United Kingdom, Angola, the United States,<br />
Libya, Venezuela, Norway, Algeria, Congo, Kazakhstan, Canada,<br />
Indonesia, Australia, Argentina, Cameroon, Mauritania, Gabon,<br />
China, Azerbaijan and Thailand. In 2005, TOTAL's exploration<br />
investments amounted to 644 M€, principally in Nigeria, Angola,<br />
the United Kingdom, Norway, Congo, the United States, Libya,<br />
Algeria, Argentina, Kazakhstan, Colombia, Indonesia and the<br />
Netherlands. In 2004, the Group’s exploration investments<br />
amounted to 651 M€, principally in the United States, Nigeria,<br />
Angola, the United Kingdom, Libya, Algeria, Congo, Kazakhstan,<br />
Norway, Bolivia, the Netherlands, Colombia and Indonesia.<br />
The development expenditures of the Group’s consolidated<br />
Exploration & Production subsidiaries amounted to 6.0 B€ in<br />
2006 (including a share in the Ichthys project in Australia),<br />
primarily in Norway, Angola, Nigeria, Kazakhstan, Indonesia,<br />
Congo, Yemen, Qatar, the United Kingdom, Canada, Australia,<br />
the United States, Venezuela, Azerbaijan and Gabon. The<br />
development investments for 2005 amounted to 5.2 B€ and<br />
were carried out principally in Norway, Angola, Nigeria,<br />
Kazakhstan, Indonesia, the United Kingdom, Qatar, Congo,<br />
Azerbaijan, Gabon, Canada and Yemen. In 2004, development<br />
expenditures amounted to 4.1 B€ and were made principally in<br />
Norway, Angola, Nigeria, Indonesia, Kazakhstan, the United<br />
Kingdom, Qatar, Azerbaijan, the United States, Gabon, Congo,<br />
Libya, Trinidad & Tobago, Venezuela and Iran.<br />
Reserves<br />
Business overview<br />
Exploration & Production - Upstream<br />
The definitions used for proved, proved developed and proved<br />
undeveloped oil and gas reserves are in accordance with the<br />
applicable U.S. Securities & Exchange Commission regulation,<br />
Rule 4-10 of Regulation S-X. Proved reserves are estimated<br />
using geological and engineering data to determine with<br />
reasonable certainty whether the crude oil or natural gas in<br />
known reservoirs is recoverable under existing economic and<br />
operating conditions.<br />
This process involves making subjective judgments.<br />
Consequently, estimates of reserves are not exact measurements<br />
and are subject to revision.<br />
The estimation of proved reserves is controlled by the Group<br />
through established validation guidelines. Reserves evaluations<br />
are established annually by senior level geoscience and<br />
engineering professionals (assisted by a central reserves group<br />
with significant technical experience) including reviews with and<br />
validation by senior management.<br />
Significant features of the reserves estimation process include:<br />
• internal peer reviews of technical evaluations also to ensure<br />
that the SEC definitions and guidance are followed, and<br />
• a requirement that management make significant funding<br />
<strong>com</strong>mitments toward the development of the reserves prior to<br />
booking.<br />
TOTAL’s oil and gas reserves are reviewed annually to take into<br />
account, among other things, production levels, field<br />
reassessments, the addition of new reserves from discoveries<br />
and acquisitions, disposals of reserves and other economic<br />
factors. Unless otherwise indicated, references to TOTAL’s<br />
proved reserves, proved developed reserves, proved<br />
undeveloped reserves and production reflect the entire Group’s<br />
share of such reserves or production. TOTAL’s worldwide proved<br />
reserves include the proved reserves of its consolidated<br />
subsidiaries as well as its proportionate share of the proved<br />
reserves of equity affiliates and of two <strong>com</strong>panies accounted for<br />
by the cost method.<br />
For further information concerning changes in TOTAL’s proved<br />
reserves as of December 31, 2006, 2005 and 2004, see<br />
“Supplemental Oil and Gas Information (Unaudited)”, included<br />
herein beginning on page 237.<br />
Rule 4-10 of Regulation S-X requires the use of the year-end<br />
price, as well as existing operating conditions, to determine<br />
reserve quantities. Reserves at year-end 2006 have been<br />
determined based on the Brent price on December 31, 2006<br />
($58.93/b).<br />
2<br />
TOTAL – <strong>Registration</strong> Document 2006 13