Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 120
Preparation of reserve estimates
To ensure GSO’s internal estimates of natural oil and gas reserves are appropriate, are accurately disclosed and
are compliant with current SEC regulations and FASB requirements, GSO has established and maintains an estimation
system comprising guidelines, procedures and standards, which are subject to review by suitably experienced
independent external consultants, and a set of internal controls, which are in accordance with the requirements of the
Sarbanes-Oxley Act. The internal controls cover, among other matters, the segregation of duties between the asset teams
which prepare the reserve estimates and, the corporate reserves team which maintains the system and assures the
estimates. The controls also include confirmation that the members of the corporate reserves team are appropriately
qualified and experienced and that their compensation arrangements are not materially affected by the reserves.
The internal estimation process includes a review of all estimated future production rates and future capital and
operating costs to ensure that the assumptions, data, methods and procedures are appropriate; a review of the
technologies used in the process to determine reliability; and arrangements to validate the economic assumptions and to
ensure that only accurate, complete and consistent data are used in the estimation of reserves.
The technical person within GSO who is primarily responsible for overseeing the internal preparation of natural
oil and gas reserves estimates is the GSO Manager: Corporate Reserves and Technical Assurance. The incumbent is a
Member of the Energy Institute, a Chartered Petroleum Engineer, holds a MA and MSc in Mathematics and has
42 years’ experience in oil and gas exploration and production activities with 33 years’ experience in reserves
estimation.
The definitions of categories of natural oil and gas reserves used in this disclosure are consistent with those set
forth in the Regulations:
Proved reserves of oil and gas—Those quantities of oil and gas, which, by analysis of geoscience and
engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward,
from known reservoirs under existing economic conditions, operating methods, and government regulations—prior to
the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably
certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract
hydrocarbons must be approved and must have commenced or the operator must be reasonably certain that it will
commence the project within a reasonable time. Additionally, Sasol requires that natural oil and gas reserves will be
produced by a “project sanctioned by all internal and external parties”.
Existing economic conditions define prices and costs at which economic producibility is to be determined. The
price is the average sales price during the 12-month period prior to the ending date of the period covered by the report,
determined as an un-weighted arithmetic average of the first-day-of-the-month price for each month within such period,
unless prices are defined by contractual arrangements. Future price changes are limited to those provided by contractual
arrangements in existence at year-end. At the reporting date, product sales prices were determined by existing contracts
for the majority of Sasol’s natural oil and gas reserves. Costs comprise development and production expenditure,
assessed in real terms, applicable to the reserves class being estimated. Depending upon the status of development
proved reserves of oil and gas are subdivided into “Proved Developed Reserves” and “Proved Undeveloped Reserves”.
Proved developed reserves—Those proved reserves that can be expected to be recovered through existing wells
with existing equipment and operating methods (or in which the cost of the required equipment is relatively minor
compared to the cost of a new well) and through installed extraction equipment and infrastructure operational at the time
of the reserves estimate if the extraction is by means not involving a well.
Proved undeveloped reserves—Those proved reserves that are expected to be recovered from new wells on
undrilled acreage or from existing wells where a relatively major expenditure is required before production can
commence.
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