Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
23. Supplemental Information on Oil and Gas Exploration and Production Activities (Unaudited)
(Continued)
All of the Company’s proved reserves are located in the U.S. Gulf of Mexico. Reserve quantity
information for the years ended December 31, 2014, 2013 and 2012 are as follows:
Oil and
Equivalent
Natural Gas Condensate
Volumes
(in Bcf)
(in MMBbls) (in MMBOE)
Proved undeveloped reserves:
Balance at December 31, 2012 . . . . . . . . . .
— — —
Discoveries . . . . . . . . . . . . . . . . . . . . . . . .
3.4
7.9
8.5
Balance at December 31, 2013 . . . . . . . . . .
3.4
7.9
8.5
Revisions . . . . . . . . . . . . . . . . . . . . . . . . .
0.3
0.5
0.5
Balance at December 31, 2014 . . . . . . . . . .
3.7
8.4
9.0
The reserves as of December 31, 2014 presented above were prepared by the independent
engineering firm, Netherland, Sewell & Associates, Inc. (‘‘NSAI’’). These reserves are located in the
U.S. Gulf of Mexico. Proved oil and natural gas reserves are the estimated quantities of oil and natural
gas which geological and engineering data demonstrate, with reasonable certainty, to be recoverable in
future years from known reservoirs under economic and operating conditions (i.e., prices and costs)
existing at the time the estimate is made. Proved developed oil and natural gas reserves are proved
reserves that can be expected to be recovered through existing wells and equipment in place and under
operating methods being utilized at the time the estimates were made. A variety of methodologies are
used to determine the Company’s proved reserve estimates. The principal methodologies employed are
decline curve analysis, advance production type curve matching, petrophysics/log analysis and analogy.
Some combination of these methods is used to determine reserve estimates in substantially all of the
Company’s fields. The Company emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries and undeveloped locations are more imprecise than estimates of
established proved producing oil and gas properties. Accordingly, these estimates are expected to
change as future information becomes available.
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
The Company follows the guidelines prescribed in ASC No. 932 for computing a standardized
measure of future net cash flows and changes therein relating to estimated proved reserves. The
following summarizes the policies used in the preparation of the accompanying oil and natural gas
reserve disclosures, standardized measures of discounted future net cash flows from proved oil and
natural gas reserves and the reconciliations of standardized measures from year to year.
The information is based on estimates of proved reserves attributable to the Company’s interest in
oil and natural gas properties as of December 31, 2014 and 2013. The Company did not have proved
reserves as of December 31, 2012. These estimates were prepared by NSAI.
The standardized measure of discounted future net cash flows from production of proved reserves
was developed as follows:
(1) Estimates are made of quantities of proved reserves and future periods during which they are
expected to be produced based on year-end economic conditions.
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