"if all true"

It is not a matter of being true, moreso of being correct. When we discussed this document last month (and in Nov) i mentioned that readers should take care when reading Nawaf Obaid's text 'cuz his is the realm of KSA Security ... not geology.

Ron's pg16 includes glaring errors with "decline rate" and "depletion rate" used interchangeably. Therefore, one cannot use logic to interpret Ron's points.

"decline rate" refers to the drop in extraction rate as expressed in "mbd"

"depletion rate" refers to the drop in URR as expressed by "Gb"

In almost all cases, Obaid means depletion rate of reserves ... not monthly or annual production.

Going back to the presentation, it is typical KSA or Aramco rhetoric in their press releases and presentations to include how much field decline is happening each year. This one is no different.

On pg6, they openly admit that the "present" operating fields face the reality of an apparent 0.8-mbd/day decline rate. But not on a net basis. On their published production rate of 8.6-mbd, this equates to 9.3% YOY (apparent). It is clear that some older fields suck big time.

But if one turns to pg9, one sees that the planned closure of the older fields, unshuttering of dormant fields and opening of new fields brings to their operations a new decline of 0.5-mbd on proposed production of 10-mbd in 2009 (assuming maintenance of the 2.55-mbd surplus capacity). This equates to an apparent decline rate of 5% YOY in 2009 and drops to 4.6% by 2011.

Ron is neither right nor wrong. He is neither brilliant nor an idiot. Mistakes happen. This was one that confused many (but not all). I studied Geology and Economics in university. All of us at TOD have our specialties with which to contribute via formal Education or Schools of Hard Knocks.