Price Assumptions for Reserve Estimation

Assumptions about future commodity prices need to be made with close regard to the purposes for which they are being used. Prices generated for financial planning or trading purposes are unlikely to be suitable for the longer run purposes of project evaluation and reserve estimation. In this latter context, price assumptions need to be realistic, stable and rooted in a rigorous fundamental analysis of long run industry drivers. Amongst the factors to be considered in such analysis are price history, production costs and structural dynamics. It is also important that prices adopted are consistent with other information being used by a company in its decision-making.