At minimum, an energy company is expected to have as much oil and gas in its proven reserves as it does in current production, which would give it a “reserve-replacement ratio” of 100 percent. As the popular site Investopedia explains, “A company’s reserve replacement ratio must be at least 100% for the company to stay in business long-term; otherwise, it will eventually run out of oil.”53 Which is why investors tend to get quite alarmed when the ratio drops below that level.
