Ann: Xanadu-1 Oil Discovery, page-338

After the discovery of a reservoir, a petroleum engineer will seek to build a better picture of the accumulation. In a simple textbook example of a uniform reservoir, the first stage is to conduct a seismic survey to determine the possible size of the trap. Appraisal wells can be used to determine the location of oil-water contact and with it, the height of the oil bearing sands. Often coupled with seismic data, it is possible to estimate the volume of oil bearing reservoir.
The next step is to use information from appraisal wells to estimate the porosity of the rock. The porosity, or the percentage of the total volume that contains fluids rather than solid rock, is 20-35% or less. It can give information on the actual capacity. Laboratory testing can determine the characteristics of the reservoir fluids, particularly the expansion factor of the oil, or how much the oil expands when brought from high pressure, high temperature of the reservoir to "stock tank" at the surface.
With such information, it is possible to estimate how many "stock tank" barrels of oil are located in the reservoir. Such oil is called the stock tank oil initially in place (STOIIP). As a result of studying factors such as the permeability of the rock (how easily fluids can flow through the rock) and possible drive mechanisms, it is possible to estimate the recovery factor, or what proportion of oil in place can be reasonably expected to be produced. The recovery factor is commonly 30-35%, giving a value for the recoverable reserves.
The difficulty is that reservoirs are not uniform. They have variable porosities and permeabilities and may be compartmentalised, with fractures and faults breaking them up and complicating fluid flow. For this reason, computer modeling of economically viable reservoirs is often carried out. Geologists, geophysicists and reservoir engineers work together to build a model which allows simulation of the flow of fluids in the reservoir, leading to an improved estimate of reserves.