Let's call it scientific guesswork. Scientists know where other rock formations may be located that could contain hydrocarbons. They have information on production from wells around the world that helps their assessment. These scientists also consider the latest technological developments that improve our ability to find and recover hydrocarbons. Of course, it is a lot more complicated than this and considerable effort is made in preparing a range of estimates.
Oil companies spend billions of dollars searching for new oil fields.
Each year companies try to replace the oil that they produce. If a company fails to replace and add to reserves they will not be able to increase production and revenues. First of all oil companies are dealing with resources that are depleted or used up. The reserve lifetimes in the above table indicate how long it will take before the reserves are depleted. In the case of the United States, the oil reserve lifetime is 7.8 years.