Abstract Material balance methods have been used in petroleum engineering for many years to evaluate the performance of oil and gas reservoirs. It has been previously shown that in many cases the standard material balance equation results in a linear form that is particularly convenient for graphical analysis. In many cases of interest, however, the linear terms exceed those which can be subjected to graphical methods. This paper documents a modification of the classical material balance method which preserves linearity in most reservoir types and is convenient for the application of statistical regression techniques. It is shown that by applying these standard statistical methods, many pitfalls in applying material balance analysis methods can easily be avoided and more insight into reservoir performance can often be gained.