Most compositional reservoir simulation practices assume that the compositions of various fluid components are the same at all locations within the reservoir system. This constant composition assumption is incorrect and unrealistic as it grossly ignores the occurrences of some less obvious physical processes in the reservoir. Gravitational force, temperature gradient, and thermal diffusion, among other factors, contribute to distribution and gradation of hydrocarbon fluid compositions in the reservoir. Therefore, incorporating compositional grading models that adequately account for the individual and combined effects of gravity force, temperature gradient, and thermal diffusion is crucial when initializing reservoir simulation models. This research seeks to elucidate the technical implications of compositional grading on improved reserve estimation and reservoir performance prediction. The mathematical framework for the compositional grading modeling is based on one-dimensional zero-mass-flow stationary state assumption. The Computer Modeling Group’s equation of state multiphase equilibrium property simulator, WinProp, was used for the fluid modeling, while the Computer Modeling Group’s compositional reservoir simulator, GEM, was used for the reservoir modeling and simulation. In the absence of historical production data, Computer Modeling Group’s CMOST was used to perform uncertainty assessment for the validation of the initialized reservoir models. The research results show that initialized reservoir models that neglected or inadequately accounted for compositional grading effects overestimated oil in-place and underestimated gas in-place. The constant composition (without compositional grading) initialized reservoir model overestimates ultimate cumulative oil production by 14.271 MMbbl more than the isothermal compositional grading model and 24.088 MMbbl more than Kempers’ thermal diffusion compositional grading initialized reservoir model. It underestimated ultimate cumulative gas production by 30.133 Bft3 less than the isothermal compositional grading and 50.408 Bft3 less than Kempers’ thermal diffusion compositional grading initialized reservoir model. These figures suggest that neglecting compositional grading or an inadequate account of compositional grading effects in reservoir simulation initialization has detrimental technical consequences.