Evaluation Summary as of December 31, 2018 from Cawley, Gillespie & Associates, Inc
Exhibit 10.1
Cawley, Gillespie & Associates, Inc.
petroleum consultants
| 13640 BRIARWICK DRIVE, SUITE 100 AUSTIN, TEXAS ###-###-#### 512 ###-###-#### | 306 WEST SEVENTH STREET, SUITE 302 FORT WORTH, TEXAS 76102-4905 817- 336-2461 www.cgaus.com | 1000 LOUISIANA STREET, SUITE 1900 HOUSTON, TEXAS 77002-5017 713 ###-###-#### |
February 11, 2019
Mr. Haim Tsuff - CEO
Isramco, Inc
2425 West Loop South, Suite 810
Houston, Texas 77027
| Re: Evaluation Summary - Strip Price Isramco Resources, LLC Interests Isramco Energy, LLC Interests Jay Petroleum, L.L.C. Interests Certain Properties in Various States As of December 31, 2018 |
Dear Mr. Tsuff:
As requested, we are submitting our estimates of proved developed producing reserves and forecasts of economics attributable to the above captioned partnerships in certain properties located in various states. The results of this evaluation are presented in the accompanying tabulations, with a composite summary presented below:
| Isramco Resources | Isramco Energy | Jay Petroleum | |||||
| Proved | Proved | Proved | |||||
| Developed | Developed | Developed | |||||
| Producing | Producing | Producing | |||||
| Net Reserves | |||||||
| Oil | - Mbbl | 1,115.2 | 562.7 | 54.8 | |||
| Gas | - MMcf | 4,045.0 | 4,012.8 | 345.3 | |||
| NGL | - Mbbl | 0.0 | 377.8 | 11.3 | |||
| Net Revenue | |||||||
| Oil | - M$ | 55,927.2 | 26,755.2 | 2,642.0 | |||
| Gas | - M$ | 14,697.5 | 9,601.0 | 1,037.3 | |||
| NGL | - M$ | 0.0 | 8,473.3 | 237.0 | |||
| Other | - M$ | 0.0 | 0.0 | 0.0 | |||
| Severance Taxes | - M$ | 4,032.0 | 2,658.2 | 245.3 | |||
| Ad Valorem Taxes | - M$ | 2,065.7 | 1,739.1 | 169.5 | |||
| Operating Expenses | - M$ | 33,315.2 | 22,195.2 | 1,448.0 | |||
| Workover Expenses | - M$ | 0.0 | 0.0 | 0.0 | |||
| 3rd Party COPAS | - M$ | 0.0 | 0.0 | 0.0 | |||
| Other Deductions | - M$ | 0.0 | 0.0 | 0.0 | |||
| Investments | - M$ | 0.0 | 0.0 | 0.0 | |||
| Net Operating Income (BFIT) | - M$ | 31,211.7 | 18,237.2 | 2,053.4 | |||
| Discounted @ 10% | - M$ | 14,521.2 | 9,560.5 | 1,092.9 | |||
February 1, 2019
Page 2
The discounted cash flow value shown above should not be construed to represent an estimate of the fair market value by Cawley, Gillespie & Associates, Inc. (“CG&A”)
Presentation
This report is divided into three partnership sections. Within each partnership tab there is a Proved Developed Producing (“PDP”) grand total Table I summary. The Table I presents composite reserve estimates and economic forecasts for the PDP reserve category. The data presented in each Table I is explained in page 1 of the Appendix. The methods employed in estimating reserves are described in page 2 of the Appendix. For a more detailed explanation of the report layout, please refer to the Table of Contents following this letter.
Hydrocarbon Pricing
As requested for the Forward Strip scenario, oil and gas prices were adjusted to the following index prices.
| Year | WTI Oil Price $/BBL | HH Gas Price $/MMBTU |
| 2019 | 47.56 | 2.869 |
| 2020 | 48.86 | 2.673 |
| 2021 | 50.77 | 2.601 |
| 2022 | 51.84 | 2.860 |
| 2023 | 52.48 | 2.860 |
| 2024 | 52.34 | 2.860 |
Oil and gas prices were held flat thereafter at $52.34 per BBL and $2.860 per MMBTU, respectively. Adjustments to oil and gas prices were forecast based upon 2017-2018 historical data and were applied by property. Adjustments may include treating costs, transportation charges and/or crude quality and gravity corrections. Shrinkage factors were applied to each property against net gas volumes.
Expenses and Taxes
Direct lease operating expenses were forecast based upon 2017-2018 historical expenses. Investments were applied going forward as provided by your office. Expenses were held constant for the life of the properties. Severance tax values were determined by applying normal state severance tax rates. Ad valorem tax rates were forecast as provided by your office.
Miscellaneous
An on-site field inspection of the properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities been examined, nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have not been included except as noted above.
The reserves and economics are predicated on regulatory agency classifications, rules, policies, laws, taxes and royalties in effect on the effective date, except as noted herein. The possible effects of changes in legislation or other Federal or State restrictive actions have not been considered. All reserve estimates represent our best judgment based on data available at the time of preparation, and assumptions as to future economic and regulatory conditions. It should be realized that the reserves actually recovered, the revenue derived therefrom and the actual cost incurred could be more or less than the estimated amounts.
February 1, 2019
Page 3
The reserve estimates and forecasts were based upon interpretations of data furnished by your office and available from our files. Ownership information was furnished by your office and economic factors such as liquid and gas prices, price differentials and expenses were furnished by your office and were accepted as furnished. To some extent, information from public records was used to check and/or supplement these data. The basic engineering and geological data were utilized subject to third party reservations and qualifications. Nothing has come to our attention, however, that would cause us to believe that we are not justified in relying on such data.
This report was prepared for the exclusive use of Naphtha Israel Petroleum Corp., LTD, J.O.E.L Jerusalem Oil Exploration LTD and Equital LTD. The undersigned hereby consents that this report shall be attached to an Israeli public filling of the above mentioned companies with respect to the oil and gas reserves of Isramco Resources, LLC, Isramco Energy, LLC and Jay Petroleum, L.L.C. as of the year ended December 31, 2018. Third parties should not rely on it without the written consent of the above and Cawley, Gillespie & Associates, Inc. Our work papers and related data are available for inspection and review by authorized, interested parties.
| Yours very truly,
CAWLEY, GILLESPIE & ASSOCIATES, INC. Texas Registered Engineering Firm F-693 | ||
|
W. Todd Brooker, P.E. President |  | |
 Agustin Presas Jr. Vice President |
Table of Contents
Isramco Resources, LLC Interests
Isramco Energy, LLC Interests
Jay Petroleum, L.L.C. Interests
As of December 31, 2018
Report Letter
Table of Contents
ISRAMCO RESOURCES, LLC INTERESTS TAB
● Table I - PDP
ISRAMCO ENERGY, LLC INTERESTS TAB
● Table I - PDP
JAY PETROLEUM, L.L.C. INTERESTS TAB
● Table I - PDP
Appendix Tab
● Page 1 - Explanatory Comments for Summary Tables
● Page 2 - Methods Employed in the Estimation of Reserves
Table I - PDP
Composite Reserve Estimates and Economic Forecasts
Isramco Resources, LLC Interests
Certain Oil & Gas Assets in Various States
Proved Developed Producing Reserves
As of December 31, 2018
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) |
| END MO-YEAR | Gross Oil Production MBBLS | Gross Gas Production MMCF | Gross NGL Production MBBLS | Net Oil Production MBBLS | Net Gas Sales MMCF | Net NGL Production MBBLS | Avg Oil Price $/BBL | Avg Gas Price $/MCF | Avg NGL Price $/BBL |
|
| |||||||||
| 12-2018 | 5862.4 | 11769.2 | 0.0 | 119.969 | 512.666 | 0.000 | 56.254 | 2.963 | 0.000 |
| 12-2019 | 4725.3 | 8146.0 | 0.0 | 100.872 | 401.307 | 0.000 | 53.069 | 2.953 | 0.000 |
| 12-2020 | 4117.2 | 6481.9 | 0.0 | 83.334 | 333.587 | 0.000 | 50.561 | 2.960 | 0.000 |
| 12-2021 | 3673.2 | 5097.7 | 0.0 | 55.172 | 264.007 | 0.000 | 48.315 | 2.989 | 0.000 |
| 12-2022 | 3348.4 | 4471.0 | 0.0 | 50.288 | 242.883 | 0.000 | 47.730 | 3.015 | 0.000 |
|
| |||||||||
| 12-2023 | 1474.6 | 2968.4 | 0.0 | 44.953 | 225.982 | 0.000 | 47.970 | 3.052 | 0.000 |
| 12-2024 | 1043.3 | 2458.5 | 0.0 | 41.315 | 204.529 | 0.000 | 48.067 | 3.036 | 0.000 |
| 12-2025 | 948.0 | 2193.9 | 0.0 | 37.244 | 178.848 | 0.000 | 48.092 | 3.032 | 0.000 |
| 12-2026 | 874.1 | 1996.3 | 0.0 | 34.392 | 165.089 | 0.000 | 48.122 | 3.036 | 0.000 |
| 12-2027 | 806.8 | 1815.0 | 0.0 | 31.888 | 153.196 | 0.000 | 48.167 | 3.036 | 0.000 |
|
| |||||||||
| 12-2028 | 708.6 | 1621.3 | 0.0 | 29.729 | 139.255 | 0.000 | 48.182 | 3.039 | 0.000 |
| 12-2029 | 632.4 | 1479.8 | 0.0 | 28.133 | 132.374 | 0.000 | 48.180 | 3.040 | 0.000 |
| 12-2030 | 589.6 | 1377.0 | 0.0 | 26.541 | 124.826 | 0.000 | 48.207 | 3.035 | 0.000 |
| 12-2031 | 550.2 | 1276.1 | 0.0 | 25.279 | 116.483 | 0.000 | 48.218 | 3.041 | 0.000 |
| 12-2032 | 511.8 | 1173.6 | 0.0 | 23.911 | 103.886 | 0.000 | 48.242 | 3.063 | 0.000 |
|
| |||||||||
| 12-2033 | 434.3 | 1022.9 | 0.0 | 22.720 | 98.770 | 0.000 | 48.249 | 3.061 | 0.000 |
| 12-2034 | 320.1 | 788.0 | 0.0 | 21.529 | 93.532 | 0.000 | 48.255 | 3.052 | 0.000 |
| 12-2035 | 301.1 | 732.4 | 0.0 | 20.583 | 87.059 | 0.000 | 48.262 | 3.053 | 0.000 |
| 12-2036 | 281.0 | 662.2 | 0.0 | 19.289 | 77.244 | 0.000 | 48.292 | 3.093 | 0.000 |
|
| |||||||||
| S Tot | 31202.5 | 57531.3 | 0.0 | 817.140 | 3655.523 | 0.000 | 50.182 | 3.010 | 0.000 |
| After | 3550.7 | 6530.1 | 0.0 | 232.422 | 724.932 | 0.000 | 48.510 | 3.217 | 0.000 |
| Total | 34753.2 | 64061.4 | 0.0 | 1049.562 | 4380.456 | 0.000 | 49.811 | 3.044 | 0.000 |
|
| |||||||||
| Cum | 251625.8 | 903028.4 | 0.0 | ||||||
| Ult | 281132.4 | 957145.6 | 0.0 |
| (11) | (12) | (13) | (14) | (15) | (16) | (17) | (18) | (19) | (20) |
| END MO-YEAR | Oil Revenue M$ | Gas Revenue M$ | NGL Revenue M$ | Hedge Revenue M$ | Other Revenue M$ | Total Revenue M$ | Production Taxes M$ | Ad Valorem Taxes M$ | $/BOE6 |
|
| |||||||||
| 12-2019 | 5319.088 | 1585.439 | 0.000 | 0.000 | 0.002 | 6904.529 | 388.018 | 203.527 | 24.119 |
| 12-2020 | 4480.074 | 1106.636 | 0.000 | 0.000 | 0.001 | 5586.710 | 311.507 | 166.138 | 18.284 |
| 12-2021 | 4323.819 | 993.665 | 0.000 | 0.000 | 0.000 | 5317.484 | 295.247 | 158.417 | 19.362 |
| 12-2022 | 3843.444 | 913.821 | 0.000 | 0.000 | -0.001 | 4757.265 | 266.496 | 140.422 | 18.995 |
| 12-2023 | 3431.244 | 809.097 | 0.000 | 0.000 | -0.001 | 4240.340 | 239.331 | 124.641 | 18.744 |
|
| |||||||||
| 12-2024 | 2395.534 | 720.874 | 0.000 | 0.000 | 0.000 | 3116.408 | 183.689 | 88.306 | 13.715 |
| 12-2025 | 2254.746 | 663.892 | 0.000 | 0.000 | 0.000 | 2918.638 | 171.780 | 83.134 | 14.280 |
| 12-2026 | 2114.748 | 621.327 | 0.000 | 0.000 | 0.000 | 2736.074 | 161.073 | 78.054 | 14.845 |
| 12-2027 | 1966.892 | 555.614 | 0.000 | 0.000 | -0.001 | 2522.505 | 147.521 | 72.375 | 15.170 |
| 12-2028 | 1834.613 | 490.623 | 0.000 | 0.000 | 0.000 | 2325.235 | 135.622 | 66.907 | 15.382 |
|
| |||||||||
| 12-2029 | 1655.126 | 444.769 | 0.000 | 0.000 | 0.000 | 2099.895 | 123.091 | 60.502 | 14.957 |
| 12-2030 | 1514.292 | 412.831 | 0.000 | 0.000 | -0.001 | 1927.122 | 113.478 | 55.405 | 14.813 |
| 12-2031 | 1388.385 | 387.995 | 0.000 | 0.000 | 0.000 | 1776.380 | 105.166 | 50.840 | 14.695 |
| 12-2032 | 1325.021 | 369.333 | 0.000 | 0.000 | 0.000 | 1694.354 | 100.232 | 48.550 | 15.331 |
| 12-2033 | 1254.858 | 350.394 | 0.000 | 0.000 | 0.000 | 1605.252 | 94.927 | 46.151 | 15.823 |
|
| |||||||||
| 12-2034 | 1159.604 | 329.592 | 0.000 | 0.000 | 0.000 | 1489.196 | 87.517 | 43.083 | 15.892 |
| 12-2035 | 1100.117 | 313.500 | 0.000 | 0.000 | 0.000 | 1413.617 | 83.019 | 40.944 | 16.448 |
| 12-2036 | 1050.822 | 298.788 | 0.000 | 0.000 | 0.000 | 1349.609 | 79.205 | 39.137 | 17.155 |
| 12-2037 | 1006.593 | 282.845 | 0.000 | 0.000 | 0.000 | 1289.438 | 75.556 | 37.505 | 17.964 |
|
| |||||||||
| S Tot | 43419.012 | 11651.036 | 0.000 | 0.000 | -0.002 | 55070.047 | 3162.475 | 1604.040 | 17.685 |
| After | 12508.216 | 3046.423 | 0.000 | 0.000 | 0.000 | 15554.636 | 869.570 | 461.694 | 22.174 |
| Total | 55927.227 | 14697.459 | 0.000 | 0.000 | -0.002 | 70624.688 | 4032.045 | 2065.734 | 18.618 |
| (21) | (22) | (23) | (24) | (25) | (26) | (27) | (28) | (29) | (30) | (31) |
|
| Operating | Wells | Workover | 3rd Party | Other | Future Net | Cumulative | Cum. Disc. | ||
| END | Expense | Gross | Net | Expense | COPAS | Deductions | Investment | Cash Flow | Cash Flow | Cash Flow |
| MO-YEAR | M$ | Count | M$ | M$ | M$ | M$ | M$ | M$ | M$ | |
|
| ||||||||||
| 12-2019 | 4556.339 | 1980. | 233.7 | 0.000 | 0.000 | 0.002 | 0.000 | 1756.644 | 1756.644 | 1679.898 |
| 12-2020 | 2689.664 | 1764. | 171.1 | 0.000 | 0.000 | -0.001 | 0.000 | 2419.398 | 4176.043 | 3780.044 |
| 12-2021 | 2647.152 | 1748. | 168.0 | 0.000 | 0.000 | -0.001 | 0.000 | 2216.670 | 6392.713 | 5529.215 |
| 12-2022 | 2237.704 | 1738. | 164.7 | 0.000 | 0.000 | -0.001 | 0.000 | 2112.643 | 8505.356 | 7044.562 |
| 12-2023 | 1949.214 | 1668. | 128.9 | 0.000 | 0.000 | 0.001 | 0.000 | 1927.155 | 10432.511 | 8301.144 |
|
| ||||||||||
| 12-2024 | 1106.720 | 560. | 52.1 | 0.000 | 0.000 | 0.000 | 0.000 | 1737.693 | 12170.204 | 9331.020 |
| 12-2025 | 1077.244 | 550. | 49.7 | 0.000 | 0.000 | 0.000 | 0.000 | 1586.480 | 13756.684 | 10185.825 |
| 12-2026 | 1048.652 | 537. | 49.0 | 0.000 | 0.000 | 0.000 | 0.000 | 1448.296 | 15204.980 | 10895.208 |
| 12-2027 | 976.244 | 502. | 46.4 | 0.000 | 0.000 | 0.000 | 0.000 | 1326.366 | 16531.346 | 11485.798 |
| 12-2028 | 906.080 | 372. | 45.4 | 0.000 | 0.000 | 0.000 | 0.000 | 1216.625 | 17747.973 | 11978.268 |
|
| ||||||||||
| 12-2029 | 797.424 | 362. | 42.3 | 0.000 | 0.000 | 0.000 | 0.000 | 1118.878 | 18866.850 | 12389.989 |
| 12-2030 | 726.925 | 355. | 38.7 | 0.000 | 0.000 | 0.000 | 0.000 | 1031.314 | 19898.164 | 12734.986 |
| 12-2031 | 665.639 | 343. | 37.0 | 0.000 | 0.000 | 0.000 | 0.000 | 954.734 | 20852.898 | 13025.319 |
| 12-2032 | 661.437 | 340. | 37.0 | 0.000 | 0.000 | 0.000 | 0.000 | 884.134 | 21737.031 | 13269.744 |
| 12-2033 | 646.819 | 335. | 36.7 | 0.000 | 0.000 | 0.000 | 0.000 | 817.355 | 22554.389 | 13475.169 |
|
| ||||||||||
| 12-2034 | 604.208 | 324. | 34.2 | 0.000 | 0.000 | 0.000 | 0.000 | 754.389 | 23308.775 | 13647.534 |
| 12-2035 | 593.723 | 312. | 32.9 | 0.000 | 0.000 | 0.000 | 0.000 | 695.932 | 24004.707 | 13792.088 |
| 12-2036 | 590.684 | 303. | 32.5 | 0.000 | 0.000 | 0.000 | 0.000 | 640.584 | 24645.293 | 13913.052 |
| 12-2037 | 588.356 | 302. | 32.5 | 0.000 | 0.000 | 0.000 | 0.000 | 588.022 | 25233.314 | 14013.999 |
|
| ||||||||||
| S Tot | 25070.22914 | 395. | 1432.7 | 0.000 | 0.000 | 0.000 | 0.000 | 25233.314 | 25233.314 | 14013.999 |
| After | 8244.988 | 7860. | 503.3 | 0.000 | 0.000 | 0.000 | 0.000 | 5978.384 | 31211.703 | 14521.246 |
| Total | 33315.21522 | 255. | 1936.0 | 0.000 | 0.000 | 0.000 | 0.000 | 31211.697 | 31211.703 | 14521.246 |
Table I – PDP
Composite Reserve Estimates and Economic Forecasts
Isramco Energy, LLC Interests
Certain Oil & Gas Assets in NM and TX
Proved Developed Producing Reserves
As of December 31, 2018
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) |
| END MO-YEAR | Gross Oil Production MBBLS | Gross Gas Production MMCF | Gross NGL Production MBBLS | Net Oil Production MBBLS | Net Gas Sales MMCF | Net NGL Production MBBLS | Avg Oil Price $/BBL | Avg Gas Price $/MCF | Avg NGL Price $/BBL |
|
| |||||||||
| 12-2019 | 1221.6 | 3937.9 | 175.7 | 56.263 | 558.525 | 49.199 | 41.184 | 2.343 | 21.846 |
| 12-2020 | 985.4 | 2239.5 | 130.8 | 43.706 | 373.015 | 33.564 | 45.344 | 2.242 | 21.756 |
| 12-2021 | 832.8 | 1980.8 | 112.4 | 39.236 | 340.283 | 30.412 | 47.256 | 2.181 | 22.476 |
| 12-2022 | 720.8 | 1803.5 | 98.8 | 35.898 | 316.664 | 27.934 | 48.315 | 2.399 | 23.040 |
| 12-2023 | 564.2 | 1631.0 | 87.0 | 32.375 | 289.697 | 24.960 | 48.930 | 2.405 | 23.379 |
|
| |||||||||
| 12-2024 | 174.1 | 1485.9 | 77.0 | 27.297 | 265.439 | 22.003 | 48.781 | 2.407 | 23.126 |
| 12-2025 | 153.7 | 1368.6 | 69.5 | 25.394 | 247.036 | 20.153 | 48.782 | 2.407 | 22.960 |
| 12-2026 | 140.1 | 1221.5 | 63.1 | 23.776 | 225.633 | 18.562 | 48.780 | 2.402 | 22.983 |
| 12-2027 | 129.6 | 1110.0 | 54.7 | 22.432 | 211.109 | 16.712 | 48.774 | 2.403 | 23.132 |
| 12-2028 | 113.5 | 1005.7 | 47.5 | 20.668 | 181.838 | 15.168 | 48.759 | 2.383 | 23.180 |
|
| |||||||||
| 12-2029 | 103.8 | 828.0 | 39.4 | 18.013 | 97.357 | 10.852 | 48.642 | 2.546 | 21.866 |
| 12-2030 | 96.0 | 766.6 | 36.2 | 17.093 | 89.909 | 9.865 | 48.641 | 2.554 | 21.763 |
| 12-2031 | 89.2 | 710.7 | 33.1 | 16.154 | 80.301 | 8.715 | 48.635 | 2.505 | 21.584 |
| 12-2032 | 72.9 | 610.8 | 24.2 | 15.206 | 70.585 | 8.052 | 48.628 | 2.427 | 21.653 |
| 12-2033 | 57.8 | 479.2 | 14.1 | 14.103 | 59.987 | 6.590 | 48.605 | 2.447 | 22.031 |
|
| |||||||||
| 12-2034 | 54.4 | 446.5 | 12.8 | 13.364 | 55.889 | 6.038 | 48.603 | 2.455 | 22.223 |
| 12-2035 | 51.2 | 380.9 | 12.2 | 12.720 | 52.856 | 5.768 | 48.603 | 2.463 | 22.224 |
| 12-2036 | 48.7 | 344.3 | 11.5 | 12.125 | 46.477 | 5.452 | 48.603 | 2.548 | 22.167 |
| 12-2037 | 46.0 | 299.8 | 9.7 | 11.450 | 38.486 | 4.672 | 48.588 | 2.630 | 22.003 |
|
| |||||||||
| S Tot | 5655.7 | 22651.2 | 1109.8 | 457.273 | 3601.085 | 324.671 | 47.313 | 2.372 | 22.477 |
| After | 372.7 | 2637.5 | 82.3 | 105.401 | 411.721 | 53.088 | 48.577 | 2.569 | 22.145 |
| Total | 6028.4 | 25288.6 | 1192.1 | 562.674 | 4012.807 | 377.759 | 47.550 | 2.393 | 22.431 |
| Cum | 67450.0 | 1337052.9 | 0.0 | ||||||
| Ult | 73478.4 | 1362341.5 | 1192.1 |
| (11) | (12) | (13) | (14) | (15) | (16) | (17) | (18) | (19) | (20) |
| END MO-YEAR | Oil Revenue M$ | Gas Revenue M$ | NGL Revenue M$ | Hedge Revenue M$ | Other Revenue M$ | Total Revenue M$ | Production Taxes M$ | Ad Valorem Taxes M$ | $/BOE6 |
| 12-2019 | 2317.136 | 1308.476 | 1074.792 | 0.000 | 0.001 | 4700.404 | 290.862 | 176.183 | 15.975 |
| 12-2020 | 1981.811 | 836.164 | 730.210 | 0.000 | 0.001 | 3548.186 | 213.734 | 135.911 | 11.759 |
| 12-2021 | 1854.114 | 742.246 | 683.541 | 0.000 | 0.000 | 3279.900 | 197.158 | 126.224 | 12.250 |
| 12-2022 | 1734.394 | 759.741 | 643.602 | 0.000 | 0.000 | 3137.738 | 189.928 | 120.956 | 12.900 |
| 12-2023 | 1584.107 | 696.800 | 583.536 | 0.000 | 0.000 | 2864.444 | 173.564 | 110.918 | 13.228 |
|
| |||||||||
| 12-2024 | 1331.573 | 638.983 | 508.854 | 0.000 | 0.000 | 2479.410 | 151.753 | 96.208 | 12.609 |
| 12-2025 | 1238.804 | 594.727 | 462.695 | 0.000 | 0.000 | 2296.226 | 140.486 | 89.179 | 13.016 |
| 12-2026 | 1159.794 | 542.052 | 426.619 | 0.000 | 0.000 | 2128.465 | 129.988 | 82.744 | 13.519 |
| 12-2027 | 1094.089 | 507.199 | 386.593 | 0.000 | 0.000 | 1987.880 | 121.153 | 77.338 | 14.073 |
| 12-2028 | 1007.735 | 433.287 | 351.603 | 0.000 | 0.000 | 1792.626 | 108.667 | 69.754 | 14.400 |
|
| |||||||||
| 12-2029 | 876.191 | 247.859 | 237.291 | 0.000 | 0.000 | 1361.342 | 79.178 | 53.280 | 13.614 |
| 12-2030 | 831.415 | 229.612 | 214.694 | 0.000 | 0.000 | 1275.722 | 73.892 | 49.992 | 14.193 |
| 12-2031 | 785.666 | 201.190 | 188.098 | 0.000 | 0.000 | 1174.954 | 67.545 | 46.125 | 14.540 |
| 12-2032 | 739.459 | 171.331 | 174.347 | 0.000 | 0.000 | 1085.138 | 61.959 | 42.595 | 15.077 |
| 12-2033 | 685.476 | 146.778 | 145.193 | 0.000 | 0.000 | 977.446 | 55.239 | 38.379 | 15.472 |
|
| |||||||||
| 12-2034 | 649.544 | 137.215 | 134.176 | 0.000 | 0.000 | 920.934 | 51.956 | 36.182 | 16.139 |
| 12-2035 | 618.228 | 130.160 | 128.181 | 0.000 | 0.000 | 876.569 | 49.454 | 34.443 | 16.939 |
| 12-2036 | 589.282 | 118.424 | 120.858 | 0.000 | 0.000 | 828.564 | 46.614 | 32.574 | 18.014 |
| 12-2037 | 556.332 | 101.236 | 102.791 | 0.000 | 0.000 | 760.360 | 42.379 | 29.957 | 18.876 |
|
| |||||||||
| S Tot | 21635.152 | 8543.479 | 7297.675 | 0.000 | 0.001 | 37476.305 | 2245.509 | 1448.941 | 13.911 |
| After | 5120.043 | 1057.543 | 1175.653 | 0.000 | 0.000 | 7353.237 | 412.661 | 290.114 | 21.814 |
| Total | 26755.195 | 9601.022 | 8473.329 | 0.000 | 0.001 | 44829.539 | 2658.170 | 1739.055 | 15.027 |
| (21) | (22) | (23) | (24) | (25) | (26) | (27) | (28) | (29) | (30) | (31) |
| Operating | Wells | Workover | 3rd Party | Other | Future Net | Cumulative | Cum. Disc. | |||
| END | Expense | Gross | Net | Expense | COPAS | Deductions | Investment | Cash Flow | Cash Flow | Cash Flow |
| MO-YEAR | M$ | Count | M$ | M$ | M$ | M$ | M$ | M$ | M$ | |
| 12-2020 | 1501.546 | 252. | 99.3 | 0.000 | 0.000 | 0.000 | 0.000 | 1696.995 | 3033.582 | 2751.180 |
| 12-2021 | 1417.526 | 227. | 79.8 | 0.000 | 0.000 | 0.000 | 0.000 | 1538.992 | 4572.574 | 3965.681 |
| 12-2022 | 1378.155 | 219. | 77.9 | 0.000 | 0.000 | 0.000 | 0.000 | 1448.698 | 6021.272 | 5004.926 |
| 12-2023 | 1281.549 | 211. | 73.6 | 0.000 | 0.000 | 0.000 | 0.000 | 1298.413 | 7319.685 | 5851.648 |
|
| ||||||||||
| 12-2024 | 1082.304 | 116. | 67.8 | 0.000 | 0.000 | 0.000 | 0.000 | 1149.146 | 8468.831 | 6532.821 |
| 12-2025 | 1036.907 | 109. | 63.7 | 0.000 | 0.000 | 0.000 | 0.000 | 1029.654 | 9498.485 | 7087.674 |
| 12-2026 | 992.948 | 101. | 61.1 | 0.000 | 0.000 | 0.000 | 0.000 | 922.784 | 10421.270 | 7539.733 |
| 12-2027 | 963.722 | 97. | 58.6 | 0.000 | 0.000 | 0.000 | 0.000 | 825.667 | 11246.938 | 7907.450 |
| 12-2028 | 875.987 | 93. | 56.6 | 0.000 | 0.000 | 0.000 | 0.000 | 738.218 | 11985.156 | 8206.332 |
|
| ||||||||||
| 12-2029 | 562.156 | 63. | 29.4 | 0.000 | 0.000 | 0.000 | 0.000 | 666.727 | 12651.883 | 8451.698 |
| 12-2030 | 546.292 | 62. | 29.4 | 0.000 | 0.000 | 0.000 | 0.000 | 605.546 | 13257.429 | 8654.292 |
| 12-2031 | 511.848 | 53. | 22.1 | 0.000 | 0.000 | 0.000 | 0.000 | 549.436 | 13806.865 | 8821.402 |
| 12-2032 | 485.544 | 51. | 21.2 | 0.000 | 0.000 | 0.000 | 0.000 | 495.040 | 14301.905 | 8958.307 |
| 12-2033 | 439.155 | 47. | 20.9 | 0.000 | 0.000 | 0.000 | 0.000 | 444.673 | 14746.578 | 9070.080 |
|
| ||||||||||
| 12-2034 | 429.344 | 44. | 19.0 | 0.000 | 0.000 | 0.000 | 0.000 | 403.452 | 15150.030 | 9162.275 |
| 12-2035 | 428.190 | 42. | 18.9 | 0.000 | 0.000 | 0.000 | 0.000 | 364.483 | 15514.513 | 9237.996 |
| 12-2036 | 421.784 | 41. | 18.9 | 0.000 | 0.000 | 0.000 | 0.000 | 327.592 | 15842.105 | 9299.868 |
| 12-2037 | 394.516 | 39. | 17.7 | 0.000 | 0.000 | 0.000 | 0.000 | 293.508 | 16135.613 | 9350.264 |
|
| ||||||||||
| S Tot | 17646.246 | 2251. | 1012.4 | 0.000 | 0.000 | 0.000 | 0.000 | 16135.613 | 16135.613 | 9350.264 |
| After | 4548.920 | 461. | 248.2 | 0.000 | 0.000 | 0.000 | 0.000 | 2101.545 | 18237.154 | 9560.454 |
| Total | 22195.166 | 2712. | 1260.6 | 0.000 | 0.000 | 0.000 | 0.000 | 18237.158 | 18237.154 | 9560.454 |
Table I - PDP
Composite Reserve Estimates and Economic Forecasts
Jay Petroleum, L.L.C. Interests
Certain Oil & Gas Assets in Various States
Proved Developed Producing Reserves
As of December 31, 2018
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) |
| END MO-YEAR | Gross Oil Production MBBLS | Gross Gas Production MMCF | Gross NGL Production MBBLS | Net Oil Production MBBLS | Net Gas Sales MMCF | Net NGL Production MBBLS | Avg Oil Price $/BBL | Avg Gas Price $/MCF | Avg NGL Price $/BBL |
| 12-2019 | 807.7 | 14166.7 | 76.7 | 8.118 | 54.500 | 2.387 | 44.996 | 2.849 | 18.251 |
| 12-2020 | 710.6 | 12800.2 | 60.1 | 5.474 | 32.698 | 1.452 | 46.388 | 2.768 | 19.274 |
| 12-2021 | 640.8 | 11708.2 | 51.8 | 4.879 | 28.978 | 1.162 | 48.207 | 2.724 | 20.231 |
| 12-2022 | 579.2 | 10725.5 | 45.3 | 4.169 | 25.361 | 0.869 | 49.049 | 3.049 | 21.113 |
| 12-2023 | 528.4 | 9846.7 | 41.3 | 3.799 | 23.156 | 0.773 | 49.630 | 3.061 | 21.458 |
| 12-2024 | 482.4 | 9040.4 | 37.9 | 3.327 | 20.568 | 0.706 | 49.603 | 3.039 | 21.418 |
| 12-2025 | 433.8 | 8265.1 | 30.5 | 2.492 | 17.074 | 0.432 | 49.436 | 3.085 | 22.718 |
| 12-2026 | 399.1 | 7578.3 | 28.1 | 2.318 | 14.960 | 0.400 | 49.431 | 3.096 | 22.692 |
| 12-2027 | 367.4 | 6962.3 | 25.9 | 2.162 | 13.541 | 0.371 | 49.434 | 3.104 | 22.663 |
| 12-2028 | 338.2 | 6407.7 | 23.8 | 2.020 | 12.640 | 0.344 | 49.442 | 3.109 | 22.633 |
| 12-2029 | 311.4 | 5897.0 | 22.0 | 1.887 | 11.080 | 0.320 | 49.449 | 3.090 | 22.602 |
| 12-2030 | 286.0 | 5426.6 | 20.1 | 1.733 | 9.848 | 0.289 | 49.401 | 3.082 | 22.654 |
| 12-2031 | 260.4 | 4989.3 | 17.8 | 1.469 | 9.055 | 0.232 | 49.090 | 3.114 | 23.127 |
| 12-2032 | 239.6 | 4589.8 | 16.4 | 1.371 | 8.255 | 0.216 | 49.101 | 3.130 | 23.091 |
| 12-2033 | 218.1 | 4215.1 | 14.5 | 1.156 | 7.420 | 0.169 | 48.746 | 3.173 | 23.732 |
| 12-2034 | 199.4 | 3878.3 | 13.1 | 1.010 | 6.923 | 0.147 | 48.636 | 3.192 | 23.996 |
| 12-2035 | 182.8 | 3570.4 | 12.1 | 0.808 | 6.517 | 0.136 | 48.760 | 3.200 | 23.951 |
| 12-2036 | 168.3 | 3287.1 | 11.1 | 0.754 | 6.137 | 0.126 | 48.784 | 3.208 | 23.905 |
| 12-2037 | 154.9 | 3026.3 | 10.2 | 0.704 | 5.780 | 0.117 | 48.808 | 3.216 | 23.858 |
| S Tot | 7308.5 | 136381.1 | 558.6 | 49.651 | 314.492 | 10.648 | 48.164 | 2.986 | 20.748 |
| After | 1605.7 | 31345.7 | 98.3 | 5.190 | 30.813 | 0.609 | 48.282 | 3.188 | 26.308 |
| Total | 8914.2 | 167726.8 | 656.9 | 54.841 | 345.305 | 11.258 | 48.175 | 3.004 | 21.049 |
| Cum | 32363.5 | 559240.9 | 0.0 | ||||||
| Ult | 41712.0 | 707163.9 | 538.6 |
| (11) | (12) | (13) | (14) | (15) | (16) | (17) | (18) | (19) | (20) |
| END MO-YEAR | Oil Revenue M$ | Gas Revenue M$ | NGL Revenue M$ | Hedge Revenue M$ | Other Revenue M$ | Total Revenue M$ | Production Taxes M$ | Ad Valorem Taxes M$ | $/BOE6 |
| 12-2019 | 365.294 | 155.255 | 43.572 | 0.000 | 0.000 | 564.122 | 35.823 | 21.715 | 17.740 |
| 12-2020 | 253.951 | 90.502 | 27.994 | 0.000 | 0.000 | 372.447 | 23.216 | 16.642 | 10.663 |
| 12-2021 | 235.199 | 78.950 | 23.498 | 0.000 | 0.000 | 337.648 | 21.085 | 15.209 | 11.619 |
| 12-2022 | 204.495 | 77.316 | 18.344 | 0.000 | 0.000 | 300.156 | 18.834 | 13.369 | 11.575 |
| 12-2023 | 188.561 | 70.869 | 16.582 | 0.000 | 0.000 | 276.013 | 17.307 | 12.330 | 12.511 |
| 12-2024 | 165.019 | 62.505 | 15.126 | 0.000 | 0.000 | 242.649 | 15.240 | 10.618 | 12.775 |
| 12-2025 | 123.171 | 52.665 | 9.810 | 0.000 | 0.000 | 185.646 | 11.756 | 7.759 | 9.974 |
| 12-2026 | 114.603 | 46.312 | 9.078 | 0.000 | 0.000 | 169.993 | 10.740 | 7.163 | 10.551 |
| 12-2027 | 106.884 | 42.031 | 8.409 | 0.000 | 0.000 | 157.325 | 9.931 | 6.655 | 11.213 |
| 12-2028 | 99.853 | 39.300 | 7.792 | 0.000 | 0.000 | 146.946 | 9.279 | 6.214 | 12.012 |
| 12-2029 | 93.327 | 34.236 | 7.222 | 0.000 | 0.000 | 134.785 | 8.491 | 5.806 | 12.638 |
| 12-2030 | 85.609 | 30.351 | 6.549 | 0.000 | 0.000 | 122.508 | 7.700 | 5.339 | 13.024 |
| 12-2031 | 72.105 | 28.198 | 5.372 | 0.000 | 0.000 | 105.674 | 6.620 | 4.569 | 12.138 |
| 12-2032 | 67.308 | 25.840 | 4.978 | 0.000 | 0.000 | 98.125 | 6.142 | 4.276 | 12.842 |
| 12-2033 | 56.340 | 23.549 | 4.011 | 0.000 | 0.000 | 83.900 | 5.227 | 3.655 | 11.894 |
| 12-2034 | 49.126 | 22.097 | 3.519 | 0.000 | 0.000 | 74.742 | 4.642 | 3.232 | 11.628 |
| 12-2035 | 39.398 | 20.854 | 3.260 | 0.000 | 0.000 | 63.511 | 3.890 | 2.719 | 10.208 |
| 12-2036 | 36.788 | 19.685 | 3.021 | 0.000 | 0.000 | 59.494 | 3.646 | 2.541 | 10.887 |
| 12-2037 | 34.366 | 18.587 | 2.799 | 0.000 | 0.000 | 55.752 | 3.419 | 2.376 | 11.606 |
| S Tot | 2391.396 | 939.102 | 220.936 | 0.000 | 0.000 | 3551.434 | 222.987 | 152.189 | 12.670 |
| After | 250.578 | 98.229 | 16.030 | 0.000 | 0.000 | 364.836 | 22.325 | 17.341 | 6.267 |
| Total | 2641.974 | 1037.330 | 236.966 | 0.000 | 0.000 | 3916.270 | 245.312 | 169.530 | 12.096 |
| (21) | (22) | (23) | (24) | (25) | (26) | (27) | (28) | (29) | (30) | (31) |
| Operating | Wells | Workover | 3rd Party | Other | Future Net | Cumulative | Cum. Disc. | |||
| END | Expense | Gross | Net | Expense | COPAS | Deductions | Investment | Cash Flow | Cash Flow | Cash Flow |
| MO-YEAR | M$ | Count | M$ | M$ | M$ | M$ | M$ | M$ | ||
|
| ||||||||||
| 12-2019 | 332.690 | 124. | 9.6 | 0.000 | 0.000 | 0.000 | 0.000 | 173.893 | 173.893 | 166.362 |
| 12-2020 | 126.550 | 103. | 3.0 | 0.000 | 0.000 | 0.000 | 0.000 | 206.038 | 379.931 | 345.280 |
| 12-2021 | 121.579 | 102. | 2.9 | 0.000 | 0.000 | 0.000 | 0.000 | 179.775 | 559.706 | 487.181 |
| 12-2022 | 103.722 | 102. | 2.9 | 0.000 | 0.000 | 0.000 | 0.000 | 164.230 | 723.936 | 605.009 |
| 12-2023 | 102.098 | 101. | 2.8 | 0.000 | 0.000 | 0.000 | 0.000 | 144.277 | 868.213 | 699.108 |
| 12-2024 | 92.154 | 101. | 2.8 | 0.000 | 0.000 | 0.000 | 0.000 | 124.638 | 992.851 | 773.006 |
| 12-2025 | 56.034 | 98. | 2.5 | 0.000 | 0.000 | 0.000 | 0.000 | 110.097 | 1102.948 | 832.335 |
| 12-2026 | 53.514 | 98. | 2.5 | 0.000 | 0.000 | 0.000 | 0.000 | 98.576 | 1201.524 | 880.625 |
| 12-2027 | 52.254 | 97. | 2.4 | 0.000 | 0.000 | 0.000 | 0.000 | 88.485 | 1290.010 | 920.032 |
| 12-2028 | 52.254 | 97. | 2.4 | 0.000 | 0.000 | 0.000 | 0.000 | 79.198 | 1369.208 | 952.097 |
| 12-2029 | 49.818 | 97. | 2.4 | 0.000 | 0.000 | 0.000 | 0.000 | 70.671 | 1439.878 | 978.109 |
| 12-2030 | 46.394 | 96. | 1.7 | 0.000 | 0.000 | 0.000 | 0.000 | 63.076 | 1502.954 | 999.214 |
| 12-2031 | 37.978 | 95. | 1.6 | 0.000 | 0.000 | 0.000 | 0.000 | 56.508 | 1559.462 | 1016.403 |
| 12-2032 | 37.071 | 95. | 1.6 | 0.000 | 0.000 | 0.000 | 0.000 | 50.636 | 1610.099 | 1030.405 |
| 12-2033 | 29.762 | 94. | 1.5 | 0.000 | 0.000 | 0.000 | 0.000 | 45.256 | 1655.354 | 1041.781 |
| 12-2034 | 26.271 | 91. | 1.5 | 0.000 | 0.000 | 0.000 | 0.000 | 40.596 | 1695.951 | 1051.058 |
| 12-2035 | 20.239 | 90. | 1.2 | 0.000 | 0.000 | 0.000 | 0.000 | 36.663 | 1732.614 | 1058.675 |
| 12-2036 | 20.239 | 90. | 1.2 | 0.000 | 0.000 | 0.000 | 0.000 | 33.068 | 1765.682 | 1064.921 |
| 12-2037 | 20.239 | 90. | 1.2 | 0.000 | 0.000 | 0.000 | 0.000 | 29.719 | 1795.401 | 1070.023 |
| S Tot | 1380.858 | 1861. | 47.6 | 0.000 | 0.000 | 0.000 | 0.000 | 1795.401 | 1795.401 | 1070.023 |
| After | 67.189 | 2437. | 3.2 | 0.000 | 0.000 | 0.000 | 0.000 | 257.981 | 2053.381 | 1092.895 |
| Total | 1448.048 | 4298. | 50.8 | 0.000 | 0.000 | 0.000 | 0.000 | 2053.381 | 2053.381 | 1092.895 |
APPENDIX
Explanatory Comments for Summary Tables
HEADINGS
Table I
Description of Table Information
Identity of Interest Evaluated
Property Description – Location
Reserve Classification and Development Status
Effective Date of Evaluation
| FORECAST | |
| (Columns) | |
| (1) (11) (21) | Calendar or Fiscal years/months commencing on effective date. |
| (2) (3) (4) | Gross Production (8/8th) for the years/months which are economical. These are expressed as thousands of barrels (Mbbl) and millions of cubic feet (MMcf) of gas at standard conditions. Total future production, cumulative production to effective date, and ultimate recovery at the effective date are shown following the annual/monthly forecasts. |
| (5) (6) (7) | Net Production accruable to evaluated interest is calculated by multiplying the revenue interest times the gross production. These values take into account changes in interest and gas shrinkage. |
| (8) | Average (volume weighted) gross liquid price per barrel before deducting production-severance taxes. |
| (9) | Average (volume weighted) gross gas price per Mcf before deducting production-severance taxes. |
| (10) | Average (volume weighted) gross NGL price per barrel before deducting production-severance taxes. |
| (12) | Revenue derived from oil sales -- column (5) times column (8). |
| (13) | Revenue derived from gas sales -- column (6) times column (9). |
| (14) | Revenue derived from NGL sales -- column (7) times column (10). |
| (15) | Revenue derived from hedge positions. |
| (16) | Total Revenue – sum of column (12) through column (15). |
| (17) | Production-Severance taxes deducted from gross oil, gas and NGL revenue. |
| (18) | Revenue after taxes – column (16) less column (17). |
| (19) | Ad Valorem taxes. |
| (20) | $/BOE6 – is the total of column (22), column (25), column (26), and column (27) divided by Barrels of Oil Equivalent (“BOE”). BOE is net oil production column (5) plus net gas production column (6) converted to oil at six Mcf gas per one bbl oil plus net NGL production column (7) converted to oil at one bbl NGL per 0.65 bbls of oil. |
| (22) | Operating Expenses are direct operating expenses to the evaluated working interest and may include combined fixed rate administrative overhead charges for operated oil and gas producers known as COPAS. |
| (23) | Average gross wells. |
| (24) | Average net wells are gross wells times working interest. |
| (25) | Work-over Expenses are non-direct operating expenses and may include maintenance, well service, compressor, tubing, and pump repair. |
| (26) | 3rd Party COPAS are combined fixed rate administrative overhead charges for non-operated oil and gas producers. |
| (27) | Other Deductions may include compression-gathering expenses, transportation costs and water disposal costs. |
| (28) | Investments, if any, include re-completions, future drilling costs, pumping units, etc. and may include either tangible or intangible or both, and the costs for plugging and the salvage value of equipment at abandonment may be shown as negative investments at end of life. |
| (29) (30) | Future Net Cash Flow is column (18) less the total of column (19), column (22), column (25), column (26), column (27) and column (28). The data in column (29) are accumulated in column (30). Federal income taxes have not been considered. |
| (31) | Cumulative Discounted Cash Flow is calculated by discounting monthly cash flows at the specified annual rates. |
| MISCELLANEOUS | ||
| DCF Profile | • | The cumulative cash flow discounted at six different interest rates are shown at the bottom of columns (30-31). Interest has been compounded monthly. The DCF’s for the “Without Hedge” case may be shown to the left of the main DCF profile. |
| Life | • | The economic life of the appraised property is noted in the lower right-hand corner of the table. |
| Footnotes | • | Comments regarding the evaluation may be shown in the lower left-hand footnotes. |
| Price Deck | • | A table of oil and gas prices, price caps and escalation rates may be shown in the lower middle footnotes. |
APPENDIX
Methods Employed in the Estimation of Reserves
The four methods customarily employed in the estimation of reserves are (1) production performance, (2) material balance, (3) volumetric and (4) analogy. Most estimates, although based primarily on one method, utilize other methods depending on the nature and extent of the data available and the characteristics of the reservoirs.
Basic information includes production, pressure, geological and laboratory data. However, a large variation exists in the quality, quantity and types of information available on individual properties. Operators are generally required by regulatory authorities to file monthly production reports and may be required to measure and report periodically such data as well pressures, gas-oil ratios, well tests, etc. As a general rule, an operator has complete discretion in obtaining and/or making available geological and engineering data. The resulting lack of uniformity in data renders impossible the application of identical methods to all properties, and may result in significant differences in the accuracy and reliability of estimates.
A brief discussion of each method, its basis, data requirements, applicability and generalization as to its relative degree of accuracy follows:
Production performance. This method employs graphical analyses of production data on the premise that all factors which have controlled the performance to date will continue to control and that historical trends can be extrapolated to predict future performance. The only information required is production history. Capacity production can usually be analyzed from graphs of rates versus time or cumulative production. This procedure is referred to as "decline curve" analysis. Both capacity and restricted production can, in some cases, be analyzed from graphs of producing rate relationships of the various production components. Reserve estimates obtained by this method are generally considered to have a relatively high degree of accuracy with the degree of accuracy increasing as production history accumulates.
Material balance. This method employs the analysis of the relationship of production and pressure performance on the premise that the reservoir volume and its initial hydrocarbon content are fixed and that this initial hydrocarbon volume and recoveries therefrom can be estimated by analyzing changes in pressure with respect to production relationships. This method requires reliable pressure and temperature data, production data, fluid analyses and knowledge of the nature of the reservoir. The material balance method is applicable to all reservoirs, but the time and expense required for its use is dependent on the nature of the reservoir and its fluids. Reserves for depletion type reservoirs can be estimated from graphs of pressures corrected for compressibility versus cumulative production, requiring only data that are usually available. Estimates for other reservoir types require extensive data and involve complex calculations most suited to computer models which makes this method generally applicable only to reservoirs where there is economic justification for its use. Reserve estimates obtained by this method are generally considered to have a degree of accuracy that is directly related to the complexity of the reservoir and the quality and quantity of data available.
Volumetric. This method employs analyses of physical measurements of rock and fluid properties to calculate the volume of hydrocarbons in-place. The data required are well information sufficient to determine reservoir subsurface datum, thickness, storage volume, fluid content and location. The volumetric method is most applicable to reservoirs which are not susceptible to analysis by production performance or material balance methods. These are most commonly newly developed and/or no-pressure depleting reservoirs. The amount of hydrocarbons in-place that can be recovered is not an integral part of the volumetric calculations but is an estimate inferred by other methods and a knowledge of the nature of the reservoir. Reserve estimates obtained by this method are generally considered to have a low degree of accuracy; but the degree of accuracy can be relatively high where rock quality and subsurface control is good and the nature of the reservoir is uncomplicated.
Analogy. This method, which employs experience and judgment to estimate reserves, is based on observations of similar situations and includes consideration of theoretical performance. The analogy method is a common approach used for “resource plays,” where an abundance of wells with similar production profiles facilitates the reliable estimation of future reserves with a relatively high degree of accuracy. The analogy method may also be applicable where the data are insufficient or so inconclusive that reliable reserve estimates cannot be made by other methods. Reserve estimates obtained in this manner are generally considered to have a relatively low degree of accuracy.
Much of the information used in the estimation of reserves is itself arrived at by the use of estimates. These estimates are subject to continuing change as additional information becomes available. Reserve estimates which presently appear to be correct may be found to contain substantial errors as time passes and new information is obtained about well and reservoir performance.
