Attached files
| file | filename |
|---|---|
| 10-K - FORM 10-K - EVERFLOW EASTERN PARTNERS LP | c98552e10vk.htm |
| EX-32.1 - EXHIBIT 32.1 - EVERFLOW EASTERN PARTNERS LP | c98552exv32w1.htm |
| EX-31.2 - EXHIBIT 31.2 - EVERFLOW EASTERN PARTNERS LP | c98552exv31w2.htm |
| EX-31.1 - EXHIBIT 31.1 - EVERFLOW EASTERN PARTNERS LP | c98552exv31w1.htm |
| EX-14.1 - EXHIBIT 14.1 - EVERFLOW EASTERN PARTNERS LP | c98552exv14w1.htm |
Exhibit 99.1
February 23, 2010
Everflow Eastern Partners, L.P.
585 West Main Street
Canfield, OH 44406
585 West Main Street
Canfield, OH 44406
ATTENTION: Mr. Brian Staebler
| SUBJECT: | Evaluation of Oil and Gas Reserves | |||
| To the Interests of Everflow Eastern Partners, L.P. | ||||
| In Certain Properties Located in Various States | ||||
| Pursuant to the Requirements of the | ||||
| Securities and Exchange Commission | ||||
| Effective December 31, 2009 | ||||
| Job 09.1148 |
At the request of Everflow Eastern Partners, L.P. (Everflow), Wright & Company, Inc. (Wright)
has performed an evaluation to estimate proved reserves and associated cash flow and economics from
certain properties to the subject interests. This evaluation was authorized by Mr. Brian Staebler
of Everflow. Projections of the reserves and cash flow to the evaluated interests were based on
specified economic parameters, operating conditions, and government regulations considered
applicable at the effective date and are pursuant to the financial reporting requirements of the
Securities and Exchange Commission (SEC). It is the understanding of Wright that the purpose of
this evaluation is for inclusion in relevant registration statements or other filings to the SEC.
The following is a summary of the results of the evaluation effective December 31, 2009.
| Total | ||||||||||||
| Everflow Eastern | Proved Developed | Proved | ||||||||||
| Partners, L.P. | Producing | Nonproducing | Developed | |||||||||
| SEC Parameters | (PDP) | (PDNP) | (PDP & PDNP) | |||||||||
Net Reserves to the
Evaluated Interests |
||||||||||||
Oil, Mbbl: |
589.616 | 11.886 | 601.502 | |||||||||
Gas, MMcf: |
31,310.087 | 250.167 | 31,560.254 | |||||||||
Gas Equivalent, MMcfe
(6 Mcf = 1 bbl) |
34,847.783 | 321.483 | 35,169.266 | |||||||||
Cash Flow (BTAX), M$
Undiscounted: |
89,635.251 | 1,200.456 | 90,835.707 | |||||||||
Discounted at 10%
Per Annum: |
53,467.184 | 763.286 | 54,230.470 | |||||||||
The properties evaluated in this report are located in the states of New York, Ohio, and
Pennsylvania. According to Everflow, the total proved reserves included in this evaluation
represent 100 percent of the reported total proved reserves of Everflow.
Proved oil and gas reserves are those quantities of oil and gas which can be estimated with
reasonable certainty to be economically producible under existing economic conditions, operating
methods, and government regulations. As specified by the SEC regulations, when calculating
economic producibility, the base product price must be the 12-month average price, calculated as
the unweighted arithmetic average of the first-day-of-the-month price for each month within the
prior 12-month period. The benchmark base gas price used for this evaluation was $4.128 per
Million British thermal units (MMBtu) for natural gas posted at Dominion South Point for Appalachia
listed in Platts Gas Daily. The benchmark base oil price used for this evaluation was $61.18 per
barrel of West Texas Intermediate (WTI) oil at Cushing, OK. The WTI base price was reduced by 6.05
per barrel to reach the Ergon Oil Purchasing — West Virginia posted price for Ohio, in accordance
with the instructions of Everflow. These benchmark prices were adjusted for energy content,
quality, and basis differential, as appropriate. Prices for oil and gas were held constant for the
life of the properties.
Oil and other liquid hydrocarbons are expressed in thousands of United States (U.S.) barrels
(Mbbl), one barrel equaling 42 U.S. gallons. Gas volumes are expressed in millions of standard
cubic feet (MMcf) at 60 degrees Fahrenheit and at the legal pressure base that prevails in the
state in which the reserves are located. No adjustment of the individual gas volumes to a common
pressure base has been made.
Net income to the evaluated interests is the cash flow after consideration of royalty revenue
payable to others, standard state and county taxes, operating expenses, and investments as
applicable. The cash flow is before federal income tax (BTAX) and excludes consideration of any
encumbrances against the properties if such exist. The cash flow (BTAX) was discounted at an
annual rate of 10.00 percent (PCT) in accordance with the reporting requirements of the SEC.
The estimates of reserves contained in this report were determined by acceptable industry
methods and to the level of detail that Wright deemed appropriate. Where sufficient production
history and other data were available, reserves for producing properties were determined by
extrapolation of historical production or sales trends. Analogy to similar producing properties
was used for development projects and for those properties that lacked sufficient production
history to yield a definitive estimate of reserves. When appropriate, Wright may have also
utilized volumetric calculations and log correlations in the determination of estimated ultimate
recovery (EUR). These calculations are often based upon limited log and/or core analysis data and
incomplete reservoir fluid and rock formation data. Since these limited data must frequently be
extrapolated over an assumed drainage area, subsequent production performance trends or material
balance calculations may cause the need for significant revisions to the estimates of reserves.
Oil and gas reserves were evaluated for the proved developed producing (PDP) and proved
developed nonproducing (PDNP) categories. The summary classification of total proved reserves
combines the PDP and PDNP categories. In preparing this evaluation, no attempt has been made to
quantify the element of uncertainty associated with any category. Reserves were assigned to each
category as warranted. Wright is not aware of any local, state, or federal regulations that would preclude Everflow from continuing to produce from
currently active wells.
There are significant uncertainties inherent in estimating reserves, future rates of
production, and the timing and amount of future costs. Oil and gas reserves estimates must be
recognized as a subjective process that cannot be measured in an exact way, and estimates of others
might differ materially from those of Wright. The accuracy of any reserves estimate is a function
of quantity and quality of available data and of subjective interpretations and judgments. It
should be emphasized that production data subsequent to the date of these estimates or changes in
the analogous properties may warrant revisions of such estimates. Accordingly, reserves estimates
are often different from the quantities of oil and gas that ultimately are recovered.
All data utilized in the preparation of this report were provided by Everflow. No inspection
of the properties was made as this was not considered to be within the scope of this evaluation.
Wright has not independently verified the accuracy and completeness of information and data
furnished by Everflow with respect to ownership interests, oil and gas production or sales,
historical costs of operation and development, product prices, or agreements relating to current
and future operations and sales of production. Wright requested and received detailed information
allowing Wright to check and confirm any calculations provided by Everflow with regard to product
pricing, appropriate adjustments, and lease operating expenses. Furthermore, if in the course of
Wright’s examination something came to our attention that brought into question the validity or
sufficiency of any information or data, Wright did not rely on such information or data until we
had satisfactorily resolved our questions relating thereto or independently verified such
information or data. In accordance with the requirements of the SEC, all operating costs were held
constant for the life of the properties.
It should be noted that neither salvage values nor abandonment costs were included in the
economic parameters in accordance with the instructions of Everflow. It was assumed that any
salvage value would be directly offset by the cost to abandon the property. Wright has not
performed a detailed study of the abandonment costs or the salvage values and offers no opinion as
to Everflow’s assumptions.
No consideration was given in this report to potential environmental liabilities that may
exist concerning the properties evaluated. There are no costs included in this evaluation for
potential liability for restoration and to clean up damages, if any, caused by past or future
operating practices.
Wright is an independent petroleum consulting firm founded in 1988 and does not own any
interests in the oil and gas properties covered by this report. No employee, officer, or director
of Wright is an employee, officer, or director of Everflow nor does Wright or any of its employees
have direct financial interest in Everflow. Neither the employment of nor the compensation
received by Wright is contingent upon the values assigned or the opinions rendered regarding the
properties covered by this report.
This report is solely for the information of Everflow and for the information and assistance
of its independent public accountants in connection with their review of and report upon the
financial statements of Everflow and for reporting disclosures as required by the SEC.
Notwithstanding, Wright understands and authorizes that this estimation of reserves may be included along with certain financial presentations on behalf of Everflow.
This report should not be used, circulated or quoted for any other purpose without the express
written consent of the undersigned, an officer of Wright, or except as required by law.
The professional qualifications of the petroleum consultants responsible for the evaluation of
the reserves and economics information discussed in this report meet the standards of Reserves
Estimator as defined in the Standards Pertaining to the Estimating and Auditing of Oil and Gas
Reserves Information as promulgated by the Society of Petroleum Engineers.
It has been a pleasure to serve you by preparing this evaluation. All related data will be
retained in our files and are available for your review.
| Very truly yours, Wright & Company, Inc. |
||||
| By: | /s/ D. Randall Wright | |||
| D. Randall Wright | ||||
| President | ||||