Attached files
Exhibit 99.4
AUSTIN 3345 Bee Cave Road Suite 201 Austin, Texas 78746 USA Tel 512.732.9812 Fax 512.732.9816 |
HOUSTON 1001 McKinney Suite 420 Houston, Texas 77002 USA Tel 713.559.9950 Fax 713.559.9959 |
February 17, 2011
Ms. Claudia Arango
Gerente General
Ramshorn International Limited
Carrera 7 77-07 Piso 7
Bogotá, D.C. Colombia
Gerente General
Ramshorn International Limited
Carrera 7 77-07 Piso 7
Bogotá, D.C. Colombia
Re: | Ramshorn International Limited 1P Reserve Report As of January 1, 2011 Cachicamo Concession SEC Guideline Case |
Dear Ms. Arango:
Pursuant to your request, Lonquist & Co. LLC (L&Co) has estimated the future hydrocarbon Reserves
and projected the associated future revenues net to the interests owned by Ramshorn International
Limited (Ramshorn) as of January 1, 2011. The assets evaluated in this report are in the
Ramshorn-operated Andarrios, Ciriguelo, Guacharaca, Hoatzin, and IVF fields in the Republic of
Colombia. At the request of Ramshorn, we have evaluated Proved Developed Producing (PDP), Proved
Developed Non-Producing (PDNP), and Proved Undeveloped (PUD) Reserves. Collectively, volumes in
these categories are known as 1P Reserves.
Our conclusions, as of January 1, 2011, are summarized below:
Net to Ramshorn International Limited | ||||||||||||||||||||||||||||
Proved | Proved | Total | Total | Total | Grand | |||||||||||||||||||||||
SEC Guideline Case | Producing | Non-Producinga | Undeveloped | Provedb | Probableb | Possibleb | Totala | |||||||||||||||||||||
Estimated Future Net Oil/Condensate, bbl |
572,050 | 1,005,079 | 429,176 | 2,006,305 | 0 | 0 | 2,006,305 | |||||||||||||||||||||
Estimated Future Net Gas, MMcf |
0.0 | 0.0 | 0.0 | 0.0 | 0 | 0 | 0.0 | |||||||||||||||||||||
Total Future
Gross Revenue, $ |
44,742,230 | 78,611,039 | 33,567,480 | 156,920,750 | 0 | 0 | 156,920,750 | |||||||||||||||||||||
Estimated
Future Production Taxes, $ |
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Estimated
Future Operating Expenses, $ |
22,659,882 | 45,614,617 | 15,281,151 | 83,555,651 | 0 | 0 | 83,555,651 | |||||||||||||||||||||
Estimated
Future Capital Costs, $ |
2,131,500 | 3,783,500 | 10,300,850 | 16,215,850 | 0 | 0 | 16,215,850 | |||||||||||||||||||||
Estimated
Future Net Revenue (FNR), $ |
19,950,848 | 29,212,932 | 7,985,478 | 57,149,258 | 0 | 0 | 57,149,258 | |||||||||||||||||||||
Discounted
FNR at 10%, $ |
19,719,379 | 21,816,998 | 5,356,843 | 46,893,219 | 0 | 0 | 46,893,219 | |||||||||||||||||||||
Discounted
FNR at 15%, $ |
19,191,449 | 19,378,090 | 4,241,989 | 42,811,527 | 0 | 0 | 42,811,527 | |||||||||||||||||||||
Estimated Net Revenues by Year, $ |
||||||||||||||||||||||||||||
2011 |
12,928,206 | 6,976,905 | -7,031,666 | 12,873,446 | 0 | 0 | 12,873,446 | |||||||||||||||||||||
2012 |
7,493,486 | 5,130,822 | 5,546,492 | 18,170,801 | 0 | 0 | 18,170,801 | |||||||||||||||||||||
2013 |
1,327,892 | 4,232,006 | 3,975,900 | 9,535,798 | 0 | 0 | 9,535,798 | |||||||||||||||||||||
Subtotal |
21,749,584 | 16,339,733 | 2,490,726 | 40,580,045 | 0 | 0 | 40,580,045 | |||||||||||||||||||||
Thereafter |
-1,798,736 | 12,873,199 | 5,494,752 | 16,569,213 | 0 | 0 | 16,569,213 | |||||||||||||||||||||
Total |
19,950,848 | 29,212,932 | 7,985,478 | 57,149,258 | 0 | 0 | 57,149,258 | |||||||||||||||||||||
Estimated Average Net Prod. Rate - 2011 |
||||||||||||||||||||||||||||
Oil/Condensate, B/D |
821 | 467 | 117 | 1,405 | 0 | 0 | 1,405 | |||||||||||||||||||||
Gas, Mcf/D |
0.0 | 0.0 | 0.0 | 0.0 | 0 | 0 | 0.0 |
a | Column includes the Proved Developed Non-Producing, shut-in and behind-pipe classifications | |
b | Totals might not match detailed cash flow due to computer rounding |
Ramshorn
International Limited Cachicamo Block 1P Reserve Report
SEC Guideline Case as of January 1,2011
February 17, 2011
Page 2 of 4
SEC Guideline Case as of January 1,2011
February 17, 2011
Page 2 of 4
Purpose of Report
This report has been prepared to provide the management of Ramshorn with a projection of estimated
remaining hydrocarbon Reserves and projected future net revenues as of January 1, 2011. These
estimates have not been adjusted for risk.
Standards of Practice
This report has been prepared in accordance with our understanding of the Securities and Exchange
Commission, S-X Reg. §210.4-10a, dated December 30, 2008
(Modernization of Oil and Gas Reporting;
Final Rule; January 14, 2009); we have evaluated the 1P Reserves. The applicable SEC oil and gas
Reserve definitions are attached hereto.
Reserve Estimates
Production data in this report were updated through December 31, 2010. Extrapolation of historical
production data was utilized for those producing properties where sufficient data were available to
suggest decline trends. In addition to rate vs. time decline curve analysis, oil cut vs. cumulative
oil and water cut vs. cumulative oil data were used to determine Reserves for producing properties,
where applicable. Reserves assigned to the remaining producing properties and the non-producing
assets were determined by analogy to offset wells producing from similar formations or by
volumetric analysis. Reserves assigned by analogy and volumetric analysis are subject to greater
revision than those projected using established performance trends.
Geological interpretations and maps of the productive sands in all fields were independently
prepared by L&Co using subsurface and seismic data provided by Ramshorn. The net pay values
included in these maps were generated through petrophysical analyses independently prepared by
L&Co. We gridded the maps to determine reservoir volumes and the results were used in the
volumetric analyses.
As of January 1, 2011, the Total 1P net remaining Reserves were estimated to be 2,006,305 barrels
of oil. At the time of this report, the net present value, discounted at 10%, of the remaining
Proved Reserves was $46,893,219.
Product Prices and Differentials
The base oil price of $79.81 per barrel utilized herein is the average oil price of the first
trading day of each month of 2010 as reported by the Energy Information Administration. As
stipulated by SEC regulations, no price escalations were included in this report. Product price
differentials were calculated by comparing the realized prices, as calculated from revenue
statements, to the average NYMEX futures price for the same calendar month. This average
differential is expressed as a percentage multiplier on price in the economic model. The realized
product prices presented in the cash flows do not reflect deductions for oil transportation costs.
These costs are variable and were included as an expense per unit volume.
Ramshorn
International Limited Cachicamo Block 1P Reserve Report
SEC Guideline Case as of January 1, 2011
February 17, 2011
Page 3 of 4
SEC Guideline Case as of January 1, 2011
February 17, 2011
Page 3 of 4
Operating Costs and Expenditures
Direct well operating expense data, input as dollars per month in the economic models, were
supplied by Ramshorn. These direct operating costs were based on actual expenses and were adjusted
for non-recurring costs, where applicable. We have accepted these expense data as correct. Direct
operating costs were not escalated in this report. The individual well projections of oil and gas
production ceased when the operating expenses exceeded the gross revenues.
Ramshorn transports its crude oil by truck from Cachicamo Block to Cusiana Station to be injected
in the OCENSA pipeline and transported to Covenas Port. According to Ramshorn, the total
transportation charge to this point is $11.81 per barrel. Based on experience with other clients in
the area, this cost is reasonable.
Development costs included in this report were provided by Ramshorn and were based on
authorizations for expenditures for the proposed work or actual costs for similar projects. The
timing of investments was dependent upon the economic life of the currently producing zone, as well
as Ramshorns long-range plans and experience in the area. Development costs were not escalated in
this report.
Values Not Considered
In all cases, we have attempted to account for all deductions from gross revenues except for the
following:
| U.S. or Colombian Income Taxes | ||
| Depreciation, depletion, and/or amortization, if any | ||
| Costs in excess of revenues of uneconomic leases | ||
| Environmental restoration costs, if any | ||
| Product price hedges, if any |
No value has been assigned to non-producing acreage or to acreage held by production.
Report Qualifications
Estimates of future revenues were based on projections of recoverable hydrocarbons, rates of
production, timing of recompletions and drilling, operating costs, direct taxes, and product
prices. Any unusual combination of the many factors, including weather, political risk or acts of
terrorism could result in future receipts being considerably less or more than those estimated
herein.
The Reserves and revenues for specific properties should be considered in context with the overall
report.
THE REVENUES AND PRESENT WORTH OF FUTURE NET REVENUES ARE NOT REPRESENTED TO BE MARKET VALUES
EITHER FOR THE INDIVIDUAL PROPERTIES OR IN A TOTAL PROPERTY BASIS.
Ramshorn
International Limited Cachicamo Block IP Reserve Report
SEC Guideline Case as of January 1, 2011
February 17, 2011
Page 4 of 4
SEC Guideline Case as of January 1, 2011
February 17, 2011
Page 4 of 4
Data Sources
Key data, including well information, geologic interpretations, direct operating costs, historical
production data, and realized product prices were supplied by Ramshorn. Ownership data were
supplied by Ramshorn. The ownership interests and other factual data were accepted without
independent verification.
We retain in our files digital databases for all properties and certain other hard copy information
that we believe pertinent. We have not inspected the properties evaluated in this report, nor have
we conducted independent well tests.
Independent Evaluation
Neither Lonquist & Co. LLC, nor any of its employees have any interest or ownership in the subject
properties, and neither our employment nor compensation is contingent on our findings herein.
Sincerely, | ||||
LONQUIST & CO., LLC Texas Registration No. F-895 Don E. Charbula, P.E. Vice President Texas License No. 73435 |
||||
Date Signed: February 17, 2011 | ||||
Austin, Texas | ||||
Tereasa S. Montemayor | ||||
Sr. Petroleum Engineer |
AREA OF INTEREST
RAMSHORN INTERNATIONAL LIMITED
RAMSHORN INTERNATIONAL LIMITED
OIL AND GAS RESERVE DEFINITIONS
The Securities and Exchange Commission, SX Reg. § 210.4-10 dated November 18,1981 as amended
September 19,1989 requires adherence to the following definitions of Proved oil and gas reserves:
Definitions:
(2) Proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude
oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions, i.e., prices and costs as of the date the estimate is made.
Prices include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.
(i) Reservoirs are considered proved if economic producibility is supported by either actual
production or conclusive formation test. The area of a reservoir considered proved includes (A)
that portion delineated by drilling and defined by gas-oil and/or
oil-water contacts, if any; and
(B) the immediately adjoining portions not yet drilled, but which can be reasonably judged as
economically productive on the basis of available geological and engineering data. In the absence
of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls
the lower proved limit of the reservoir.
(ii) Reserves which can be produced economically through application of improved recovery
techniques (such as fluid injection) are included in the proved classification when successful
testing by a pilot project, or the operation of an installed program in the reservoir, provides
support for the engineering analysis on which the project or program was based.
(iii) Estimates of proved reserves do not include the following: (A) oil that may become available
from known reservoirs but is classified separately as indicated additional reserves; (B) crude
oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt
because of uncertainty as to geology, reservoir characteristics, or economic factors; (C) crude
oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and (D) crude
oil, natural gas, and natural gas liquids, that may be recovered from oil shales, coal, gilsonite
and other such sources.
(3) Proved developed oil and gas reserves. Proved developed oil and gas reserves are reserves that
can be expected to be recovered through existing wells with existing equipment and operating
methods. Additional oil and gas expected to be obtained through the application of fluid injection
or other improved recovery techniques for supplementing the natural forces and mechanisms of
primary recovery should be included as proved developed reserves only after testing by a pilot
project or after the operation of an installed program has confirmed through production response
that increased recovery will be achieved.
(4) Proved undeveloped reserves. Proved undeveloped oil and gas reserves are reserves that are
expected to be recovered from new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for recompletion. Reserves on undrilled acreage shall be
limited to those drilling units offsetting productive units that are reasonably certain of
production when drilled. Proved reserves for other undrilled units can be claimed only where it can
be demonstrated with certainty that there is continuity of production from the existing productive
formation. Under no circumstances should estimates, for proved undeveloped reserves be attributable
to any acreage or which an application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests in the area and in
the same reservoir.
Amended SEC guidelines Reg. § 210.4-10 definitions (Modernization of Oil and Gas Reporting; Final
Rule; January 14, 2009):
(17) Possible reserves. Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves.
(i) When deterministic methods are used, the total quantities ultimately recovered from a project
have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic
methods are used, there should be at least a 10 percent probability that the total quantities
ultimately recovered will equal or exceed the estimated proved plus probable plus possible reserves
estimates.
(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where
data control and interpretations of available data are progressively less certain. Frequently, this
will be in areas where geoscience and engineering data are unable to define clearly the area and
vertical limits of commercial production from the reservoir by defined project.
(18) Probable reserves. Probable reserves are those additional reserves that are less certain to be
recovered than proved reserves, but which, together with proved reserves, are as likely as not to
be recovered.
(i) When deterministic methods are used, that the actual remaining quantities recovered will exceed
the sum of the estimated proved plus probable plus reserves. When probabilistic methods are used,
there should be at least a 50 percent probability that the quantities actually recovered will equal
or exceed the proved plus probable reserves estimates.
(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where
data control or interpretations of available data are less certain, even if the interpreted
reservoir continuity of structure or productivity does not meet the reasonable certainty criterion.
Probable reserves may be assigned to areas that are structurally higher than the proved area if
these areas are in communication with the proved reservoir.