Attached files
file | filename |
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EX-10.37 - EX-10.37 - PAR PACIFIC HOLDINGS, INC. | d80594exv10w37.htm |
10-K - FORM 10-K - PAR PACIFIC HOLDINGS, INC. | d80594e10vk.htm |
EX-31.2 - EX-31.2 - PAR PACIFIC HOLDINGS, INC. | d80594exv31w2.htm |
EX-32.1 - EX-32.1 - PAR PACIFIC HOLDINGS, INC. | d80594exv32w1.htm |
EX-21.1 - EX-21.1 - PAR PACIFIC HOLDINGS, INC. | d80594exv21w1.htm |
EX-23.1 - EX-23.1 - PAR PACIFIC HOLDINGS, INC. | d80594exv23w1.htm |
EX-32.2 - EX-32.2 - PAR PACIFIC HOLDINGS, INC. | d80594exv32w2.htm |
EX-23.2 - EX-23.2 - PAR PACIFIC HOLDINGS, INC. | d80594exv23w2.htm |
EX-31.1 - EX-31.1 - PAR PACIFIC HOLDINGS, INC. | d80594exv31w1.htm |
EX-10.36 - EX-10.36 - PAR PACIFIC HOLDINGS, INC. | d80594exv10w36.htm |
EX-10.16 - EX-10.16 - PAR PACIFIC HOLDINGS, INC. | d80594exv10w16.htm |
EX-10.25 - EX-10.25 - PAR PACIFIC HOLDINGS, INC. | d80594exv10w25.htm |
EX-10.38 - EX-10.38 - PAR PACIFIC HOLDINGS, INC. | d80594exv10w38.htm |
Exhibit 99.1
DELTA PETROLEUM CORPORATION
ESTIMATED RESERVES
AND NON ESCALATED REMAINING REVENUE
AS OF DECEMBER 31, 2010
RALPH E. DAVIS ASSOCIATES, INC.
HOUSTON, TEXAS
HOUSTON, TEXAS
February 28, 2011
Delta Petroleum Corporation
370 Seventeenth Street, Suite 4300
Denver, Colorado 80202
370 Seventeenth Street, Suite 4300
Denver, Colorado 80202
Attn: Mr. Carl E. Lakey
CEO
CEO
Re: Estimated Reserves and Non Escalated Future
Net Revenue Remaining as of December 31, 2010
Delta Petroleum Corporation
Net Revenue Remaining as of December 31, 2010
Delta Petroleum Corporation
Dear Mr. Lakey:
At your request the firm of Ralph E. Davis Associates, Inc. of Houston, Texas has prepared an
estimate of the oil and natural gas reserves on specific leaseholds in which Delta Petroleum
Corporation (Delta) has certain interests. The interests evaluated are applicable to specific oil
and gas properties in which Delta may or may not be the operator. This report presents our
estimate of the proved developed producing, non-producing and undeveloped reserves anticipated to
be produced from those leaseholds and remaining as of December 31, 2010.
Davis has evaluated 100% of Deltas proved developed and undeveloped properties located in various
states of the United States. It is our opinion that these properties represent all of Deltas oil
and gas assets that may be classified as proved in accordance with the Securities Exchange
Commission directives as detailed later in this report.
The proved reserves presented herein conform to the definitions of the Securities and Exchange
Commission as found in Part 210Form and Content of and Requirements for Financial Statements,
Securities Act of 1933, Securities Exchange Act of 1934, Public Utility Holding Company Act of
1935, Investment Company Act of 1940, Investment Advisers Act of 1940, and Energy Policy and
Conservation Act of 1975, under Rules of General Application § 210.4-10 Financial accounting and
reporting for oil and gas producing activities pursuant to the Federal securities laws and the
Energy Policy and Conservation Act of 1975. A summation of these definitions is included
as a portion of this letter.
1717 St. James Place, Suite 460 Houston, Texas 77056 Office 713-622-8955 Fax 713-626-3664 www.ralphedavis.com
Worldwide Energy Consultants Since 1924
Worldwide Energy Consultants Since 1924
Delta Petroleum Corporation Estimated Reserves and Non Escalated Future Net Revenue Remaining as of December 31, 2010 |
February 28, 2011 Page 2 |
We have also estimated the future net revenue and discounted present value associated with these
reserves as of December 31, 2010, utilizing a scenario of non-escalated product prices as well as
non-escalated costs of operations, i.e., prices and costs were not escalated above current values
as detailed later in this report. The present value is presented for your information and should
not be construed as an estimate of the fair market value.
The results of our study may be summarized as follows:
Non Escalated Pricing Scenario
Estimated Reserves and Future Net Income
Net to Delta Petroleum Corporation
As of December 31, 2010
Estimated Reserves and Future Net Income
Net to Delta Petroleum Corporation
As of December 31, 2010
Estimated Net Reserves | Estimated Future Net Income ($1000) | |||||||||||||||
Reserve Category | MBarrels | MMCF | Undiscounted | Discounted@ 10% | ||||||||||||
PROVED
RESERVES |
||||||||||||||||
Producing |
1,671.2 | 96,911.6 | $ | 305,227.4 | $ | 166,642.8 | ||||||||||
Non-Producing |
188.4 | 15,621.9 | $ | 45,902.3 | $ | 17,397.2 | ||||||||||
Undeveloped |
60.4 | 10,145.2 | $ | 20,986.7 | $ | 8,053.6 | ||||||||||
TOTAL PROVED |
1,919.9 | 122,678.7 | $ | 372,116.5 | $ | 192,093.5 |
Liquid volumes are expressed in thousands of barrels (MBbls) of stock tank oil. Gas volumes are
expressed in millions of standard cubic feet (MMSCF) at the official temperature and pressure bases
of the areas wherein the gas reserves are located.
DATA SOURCE
Basic well and field data used in the preparation of this report were furnished by Delta or were
obtained from commercial sources. Records as they pertain to factual matters such as acreage
controlled, the number and depths of wells, reservoir pressure and production history, the
existence of contractual obligations to others and similar matters were accepted as presented.
RALPH E. DAVIS ASSOCIATES, INC.
Texas Registered Engineering Firm F-1529
Texas Registered Engineering Firm F-1529
Delta Petroleum Corporation Estimated Reserves and Non Escalated Future |
February 28, 2011 Page 3 |
Net Revenue Remaining as of December 31, 2010
Additionally, the analyses of these properties utilized not only the basic data on the subject
wells but also data on analogous properties as provided. Well logs, ownership interest, revenues
received from the sale of products and operating costs were furnished by Delta. No physical
inspection of the properties was made nor any well tests conducted.
Operating cost data for the previous twelve month period for which data was available were provided
by Delta along with an average of each propertys lease operating expense and well operating
expense for the same time period. This data was utilized to determine the direct cost of operation
for each property or producing unit.
Monthly revenues received from the sale of produced products were compared to published prices in
effect in order to develop a pricing differential to each property or unit. The revenue statement
for the latest month for which data was available was used to calculate an effective differential
between posted product prices and that actually received for a propertys production. The most
recent month available was usually dependent upon the type of interest owned by Delta, either an
overriding royalty or a working interest position.
RESERVE ESTIMATES
The estimate of reserves included in this report is based primarily upon production history or
analogy with wells in the area producing from the same or similar formations. In addition to
individual well production history, geological and well test information, when available, were
utilized in the evaluation.
Estimates of reserves to be recovered from undrilled locations are based upon the ultimate reserve
potential of existing Delta wells with consideration to recently completed wells, and their
production histories as possible indication of potential drainage or changing structural position.
The ultimate recoverable reserve potential of the various reservoirs was compared to the volumetric
estimate of original hydrocarbons in place and the anticipated recovery efficiency.
The accuracy of reserve estimates is dependent upon the quality of available data and upon the
independent geological and engineering interpretation of that data. The quantities presented
herein are estimated reserves of oil and natural gas that geologic and engineering data demonstrate
can be recovered from known reservoirs under current economic conditions with reasonable certainty.
The reserves have been determined using methods and procedures widely accepted within the industry
and are believed to be appropriate for the purposes of this report.
RALPH E. DAVIS ASSOCIATES, INC.
Texas Registered Engineering Firm F-1529
Texas Registered Engineering Firm F-1529
Delta Petroleum Corporation Estimated Reserves and Non Escalated Future Net Revenue Remaining as of December 31, 2010 |
February 28, 2011 Page 4 |
PRODUCING RATES
As mentioned previously, estimated reserves are scheduled for recovery primarily on the basis of
actual producing rates or appropriate well test information. They were prepared giving
consideration to engineering and geological data such as reservoir pressure, anticipated producing
mechanisms, the number and types of completions, as well as past performance of analogous
reservoirs.
These and other future rates may be subject to regulation by various agencies, changes in market
demand or other factors; consequently, reserves recovered and the actual rates of recovery may vary
from the estimates included herein. Scheduled dates of future well completions may vary from that
provided by Delta due to changes in market demand or the availability of materials and/or capital;
however, the timing of the wells and their estimated rates of production are reasonable and
consistent with established performance to date.
PRICING PROVISIONS
Prices utilized in the evaluation results presented in the letter portion of this report and
summarized in the various tables included in this evaluation were furnished by Delta. Prices
received for products sold, adjustments due to the BTU content of the gas, shrinkage for
transportation, measuring or the removal of liquids, the liquid yield from gas processed, etc.,
were accepted as presented.
The unit price used throughout this report for crude oil, condensate and natural gas is based upon
the appropriate price in effect the first trading of each month during calendar 2010, and averaged
for the year.
Crude Oil and Condensate The unit price used throughout this report for crude oil and condensate
is based upon the average of prices for 2010 as indicated above. An average crude oil price for
West Texas Intermediate crude of $79.61 per barrel was held constant throughout the producing life
of the property. A pricing differential from this posted price for each producing property had
been developed based upon historical sales information. This pricing differential was similarly
held constant. Prices for liquid reserves scheduled for initial production at some future date
were estimated using current prices on the same properties.
Natural Gas The unit price used throughout this report for natural gas is based upon the average
of prices for 2010 as indicated above. An initial average gas price of $4.448 per MMBTU
represents the December 31, 2010 NYMEX natural gas price in effect. A similar pricing differential
for gas for each property had been developed, and this differential as well as the price for gas
was held constant throughout the producing life of the property. Prices for gas reserves scheduled
for initial production at some future date were estimated using this same price.
RALPH E. DAVIS ASSOCIATES, INC.
Texas Registered Engineering Firm F-1529
Texas Registered Engineering Firm F-1529
Delta Petroleum Corporation Estimated Reserves and Non Escalated Future Net Revenue Remaining as of December 31, 2010 |
February 28, 2011 Page 5 |
FUTURE NET INCOME
Future net income is based upon gross income from future production, less direct operating expenses
and taxes (production, severance, ad valorem or other). Estimated future capital for development
and workover costs was also deducted from gross income at the time it will be expended. No
allowance was made for depletion, depreciation, income taxes or administrative expense.
Direct lease operating expense includes direct cost of operations of each lease or an estimated
value for future operations based upon analogous properties. Lease operating expense and/or
capital costs for drilling and/or major workover expense were held constant throughout the
remaining producing life of the properties. Neither the cost to abandon onshore properties nor the
salvage value of equipment was considered in this report.
Future net income has been discounted for present worth at values ranging from 0 to 100 percent
using continuous discounting. In this report the future net income is discounted at a primary rate
of ten (10.0) percent.
GENERAL
Delta Petroleum Corporation has provided access to all of its accounts, records, geological and
engineering data, reports and other information as required for this investigation. The ownership
interests, product classifications relating to prices and other factual data were accepted as
furnished without verification.
No consideration was given in this report to either gas contract disputes including take or pay
demands or gas sales imbalances.
No consideration was given in this report to potential environmental liabilities which may exist,
nor were any costs included for potential liability to restore and clean up damages, if any, caused
by past operating practices.
If investments or business decisions are to be made in reliance on these estimates by anyone other
than our client, such person with the approval of our client is invited to arrange a visit so that
he can evaluate the assumptions made and the completeness and extent of the data available on which
the estimates are made.
RALPH E. DAVIS ASSOCIATE, INC.
Texas Registered Engineering Firm F-1529
Texas Registered Engineering Firm F-1529
Delta Petroleum Corporation Estimated Reserves and Non Escalated Future Net Revenue Remaining as of December 31, 2010 |
February 28, 2011 Page 6 |
This report has been prepared for public disclosure by Delta Petroleum Corporation in filings made
with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.
The data and work papers used in the preparation of this report are available for examination by
authorized parties in our offices. Please feel free to contact us if we can be of further service.
Very truly yours, RALPH E. DAVIS ASSOCIATES, INC. |
||||
/s/ Allen C. Barron, P. E. | ||||
Allen C. Barron, P. E. | ||||
President | ||||
RALPH E. DAVIS ASSOCIATE, INC.
Texas Registered Engineering Firm F-1529
Texas Registered Engineering Firm F-1529
SECURITIES AND EXCHANGE COMMISSION
DEFINITIONS OF RESERVES
DEFINITIONS OF RESERVES
The following information is taken from the United States Securities and Exchange Commission:
PART 210FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF
1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT
COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF
1975
Rules of General Application
§ 210.4-10 Financial accounting and reporting for oil and gas producing activities pursuant
to the Federal securities laws and the Energy Policy and Conservation Act of 1975.
Reserves
Reserves are estimated remaining quantities of oil and gas and related substances
anticipated to be economically producible, as of a given date, by application of development
projects to known accumulations. In addition, there must exist, or there must be a reasonable
expectation that there will exist, the legal right to produce or a revenue interest in the
production, installed means of delivering oil and gas or related substances to market, and all
permits and financing required to implement the project.
Reserves should not be assigned to adjacent reservoirs isolated by major, potentially
sealing, faults until those reservoirs are penetrated and evaluated as economically producible.
Reserves should not be assigned to areas that are clearly separated from a known accumulation
by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or
negative test results). Such areas may contain prospective resources (i.e., potentially
recoverable resources from undiscovered accumulations).
Proved Oil and Gas Reserves
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically
produciblefrom a given date forward, from known reservoirs, and under existing economic
conditions, operating methods, and government regulationsprior to the time at which contracts
providing the right to operate expire, unless evidence indicates that renewal is reasonably
certain, regardless of whether deterministic or probabilistic methods are used for the
estimation. The project to extract the hydrocarbons must have commenced or the operator must be
reasonably certain that it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling and limited by fluid contacts, if any, and
(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be
judged to be continuous with it and to contain economically producible oil or gas on the basis
of available geoscience and engineering data.
(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by
the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience,
engineering, or performance data and reliable technology establishes a lower contact with
reasonable certainty.
(iii) Where direct observation from well penetrations has defined a highest known oil (HKO)
elevation and the potential exists for an associated gas cap, proved oil reserves may be
assigned in the structurally higher portions of the reservoir only if geoscience, engineering,
or performance data and reliable technology establish the higher contact with reasonable
certainty.
(iv) Reserves which can be produced economically through application of improved recovery
techniques (including, but not limited to, fluid injection) are included in the proved
classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no
more favorable than in the reservoir as a whole, the operation of an installed program in the
reservoir or an analogous reservoir, or other evidence using reliable technology establishes
the reasonable certainty of the engineering analysis on which the project or program was based;
and
Securities and Exchange Commission § 210.4-10 Definitions (of Reserves) Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter |
Page 2 |
(B) The project has been approved for development by all necessary parties and entities,
including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from
a reservoir is to be determined. The price shall be the average price during the 12-month
period prior to the ending date of the period covered by the report, determined as an
unweighted arithmetic average of the first-day-of-the-month price for each month within such
period, unless prices are defined by contractual arrangements, excluding escalations based upon
future conditions.
Reasonable certainty. If deterministic methods are used, reasonable certainty means a high
degree of confidence that the quantities will be recovered. If probabilistic methods are used,
there should be at least a 90% probability that the quantities actually recovered will equal or
exceed the estimate. A high degree of confidence exists if the quantity is much more likely to
be achieved than not, and, as changes due to increased availability of geoscience (geological,
geophysical, and geochemical), engineering, and economic data are made to estimated ultimate
recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain
constant than to decrease.
Reliable technology. Reliable technology is a grouping of one or more technologies (including
computational methods) that has been field tested and has been demonstrated to provide
reasonably certain results with consistency and repeatability in the formation being evaluated
or in an analogous formation.
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, it is as likely as not that actual remaining
quantities recovered will exceed the sum of estimated proved plus probable reserves. When
probabilistic methods are used, there should be at least a 50% probability that the actual
quantities 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.
(iii) Probable reserves estimates also include potential incremental quantities associated
with a greater percentage recovery of the hydrocarbons in place than assumed for proved
reserves.
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% probability that the total
quantities ultimately recovered will equal or exceed the 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 a
defined project.
(iii) Possible reserves also include incremental quantities associated with a greater
percentage recovery of the hydrocarbons in place than the recovery quantities assumed for
probable reserves.
(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be
based on reasonable alternative technical and commercial interpretations within the reservoir
or subject project that are clearly documented, including comparisons to results in successful
similar projects.
(v) Possible reserves may be assigned where geoscience and engineering data identify
directly adjacent portions of a reservoir within the same accumulation that may be separated
from proved areas by faults with
displacement less than formation thickness or other geological discontinuities and that
have not been penetrated by a wellbore, and the registrant believes that such adjacent portions
are in communication
with the known (proved) reservoir. Possible reserves may be assigned to
areas that are structurally higher or lower than the proved area if these areas are in
communication with the proved reservoir.
Securities and Exchange Commission § 210.4-10 Definitions (of Reserves) Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter |
Page 3 |
(vi) Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has
defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap,
proved oil reserves should be assigned in the structurally higher portions of the reservoir
above the HKO only if the higher contact can be established with reasonable certainty through
reliable technology. Portions of the reservoir that do not meet this reasonable certainty
criterion may be assigned as probable and possible oil or gas based on reservoir fluid
properties and pressure gradient interpretations.
Developed Oil and Gas Reserves
Developed oil and gas reserves are reserves of any category that can be expected to
be recovered:
(i) Through existing wells with existing equipment and operating methods or in which the
cost of the required equipment is relatively minor compared to the cost of a new well; and
(ii) Through installed extraction equipment and infrastructure operational at the time of
the reserves estimate if the extraction is by means not involving a well.
Undeveloped Oil and Gas Reserves
Undeveloped oil and gas reserves are reserves of any category 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.
(i) Reserves on undrilled acreage shall be limited to those directly offsetting
development spacing areas that are reasonably certain of production when drilled, unless
evidence using reliable technology exists that establishes reasonable certainty of economic
producibility at greater distances.
(ii) Undrilled locations can be classified as having undeveloped reserves only if a
development plan has been adopted indicating that they are scheduled to be drilled within five
years, unless the specific circumstances, justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to
any acreage for which an application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual projects in the same
reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by
other evidence using reliable technology establishing reasonable certainty.
Additional Definitions:
Deterministic Estimate
The method of estimating reserves or resources is called deterministic when a single
value for each parameter (from the geoscience, engineering, or economic data) in the reserves
calculation is used in the reserves estimation procedure.
Probabilistic Estimate
The method of estimation of reserves or resources is called probabilistic when the
full range of values that could reasonably occur for each unknown parameter (from the
geoscience and engineering data) is used to generate a full range of possible outcomes and
their associated probabilities of occurrence.
Reasonable Certainty
If deterministic methods are used, reasonable certainty means a high degree of confidence that
the quantities will be recovered. If probabilistic methods are used, there should be at least a 90%
probability that the quantities actually recovered will equal or exceed the estimate. A high degree
of confidence exists if the quantity is much more likely to be achieved than not, and, as changes
due to increased availability of geoscience (geological, geophysical, and geochemical),
engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably
certain EUR is much more likely to increase or remain constant than to decrease.
CERTIFICATE OF QUALIFICATION
I, Allen C. Barron, of 1717 St. James Place, Suite 460, Houston, Texas 77056 hereby certify:
1. | I am an employee of Ralph E. Davis Associates, Inc., that has prepared an estimate of the oil and natural gas reserves on specific leaseholds in which Delta Petroleum Corporation has certain interests. The effective date of this evaluation is December 31, 2010. | ||
2. | I am Licensed Professional Engineer by the State of Texas, P.E. License number 48284. | ||
3. | I attended the University of Houston in Houston, Texas and graduated with a Bachelor of Science Degree in Chemical Engineering with a Petroleum Engineering option in 1968. I have in excess of forty years experience in the Petroleum Industry of which over thirty years experience are in the conduct of evaluation and engineering studies relating to both domestic U.S. oil and gas fields and international energy assets. | ||
4. | I have prepared reserve evaluation studies and reserve audits for public and private companies for the purpose of reserve certification filings in foreign countries, domestic regulatory filings, financial disclosures and corporate strategic planning. I personally supervised and participated in the evaluation of the Delta Petroleum Corporation properties that are the subject of this report. | ||
5. | I do not have, nor do I expect to receive, any direct or indirect interest in the securities of Delta Petroleum Corporation. or any affiliated organizations. | ||
6. | A personal field inspection of the properties was not made, however, such an inspection was not considered necessary in view of the information available from public information, records and the files of the operator of the properties. |
SIGNED: February 28, 2011
/s/ Allen C. Barron, P. E. | ||||
Allen C. Barron, P. E. | ||||
President | ||||
Ralph E. Davis Associates, Inc. | ||||
1717 St. James Place, Suite 460 Houston, Texas 77056 Office 713-622-8955 Fax 713-626-3664 www.ralphedavis.com
Worldwide Energy Consultants Since 1924
Worldwide Energy Consultants Since 1924