Attached files

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8-K/A - ATLAS RESOURCE PARTNERS, L.P. - FORM 8-K/A - Titan Energy, LLCd401961d8ka.htm
EX-23.1 - CONSENT OF RYLANDER CLAY & OPITZ LLP - Titan Energy, LLCd401961dex231.htm
EX-99.1 - TITAN OPERATING, LLC UNAUDITED BALANCE SHEETS - Titan Energy, LLCd401961dex991.htm
EX-99.2 - TITAN OPERATING, LLC AUDITED BALANCE SHEETS AS OF DECEMBER 31, 2011 - Titan Energy, LLCd401961dex992.htm
EX-99.5 - UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - Titan Energy, LLCd401961dex995.htm
EX-99.3 - TITAN OPERATING, LLC AUDITED BALANCE SHEETS AS OF DECEMBER 31, 2010 - Titan Energy, LLCd401961dex993.htm

Exhibit 99.4

SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED)

The following tables summarize the net ownership interest in the proved oil and gas reserves and the standardized measure of discounted future net cash flows related to the proved oil and gas reserves for the Properties and are derived from the reserve reports prepared for Titan Operating, LLC (“The Company”) and annual financial statements for the years ended December 31, 2011, 2010 and 2009. For these periods, independent third-party reserve engineers were retained to prepare a report of proved oil and gas reserves related to the Company. The standardized measure presented here excludes income taxes as the Company is a limited liability company and is not liable for federal income taxes. The proved oil and gas reserve estimates and other components of the standardized measure were determined in accordance with the authoritative guidance of the Financial Accounting Standards Board and the SEC.

Proved Oil and Gas Reserve Quantities

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 producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. Proved developed reserves are proved reserves that can be expected to be recovered 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. Proved undeveloped reserves are proved 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. The net proved oil and gas reserves and changes in net proved oil and gas reserves attributable to the Company’s properties, all of which are located in the state of Texas, are summarized below:

 

2009

 
     Crude Oil
(MBbls)
     Natural
Gas
(MMcf)
    Natural
Gas
Liquids
(MBbls)
 

Proved developed and undeveloped reserves —

       

January 1, 2009

     —           —          —     

Extensions and discoveries

     —           18,829        —     

Revisions of previous estimates

     —           —          —     

Production

     —           (183     —     
  

 

 

    

 

 

   

 

 

 

End of year - December 31, 2009

     —           18,646        —     
  

 

 

    

 

 

   

 

 

 

Proved developed reserves at beginning of year

     —           —          —     
  

 

 

    

 

 

   

 

 

 

Proved developed reserves at end of year

     —           4,984        —     
  

 

 

    

 

 

   

 

 

 

Proved undeveloped reserves at beginning of year

     —           —          —     
  

 

 

    

 

 

   

 

 

 

Proved undeveloped reserves at end of year

     —           13,662        —     
  

 

 

    

 

 

   

 

 

 

 

39


2010

 
     Crude Oil
(MBbls)
    Natural
Gas
(MMcf)
    Natural
Gas
Liquids
(MBbls)
 

Proved developed and undeveloped reserves —

      

January 1, 2010

     —          18,646        —     

Extensions and discoveries

     13        86,972        7,558   

Revisions of previous estimates

     —          (273     405   

Production

     (2     (5,465     (203
  

 

 

   

 

 

   

 

 

 

End of year - December 31, 2010

     11        99,880        7,760   
  

 

 

   

 

 

   

 

 

 

Proved developed reserves at beginning of year

     —          4,984        —     
  

 

 

   

 

 

   

 

 

 

Proved developed reserves at end of year

     11        43,638        2,117   
  

 

 

   

 

 

   

 

 

 

Proved undeveloped reserves at beginning of year

     —          13,662        —     
  

 

 

   

 

 

   

 

 

 

Proved undeveloped reserves at end of year

     —          56,242        5,643   
  

 

 

   

 

 

   

 

 

 

2011

 
     Crude Oil
(MBbls)
    Natural
Gas
(MMcf)
    Natural
Gas
Liquids
(MBbls)
 

Proved developed and undeveloped reserves —

      

January 1, 2011

     11        99,880        7,760   

Extensions and discoveries

     2        25,724        526   

Revisions of previous estimates

     8        (11,015     (2,231

Production

     (3     (7,194     (202
  

 

 

   

 

 

   

 

 

 

End of year - December 31, 2011

     18        107,395        5,852   
  

 

 

   

 

 

   

 

 

 

Proved developed reserves at beginning of year

     11        43,638        2,117   
  

 

 

   

 

 

   

 

 

 

Proved developed reserves at end of year

     4        48,701        1,987   
  

 

 

   

 

 

   

 

 

 

Proved undeveloped reserves at beginning of year

     —          56,242        5,643   
  

 

 

   

 

 

   

 

 

 

Proved undeveloped reserves at end of year

     14        58,694        3,865   
  

 

 

   

 

 

   

 

 

 

Capitalized Costs Related to Oil and Gas Producing Activities

The components of capitalized costs related to oil and gas producing activities of the Company during the periods indicated were as follows:

 

     December 31,  
     2011     2010     2009  
     (in thousands)  

Proved Properties

   $ 344,820      $ 14,491      $ 22,796   

Unevaluated Properties

     91,680        238,535        231,157   
  

 

 

   

 

 

   

 

 

 
     436,500        353,026        253,953   

Accumulated depreciation, depletion and amortization

     (248,768     (25,522     (15,806
  

 

 

   

 

 

   

 

 

 

Net capitalized costs

   $ 187,732      $ 327,504      $ 238,147   
  

 

 

   

 

 

   

 

 

 

 

40


Costs Incurred

The following table summarizes costs incurred and capitalized in oil and natural gas property acquisition, exploration and development activities:

 

     Year Ended December 31,  
     2011      2010      2009  
     (in thousands)  

Unproved Property Acquisition

   $ 11,361       $ 27,881       $ 42,400   

Exploration Costs

     3,469         7,541         1,301   

Development Costs

     69,521         64,668         11,657   
  

 

 

    

 

 

    

 

 

 
   $ 84,351       $ 100,090       $ 55,358   
  

 

 

    

 

 

    

 

 

 

Oil and Natural Gas Operating Results

Results of operations from oil and natural gas producing activities were as follows:

 

     Year Ended December 31,  
     2011     2010     2009  
     (in thousands)  

Revenues

   $ 30,886      $ 23,305      $ 725   

Lease Operating Expenses

     (3,210     (1,039     (13

Taxes

     (2,120     (1,535     (61

Accretion of Asset Retirement Obligation

     (26     (10     (2

DD&A

     (26,500     (9,796     (425

Full Cost Ceiling Write Down

     (196,835     —          (15,445
  

 

 

   

 

 

   

 

 

 
   $ (197,805   $ 10,925      $ (15,221
  

 

 

   

 

 

   

 

 

 

Standardized Measure

Pursuant to SEC guidelines, the standardized measure utilizes the unweighted trailing 12-month arithmetic average of the first of month natural gas and crude oil benchmark prices. The average prices used for 2011, 2010 and 2009 under these rules were $96.19 and $79.43, and N/A per barrel, respectively, for crude oil, condensate, and natural gas liquids (WTI - Cushing, Oklahoma), and $4.12, $4.38 and $3.87 per MMbtu, respectively, for natural gas (Henry Hub).

Future cash inflows were reduced by estimated future production, development and abandonment costs based on current cost, with no escalation to determine pre-tax cash inflows. As mentioned above, the standardized measure presented below does not include the effects of income taxes as the Company is not subject to income tax. A discount factor of 10% was used to reflect the timing of future net cash flows. The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the Properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, and a discount factor more representative of the time value of money and the risks inherent in oil and gas reserve estimates.

The standardized measure of discounted future net cash flows before income taxes related to the proved oil and gas reserves of the Company’s properties is as follows:

 

     December 31,  
     2011     2010     2009  
     (in thousands)  

Future cash inflows

   $ 585,053      $ 635,848      $ 60,098   

Future production costs

     (171,389     (168,695     (20,510

Future development costs

     (116,579     (122,566     (14,140
  

 

 

   

 

 

   

 

 

 

Future net cash flows

     297,085        344,587        25,447   

Less 10% annual discount to reflect timing of cash flows

     (201,032     (210,637     (18,457
  

 

 

   

 

 

   

 

 

 

Standard measure of discounted future net cash flows

   $ 96,053      $ 133,950      $ 6,990   
  

 

 

   

 

 

   

 

 

 

 

41


The following table summarizes changes in the standardized measure of discounted future net cash flows:

 

     Year Ended December 31,  
     2011     2010     2009  
     (in thousands)  

Changes in Standardized Measure:

      

Standardized measure — beginning of year

   $ 133,950      $ 6,990      $ —     
  

 

 

   

 

 

   

 

 

 

Revisions to reserves proved in prior years:

      

Net change in sales prices and production costs related to future production

     (6,548     7,562        —     

Net change in estimated future development costs

     (13,657     (4,839     —     

Net change due to revisions in quantity estimates

     (22,266     810        —     

Accretion of discount

     13,395        699        —     

Changes in production rates (timing) and other

     (2,564     10,032        —     
  

 

 

   

 

 

   

 

 

 

Total revisions

     (31,640     14,264        —     

Net change due to extensions and discoveries, net of estimated future development and production costs

     7,404        129,869        7,641   

Sales of oil and gas produced, net of production costs

     (25,555     (20,731     (651

Previously estimated development costs incurred

     11,894        3,558        —     
  

 

 

   

 

 

   

 

 

 

Net change in standardized measure of discounted future net cash flows

     (37,897     126,960        6,990   
  

 

 

   

 

 

   

 

 

 

Standardized measure — end of year

   $ 96,053      $ 133,950      $ 6,990   
  

 

 

   

 

 

   

 

 

 

 

42