Use of Estimates
In preparing financial statements
in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates
and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period.
Actual results could differ materially from those estimates. The accounting policies most affected by managements estimates
and assumptions are as follows:
· The reliance on estimates
of proved reserves to compute the provision for depreciation, depletion and amortization and to determine the amount of any impairment
of proved properties;
The valuation of unproved acreage and proved oil and gas properties to determine the amount of any impairment of oil and gas properties;
regarding the productive status of in-progress exploratory wells to determine the amount of any provision for abandonment; and
Estimates regarding abandonment obligations.