Vanguard Natural Resources, Inc. - FORM 8-K/A - EX-99.3 - November 3, 2014

Attached files

file filename
8-K/A - Vanguard Natural Resources, Inc.form8-k_abbcpiceanceaudite.htm
EX-23.1 - Vanguard Natural Resources, Inc.exhibit231bdoconsent-picea.htm
EX-99.2 - Vanguard Natural Resources, Inc.exhibit992piceanceproformas.htm
EX-99.1 - Vanguard Natural Resources, Inc.exhibit991rev-doe.htm


EXHIBIT 99.3
Summary Pro Forma Combined
Oil, Natural Gas and Natural Gas Liquids
Reserve Data
 
The following tables set forth summary pro forma information with respect to Vanguard's pro forma combined estimated net proved and proved developed natural gas, oil and natural gas liquids reserves as of December 31, 2013. This pro forma information gives effect to the Pinedale Acquisition and the Piceance Acquisition as if they occurred on January 1, 2013. Future exploration, exploitation and development expenditures, as well as future commodity prices and service costs, will affect the reserve volumes attributable to the acquired properties and the standardized measure of discounted future net cash flows.
 
Estimated changes in the quantities of natural gas, oil and natural gas liquids reserves for the year ended December 31, 2013 are as follows:

 
Natural Gas (in MMcf)
 
Vanguard Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard
Pro forma Combined (a)
Net proved reserves
 
 
 
 
 
 
 
January 1, 2013
546,513

 
605,911

 
319,171

 
1,471,595

Revisions of previous estimates
(9,589
)
 
—

 
—

 
(9,589
)
Extensions, discoveries and other
13,556

 
—

 
—

 
13,556

Purchases of reserves in place
86,245

 
—

 
—

 
86,245

Production
(50,236
)
 
(32,156
)
 
(25,171
)
 
(107,563
)
December 31, 2013
586,489

 
573,755

 
294,000

 
1,454,244


 
Oil (in MBbls)
 
Vanguard Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard
Pro forma Combined (a)
Net proved reserves
 
 
 
 
 
 
 
January 1, 2013
42,218

 
5,102

 
2,809

 
50,129

Revisions of previous estimates
(765
)
 
—

 
—

 
(765
)
Extensions, discoveries and other
303

 
—

 
—

 
303

Purchases of reserves in place
6,649

 
—

 
—

 
6,649

Production
(3,089
)
 
(250
)
 
(332
)
 
(3,671
)
December 31, 2013
45,316

 
4,852

 
2,477

 
52,645


 
Natural Gas Liquids (in MBbls)
 
Vanguard Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard
Pro forma Combined (a)
Net proved reserves
 
 
 
 
 
 
 
January 1, 2013
18,940

 
21,200

 
14,188

 
54,328

Revisions of previous estimates
4,836

 
—

 
—

 
4,836

Extensions, discoveries and other
343

 
—

 
—

 
343

Purchases of reserves in place
6,553

 
—

 
—

 
6,553

Production
(1,477
)
 
(1,156
)
 
(1,848
)
 
(4,481
)
December 31, 2013
29,195

 
20,044

 
12,340

 
61,579






(a)
Includes Vanguard’s, the Pinedale Acquisition’s and the Piceance Acquisition's estimated net proved and proved developed oil, natural gas and natural gas liquids reserves as of December 31, 2013.

 
 
Vanguard Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard
Pro forma Combined (a)
Estimated proved reserves:
 
 
 
 
 
 
 
 
Natural Gas (MMcf)
 
586,489

 
573,755

 
294,000

 
1,454,244

Oil (MBbls)
 
45,316

 
4,852

 
2,477

 
52,645

Natural Gas Liquids (MBbls)
 
29,195

 
20,044

 
12,340

 
61,579

MMcfe
 
1,033,555

 
723,131

 
382,902

 
2,139,588

 
 
 
 
 
 
 
 
 
Estimated proved developed reserves:
 
 
 
 
 
 
 
 
Natural Gas (MMcf)
 
455,162

 
274,723

 
245,249

 
975,134

Oil (MBbls)
 
40,099

 
2,126

 
1,981

 
44,206

Natural Gas Liquids (MBbls)
 
18,962

 
9,586

 
10,294

 
38,842

MMcfe
 
809,528

 
344,995

 
318,899

 
1,473,422


(a)
Includes Vanguard’s, the Pinedale Acquisition’s and the Piceance Acquisition's estimated net proved and proved developed oil, natural gas and natural gas liquids reserves as of December 31, 2013.

The standardized measure of discounted future net cash flows relating to the combined proved oil, natural gas and natural gas liquids reserves at December 31, 2013 is as follows (in thousands):

 
 
Vanguard
Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard
Pro forma Combined (a)
Future cash inflows
 
$
6,670,299

 
$
2,290,161

 
$
1,908,366

 
$
10,868,826

Future production costs
 
(2,352,721
)
 
(876,434
)
 
(577,132
)
 
(3,806,287
)
Future development costs
 
(358,119
)
 
(333,861
)
 
(104,385
)
 
(796,365
)
Future net cash flows
 
3,959,459

 
1,079,866

 
1,226,849

 
6,266,174

10% annual discount for estimated timing of cash flows
 
(2,125,488
)
 
(619,767
)
 
(692,142
)
 
(3,437,397
)
Standardized measure of discounted future net cash flows
 
$
1,833,971

 
$
460,099

 
$
534,707

 
$
2,828,777


(a)
The pro forma standardized measure includes Vanguard, the Pinedale Acquisition and the Piceance Acquisition.

For the December 31, 2013 calculations in the preceding table, estimated future cash inflows from estimated future production of proved reserves were computed using the average oil and natural gas price based upon the 12-month average price of $96.90 per barrel of crude oil and $3.67 per MMBtu for natural gas adjusted for quality, transportation fees and a regional price differential, and the volume-weighted average price of $36.28 per barrel of natural gas liquids. The natural gas liquids prices were calculated using the differentials for each property to West Texas Intermediate reference price of $96.90. We may receive amounts different than the standardize measure of discounted cash flow for a number of reasons, including price changes and the effects of our hedging activities.

The following are the principal sources of change in the combined standardized measure of discounted future net cash flows for the year ended December 31, 2013 (in thousands):





 
 
Vanguard Historical
 
Pinedale Acquisition
 
Piceance Acquisition
 
Vanguard 
Pro forma Combined (a)
Sales and transfers, net of production costs
 
$
(297,316
)
 
$
(97,107
)
 
$
(122,455
)
 
$
(516,878
)
Net changes in prices and production costs
 
(13,797
)
 
—

 
—

 
(13,797
)
Extensions discoveries and improved recovery, less related costs
 
24,110

 
—

 
—

 
24,110

Changes in estimated future development costs
 
43,496

 
—

 
—

 
43,496

Previously estimated development costs incurred during the period
 
56,661

 
—

 
—

 
56,661

Revision of previous quantity estimates
 
28,462

 
—

 
—

 
28,462

Accretion of discount
 
157,655

 
50,655

 
59,742

 
268,052

Purchases of reserves in place
 
333,530

 
—

 
—

 
333,530

Change in production rates, timing and other
 
(75,377
)
 
—

 
—

 
(75,377
)
Net change in standardized measure
 
257,424

 
(46,452
)
 
(62,713
)
 
148,259

Standardized measure, January 1, 2013
 
1,576,547

 
506,551

 
597,420

 
2,680,518

Standardized measure, December 31, 2013
 
$
1,833,971

 
$
460,099

 
$
534,707

 
$
2,828,777


(a)
The pro forma standardized measure includes Vanguard, the Pinedale Acquisition and the Piceance Acquisition.





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