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EX-99.4 - EX-99.4 - VINE ENERGY INC.d462291dex994.htm
EX-99.3 - EX-99.3 - VINE ENERGY INC.d462291dex993.htm
EX-99.1 - EX-99.1 - VINE ENERGY INC.d462291dex991.htm
EX-23.3 - EX-23.3 - VINE ENERGY INC.d462291dex233.htm
EX-23.2 - EX-23.2 - VINE ENERGY INC.d462291dex232.htm
EX-23.1 - EX-23.1 - VINE ENERGY INC.d462291dex231.htm
S-1/A - AMENDMENT NO. 3 TO FORM S-1 - VINE ENERGY INC.d462291ds1a.htm

Exhibit 99.2

 

W.D.Von Gonten&Co.

Petroleum Engineering

   10496 Old Katy Road, Suite 200     Houston, Texas 77043    r: 713.224.6333    www.wdvgco.com

December 21, 2017

Mr. Eric Marsh

Chief Executive Officer

Vine Oil & Gas LP.

5800 Granite Parkway, Suite 480

Plano, Texas 75024

 

  

Re: Vine Oil & Gas LP.

Haynesville and Mid-Bossier Shale Properties

Estimate of Reserves and Revenues

SEC Pricing Case

“As of” January 1, 2018

Dear Mr. Marsh:

At your request, W.D. Von Gonten & Co. has prepared estimates of future reserves and projected net revenues for certain property interests owned by Vine Oil & Gas, L.P. (“Vine”). This report was prepared in accordance with guidelines specified in item 1202(a)(8) of Regulation S-K and may be used for inclusion in certain SEC filings by Vine. These properties include producing, non-producing and undeveloped locations are located in Red River, DeSoto, Sabine and Natchitoches Parishes, Louisiana. This report excludes effects of commodity derivatives and any unmet midstream commitments. Our third party evaluation was completed on December 21, 2017. Our conclusions, as of January 1, 2018, are as follows:

 

     Net to Vine Oil & Gas, LP  

SEC Price Case

   Proved
Producing
    Proved
Non.Producing
    Proved
Undeveloped
    Total Proved  

Reserve Estimates

        

Gas, MMcf

     327,728.2       1,779.5       1,263,419.9       1,592,927.6  

Revenues

        

Gas, $(100) %

     903,548,096       4,906,052       3,483,256,320       4,391,710,468  

Total,$

     903,548,096       4,906,052       3,483,256,320       4,391,710,468  

Expenditures

        

Ad valorem Taxes, $

     31,078,516       294,483       50,351,180       81,724,179  

Severance Taxes, $

     19,795,026       156,444       60,027,572       79,979,042  

Fixed Operating Expense, $

     233,938,192       1,729,147       602,326,656       837,993,995  

Variable Operating Expense, $

     20,172,076       113,805       78,267,256       98,553,137  

Transportation Expense, $

     33,092,712       203,483       139,941,888       173,238,083  

Total,$

     338,076,522       2,497,362       930,914,552       1,271,488,436  

Investments, $

       818,162       1,290,199,808       1,291,017,970  

Plugging & Abandonment, $

     18,905,894       50,252       8,976,435       27,932,581  

Total,$

     18,905,894       868,414       1,299,176,243       1,318,950,551  

Estimated Future Net Revenues (FNR)

        

Undiscounted FNR, $

     546,565,504       1,540,275       1,253,165,312       1,801,271,091  

FNR Disc. @ 10%, $

     440,761,408       1,044,657       549,160,576       990,966,641  

Allocation Percentage by Classification FNR Disc. @ 10%

     44.5     0.1     55.4     100.0

 

* Due to computer rounding, numbers in the above table may not sum exactly.


W.D.Von Gonten&Co.

Petroleum Engineering

 

Purpose of Report - The purpose of this report is to provide Vine with an estimate of future reserves and net revenues attributable to interests owned by Vine in the Haynesville and Mid-Bossier shale formations effective as of January 1, 2018 in accordance with the SEC guidelines.

Scope of Work - W.D. Von Gonten & Co. was engaged by Vine to develop the appropriate reserve projections and estimate the remaining reserves associated with the developed and undeveloped properties included in this report. The properties evaluated by W.D. Von Gonten & Co. represent 100% of the total net proved gas reserves owned by Vine as of January 1, 2018. Once reserves were estimated, future revenues were determined in accordance with SEC pricing effective January 1, 2018.

Reporting Requirements -Securities and Exchange Commission (SEC) Regulation S-X 210, Rule 4- 10 and Regulation S-K 229, Item 1200 (as revised in December 2008, effective 1-1-10), and Accounting Standards Codification Topic 932 require oil and gas reserve information to be reported by publicly held companies as supplemental financial data. These regulations and standards provide for estimates of Proved reserves and revenues discounted at 10% and based on un-escalated prices and costs. Revenues based on alternate product price scenarios may be reported in addition to the current pricing case.

The estimated Proved reserves herein have been prepared in conformance with all SEC definitions and requirements.

Projections - The attached reserves and revenue projections are on a calendar year basis with the first time period being January 1, 2018 through December 31, 2018.

Property Discussion

Vine currently owns, and operates, an approximate 54% working interest in 270 Proved Developed Producing (“PDP”) wells, an approximate 45% working interest in 220 PDP wells that GeoSouthern Energy Corp. (“GeoSouthern”) operates, and an approximate mean working interest of 9% in 39 PDP wells operated by miscellaneous other 3rd party companies. Vine also owns royalty and mineral interests in 113 wells operated by GeoSouthern and other 3rd party companies. All wells are located in Red River, De Soto, Sabine, and Natchitoches Parishes, Louisiana. The PDP wells are producing from the Haynesville and Mid-Bossier shale formations.

Reserve Estimates

Producing Properties - Reserve estimates for the PDP properties were based on volumetric calculations, log analysis, decline curve analysis, rate transient analysis, and/or analogy to nearby production, including from other operators.

Undeveloped Properties - The undeveloped reserves were necessarily estimated using volumetric calculations, log analysis, core analysis, geophysical interpretation and/or analogy to nearby recently drilled wells with comparative completion practices to that which Vine will implement. In addition, W.D. Von Gonten & Co. has performed a field study of the Haynesville and Mid-Bossier shale plays independent of this report. Our conclusion from that field study has fortified our confidence in the producing and undeveloped reserves included herein.

Based on SEC reserves reporting requirements, only those undeveloped volumes scheduled to be drilled within five years of their initial recognition have been included within the Proved Undeveloped category of reserves. That volume, as reflected in the results table of page 1 of this report, is approximately 1,263,420 MMcf of natural gas.

 

Vine Oil & Gas, LP. - 01.01.18 SEC 1P Reserves Report, December 21, 2017 - Page 2


W.D.Von Gonten&Co.

Petroleum Engineering

 

Reserves and schedules of production included in this report are only estimates. The amount of available data, reservoir and geological complexity, reservoir drive mechanism, and mechanical aspects can have a material effect on the accuracy of these reserve estimates. Due to inherent uncertainties in future production rates, well costs, commodity prices, and geologic conditions, it should be realized that the reserve estimates, the reserves actually recovered, the revenue derived therefrom, and the actual cost incurred could be more or less than the estimated amounts. We consider the assumptions, data, methods, and procedures used in this report appropriate hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves and future net revenues.

Product Prices

The estimated revenues shown herein were based on SEC pricing guidelines effective January 1, 2018. SEC pricing is determined by averaging the first day of each month’s closing price for the previous 12 months using published benchmark oil and gas prices. This method renders a Henry Hub gas price of $2.98/MMBtu. This price was held constant throughout the life of the properties as per SEC guidelines. A pricing differential was applied to all properties on an individual property basis in order to reflect prices actually received at the point of sale. The differential from SEC pricing reflects the loss in heating (energy) value measured in BTU’s from the Haynesville and Mid-Bossier shales. Vine provided a wellhead gross heating value of 965 Btu/Scf for both shales, therefore, W.D. Von Gonten & Co. used SEC pricing less 3.5% for estimates of future reserves and projected net revenues for all developed and undeveloped Haynesville and Mid-Bossier wells in this report. The average realized price after adjustments for location and quality differentials such as transportation and BTU content for the reserves included in the report as part of the primary economic assumptions to comply with Item 1202(a)(8)(v) is $2.76/Mcf.

Operating Expenses and Capital Cost

Monthly operating expenses for wells operated by Vine and other 3rd party companies (including GeoSouthern) were provided by Vine. Vine provided W.D. Von Gonten & Co. Vine operated, non-operated, and a blend of both, with 12 months (November 2016-0ctober 2017) of historical fixed and variable operating expense data. W.D Von Gonten & Co. then applied Vine’s recommended blended fixed and variable operating costs to each individual property.

Capital costs associated with the drilling and completion of future undeveloped locations were provided by Vine. Support data including drilling, completion, and facility costs, as well as current completion designs rendered applicable for future development wells, were provided by Vine for wells spud from October of 2016 through June of 2017. Where available, these costs were further verified from recently drilled and competed wells from other regional and/or offsetting operators, including GeoSouthern.

All operating expenses and capital costs were held flat for the life of the properties in accordance with SEC guidelines.

Other Considerations

Abandonment Costs - The costs necessary for abandonment of certain properties were provided by Vine. W.D. Von Gonten & Co. expresses no warranties regarding the accuracy or validity of these costs for the generation of this report.

Additional Costs - Costs were not deducted for general and administrative expenses, depletion, depreciation and/or amortization (a non-cash item) or federal income tax.

Data Sources - Data furnished by Vine included basic well information including daily gas, water, and flowing pressure data, future development schedules with lateral well locations, lease acreage maps illustrating Haynesville and Mid-Bossier opportunities, and the majority of development locations for Haynesville and Mid-Bossier wells were identified by either Vine or GeoSouthern. Public data sources such as IHS Energy and the U.S. Geological Survey (USGS) were used to gather any additional necessary data.

 

Vine Oil & Gas, LP. - 01.01.18 SEC 1P Reserves Report, December 21, 2017 - Page 3


W.D.Von Gonten&Co.

Petroleum Engineering

 

Context - We specifically advise that any particular reserve estimate for a specific property not be used out of context from the overall report. The revenues and present worth of future net revenues are not represented to be market value either for individual properties or on a total property basis. The estimation of fair market value for oil and gas properties requires additional analysis other than evaluating undiscounted and discounted future net revenues.

While the oil and gas industry may be subject to regulatory changes from time to time that could affect an industry participant’s ability to recover its oil and gas reserves, we are not aware of any such governmental actions which would restrict the recovery of the January 1, 2018 estimated oil and gas volumes. The reserves in this report can be produced under current regulatory guidelines. Actual future commodity prices may differ substantially from the utilized pricing scenario which may or may not extend or limit the estimated reserve and revenue quantities presented in this report.

We have not inspected the properties included in this report, nor have we conducted independent well tests.

W.D. Von Gonten & Co. and our employees have no direct ownership in any of the properties included in this report. Our fees are based on hourly expenses and are not related to the reserves and revenue estimates produced in this report.

Thank you for the opportunity to assist Vine with this report.

 

LOGO

    

Respectfully Submitted,

 

/s/ William D. Von Gonten, Jr., P.E.

William D. Von Gonten, Jr., P.E.

TX# 73244

 

/s/ John M. Parker

John M. Parker

    
    
    
    

 

Vine Oil & Gas, L.P. - 01.01.18 SEC 1P Reserves Report, December 21, 2017 - Page 4