EXHIBIT 99.3
Summary Pro Forma Combined
Oil, Natural Gas and Natural Gas Liquids
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 as if it 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 | Vanguard pro forma combined (a) | ||||||
| Net proved reserves | ||||||||
| January 1, 2013 | 546,513 | 605,911 | 1,152,424 | |||||
| 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 | ) | (82,392 | ) | ||
| December 31, 2013 | 586,489 | 573,755 | 1,160,244 | |||||
| Oil (in MBbls) | ||||||||
| Vanguard historical | Pinedale Acquisition | Vanguard pro forma combined (a) | ||||||
| Net proved reserves | ||||||||
| January 1, 2013 | 42,218 | 5,102 | 47,320 | |||||
| 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 | ) | (3,339 | ) | ||
| December 31, 2013 | 45,316 | 4,852 | 50,168 | |||||
| Natural Gas Liquids (in MBbls) | ||||||||
| Vanguard historical | Pinedale Acquisition | Vanguard pro forma combined (a) | ||||||
| Net proved reserves | ||||||||
| January 1, 2013 | 18,940 | 21,200 | 40,140 | |||||
| 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 | ) | (2,633 | ) | ||
| December 31, 2013 | 29,195 | 20,044 | 49,239 | |||||
| (a) | Includes Vanguard’s and the Pinedale 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 | Vanguard pro forma combined (a) | |||||||
| Estimated proved reserves: | |||||||||
| Natural Gas (MMcf) | 586,489 | 573,755 | 1,160,244 | ||||||
| Oil (MBbls) | 45,316 | 4,852 | 50,168 | ||||||
| Natural Gas Liquids (MBbls) | 29,195 | 20,044 | 49,239 | ||||||
| MMcfe | 1,033,555 | 723,131 | 1,756,686 | ||||||
| Estimated proved developed reserves: | |||||||||
| Natural Gas (MMcf) | 455,162 | 274,723 | 729,885 | ||||||
| Oil (MBbls) | 40,099 | 2,126 | 42,225 | ||||||
| Natural Gas Liquids (MBbls) | 18,962 | 9,586 | 28,548 | ||||||
| MMcfe | 809,528 | 344,995 | 1,154,523 | ||||||
| (a) | Includes Vanguard’s and the Pinedale 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 | Vanguard pro forma combined (a) | ||||||||||
| Future cash inflows | $ | 6,670,299 | $ | 2,290,161 | $ | 8,960,460 | ||||||
| Future production costs | (2,352,721 | ) | (876,434 | ) | (3,229,155 | ) | ||||||
| Future development costs | (358,119 | ) | (333,861 | ) | (691,980 | ) | ||||||
| Future net cash flows | 3,959,459 | 1,079,866 | 5,039,325 | |||||||||
| 10% annual discount for estimated timing of cash flows | (2,125,488 | ) | (619,767 | ) | (2,745,255 | ) | ||||||
| Standardized measure of discounted future net cash flows | $ | 1,833,971 | $ | 460,099 | $ | 2,294,070 | ||||||
| (a) | The pro forma standardized measure includes Vanguard and the Pinedale 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, transporation 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 | Vanguard pro forma combined (a) | ||||||||||
| Sales and transfers, net of production costs | $ | (297,316 | ) | $ | (97,107 | ) | $ | (394,423 | ) | |||
| 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 | 208,310 | |||||||||
| 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 | ) | 210,972 | ||||||||
| Standardized measure, January 1, 2013 | 1,576,547 | 506,551 | 2,083,098 | |||||||||
| Standardized measure, December 31, 2013 | $ | 1,833,971 | $ | 460,099 | $ | 2,294,070 | ||||||
| (a) | The pro forma standardized measure includes Vanguard and the Pinedale Acquisition. |