Exhibit 99.2
Cawley, Gillespie & Associates, Inc.
petroleum consultants
petroleum consultants
AUSTIN OFFICE: | MAIN OFFICE: | HOUSTON OFFICE: | ||
9601 AMBERGLEN BLVD., SUITE 117 | 306 WEST 7TH STREET, SUITE 302 | 1000 LOUISIANA, SUITE 625 | ||
AUSTIN, TEXAS 78729 | FORT WORTH, TEXAS 76102-4987 | HOUSTON, TEXAS 77002-5008 | ||
(512) 249-7000 | (817) 336-2461 | (713) 651-9944 | ||
FAX (512) 233-2618 | FAX (817) 877-3728 | FAX (713) 651-9980 |
February 10, 2010
Mr. Ron Hooper
Permian Basin Royalty Trust
901 Main Street, 17th Floor
Dallas, Texas 75202 — 3714
Permian Basin Royalty Trust
901 Main Street, 17th Floor
Dallas, Texas 75202 — 3714
Re: | A Report of Proved Reserves Riverhill Energy Corporation Texas Royalty Properties Permian Basin Royalty Trust Interests As of December 31, 2009 Pursuant to the Guidelines of the Securities and Exchange Commission for Reporting Corporate Reserves and Future Net Revenue |
Dear Mr. Hooper:
As requested, we are submitting estimates of proved reserves and forecasts of economics attributable to the above captioned interests. The Texas Royalty Properties are located in 33 counties across Texas and contain approximately 303,000 gross (51,000 net) producing acres. This evaluation groups the Texas Royalty Properties into 136 separate royalty entities.
Composite reserve estimates and economic forecasts for the Permian Basin Royalty Trust Interests are within this volume (Volume IV) in Table I. The present worth values in Table I should not be construed to represent an estimate of fair market value by Cawley, Gillespie & Associates, Inc.
The Permian Basin Royalty Trust consists of two major groups of properties, the Waddell Ranch Properties and the Texas Royalty Properties. The Cawley, Gillespie & Associates, Inc.
Mr. Ron Hooper
February 10, 2010
Page 2
February 10, 2010
Page 2
evaluation of the entire Permian Basin Royalty Trust is presented in four volumes. The evaluation results of the Texas Royalty Properties interests referred to as the “Permian Basin Royalty Trust Interests” are presented within this volume (Volume IV). As requested, the portion of the Texas Royalty Properties attributable to the Total Controlled Interests are presented in Volume III. The evaluation results of the Waddell Ranch Properties Total Controlled Interests and Waddell Ranch Properties Permian Basin Royalty Trust Portion are presented in Volumes I and II, respectively.
The detailed forecasts of reserves and economics are presented in the attached tables. Table I is a composite forecast of proved developed producing reserves. Table II is a summary of proved developed producing reserves showing estimates of ultimate recovery, gross and net reserves, ownership, revenue, expenses, net income and discounted cash flow for the individual properties. Individual reserve forecasts are presented in the Arabic numbered tables. Page 1 of Appendix II explains the type of data in these tables. Table II groups royalty entities together primarily by county. The individual fields are presented in alphabetical order by county name.
Production data was supplied by Schlumberger IPM and Riverhill Energy Corporation in the form of net royalty oil and gas production by accounting entity. The accounting entities are consolidated into royalty properties for the purpose of forecasting future net reserves. For this report, the accounting entities were consolidated into 136 royalty evaluations. Certain entities have been identified as being within major fields and public information regarding these fields has been used to determine future rates and remaining reserves. The future net reserves for the remaining entities have been forecast by analysis of the past net production trends with extrapolation to an estimated final production rate equal to approximately one-tenth to one-fifth of the current rate. Reserve evaluation methods and definitions of reserves are explained and defined on pages 2 and 3, respectively, of Appendix II.
The Trust has instructed Cawley, Gillespie & Associates, Inc. as to the method by which reserves and net revenue should be allocated to the Permian Basin Royalty Trust Interests in preparing reserve reports and economic forecasts for the Texas Royalty Properties. A thorough explanation of the allocation formula is included in Appendix I.
December 31, 2009 oil and gas prices of $55.38/BBL and $6.27/MCF, respectively, were determined pursuant to the Securities and Exchange Commission regulations effective January 1, 2010, and applied to every entity. These prices were forecast to remain constant throughout the life of the entity. Ad valorem taxes have been included as operating expenses without escalation.
These estimates were prepared in accordance with applicable published rules and regulations of the Securities and Exchange Commission using the described prices. All estimates represent our best judgment based on the data available at the time of preparation. It should be realized that the reserves actually recovered, the revenue derived therefrom and the total costs incurred could be more or less than the estimated amounts and may be subject to revision when additional data becomes available.
Mr. Ron Hooper
February 10, 2010
Page 3
February 10, 2010
Page 3
The reserve estimates were based on interpretations of factual data furnished by you, Schlumberger IPM or Riverhill Energy Corp. Net production, prices, and ownership were supplied by you, Schlumberger IPM or Riverhill Energy Corp. and were accepted as furnished. To some extent information from public records has been used to check or supplement these data. The basic engineering and geological data were utilized subject to third party reservations and qualifications. Nothing has come to our attention that would cause us to believe that we are not justified in relying on such data.
An on-site inspection of these properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities been examined nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have not been included.
Submitted,
CAWLEY, GILLESPIE & ASSOCIATES, INC.
Texas Registered Engineering Firm F-693
/s/ Cawley, Gillespie & Associates, Inc.
Texas Registered Engineering Firm F-693
/s/ Cawley, Gillespie & Associates, Inc.
CGA:rp
Engineering Data
Table I — Proved
Composite of Reserve Estimates and Economic Forecasts
Permian Basin Royalty Trust Interests — Texas Royalty Properties
Proved Developed Producing Reserves
Various Counties, Texas
As of December 31, 2009
Composite of Reserve Estimates and Economic Forecasts
Permian Basin Royalty Trust Interests — Texas Royalty Properties
Proved Developed Producing Reserves
Various Counties, Texas
As of December 31, 2009
Effective Date | 1/01/2010 | |||||||||||||||||||||||||||||||||||||||||||||
$M | Net Production | Net Revenue | Prices | |||||||||||||||||||||||||||||||||||||||||||
Year | Oil (Mbbls) | Gas (MMcf) | NGL (Mbbls) | Oil (M$) | Gas (M$) | NGL (M$) | Other (M$) | Oil ($/bbl) | Gas ($/MCF) | NGL ($/bbl) | ||||||||||||||||||||||||||||||||||||
2010 | 257.010 | 402.000 | 0.000 | 14233.290 | 2520.540 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2011 | 236.920 | 371.700 | 0.000 | 13120.690 | 2330.600 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2012 | 218.330 | 343.920 | 0.000 | 12091.270 | 2156.420 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2013 | 201.330 | 318.430 | 0.000 | 11149.870 | 1996.570 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2014 | 185.770 | 295.010 | 0.000 | 10288.000 | 1849.730 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2015 | 171.500 | 273.480 | 0.000 | 9498.170 | 1714.740 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2016 | 158.430 | 253.670 | 0.000 | 8774.290 | 1590.550 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2017 | 146.410 | 235.410 | 0.000 | 8108.420 | 1476.030 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2018 | 135.380 | 218.600 | 0.000 | 7497.690 | 1370.650 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2019 | 125.260 | 203.110 | 0.000 | 6936.940 | 1273.550 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2020 | 115.910 | 188.820 | 0.000 | 6419.510 | 1183.920 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2021 | 107.310 | 175.590 | 0.000 | 5943.220 | 1100.980 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2022 | 99.380 | 163.290 | 0.000 | 5504.100 | 1023.870 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2023 | 92.120 | 152.020 | 0.000 | 5101.610 | 953.180 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
2024 | 85.420 | 141.330 | 0.000 | 4730.690 | 886.180 | 0.000 | 0.000 | 55.380 | 6.270 | 0.000 | ||||||||||||||||||||||||||||||||||||
S Total | 2336.480 | 3736.380 | 0.000 | 129397.760 | 23427.510 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||||
After | 809.570 | 1500.710 | 0.000 | 44834.330 | 9409.500 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||||
Total | 3146.120 | 5237.170 | 0.000 | 174232.100 | 32837.070 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||||
Last Year | 809.570 | 1500.710 | 0.000 | 44834.330 | 9409.500 | 0.000 | ||||||||||||||||||||||||||||||||||||||||
S Total | 2336.480 | 3736.380 | 0.000 | 129397.760 | 23427.510 | 0.000 | ||||||||||||||||||||||||||||||||||||||||
Diff | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | ||||||||||||||||||||||||||||||||||||||||
OK | OK | OK | OK | OK | OK | |||||||||||||||||||||||||||||||||||||||||
Total | 3146.050 | 5237.090 | 0.000 | 174232.090 | 32837.010 | 0.000 | ||||||||||||||||||||||||||||||||||||||||
Diff | 0.070 | 0.080 | 0.000 | 0.010 | 0.060 | 0.000 | Total Revenue | 207069.200 | ||||||||||||||||||||||||||||||||||||||
ERR | ERR | OK | ERR | ERR | OK | Total Taxes | 9332.740 | |||||||||||||||||||||||||||||||||||||||
$M | Wells | Taxes | Expenses | Cumulative Net Cash Flow | ||||||||||||||||||||||||||||||||||||||||
Year | Net | Production (M$) | Ad Valorem (M$) | Operating (M$) | Workover (M$) | COPAS (M$) | Other (M$) | Capital (M$) | Undiscounted (M$) | Discounted @ 10% | ||||||||||||||||||||||||||||||||||
2010 | 0.000 | 751.520 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 16002.320 | 15263.390 | ||||||||||||||||||||||||||||||||||
2011 | 0.000 | 693.250 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 30760.350 | 28060.250 | ||||||||||||||||||||||||||||||||||
2012 | 0.000 | 639.440 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 44368.590 | 38787.410 | ||||||||||||||||||||||||||||||||||
2013 | 0.000 | 590.190 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 56924.830 | 47785.480 | ||||||||||||||||||||||||||||||||||
2014 | 0.000 | 545.080 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 68517.480 | 55337.800 | ||||||||||||||||||||||||||||||||||
2015 | 0.000 | 503.700 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 79226.690 | 61680.320 | ||||||||||||||||||||||||||||||||||
2016 | 0.000 | 465.750 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 89125.780 | 67010.070 | ||||||||||||||||||||||||||||||||||
2017 | 0.000 | 430.820 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 98279.420 | 71490.450 | ||||||||||||||||||||||||||||||||||
2018 | 0.000 | 398.760 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 106749.000 | 75259.130 | ||||||||||||||||||||||||||||||||||
2019 | 0.000 | 369.300 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 114590.200 | 78431.010 | ||||||||||||||||||||||||||||||||||
2020 | 0.000 | 342.110 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 121851.500 | 81101.300 | ||||||||||||||||||||||||||||||||||
2021 | 0.000 | 317.060 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 128578.700 | 83350.260 | ||||||||||||||||||||||||||||||||||
2022 | 0.000 | 293.920 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 134812.700 | 85244.900 | ||||||||||||||||||||||||||||||||||
2023 | 0.000 | 272.710 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 140594.800 | 86842.430 | ||||||||||||||||||||||||||||||||||
2024 | 0.000 | 253.030 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 145958.700 | 88189.680 | ||||||||||||||||||||||||||||||||||
S Total | 6866.640 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 145958.700 | 88189.680 | |||||||||||||||||||||||||||||||||||
After | 2466.040 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 197736.400 | 94948.930 | |||||||||||||||||||||||||||||||||||
Total | 9332.740 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 197736.400 | 94948.930 | |||||||||||||||||||||||||||||||||||
Last Year | 2466.040 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||
S Total | 6866.640 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||
Diff | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||
OK | OK | OK | OK | OK | OK | OK | ||||||||||||||||||||||||||||||||||||||
Total | 9332.680 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||
Diff | 0.060 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |||||||||||||||||||||||||||||||||||||
ERR | OK | OK | OK | OK | OK | OK | ||||||||||||||||||||||||||||||||||||||
SEC Flat Pricing
Year | Cushing WTI | Henry Hub | ||||||
2010 | 61.18 | 3.830 | ||||||
Thereafter | Flat | Flat | ||||||
Cap | 61.18 | 3.830 |