| Oil and Gas Reserve Data (Unaudited) | 15. Oil and Gas Reserve Data (Unaudited) The estimates of the Companys
proved oil and gas reserves, which are located entirely within the United States, were prepared in accordance with the guidelines
established by the SEC. The estimates as of March 31, 2016, 2015, and 2014 are based on evaluations prepared by Joe C. Neal and
Associates, Petroleum Consultants. Management emphasizes that reserve estimates are inherently imprecise and are expected to change
as new information becomes available and as economic conditions in the industry change. Proved reserves are estimated quantities
of oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be
commercially recoverable in future years from known reservoirs under existing economic and operating conditions. The Companys total estimated
proved reserves at March 31, 2016 were approximately 2.051 million barrels of oil equivalent (Boe) of which 53% was
oil and natural gas liquids and 47% was natural gas. Changes in Proved Reserves
Oil (Bbls) Natural Gas (Mcf)
Proved Developed and Undeveloped Reserves:
As of April 1, 2013 366,000 7,844,000
Revision of previous estimates 12,000 (1,404,000 )
Purchase of minerals in place 50,000 18,000
Extensions and discoveries 101,000 163,000
Sales of minerals in place - -
Production (27,000 ) (362,000 )
As of March 31, 2014 502,000 6,259,000
Revision of previous estimates (90,000 ) (665,000 )
Purchase of minerals in place 43,000 795,000
Extensions and discoveries 235,000 269,000
Sales of minerals in place - -
Production (30,000 ) (369,000 )
As of March 31, 2015 660,000 6,289,000
Revision of previous estimates (13,000 ) (736,000 )
Purchase of minerals in place - -
Extensions and discoveries 479,000 665,000
Sales of minerals in place (3,000 ) (9,000 )
Production (39,000 ) (408,000 )
As of March 31, 2016 1,084,000 5,801,000 Proved developed reserves are those
expected to be recovered through existing wells, equipment and operating methods. Proved undeveloped reserves (PUD)
are proved reserves are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively
major expenditure is required for recompletion. The downward revision of oil and natural gas is primarily the result of SEC rules
which require such reserves to be developed within five years and because of the participation in one unsuccessful well. Reserves
written off due to the five year limitation are primarily in the Haynesville field in Louisiana which are on leases held by production
and are still in place to be developed in the future. Summary of Proved Developed and Undeveloped
Reserves as of March 31, 2016, 2015 and 2014
Oil (Bbls) Natural Gas (Mcf)
Proved Developed Reserves:
As of April 1, 2013 237,420 4,807,020
As of March 31, 2014 294,620 4,081,470
As of March 31, 2015 283,670 4,584,790
As of March 31, 2016 350,180 4,406,060
Proved Undeveloped Reserves:
As of April 1, 2013 128,290 3,037,180
As of March 31, 2014 206,930 2,177,810
As of March 31, 2015 376,070 1,703,790
As of March 31, 2016 734,170 1,395,220 At March 31, 2016, the Company reported
estimated PUDs of 5.8 bcfe, which accounted for 47% of its total estimated proved oil and gas reserves. This figure primarily consists
of a projected 67 new wells (3.4 bcfe), 4 of which the Company operates. The 4 wells the Company operates (1.2 bcfe), will be drilled
on existing acreage in the Goldsmith field where the Company currently operates 3 wells. The Company projects 4 operated wells
will be drilled in fiscal 2019. Regarding the remaining 63 PUD locations operated by others (2.2 bcfe), 1 well is currently being
drilled with plans for 14 wells to follow in 2017, 14 wells in 2018, 16 wells in 2019 and 18 wells in 2020. As of March 31, 2016, 2015 and 2014
reserves were computed using the 12-month unweighted average of the first-day-of-the-month prices, in accordance with current SEC
rules. The following table discloses the Companys
progress toward the conversion of PUDs during fiscal 2016. Progress of Converting Proved Undeveloped
Reserves
Oil & Natural Gas Future
(Mcfe) Development Costs
PUDs, beginning of year 3,960,232 $ 6,617,402
Revision of previous estimates (1,441,324 ) (2,778,279 )
Conversions to PD reserves (256,618 ) (732,620 )
Additional PUDs added 3,537,952 6,510,657
PUDs, end of year 5,800,242 $ 9,617,160 Estimated future net cash flows represent
an estimate of future net revenues from the production of proved reserves using average prices for 2016, 2015 and 2014 along with
estimates of the operating costs, production taxes and future development costs necessary to produce such reserves. No deduction
has been made for depreciation, depletion or any indirect costs such as general corporate overhead or interest expense. Operating costs and production taxes
are estimated based on current costs with respect to producing oil and natural gas properties. Future development costs including
abandonment costs are based on the best estimate of such costs assuming current economic and operating conditions. The future cash
flows estimated to be spent to develop the Companys share of proved undeveloped properties through March 31, 2021 are $9,617,160. Income tax expense is computed based
on applying the appropriate statutory tax rate to the excess of future cash inflows less future production and development costs
over the current tax basis of the properties involved, less applicable carryforwards. The future net revenue information assumes
no escalation of costs or prices, except for oil and natural gas sales made under terms of contracts which include fixed and determinable
escalation. Future costs and prices could significantly vary from current amounts and, accordingly, revisions in the future could
be significant. The current reporting rules require
that year end reserve calculations and future cash inflows be based on the 12-month average market prices for sales of oil and
gas on the first calendar day of each month during the fiscal year discounted at 10% per year and assuming continuation of existing
economic conditions. The average prices used for fiscal 2016 were $41.76 per bbl of oil and $1.998 per mcf of natural gas. The
average prices used for fiscal 2015 were $74.84 per bbl of oil and $3.595 per mcf of natural gas. The average prices used for fiscal
2014 were $94.23 per bbl of oil and $3.67 per mcf of natural gas. The standardized measure of discounted
future net cash flows were computed by applying 12-month average prices for oil and gas (with consideration of price changes only
to the extent provided by contractual arrangements in existence at year end) to the estimated future production of proved oil and
gas reserves, less estimated future expenditures (based on year end costs) to be incurred in developing and producing the proved
reserves, less estimated future income tax expenses (based on the year end statutory tax rates with consideration of future tax
rates already legislated) to be incurred on pretax net cash flows less tax basis of the properties and available credits and assuming
continuation of existing economic conditions. The estimated future net cash flows are then discounted using a rate of 10%. The basis for this table is the reserve
studies prepared by an independent petroleum engineering consultant, which contain imprecise estimates of quantities and rates
of production of reserves. Revisions of previous year estimates can have a significant impact on these results. Also, exploration
costs in one year may lead to significant discoveries in later years and may significantly change previous estimates of proved
reserves and their valuation. Therefore, the standardized measure of discounted future net cash flow is not necessarily indicative
of the fair value of proved oil and gas properties. The standardized measure of discounted
future cash flows at March 31, 2016, 2015 and 2014, which represents the present value of estimated future cash flows using a discount
rate of 10% a year, follows: Standardized Measure of Discounted
Future Net Cash Flows Relating to Proved Reserves:
March 31
2016 2015 2014
Future cash inflows $ 57,318,000 $ 72,238,000 $ 70,252,000
Future production costs and taxes (14,571,000 ) (19,569,000 ) (20,647,000 )
Future development costs (9,617,000 ) (6,617,000 ) (4,826,000 )
Future income taxes (4,569,000 ) (9,254,000 ) (9,801,000 )
Future net cash flows 28,561,000 36,798,000 34,978,000
Annual 10% discount for estimated timing of cash flows (14,663,000 ) (17,860,000 ) (15,649,000 )
Standardized measure of discounted future net cash flows $ 13,898,000 $ 18,938,000 $ 19,329,000 Changes in Standardized Measure of
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves:
March 31
2016 2015 2014
Sales of oil and gas produced, net of production costs $ (1,240,000 ) $ (2,036,000 ) $ (2,762,000 )
Net changes in price and production costs (12,510,000 ) (4,066,000 ) 2,464,000
Changes in previously estimated development costs 3,701,000 2,627,000 270,000
Revisions of quantity estimates (602,000 ) (3,718,000 ) (657,000 )
Net change due to purchases and sales of minerals in place (105,000 ) 2,777,000 1,332,000
Extensions and discoveries, less related costs 5,174,000 4,607,000 3,802,000
Net change in income taxes 2,539,000 654,000 (1,997,000 )
Accretion of discount 2,370,000 2,474,000 1,779,000
Changes in timing of estimated cash flows and other (4,367,000 ) (3,710,000 ) 729,000
Changes in standardized measure (5,040,000 ) (391,000 ) 4,960,000
Standardized measure, beginning of year 18,938,000 19,329,000 14,369,000
Standardized measure, end of year $ 13,898,000 $ 18,938,000 $ 19,329,000 |
