February 6, 1995
Mr. John A. Fanning
Snyder Oil Corporation
777 Main Street, Suite 2500
Fort Worth, Texas 76102
Dear Mr. Fanning:
In accordance with your request, we have estimated the proved
reserves and future revenue, as of December 31, 1994, to the Snyder
Oil Corporation (SOCO) interest in certain oil and gas properties
located in Colorado, New Mexico, Texas, and Wyoming as listed in the
accompanying tabulations. As requested, lease and well operating
costs do not include the per-well overhead expenses allowed under
joint operating agreements for those properties operated by SOCO.
This report is based on constant prices and costs in accordance with
the guidelines of the Securities and Exchange Commission (SEC).
As presented in the accompanying summary projections, Tables I
through IV, we estimate the net reserves and future net revenue to
the SOCO interest, as of December 31, 1994, to be:
Net Reserves Future Net Revenue
----------------------- ----------------------------
Oil Gas Present Worth
Category (Barrels) (MCF) Total at 10%
- ---------------------- ---------- ----------- ------------ -------------
Proved Developed
Producing 18,047,637 168,298,775 $318,615,200 $205,712,300
Non-Producing 1,292,266 13,343,739 25,414,300 14,766,700
Proved Undeveloped 4,542,989 68,174,870 66,322,400 19,469,100
---------- ----------- ------------ ------------
Total Proved 23,822,892 249,817,384 $410,351,900 $239,948,100
The oil reserves shown include crude oil and condensate. Oil
volumes are expressed in barrels which are equivalent to 42 United
States gallons. Gas volumes are expressed in thousands of standard
cubic feet (MCF) at the contract temperature and pressure bases.
As shown in the Table of Contents, the properties in this
report have been subdivided into SOCO's significant property groups
behind the appropriate state tab. Included for each significant
property group are summary projections of reserves and revenue for
each reserve category along with one-line summaries of reserves,
economics, and basic data by lease. For the purposes of this report,
the term "lease" refers to a single economic projection.
The estimated reserves and future revenue shown in this report
are for proved developed producing, proved developed non-producing,
and proved undeveloped reserves. In accordance with SEC guidelines,
our estimates do not include any value for probable or possible
reserves which may exist for these properties. This report does not
include any value which could be attributed to interests in undevel-
oped acreage beyond those tracts for which undeveloped reserves have
been estimated.
Future gross revenue to the SOCO interest is prior to deducting
state production taxes and ad valorem taxes. Future net revenue is
after deducting these taxes, future capital costs, and operating
expenses, but before consideration of Federal income taxes. In
accordance with SEC guidelines, the future net revenue has been
discounted at an annual rate of 10 percent to determine its "present
worth." The present worth is shown to indicate the effect of time on
the value of money and should not be construed as being the fair
market value of the properties.
For the purposes of this report, a field inspection of the
properties has not been performed nor has the mechanical operation or
condition of the wells and their related facilities been examined.
We have not investigated possible environmental liability related to
the properties; therefore, our estimates do not include any costs
which may be incurred due to such possible liability. Also, our
estimates do not include any salvage value for the lease and well
equipment nor the cost of abandoning the properties.
Oil prices used in this report are based on a December 31, 1994
West Texas Intermediate posted price of $16.00 per barrel, adjusted
by significant property group or lease for regional posted price
differentials. Gas prices used in this report are based on average
December 1994 prices for each significant property group. Oil and
gas prices are held constant in accordance with SEC guidelines.
Lease and well operating costs are based on operating expense
records of SOCO. For non-operated properties, these costs include
the per-well overhead expenses allowed under joint operating
agreements along with costs estimated to be incurred at and below the
district and field levels. As requested, lease and well operating
costs for the operated properties include only direct lease and field
level costs. Headquarters general and administrative overhead ex-
penses of SOCO are not included. Lease and well operating costs are
held constant in accordance with SEC guidelines. Capital costs are
included as required for workovers, new development wells, and
production equipment.
We have made no investigation of potential gas volume and value
imbalances which may have resulted from overdelivery or underdelivery
to the SOCO interest. Therefore, our estimates of reserves and
future revenue do not include adjustments for the settlement of any
such imbalances; our projections are based on SOCO receiving its net
revenue interest share of estimated future gross gas production.
The reserves included in this report are estimates only and
should not be construed as exact quantities. They may or may not be
recovered; if recovered, the revenues therefrom and the costs related
thereto could be more or less than the estimated amounts. The sales
rates, prices received for the reserves, and costs incurred in
recovering such reserves may vary from assumptions included in this
report due to governmental policies and uncertainties of supply and
demand. Also, estimates of reserves may increase or decrease as a
result of future operations.
In evaluating the information at our disposal concerning this
report, we have excluded from our consideration all matters as to
which legal or accounting, rather than engineering, interpretation
may be controlling. As in all aspects of oil and gas evaluation,
there are uncertainties inherent in the interpretation of engineering
data; therefore, our conclusions necessarily represent only informed
professional judgments.
The titles to the properties have not been examined by
Netherland, Sewell & Associates, Inc., nor has the actual degree or
type of interest owned been independently confirmed. The data used
in our estimates were obtained from Snyder Oil Corporation, other
interest owners, various operators of the properties, and the
nonconfidential files of Netherland, Sewell & Associates, Inc. and
were accepted as accurate. We are independent petroleum engineers
and geologists; we do not own an interest in these properties and are
not employed on a contingent basis. Basic geologic and field
performance data together with our engineering work sheets are
maintained on file in our office.
Very truly yours,
/s/ Frederic D. Sewell
RKG:LCD