February 7, 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 audited the estimates
prepared by Snyder Oil Corporation (SOCO), as of December 31, 1994,
of the proved oil and gas reserves and future net revenue to the SOCO
interest in certain oil and gas properties located in the United
States. SOCO's estimates are based on constant prices and costs
which conform to the guidelines of the Securities and Exchange
Commission (SEC). The following table sets forth SOCO's estimates of
the proved reserves and future net revenue, as of December 31, 1994,
for the audited properties:
Net Reserves Future Net Revenue
----------------------- ----------------------------
Oil Gas Present Worth
Category (Barrels) (MCF) Total at 10%
- ---------------------- ---------- ----------- ------------ -------------
Proved Developed
Producing 23,417,100 312,445,100 $492,950,400 $316,401,900
Non-Producing 2,686,900 41,484,500 66,879,900 38,673,800
Proved Undeveloped 8,873,300 157,321,300 151,958,300 59,291,600
---------- ----------- ------------ ------------
Total Proved 34,977,300 511,250,900 $711,788,600 $414,367,300
In our opinion, the estimates of SOCO's net proved oil and gas
reserves, as shown herein and in certain computer printouts on file
in our office, are in the aggregate reasonable and have been prepared
in accordance with generally accepted petroleum engineering and
evaluation principles as set forth in the Standards Pertaining to the
Estimating and Auditing of Oil and Gas Reserve Information
promulgated by the Society of Petroleum Engineers. We are satisfied
with the methods and procedures utilized by SOCO in preparing the
December 31, 1994 reserve estimates, and we saw nothing of an unusual
nature that would cause us to take exception with the estimates, in
the aggregate, as prepared by SOCO.
The estimated reserves and future revenue shown herein are for
total proved reserves which include proved developed producing,
proved developed non-producing, and proved undeveloped reserves. Our
audit did not include consideration of probable or possible reserves
which might be established for these properties, nor did it include
any consideration of undeveloped acreage beyond those tracts for
which proved reserves have been estimated.
It should be understood that our audit does not constitute a
complete reserve study of SOCO's oil and gas properties. The
complete reserve study consists of properties evaluated by
Netherland, Sewell & Associates, Inc. as presented in our report
dated February 6, 1995, representing 57.8 percent of the total proved
present worth discounted at 10 percent, and properties evaluated by
SOCO, representing 23.6 percent of the total proved present worth.
Our audit consisted of a detailed review of properties making up 81.4
percent of the present worth for total proved reserves. In our
audit, we accepted without independent verification the accuracy and
completeness of the historical information and data furnished by SOCO
with respect to ownership interest, oil and gas production, well test
data, oil and gas prices, historical costs of operation and
development, and any agreements relating to current and future
operations of the properties and sales of production. If, however,
in the course of our examination something came to our attention
which brought into question the validity or sufficiency of any such
information or data, we did not rely on such information or data
until we had satisfactorily resolved our questions relating thereto
or had independently verified such information or data.
The above indicated reserve estimates were made in accordance
with guidelines prescribed by the SEC relating to the use of constant
prices and costs. The oil and gas prices for each of SOCO's
significant property groups are based on a December 31, 1994 West
Texas Intermediate posted price of $16.00 per barrel and average
December 1994 gas prices, respectively, and are held constant
throughout the life of the properties. Lease and well operating
costs are held constant at current levels for the life of the
properties. Future capital costs are included as required for
workovers, new development wells, and production equipment and are
also held constant until expenditure.
We are independent petroleum engineers with respect to SOCO as
provided in the Standards Pertaining to the Estimating and Auditing
of Oil and Gas Reserve Information promulgated by the Society of
Petroleum Engineers. We do not own an interest in these properties
and are not employed on a contingent basis.
We received the full cooperation of the engineering,
geological, and accounting personnel of Snyder Oil Corporation during
our review. Please let us know if we can be of further assistance in
this matter.
Very truly yours,
/s/ Frederic D. Sewell
RKG:LCD