EXHIBIT 99.2
March 20, 1996
Snyder Oil Corporation
Suite 2500
777 Main Street
Fort Worth, Texas 76102
Gentlemen:
In accordance with your request, we have estimated the proved
reserves and future revenue, as of December 31, 1995, to the Snyder
Oil Corporation (SOCO) interest in certain oil and gas properties
located in Colorado, Nebraska, Utah, 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 has been prepared using 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, 1995, to be:
Net Reserves Future Net Revenue
------------------------ ---------------------------
Oil Gas Present Worth
Category (Barrels) (MCF) Total at 10%
- ----------------- ---------- ----------- ----------- --------------
Proved Developed
Producing 18,308,376 263,674,635 $406,194,100 $253,646,600
Non-Producing 790,450 12,055,007 17,670,000 7,679,000
Proved Undeveloped 1,907,590 42,603,423 32,743,700 9,483,800
Total Proved 21,006,416 318,333,065 $456,607,800 $270,809,400
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 projec- tions 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 unde- veloped 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
undeveloped 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 consider- ation 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,
1995 West Texas Intermediate posted price of $18.00 per barrel,
adjusted by lease for regional posted price differentials. Gas
prices used in this report are based on either the most current price
available for each lease, adjusted to a December 1995 regional spot
market price, or the contract price. 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 uncertain- ties 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 and geological,
interpretation may be controlling. As in all aspects of oil and gas
evaluation, there are uncer- tainties inherent in the interpretation
of engineering and geological 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, geologists, and
geophysicists; 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/ Clarence Netherland
RKG:LCD