EXHIBIT 99.1
NSAll N E T H E R L A N D, S E W E L L CHAIRMAN-CLARENCE M.NETHERLAND
& A S S O C I A T E S. I N C. PRESIDENT- FREDERIC D.SEWELL
International Petroleum Consultants SENIOR VICE PRESIDENTS
Engineering, Geology, Geophysics DANNY D. SIMMONS -HOUSTON
THOMAS J. TELLA II - DALLAS
DAN PAUL SMITH - DALLAS
G. LANCE BINDER - DALLAS
PHILLIP A.LONGACRE - DALLAS
P. SCOTT FROST - DALLAS
C.H.(SCOTT) REES II - DALLAS
February 3, 1999
Snyder Oil Corporation
777 Main-Street, Suite 1400
Fort Worth, Texas 76102
Gentlemen:
In accordance with your request, we have estimated the proved reserves
and future revenue, as of December 31, 1998, to the Snyder Oil Corporation
(SOCO) interest in certain oil and gas properties located in Wyoming and in
state and federal waters offshore Gulf of Mexico as listed in the accompanying
tabulations. This report has been prepared using constant prices and costs and
conforms to 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, 1998, to be:
Net Reserves Future Net Revenue
------------------------------- -------------------------------------
Oil Gas Present Worth
Category (Barrels) (MCF) Total at 10%
- ------------------------ ----------- --------------- --------------- --------------
Proved Developed
Producing 2,109,898 262,025,911 $36O,693,600 $215,412,500
Non-Producing 1,447,711 43,168,301 70,520,100 44,911,100
Proved Undeveloped 875,798 67,846,732 67,919,400 25,100,100
--------- ------------ -------------- --------------
Total Proved 4,433,407 373,040,944 $499,133,100 $285,423,700
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, this report includes summary
projections of reserves and revenue by reserve category for all properties and
for each division. Summary projections of reserves and revenue by reserve
category along with one-line summaries of reserves, economics, and basic data by
lease are also included for each project behind the appropriate division tab.
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 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
consideration of federal income taxes; future net revenue for the offshore
properties is also after deducting abandonment costs. 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. Our estimates of future revenue do not include any salvage value for
the lease and well equipment nor the cost of abandoning the onshore properties.
Future revenue estimates for offshore properties include SOCO's estimates of the
net costs to abandon the wells, platforms, and production facilities; such net
costs include credit for recoverable salvage. We have reviewed SOCO's estimates
and consider them to be reasonable. Abandonment costs for offshore properties
are included with other capital investments.
Oil prices used in this report are based on a December 31, 1998 West
Texas Intermediate posted price of $9.50 per barrel, adjusted for regional
posted price differentials by zone for the Beaver Creek Project, by significant
property group for the Washakie Project, and by field for the offshore projects.
Gas prices used in this report are based on average December 1998 prices by zone
for the Beaver Creek Project, by pipeline for the Washakie Project, and by field
for the offshore projects. 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 expenses 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 and geological, interpretation may be
controlling. As in all aspects of oil and gas evaluation, there are
uncertainties 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 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/ Frederic D. Sewell
RKG:EAD