EXHIBIT 28
{LOGO} RYDER SCOTT COMPANY
PETROLEUM ENGINEERS FAX (713) 651-0849
1100 LOUISIANA SUITE 3800 HOUSTON, TEXAS 77002-5218 TELEPHONE (713) 651-9191
January 28, 1994
Pogo Producing Company
Post Office Box 61289
Houston, Texas 77208
Gentlemen:
At your request we have prepared an estimate of the
reserves, future production, and income attributable to certain
leasehold and royalty interests of Pogo Producing Company and its
wholly owned subsidiaries (the Company) as of December 31, 1993. In
accordance with the requirements of FASB 69, our estimates of the
Company's net proved reserves as of December 31, 1990, 1991, 1992, and
1993, as contained in this report and our previous reports, are
presented in attached Table No. 1 together with a tabulation of the
components of the differences in the estimates as of such dates. The
Company's reserves in the United States are located in the states of
Louisiana, New Mexico, Oklahoma, Texas, and in state and federal
waters offshore Alabama, Louisiana, and Texas. The Company's foreign
reserves are located offshore Thailand.
The estimated reserve volumes and future income amounts
presented in this report are related to hydrocarbon prices. December
1993 hydrocarbon prices were used in the preparation of this report as
required by Securities and Exchange Commission (SEC) and Financial
Accounting Standards Bulletin No. 69 (FASB 69) guidelines; however,
actual future prices may vary significantly from December 1993 prices.
Therefore, volumes of reserves actually recovered and amounts of
income actually received may differ from the estimated quantities
presented in this report. Our estimates of the proved net reserves
attributable to the interests of the Company as of December 31, 1993
are shown below:
Proved Net Reserves
As of December 31, 1993
Liquid Barrels Gas MMCF
Developed and Undeveloped
United States 22,843,628 199,392
Foreign 5,424,813 33,474
----------- --------
Total Worldwide 28,268,441 232,866
Developed
United States 20,976,194 183,139
Foreign 0 0
----------- --------
Total Worldwide 20,976,194 183,139
The "Liquid" reserves shown above are comprised of crude
oil, condensate, and natural gas liquids. Natural gas liquids
comprise 18 percent of the Company's developed liquid reserves and 14
percent of the Company's developed and undeveloped liquid reserves.
All hydrocarbon liquid reserves are expressed in standard 42 gallon
barrels. All gas volumes are sales gas expressed in MMCF at the
pressure and temperature bases of the area where the gas reserves are
located.
The proved reserves presented in this report comply with the
SEC's Regulation S-X Part 210.4-10 Sec. (a) as clarified by subsequent
Commission Staff Accounting Bulletins, and are based on the following
definitions and criteria:
Proved reserves of crude oil, condensate, natural gas, and
natural gas liquids are estimated quantities that geological and
engineering data demonstrate with reasonable certainty to be
recoverable in the future from known reservoirs under existing
conditions. Reservoirs are considered proved if economic
producibility is supported by actual production or formation
tests. In certain instances, proved reserves are assigned on the
basis of a combination of core analysis and electrical and other
type logs which indicate the reservoirs are analogous to
reservoirs in the same field which are producing or have
demonstrated the ability to produce on a formation test. The
area of a reservoir considered proved includes (1) that portion
delineated by drilling and defined by fluid contacts, if any, and
(2) the adjoining portions not yet drilled that can be reasonably
judged as economically productive on the basis of available
geological and engineering data. In the absence of data on fluid
contacts, the lowest known structural occurrence of hydrocarbons
controls the lower proved limit of the reservoir. Proved
reserves are estimates of hydrocarbons to be recovered from a
given date forward. They may be revised as hydrocarbons are
produced and additional data become available. Proved natural
gas reserves are comprised of non-associated, associated, and
dissolved gas. An appropriate reduction in gas reserves has been
made for the expected removal of natural gas liquids, for lease
and plant fuel, and the exclusion of non-hydrocarbon gases if
they occur in significant quantities and are removed prior to
sale. Reserves that can be produced economically through the
application of improved recovery techniques are included in the
proved classification when these qualifications are met: (1)
successful testing by a pilot project or the operation of an
installed program in the reservoir provides support for the
engineering analysis on which the project or program was based,
and (2) it is reasonably certain the project will proceed.
Improved recovery includes all methods for supplementing natural
reservoir forces and energy, or otherwise increasing ultimate
recovery from a reservoir, including (1) pressure maintenance,
(2) cycling, and (3) secondary recovery in its original sense.
Improved recovery also includes the enhanced recovery methods of
thermal, chemical flooding, and the use of miscible and
immiscible displacement fluids. Estimates of proved reserves do
not include crude oil, natural gas, or natural gas liquids being
held in underground storage. Depending on the status of
development, these proved reserves are further subdivided into:
(i) "developed reserves" which are those proved reserves
reasonably expected to be recovered through existing wells
with existing equipment and operating methods, including (a)
"developed producing reserves" which are those proved
developed reserves reasonably expected to be produced from
existing completion intervals now open for production in
existing wells, and (b) "developed non-producing reserves"
which are those proved developed reserves which exist behind
the casing of existing wells which are reasonably expected
to be produced through these wells in the predictable future
where the cost of making such hydrocarbons available for
production should be relatively small compared to the cost
of a new well; and
(ii) "undeveloped reserves" which are those proved reserves
reasonably expected to be recovered from new wells on
undrilled acreage, from existing wells where a relatively
large expenditure is required, and from acreage for which an
application of fluid injection or other improved recovery
technique is contemplated where the technique has been
proved effective by actual tests in the area in the same
reservoir. Reserves from undrilled acreage are limited to
those drilling units offsetting productive units that
are reasonably certain of production when drilled. Proved
reserves for other undrilled units are included only where
it can be demonstrated with reasonable certainty that there
is continuity of production from the existing productive
formation.
Because of the direct relationship between volumes of proved
undeveloped reserves and development plans, we include in the proved
undeveloped category only reserves assigned to undeveloped locations
that we have been assured will definitely be drilled and reserves
assigned to the undeveloped portions of secondary or tertiary projects
which we have been assured will definitely be developed.
The Company has interests in certain tracts which have
substantial additional hydrocarbon quantities which cannot be
classified as proved and consequently are not included herein. The
Company has active exploratory and development drilling programs which
may result in the reclassification of significant additional volumes
to the proved category.
In accordance with the requirements of FASB 69, our
estimates of future cash inflows, future costs, and future net cash
inflows before income tax as of December 31, 1993 from this report and
as of December 31, 1992 from our previous report are presented below.
As of December 31
1993 1992
Future Cash Inflows $895,060,044 $866,414,345
Future Costs
Production $211,741,925 $189,897,073
Development 133,257,042 105,843,039
------------ -------------
Total Costs $344,998,967 $295,740,112
Future Net Cash Inflows
Before Income Tax $550,061,077 $570,674,233
Present Value at 10%
Before Income Tax $403,840,199 $405,101,565
Our estimates as of December 31, 1993 and 1992 of future
cash inflows, future costs, future net cash inflows before income tax,
and present value at 10 percent before income tax are shown
individually for total worldwide, total United States (onshore and
offshore), and foreign areas in Table No. 2 which is attached.
The future cash inflows are gross revenues before any
deductions. The production costs were based on current data and
include production taxes, ad valorem taxes, and certain other items
such as transportation costs in addition to the operating costs
directly applicable to the individual leases or wells. The
development costs were based on current data and include dismantlement
and abandonment costs net of salvage for properties where such costs
are relatively significant.
The Company furnished us with gas prices in effect at
December 31, 1993 and with its forecasts of future gas prices which
take into account SEC guidelines, current market prices, contract
prices, and fixed and determinable price escalations where applicable.
In accordance with SEC guidelines, the future gas prices used in this
report make no allowances for future gas price increases which may
occur as a result of inflation nor do they account for seasonal
variations in gas prices
which may cause future yearly average gas prices to be
somewhat lower than December gas prices. For gas sold
under contract, the contract gas price including fixed and
determinable escalations exclusive of inflation adjustments, was used
until the contract expires and then was adjusted to the current market
price for the area and held at this adjusted price to depletion of the
reserves.
The Company furnished us with liquid prices in effect at
December 31, 1993 and these prices were held constant to depletion of
the properties. In accordance with SEC guidelines, changes in liquid
prices subsequent to December 31, 1993 were not considered in this
report.
The estimates of future net revenue from the Company's
foreign property are based on existing law. Operating costs for the
leases and wells in this report were based on the operating expense
reports of the Company and include only those costs directly
applicable to the leases or wells. When applicable, the operating
costs include a portion of general and administrative costs allocated
directly to the leases and wells under terms of operating agreements.
Development costs were furnished to us by the Company and are based on
authorizations for expenditure for the proposed work or actual costs
for similar projects. The current operating and development costs
were held constant throughout the life of the properties. For
properties located onshore, this study did not consider the salvage
value of the lease equipment or the abandonment cost since both are
relatively insignificant and tend to offset each other. The estimated
net cost of abandonment after salvage was included for offshore
properties where abandonment costs net of salvage are significant.
The estimates of the offshore net abandonment costs furnished by the
Company were accepted without independent verification. No deduction
was made for indirect costs such as general administration and
overhead expenses, loan repayments, interest expenses, and exploration
and development prepayments. The Company supplied data on accumulated
gas production imbalances which were taken into account in our
estimates of future production and income
The estimates of reserves presented herein are based upon a
detailed study of the properties in which the Company owns an
interest; however, we have not made any field examination of the
properties. No consideration was given in this report to potential
environmental liabilities which may exist nor were any costs included
for potential liability to restore and clean up damages, if any,
caused by past operating practices. The Company has informed us that
they have furnished us all of the accounts, records, geological and
engineering data and reports, and other data required for this
investigation. The ownership interests, prices, and other factual
data furnished by the Company were accepted without independent
verification. The estimates presented in this report are based on
data available through December 1993.
The reserves included in this report are estimates only and
should not be construed as being exact quantities. They may or may
not be actually recovered, and if recovered, the revenues therefrom
and the actual costs related thereto could be more or less than the
estimated amounts. Moreover, estimates of reserves may increase or
decrease as a result of future operations.
In general, we estimate that future gas production rates
will continue to be the same as the average rate for the latest
available 12 months of actual production until such time that the well
or wells are incapable of producing at this rate. The well or wells
were then projected to decline at their decreasing delivery capacity
rate. Our general policy on estimates of future gas production rates
is adjusted when necessary to reflect actual gas market conditions in
specific cases. The future production rates from wells now on
production may be more or less than estimated because of changes in
market demand or allowables set by regulatory bodies. Wells or
locations which are not currently producing may start producing
earlier or later than anticipated in our estimates of their future
production rates.
While it may reasonably be anticipated that the future
prices received for the sale of production and the operating costs and
other costs relating to such production may also increase or decrease
from existing levels, such changes were, in accordance with rules
adopted by the SEC, omitted from consideration in making this
evaluation.
Neither we nor any of our employees have any interest in the
subject properties and neither the employment to make this study nor
the compensation is contingent on our estimates of reserves and future
cash inflows for the subject properties.
Very truly yours,
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
/s/ Fred P. Richoux
Fred P. Richoux, P.E.
Group Vice President
TABLE NO. 1
POGO PRODUCING COMPANY
Proved Net Reserve Data
United States
Total Worldwide Total Onshore and Offshore
1993 1992 1991 1993 1992 1991
Net Proved Liquid(1)
Reserves, Barrels
Developed and Undeveloped
Beginning of Year 22,555,788 18,818,091 19,090,376 19,978,881 18,818,091 19,090,376
Revisions 342,022 1,721,385 782,707 342,022 1,721,385 782,707
Extensions and Discoveries 9,764,408 5,486,273 1,612,983 6,916,502 2,909,366 1,612,983
Improved Recovery 0 0 0 0 0 0
Estimated Production -4,219,873 -3,611,105 -2,931,465 -4,219,873 -3,611,105 -2,931,465
Purchase of Reserves In-Place 182,610 335,750 263,495 182,610 335,750 263,495
Sales of Reserves In-Place -356,514 -194,606 -5 -356,514 -194,606 -5
End of Year 28,268,441 22,555,788 18,818,091 22,843,628 19,978,881 18,818,091
Developed
Beginning of Year 18,798,149 17,549,830 17,841,751 18,798,149 17,549,830 17,841,751
End of Year 20,976,194 18,798,149 17,549,830 20,976,194 18,798,149 17,549,830
Net Proved Gas
Reserves, Millions of Cubic Feet
Developed and Undeveloped
Beginning of Year 207,068 202,735 217,500 196,400 202,735 217,500
Revisions 1,148 20,284 3,531 1,148 20,284 3,531
Extensions and Discoveries 55,626 19,126 16,157 32,820 8,458 16,157
Improved Recovery 0 0 0 0 0 0
Estimated Production -32,319 -40,581 -39,362 -32,319 -40,581 -39,362
Purchase of Reserves In-Place 13,192 10,237 4,913 13,192 10,237 4,913
Sales of Reserves In-Place -11,849 -4,733 -4 -11,849 -4,733 -4
End of Year 232,866 207,068 202,735 199,392 196,400 202,735
Developed
Beginning of Year 175,523 188,090 202,471 175,523 188,090 202,471
End of Year 183,139 175,523 188,090 183,139 175,523 188,090
Foreign
Thailand Offshore
1993 1992 1991
Net Proved Liquid(1)
Reserves, Barrels
Developed and Undeveloped
Beginning of Year 2,576,907 0 0
Revisions 0 0 0
Extensions and Discoveries 2,847,906 2,576,907 0
Improved Recovery 0 0 0
Estimated Production 0 0 0
Purchase of Reserves In-Place 0 0 0
Sales of Reserves In-Place 0 0 0
End of Year 5,424,813 2,576,907 0
Developed
Beginning of Year 0 0 0
End of Year 0 0 0
Net Proved Gas
Reserves, Millions of Cubic Feet
Developed and Undeveloped
Beginning of Year 10,668 0 0
Revisions 0 0 0
Extensions and Discoveries 22,806 10,668 0
Improved Recovery 0 0 0
Estimated Production 0 0 0
Purchase of Reserves In-Place 0 0 0
Sales of Reserves In-Place 0 0 0
End of Year 33,474 10,668 0
Developed
Beginning of Year 0 0 0
End of Year 0 0 0
_______________________________
(1) Liquid reserves shown above are comprised of crude oil, condensate, and
natural gas liquids.
TABLE NO. 2
POGO PRODUCING COMPANY
Cash Inflow and Cost Data (U.S. Dollars)
United States
Total Worldwide Onshore and Offshore Thailand Offshore
As of December 31 As of December 31 As of December 31
1993 1992 1993 1992 1993 1992
Future Cash Inflows(1) $895,060,044 $866,414,345 $744,200,701 $791,864,973 $150,859,343 $74,549,372
Future Costs
Production(2) $211,741,925 $189,897,073 $158,934,102 $173,355,154 $ 52,807,823 $16,541,919
Development(3) 133,257,042 105,843,039 79,734,742 80,887,079 53,522,300 24,955,960
Total Costs $344,998,967 $295,740,112 $238,668,844 $254,242,233 $106,330,123 $41,497,879
Future Cash Inflows
Before Income Tax $550,061,077 $570,674,233 $505,531,857 $537,622,740 $ 44,529,220 $33,051,493
Present Value @ 10%
Before Income Tax $403,840,199 $405,101,565 $386,673,722 $390,893,269 $ 17,166,477 $14,208,296
_______________________________
(1) Gross revenues before any deductions.
(2) Includes production taxes in the U.S.A., SRB taxes in Thailand, ad valorem
taxes and certain other items such as transportation charges.
(3) Includes future abandonment costs net of salvage for offshore properties where
such costs are relatively significant.