SUMMIT PETROLEUM CORPORATION
VALUATION
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SUMMIT PETROLEUM CORPORATION
SUMMARY BALANCE SHEET INFORMATION
April 30, April 30,
1996 1996
---------- ---------
Actual Adjusted
ASSETS
Current Assets $ 198,268 $ 198,268
Property Plant & Equipment (Net) $ 847,652 $ -
Other $ 144,196 $ 144,196
---------- ---------
Total Assets $1,190,116 $ 342,464
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities $ 320,930 $ 320,930
Long Term Debt $ 186,652 $ 186,652
Stockholders' Equity $ 682,534 $(165,118)
---------- ---------
Total Liabilities &
Stockholders' Equity $1,190,116 $ 342,464
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KEY FACTORS
Net Stockholders' $ 682,534
Less: PP&E $(847,652)
---------
Net Equity without PP&E $(165,118)
Fully Diluted Shares 2,700,184
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METHOD 1
$/BBL & $/MCF IN GROUND
ALL RESERVES
UNESCALATED WITH 3D SEISMIC DEVELOPMENT
OIL-BBL PRICE VALUE GAS-MCF PRICE VALUE
------- ----- -------- --------- ----- --------
220,503 $3.00 $661,509 1,291,000 $0.40 $516,400
$3.50 $771,761 $0.50 $645,500
$4.00 $882,012 $0.60 $774,600
$4.50 $992,264 $0.70 $903,700
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PRICE MATRIX
$/BBL & $/MCF IN GROUND
ALL RESERVES
UNESCALATED WITH 3D SEISMIC DEVELOPMENT
TOTAL RESERVE VALUE
GAS PRICE
$0.40 $0.50 $0.60 $0.70
---------- ---------- ---------- ----------
$3.00 $1,177,909 $1,307,009 $1,436,109 $1,565,209
OIL PRICE $3.50 $1,288,161 $1,417,261 $1,546,361 $1,675,461
$4.00 $1,398,412 $1,527,512 $1,656,612 $1,785,712
$4.50 $1,508,664 $1,637,764 $1,766,864 $1,895,964
PER SHARE VALUE
GAS PRICE
$0.40 $0.50 $0.60 $0.70
---------- ---------- ---------- ----------
$3.00 $0.50 $0.55 $0.59 $0.64
OIL PRICE $3.50 $0.54 $0.59 $0.63 $0.68
$4.00 $0.58 $0.63 $0.67 $0.72
$4.50 $0.62 $0.67 $0.72 $0.76
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$/BBL & $/MCF IN GROUND
ALL RESERVES
ESCALATED WITH NON PRODUCING RESERVES RISKED
OIL-BBL PRICE VALUE GAS-MCF PRICE VALUE
------- ----- -------- --------- ----- --------
205,389 $3.00 $616,167 1,156,534 $0.40 $462,614
$3.50 $718,862 $0.50 $578,267
$4.00 $821,556 $0.60 $693,920
$4.50 $924,251 $0.70 $809,574
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PRICE MATRIX
$/BBL & $/MCF IN GROUND
ALL RESERVES
ESCALATED WITH NON PRODUCING RESERVES RISKED
TOTAL RESERVE VALUE
GAS PRICE
$0.40 $0.50 $0.60 $0.70
---------- ---------- ---------- ----------
$3.00 $1,078,781 $1,194,434 $1,310,087 $1,425,741
OIL PRICE $3.50 $1,181,475 $1,297,129 $1,412,782 $1,528,435
$4.00 $1,284,170 $1,399,823 $1,515,476 $1,631,130
$4.50 $1,386,864 $1,502,518 $1,618,171 $1,733,824
PER SHARE VALUE
GAS PRICE
$0.40 $0.50 $0.60 $0.70
---------- ---------- ---------- ----------
$3.00 $0.46 $0.50 $0.55 $0.59
OIL PRICE $3.50 $0.50 $0.54 $0.58 $0.63
$4.00 $0.54 $0.58 $0.62 $0.67
$4.50 $0.57 $0.62 $0.66 $0.70
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METHOD 2
NET PROVED DEVELOPED PRODUCING
& NET DEVELOPED NON PRODUCING
UNESCALATED WITH 3D SEISMIC DEVELOPMENT
OIL-BBL PRICE VALUE GAS-MCF PRICE VALUE
------- ----- ---------- ------- ----- --------
PDP 90,558 $6.00 $ 543,348 772,454 $1.00 $772,454
PDNP 21,528 $3.00 $ 64,584 266,222 $0.50 $133,111
---------- --------
$ 607,932 $905,565
$1,513,497 Total Reserve Value
$ (165,118) Less: Net Debt
----------
$1,348,379
2,700,184 Fully Diluted Shares
----------
$ 0.50 Price per Share
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NET PROVED DEVELOPED PRODUCING
& NET PROVED DEVELOPED NON PRODUCING
ESCALATED WITH 3D SEISMIC DEVELOPMENTS
NON PRODUCING RISKED
OIL-BBL PRICE VALUE GAS-MCF PRICE VALUE
------- ----- ---------- ------- ----- --------
PDP 91,542 $6.00 $ 549,252 797,882 $1.00 $797,882
PDNP 16,772 $3.00 $ 50,316 211,612 $0.50 $105,806
---------- --------
$ 599,568 $903,688
$1,503,256 Total Reserve Value
$ - Less: Net Debt
----------
$1,503,256
2,700,184 Fully Diluted Shares
----------
$ 0.56 Price per Share
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METHOD 3
DISCOUNTED RESERVE VALUE
UNESCALATED WITH 3D SEISMIC DEVELOPMENT
ALL RESERVES
UNRISKED
15% 12% 10%
---------- ---------- ----------
$1,223,008 $1,402,828 $1,548,899 Reserve Value
$ (165,118) $ (165,118) (165,118) Less: Net Debt
$1,057,890 $1,237,710 $1,383,781
2,700,184 2,700,184 2,700,184 Fully Diluted Shares
$ 0.39 $ 0.46 $ 0.51 Price per Share
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DISCOUNTED RESERVE VALUE
ESCALATED WITH 3D SEISMIC DEVELOPMENTS
ALL RESERVES
RISKED
15% 12% 10%
---------- ---------- ----------
$1,254,354 $1,452,070 $1,613,354 Reserve Value
$ (166,000) $ (166,000) (166,000) Less: Net Debt
$1,088,354 $1,286,070 $1,447,354
2,700,184 2,700,184 2,700,184 Fully Diluted Shares
$ 0.40 $ 0.48 $ 0.54 Price per Share
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METHOD 4
PRICE PER EQUIVALENT BBL
ESCALATED WITH 3D SEISMIC DEVELOPMENTS
ALL RESERVES
RISKED
ALL RESERVES
OIL-BBL GAS-MCF
---------- ---------
PDP 91,542 797,882
PDNP 16,772 211,612
PUD 97,075 147,040
---------- ---------
205,389 Total Oil BBL 1,156,534 Total Gas MCF
DIVIDED BY 6 Conversion Ratio
192,756 Gas Equivalent BBL 192,756 Gas Equivalent BBL
----------
398,145 Total Equivalent BBL
2,700,184 Shares Outstanding
$ 0.50 Times: Price per Share
----------
$1,350,092 Total Price
398,145 Divided by: Total Equivalent BBL
----------
$ 3.39 Price Paid per Equivalent BBL
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ESCALATED WITH 3D SEISMIC DEVELOPMENTS
PROVED DEVELOPED ONLY
RISKED
PROVED DEVELOPED ONLY
OIL-BBL GAS-MCF
---------- ---------
PDP 91,542 797,882
PDNP 16,772 211,612
PUD 0 0
---------- ---------
108,314 Total Oil BBL 1,009,494 Total Gas MCF
DIVIDED BY 6 Conversion Ratio
168,249 Gas Equivalent BBL 168,249 Gas Equivalent BBL
----------
276,563 Total Equivalent BBL
2,700,184 Shares Outstanding
$ 0.50 Times: Price per Share
----------
$1,350,092 Total Price
276,563 Divided by: Total Equivalent BBL
----------
$ 4.88 Price Paid per Equivalent BBL
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VALUE OF WELL OPERATIONS
April 30,
Other Considerations 1996
---------
Property Operation Fees $134,283 = pretax income
15% 5 Year PV $450,138 15% 3 Year PV $306,598
Per Share Contribution $ 0.17 Per Share Contribution $ 0.11
10% 5 Year PV $509,038 10% 4 Year PV $425,659
Per Share Contribution $ 0.19 Per Share Contribution $ 0.16
20% 5 Year PV $401,588 20% 6 Year PV $446,559
Per Share Contribution $ 0.15 Per Share Contribution $ 0.17
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VALUE OF NET LOSS CARRYFORWARD
$200,000
Per Share Contribution
Full Value $ 0.07
75% Value $ 0.06
50% Value $ 0.04
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Other Considerations:
1 A third party non operator would incur overhead that MRI does not.
2 The cost of separate filings is eliminated.
3 A third party would probably risk reserves more, due to unfamiliarity
with the properties.
4 A third party may give little or no value to future development, since
it would not operate or control.
5 MRI has been loaning money to Summit to fund development.
6 Other parties might have different pricing assumptions.
7 Well operation revenues to MRI are almost pure profit.
We assumed expenses of three months revenues.
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