Exhibit 10.1

 

Cawley, Gillespie & Associates, Inc.

petroleum consultants

 

13640 BRIARWICK DRIVE, SUITE 100

AUSTIN, TEXAS 78729-1707

512-249-7000

306 WEST SEVENTH STREET, SUITE 302

FORT WORTH, TEXAS 76102-4905

817- 336-2461

www.cgaus.com

1000 LOUISIANA STREET, SUITE 1900

HOUSTON, TEXAS 77002-5017

713-651-9944

 

 

February 11, 2019

 

 

Mr. Haim Tsuff - CEO

Isramco, Inc

2425 West Loop South, Suite 810

Houston, Texas 77027

 

 

Re:     Evaluation Summary - Strip Price

Isramco Resources, LLC Interests

Isramco Energy, LLC Interests

Jay Petroleum, L.L.C. Interests

Certain Properties in Various States

As of December 31, 2018

 

 

Dear Mr. Tsuff:

 

As requested, we are submitting our estimates of proved developed producing
reserves and forecasts of economics attributable to the above captioned
partnerships in certain properties located in various states. The results of
this evaluation are presented in the accompanying tabulations, with a composite
summary presented below:

 

     

Isramco Resources

 

Isramco Energy

 

Jay Petroleum

     

Proved

 

Proved

 

Proved

     

Developed

 

Developed

 

Developed

     

Producing

 

Producing

 

Producing

Net Reserves

             

Oil

- Mbbl

1,115.2

 

562.7

 

54.8

 

Gas

- MMcf

4,045.0

 

4,012.8

 

345.3

 

NGL

- Mbbl

0.0

 

377.8

 

11.3

Net Revenue

             

Oil

- M$

55,927.2

 

26,755.2

 

2,642.0

 

Gas

- M$

14,697.5

 

9,601.0

 

1,037.3

 

NGL

- M$

0.0

 

8,473.3

 

237.0

 

Other

- M$

0.0

 

0.0

 

0.0

Severance Taxes

- M$

4,032.0

 

2,658.2

 

245.3

Ad Valorem Taxes

- M$

2,065.7

 

1,739.1

 

169.5

Operating Expenses

- M$

33,315.2

 

22,195.2

 

1,448.0

Workover Expenses

- M$

0.0

 

0.0

 

0.0

3rd Party COPAS

- M$

0.0

 

0.0

 

0.0

Other Deductions

- M$

0.0

 

0.0

 

0.0

Investments

- M$

0.0

 

0.0

 

0.0

Net Operating Income (BFIT)

- M$

31,211.7

 

18,237.2

 

2,053.4

 

Discounted @ 10%

- M$

14,521.2

 

9,560.5

 

1,092.9

 

 

--------------------------------------------------------------------------------

 

 

February 1, 2019

Page 2

 

 

The discounted cash flow value shown above should not be construed to represent
an estimate of the fair market value by Cawley, Gillespie & Associates, Inc.
(“CG&A”)

 

Presentation

This report is divided into three partnership sections. Within each partnership
tab there is a Proved Developed Producing (“PDP”) grand total Table I summary.
The Table I presents composite reserve estimates and economic forecasts for the
PDP reserve category. The data presented in each Table I is explained in page 1
of the Appendix. The methods employed in estimating reserves are described in
page 2 of the Appendix. For a more detailed explanation of the report layout,
please refer to the Table of Contents following this letter.

 

Hydrocarbon Pricing

As requested for the Forward Strip scenario, oil and gas prices were adjusted to
the following index prices.

 

Year

WTI

Oil Price 

$/BBL

HH

Gas Price

$/MMBTU

2019 47.56 2.869 2020 48.86 2.673 2021 50.77 2.601 2022 51.84 2.860 2023 52.48
2.860 2024 52.34 2.860

     

Oil and gas prices were held flat thereafter at $52.34 per BBL and $2.860 per
MMBTU, respectively. Adjustments to oil and gas prices were forecast based upon
2017-2018 historical data and were applied by property. Adjustments may include
treating costs, transportation charges and/or crude quality and gravity
corrections. Shrinkage factors were applied to each property against net gas
volumes.

 

Expenses and Taxes

Direct lease operating expenses were forecast based upon 2017-2018 historical
expenses. Investments were applied going forward as provided by your office.
Expenses were held constant for the life of the properties. Severance tax values
were determined by applying normal state severance tax rates. Ad valorem tax
rates were forecast as provided by your office.

 

Miscellaneous

An on-site 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, nor have the wells been tested by Cawley, Gillespie & Associates, Inc.
Possible environmental liability related to the properties has not been
investigated nor considered. The cost of plugging and the salvage value of
equipment at abandonment have not been included except as noted above.

 

The reserves and economics are predicated on regulatory agency classifications,
rules, policies, laws, taxes and royalties in effect on the effective date,
except as noted herein. The possible effects of changes in legislation or other
Federal or State restrictive actions have not been considered. All reserve
estimates represent our best judgment based on data available at the time of
preparation, and assumptions as to future economic and regulatory conditions. It
should be realized that the reserves actually recovered, the revenue derived
therefrom and the actual cost incurred could be more or less than the estimated
amounts.

 

 

--------------------------------------------------------------------------------

 

 

February 1, 2019

Page 3

 

The reserve estimates and forecasts were based upon interpretations of data
furnished by your office and available from our files. Ownership information was
furnished by your office and economic factors such as liquid and gas prices,
price differentials and expenses were furnished by your office and were accepted
as furnished. To some extent, information from public records was used to check
and/or supplement these data. The basic engineering and geological data were
utilized subject to third party reservations and qualifications. Nothing has
come to our attention, however, that would cause us to believe that we are not
justified in relying on such data.

 

This report was prepared for the exclusive use of Naphtha Israel Petroleum
Corp., LTD, J.O.E.L Jerusalem Oil Exploration LTD and Equital LTD. The
undersigned hereby consents that this report shall be attached to an Israeli
public filling of the above mentioned companies with respect to the oil and gas
reserves of Isramco Resources, LLC, Isramco Energy, LLC and Jay Petroleum,
L.L.C. as of the year ended December 31, 2018. Third parties should not rely on
it without the written consent of the above and Cawley, Gillespie & Associates,
Inc. Our work papers and related data are available for inspection and review by
authorized, interested parties.

 

 

 

Yours very truly,

 

CAWLEY, GILLESPIE & ASSOCIATES, INC.

Texas Registered Engineering Firm F-693

   

[ex_134302img002.jpg]

W. Todd Brooker, P.E.

President

[ex_134302img001.jpg]  
[sig2.jpg]
Agustin Presas Jr.
   Vice President
 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Table of Contents

Isramco Resources, LLC Interests

Isramco Energy, LLC Interests

Jay Petroleum, L.L.C. Interests

As of December 31, 2018

--------------------------------------------------------------------------------

Report Letter

Table of Contents

 

ISRAMCO RESOURCES, LLC INTERESTS TAB

●     Table I - PDP

 

ISRAMCO ENERGY, LLC INTERESTS TAB

●     Table I - PDP

 

JAY PETROLEUM, L.L.C. INTERESTS TAB

●     Table I - PDP

 

Appendix Tab

 

●     Page 1 - Explanatory Comments for Summary Tables

●     Page 2 - Methods Employed in the Estimation of Reserves

 

 

 

--------------------------------------------------------------------------------

 

 

Table I - PDP

Composite Reserve Estimates and Economic Forecasts

Isramco Resources, LLC Interests

Certain Oil & Gas Assets in Various States

Proved Developed Producing Reserves

As of December 31, 2018

 

 

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

END

MO-YEAR

Gross Oil

Production

MBBLS

Gross Gas

Production

MMCF

Gross NGL

Production

MBBLS

Net Oil

Production

MBBLS

Net Gas

Sales

MMCF

Net NGL

Production

MBBLS

Avg Oil

Price

$/BBL

Avg Gas

Price

$/MCF

Avg NGL

Price

$/BBL

 

                 

12-2018

5862.4

11769.2

0.0

119.969

512.666

0.000

56.254

2.963

0.000

12-2019

4725.3

8146.0

0.0

100.872

401.307

0.000

53.069

2.953

0.000

12-2020

4117.2

6481.9

0.0

83.334

333.587

0.000

50.561

2.960

0.000

12-2021

3673.2

5097.7

0.0

55.172

264.007

0.000

48.315

2.989

0.000

12-2022

3348.4

4471.0

0.0

50.288

242.883

0.000

47.730

3.015

0.000

 

                 

12-2023

1474.6

2968.4

0.0

44.953

225.982

0.000

47.970

3.052

0.000

12-2024

1043.3

2458.5

0.0

41.315

204.529

0.000

48.067

3.036

0.000

12-2025

948.0

2193.9

0.0

37.244

178.848

0.000

48.092

3.032

0.000

12-2026

874.1

1996.3

0.0

34.392

165.089

0.000

48.122

3.036

0.000

12-2027

806.8

1815.0

0.0

31.888

153.196

0.000

48.167

3.036

0.000

 

                 

12-2028

708.6

1621.3

0.0

29.729

139.255

0.000

48.182

3.039

0.000

12-2029

632.4

1479.8

0.0

28.133

132.374

0.000

48.180

3.040

0.000

12-2030

589.6

1377.0

0.0

26.541

124.826

0.000

48.207

3.035

0.000

12-2031

550.2

1276.1

0.0

25.279

116.483

0.000

48.218

3.041

0.000

12-2032

511.8

1173.6

0.0

23.911

103.886

0.000

48.242

3.063

0.000

 

                 

12-2033

434.3

1022.9

0.0

22.720

98.770

0.000

48.249

3.061

0.000

12-2034

320.1

788.0

0.0

21.529

93.532

0.000

48.255

3.052

0.000

12-2035

301.1

732.4

0.0

20.583

87.059

0.000

48.262

3.053

0.000

12-2036

281.0

662.2

0.0

19.289

77.244

0.000

48.292

3.093

0.000

 

                 

   S Tot

31202.5

57531.3

0.0

817.140

3655.523

0.000

50.182

3.010

0.000

   After

3550.7

6530.1

0.0

232.422

724.932

0.000

48.510

3.217

0.000

   Total

34753.2

64061.4

0.0

1049.562

4380.456

0.000

49.811

3.044

0.000

 

                 

Cum

251625.8

903028.4

0.0

           

Ult

281132.4

957145.6

0.0

           

 

 

--------------------------------------------------------------------------------

 

 

 

                   

   (11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

END

MO-YEAR

Oil

Revenue

M$

Gas

Revenue

M$

NGL

Revenue

M$

Hedge

Revenue

M$

Other

Revenue

M$

Total

Revenue

M$

Production

Taxes

M$

Ad Valorem

Taxes

M$

$/BOE6

 

                 

12-2019

5319.088

1585.439

0.000

0.000

0.002

6904.529

388.018

203.527

24.119

12-2020

4480.074

1106.636

0.000

0.000

0.001

5586.710

311.507

166.138

18.284

12-2021

4323.819

993.665

0.000

0.000

0.000

5317.484

295.247

158.417

19.362

12-2022

3843.444

913.821

0.000

0.000

-0.001

4757.265

266.496

140.422

18.995

12-2023

3431.244

809.097

0.000

0.000

-0.001

4240.340

239.331

124.641

18.744

 

                 

12-2024

2395.534

720.874

0.000

0.000

0.000

3116.408

183.689

88.306

13.715

12-2025

2254.746

663.892

0.000

0.000

0.000

2918.638

171.780

83.134

14.280

12-2026

2114.748

621.327

0.000

0.000

0.000

2736.074

161.073

78.054

14.845

12-2027

1966.892

555.614

0.000

0.000

-0.001

2522.505

147.521

72.375

15.170

12-2028

1834.613

490.623

0.000

0.000

0.000

2325.235

135.622

66.907

15.382

 

                 

12-2029

1655.126

444.769

0.000

0.000

0.000

2099.895

123.091

60.502

14.957

12-2030

1514.292

412.831

0.000

0.000

-0.001

1927.122

113.478

55.405

14.813

12-2031

1388.385

387.995

0.000

0.000

0.000

1776.380

105.166

50.840

14.695

12-2032

1325.021

369.333

0.000

0.000

0.000

1694.354

100.232

48.550

15.331

12-2033

1254.858

350.394

0.000

0.000

0.000

1605.252

94.927

46.151

15.823

 

                 

12-2034

1159.604

329.592

0.000

0.000

0.000

1489.196

87.517

43.083

15.892

12-2035

1100.117

313.500

0.000

0.000

0.000

1413.617

83.019

40.944

16.448

12-2036

1050.822

298.788

0.000

0.000

0.000

1349.609

79.205

39.137

17.155

12-2037

1006.593

282.845

0.000

0.000

0.000

1289.438

75.556

37.505

17.964

 

                 

   S Tot

43419.012

11651.036

0.000

0.000

-0.002

55070.047

3162.475

1604.040

17.685

   After

12508.216

3046.423

0.000

0.000

0.000

15554.636

869.570

461.694

22.174

   Total

55927.227

14697.459

0.000

0.000

-0.002

70624.688

4032.045

2065.734

18.618

 

 

--------------------------------------------------------------------------------

 

 

 

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

 

Operating

Wells

Workover

3rd Party

Other

 

Future Net

Cumulative

Cum. Disc.

END

Expense

Gross

Net

Expense

COPAS

Deductions

Investment

Cash Flow

Cash Flow

Cash Flow

MO-YEAR

M$

Count

M$

M$

M$

M$

M$

M$

M$

 

                   

12-2019

4556.339

1980.

233.7

0.000

0.000

0.002

0.000

1756.644

1756.644

1679.898

12-2020

2689.664

1764.

171.1

0.000

0.000

-0.001

0.000

2419.398

4176.043

3780.044

12-2021

2647.152

1748.

168.0

0.000

0.000

-0.001

0.000

2216.670

6392.713

5529.215

12-2022

2237.704

1738.

164.7

0.000

0.000

-0.001

0.000

2112.643

8505.356

7044.562

12-2023

1949.214

1668.

128.9

0.000

0.000

0.001

0.000

1927.155

10432.511

8301.144

 

                   

12-2024

1106.720

560.

52.1

0.000

0.000

0.000

0.000

1737.693

12170.204

9331.020

12-2025

1077.244

550.

49.7

0.000

0.000

0.000

0.000

1586.480

13756.684

10185.825

12-2026

1048.652

537.

49.0

0.000

0.000

0.000

0.000

1448.296

15204.980

10895.208

12-2027

976.244

502.

46.4

0.000

0.000

0.000

0.000

1326.366

16531.346

11485.798

12-2028

906.080

372.

45.4

0.000

0.000

0.000

0.000

1216.625

17747.973

11978.268

 

                   

12-2029

797.424

362.

42.3

0.000

0.000

0.000

0.000

1118.878

18866.850

12389.989

12-2030

726.925

355.

38.7

0.000

0.000

0.000

0.000

1031.314

19898.164

12734.986

12-2031

665.639

343.

37.0

0.000

0.000

0.000

0.000

954.734

20852.898

13025.319

12-2032

661.437

340.

37.0

0.000

0.000

0.000

0.000

884.134

21737.031

13269.744

12-2033

646.819

335.

36.7

0.000

0.000

0.000

0.000

817.355

22554.389

13475.169

 

                   

12-2034

604.208

324.

34.2

0.000

0.000

0.000

0.000

754.389

23308.775

13647.534

12-2035

593.723

312.

32.9

0.000

0.000

0.000

0.000

695.932

24004.707

13792.088

12-2036

590.684

303.

32.5

0.000

0.000

0.000

0.000

640.584

24645.293

13913.052

12-2037

588.356

302.

32.5

0.000

0.000

0.000

0.000

588.022

25233.314

14013.999

 

                   

   S Tot

25070.22914

395.

1432.7

0.000

0.000

0.000

0.000

25233.314

25233.314

14013.999

   After

8244.988

7860.

503.3

0.000

0.000

0.000

0.000

5978.384

31211.703

14521.246

   Total

33315.21522

255.

1936.0

0.000

0.000

0.000

0.000

31211.697

31211.703

14521.246

 

 

 

--------------------------------------------------------------------------------

 

 

Table I – PDP

Composite Reserve Estimates and Economic Forecasts

Isramco Energy, LLC Interests

Certain Oil & Gas Assets in NM and TX

Proved Developed Producing Reserves

As of December 31, 2018

 

 

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

END

MO-YEAR

Gross Oil

Production 

MBBLS

Gross Gas

Production

MMCF

Gross NGL

Production

MBBLS

Net Oil

Production

MBBLS

Net Gas

Sales

MMCF

Net NGL

Production

MBBLS

Avg Oil

Price

$/BBL

Avg Gas

Price

$/MCF

Avg NGL

Price

$/BBL

 

                 

12-2019

1221.6

3937.9

175.7

56.263

558.525

49.199

41.184

2.343

21.846

12-2020

985.4

2239.5

130.8

43.706

373.015

33.564

45.344

2.242

21.756

12-2021

832.8

1980.8

112.4

39.236

340.283

30.412

47.256

2.181

22.476

12-2022

720.8

1803.5

98.8

35.898

316.664

27.934

48.315

2.399

23.040

12-2023

564.2

1631.0

87.0

32.375

289.697

24.960

48.930

2.405

23.379

 

                 

12-2024

174.1

1485.9

77.0

27.297

265.439

22.003

48.781

2.407

23.126

12-2025

153.7

1368.6

69.5

25.394

247.036

20.153

48.782

2.407

22.960

12-2026

140.1

1221.5

63.1

23.776

225.633

18.562

48.780

2.402

22.983

12-2027

129.6

1110.0

54.7

22.432

211.109

16.712

48.774

2.403

23.132

12-2028

113.5

1005.7

47.5

20.668

181.838

15.168

48.759

2.383

23.180

 

                 

12-2029

103.8

828.0

39.4

18.013

97.357

10.852

48.642

2.546

21.866

12-2030

96.0

766.6

36.2

17.093

89.909

9.865

48.641

2.554

21.763

12-2031

89.2

710.7

33.1

16.154

80.301

8.715

48.635

2.505

21.584

12-2032

72.9

610.8

24.2

15.206

70.585

8.052

48.628

2.427

21.653

12-2033

57.8

479.2

14.1

14.103

59.987

6.590

48.605

2.447

22.031

 

                 

12-2034

54.4

446.5

12.8

13.364

55.889

6.038

48.603

2.455

22.223

12-2035

51.2

380.9

12.2

12.720

52.856

5.768

48.603

2.463

22.224

12-2036

48.7

344.3

11.5

12.125

46.477

5.452

48.603

2.548

22.167

12-2037

46.0

299.8

9.7

11.450

38.486

4.672

48.588

2.630

22.003

 

                 

   S Tot

5655.7

22651.2

1109.8

457.273

3601.085

324.671

47.313

2.372

22.477

   After

372.7

2637.5

82.3

105.401

411.721

53.088

48.577

2.569

22.145

   Total

6028.4

25288.6

1192.1

562.674

4012.807

377.759

47.550

2.393

22.431

                   

Cum

67450.0

1337052.9

0.0

           

Ult

73478.4

1362341.5

1192.1

           

 

 

--------------------------------------------------------------------------------

 

 

 

                   

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

END

MO-YEAR

Oil

Revenue

M$

Gas

Revenue

M$

NGL

Revenue

M$

Hedge

Revenue

M$

Other

Revenue

M$

Total

Revenue

M$

Production

Taxes

M$

Ad Valorem

Taxes

M$

$/BOE6

                   

12-2019

2317.136

1308.476

1074.792

0.000

0.001

4700.404

290.862

176.183

15.975

12-2020

1981.811

836.164

730.210

0.000

0.001

3548.186

213.734

135.911

11.759

12-2021

1854.114

742.246

683.541

0.000

0.000

3279.900

197.158

126.224

12.250

12-2022

1734.394

759.741

643.602

0.000

0.000

3137.738

189.928

120.956

12.900

12-2023

1584.107

696.800

583.536

0.000

0.000

2864.444

173.564

110.918

13.228

 

                 

12-2024

1331.573

638.983

508.854

0.000

0.000

2479.410

151.753

96.208

12.609

12-2025

1238.804

594.727

462.695

0.000

0.000

2296.226

140.486

89.179

13.016

12-2026

1159.794

542.052

426.619

0.000

0.000

2128.465

129.988

82.744

13.519

12-2027

1094.089

507.199

386.593

0.000

0.000

1987.880

121.153

77.338

14.073

12-2028

1007.735

433.287

351.603

0.000

0.000

1792.626

108.667

69.754

14.400

 

                 

12-2029

876.191

247.859

237.291

0.000

0.000

1361.342

79.178

53.280

13.614

12-2030

831.415

229.612

214.694

0.000

0.000

1275.722

73.892

49.992

14.193

12-2031

785.666

201.190

188.098

0.000

0.000

1174.954

67.545

46.125

14.540

12-2032

739.459

171.331

174.347

0.000

0.000

1085.138

61.959

42.595

15.077

12-2033

685.476

146.778

145.193

0.000

0.000

977.446

55.239

38.379

15.472

 

                 

12-2034

649.544

137.215

134.176

0.000

0.000

920.934

51.956

36.182

16.139

12-2035

618.228

130.160

128.181

0.000

0.000

876.569

49.454

34.443

16.939

12-2036

589.282

118.424

120.858

0.000

0.000

828.564

46.614

32.574

18.014

12-2037

556.332

101.236

102.791

0.000

0.000

760.360

42.379

29.957

18.876

 

                 

   S Tot

21635.152

8543.479

7297.675

0.000

0.001

37476.305

2245.509

1448.941

13.911

   After

5120.043

1057.543

1175.653

0.000

0.000

7353.237

412.661

290.114

21.814

   Total

26755.195

9601.022

8473.329

0.000

0.001

44829.539

2658.170

1739.055

15.027

                   

 

 

--------------------------------------------------------------------------------

 

 

 

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

 

Operating

Wells

Workover

3rd Party

Other

 

Future Net

Cumulative

Cum. Disc.

END

Expense

Gross

Net

Expense

COPAS

Deductions

Investment

Cash Flow

Cash Flow

Cash Flow

MO-YEAR

M$

Count

M$

M$

M$

M$

M$

M$

M$

                     

12-2020

1501.546

252.

99.3

0.000

0.000

0.000

0.000

1696.995

3033.582

2751.180

12-2021

1417.526

227.

79.8

0.000

0.000

0.000

0.000

1538.992

4572.574

3965.681

12-2022

1378.155

219.

77.9

0.000

0.000

0.000

0.000

1448.698

6021.272

5004.926

12-2023

1281.549

211.

73.6

0.000

0.000

0.000

0.000

1298.413

7319.685

5851.648

 

                   

12-2024

1082.304

116.

67.8

0.000

0.000

0.000

0.000

1149.146

8468.831

6532.821

12-2025

1036.907

109.

63.7

0.000

0.000

0.000

0.000

1029.654

9498.485

7087.674

12-2026

992.948

101.

61.1

0.000

0.000

0.000

0.000

922.784

10421.270

7539.733

12-2027

963.722

97.

58.6

0.000

0.000

0.000

0.000

825.667

11246.938

7907.450

12-2028

875.987

93.

56.6

0.000

0.000

0.000

0.000

738.218

11985.156

8206.332

 

                   

12-2029

562.156

63.

29.4

0.000

0.000

0.000

0.000

666.727

12651.883

8451.698

12-2030

546.292

62.

29.4

0.000

0.000

0.000

0.000

605.546

13257.429

8654.292

12-2031

511.848

53.

22.1

0.000

0.000

0.000

0.000

549.436

13806.865

8821.402

12-2032

485.544

51.

21.2

0.000

0.000

0.000

0.000

495.040

14301.905

8958.307

12-2033

439.155

47.

20.9

0.000

0.000

0.000

0.000

444.673

14746.578

9070.080

 

                   

12-2034

429.344

44.

19.0

0.000

0.000

0.000

0.000

403.452

15150.030

9162.275

12-2035

428.190

42.

18.9

0.000

0.000

0.000

0.000

364.483

15514.513

9237.996

12-2036

421.784

41.

18.9

0.000

0.000

0.000

0.000

327.592

15842.105

9299.868

12-2037

394.516

39.

17.7

0.000

0.000

0.000

0.000

293.508

16135.613

9350.264

 

                   

   S Tot

17646.246

2251.

1012.4

0.000

0.000

0.000

0.000

16135.613

16135.613

9350.264

   After

4548.920

461.

248.2

0.000

0.000

0.000

0.000

2101.545

18237.154

9560.454

   Total

22195.166

2712.

1260.6

0.000

0.000

0.000

0.000

18237.158

18237.154

9560.454

 

 

 

--------------------------------------------------------------------------------

 

 

Table I - PDP

Composite Reserve Estimates and Economic Forecasts

Jay Petroleum, L.L.C. Interests

Certain Oil & Gas Assets in Various States

Proved Developed Producing Reserves

As of December 31, 2018

 

 

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

END

MO-YEAR

Gross Oil

Production

MBBLS

Gross Gas

Production

MMCF

Gross NGL

Production

MBBLS

Net Oil

Production

MBBLS

Net Gas

Sales

MMCF

Net NGL

Production

MBBLS

Avg Oil

Price

$/BBL

Avg Gas

Price

$/MCF

Avg NGL

Price

$/BBL

                   

12-2019

807.7

14166.7

76.7

8.118

54.500

2.387

44.996

2.849

18.251

12-2020

710.6

12800.2

60.1

5.474

32.698

1.452

46.388

2.768

19.274

12-2021

640.8

11708.2

51.8

4.879

28.978

1.162

48.207

2.724

20.231

12-2022

579.2

10725.5

45.3

4.169

25.361

0.869

49.049

3.049

21.113

12-2023

528.4

9846.7

41.3

3.799

23.156

0.773

49.630

3.061

21.458

                   

12-2024

482.4

9040.4

37.9

3.327

20.568

0.706

49.603

3.039

21.418

12-2025

433.8

8265.1

30.5

2.492

17.074

0.432

49.436

3.085

22.718

12-2026

399.1

7578.3

28.1

2.318

14.960

0.400

49.431

3.096

22.692

12-2027

367.4

6962.3

25.9

2.162

13.541

0.371

49.434

3.104

22.663

12-2028

338.2

6407.7

23.8

2.020

12.640

0.344

49.442

3.109

22.633

                   

12-2029

311.4

5897.0

22.0

1.887

11.080

0.320

49.449

3.090

22.602

12-2030

286.0

5426.6

20.1

1.733

9.848

0.289

49.401

3.082

22.654

12-2031

260.4

4989.3

17.8

1.469

9.055

0.232

49.090

3.114

23.127

12-2032

239.6

4589.8

16.4

1.371

8.255

0.216

49.101

3.130

23.091

12-2033

218.1

4215.1

14.5

1.156

7.420

0.169

48.746

3.173

23.732

                   

12-2034

199.4

3878.3

13.1

1.010

6.923

0.147

48.636

3.192

23.996

12-2035

182.8

3570.4

12.1

0.808

6.517

0.136

48.760

3.200

23.951

12-2036

168.3

3287.1

11.1

0.754

6.137

0.126

48.784

3.208

23.905

12-2037

154.9

3026.3

10.2

0.704

5.780

0.117

48.808

3.216

23.858

                   

S Tot

7308.5

136381.1

558.6

49.651

314.492

10.648

48.164

2.986

20.748

After

1605.7

31345.7

98.3

5.190

30.813

0.609

48.282

3.188

26.308

Total

8914.2

167726.8

656.9

54.841

345.305

11.258

48.175

3.004

21.049

                   

Cum

32363.5

559240.9

0.0

           

Ult

41712.0

707163.9

538.6

           

 

 

--------------------------------------------------------------------------------

 

 

 

                   

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

END

MO-YEAR

Oil

Revenue

M$

Gas

Revenue

M$

NGL

Revenue

M$

Hedge

Revenue

M$

Other

Revenue

M$

Total

Revenue

M$

Production

Taxes

M$

Ad Valorem

Taxes

M$

$/BOE6

                   

12-2019

365.294

155.255

43.572

0.000

0.000

564.122

35.823

21.715

17.740

12-2020

253.951

90.502

27.994

0.000

0.000

372.447

23.216

16.642

10.663

12-2021

235.199

78.950

23.498

0.000

0.000

337.648

21.085

15.209

11.619

12-2022

204.495

77.316

18.344

0.000

0.000

300.156

18.834

13.369

11.575

12-2023

188.561

70.869

16.582

0.000

0.000

276.013

17.307

12.330

12.511

                   

12-2024

165.019

62.505

15.126

0.000

0.000

242.649

15.240

10.618

12.775

12-2025

123.171

52.665

9.810

0.000

0.000

185.646

11.756

7.759

9.974

12-2026

114.603

46.312

9.078

0.000

0.000

169.993

10.740

7.163

10.551

12-2027

106.884

42.031

8.409

0.000

0.000

157.325

9.931

6.655

11.213

12-2028

99.853

39.300

7.792

0.000

0.000

146.946

9.279

6.214

12.012

                   

12-2029

93.327

34.236

7.222

0.000

0.000

134.785

8.491

5.806

12.638

12-2030

85.609

30.351

6.549

0.000

0.000

122.508

7.700

5.339

13.024

12-2031

72.105

28.198

5.372

0.000

0.000

105.674

6.620

4.569

12.138

12-2032

67.308

25.840

4.978

0.000

0.000

98.125

6.142

4.276

12.842

12-2033

56.340

23.549

4.011

0.000

0.000

83.900

5.227

3.655

11.894

                   

12-2034

49.126

22.097

3.519

0.000

0.000

74.742

4.642

3.232

11.628

12-2035

39.398

20.854

3.260

0.000

0.000

63.511

3.890

2.719

10.208

12-2036

36.788

19.685

3.021

0.000

0.000

59.494

3.646

2.541

10.887

12-2037

34.366

18.587

2.799

0.000

0.000

55.752

3.419

2.376

11.606

                   

S Tot

2391.396

939.102

220.936

0.000

0.000

3551.434

222.987

152.189

12.670

After

250.578

98.229

16.030

0.000

0.000

364.836

22.325

17.341

6.267

Total

2641.974

1037.330

236.966

0.000

0.000

3916.270

245.312

169.530

12.096

                   

 

 

--------------------------------------------------------------------------------

 

 

 

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

 

Operating

Wells

Workover

3rd Party

Other

 

Future Net

Cumulative

Cum. Disc.

END

Expense

Gross

Net

Expense

COPAS

Deductions

Investment

Cash Flow

Cash Flow

Cash Flow

MO-YEAR

M$

Count

M$

M$

M$

M$

M$

M$

 

 

                   

12-2019

332.690

124.

9.6

0.000

0.000

0.000

0.000

173.893

173.893

166.362

12-2020

126.550

103.

3.0

0.000

0.000

0.000

0.000

206.038

379.931

345.280

12-2021

121.579

102.

2.9

0.000

0.000

0.000

0.000

179.775

559.706

487.181

12-2022

103.722

102.

2.9

0.000

0.000

0.000

0.000

164.230

723.936

605.009

12-2023

102.098

101.

2.8

0.000

0.000

0.000

0.000

144.277

868.213

699.108

                     

12-2024

92.154

101.

2.8

0.000

0.000

0.000

0.000

124.638

992.851

773.006

12-2025

56.034

98.

2.5

0.000

0.000

0.000

0.000

110.097

1102.948

832.335

12-2026

53.514

98.

2.5

0.000

0.000

0.000

0.000

98.576

1201.524

880.625

12-2027

52.254

97.

2.4

0.000

0.000

0.000

0.000

88.485

1290.010

920.032

12-2028

52.254

97.

2.4

0.000

0.000

0.000

0.000

79.198

1369.208

952.097

                     

12-2029

49.818

97.

2.4

0.000

0.000

0.000

0.000

70.671

1439.878

978.109

12-2030

46.394

96.

1.7

0.000

0.000

0.000

0.000

63.076

1502.954

999.214

12-2031

37.978

95.

1.6

0.000

0.000

0.000

0.000

56.508

1559.462

1016.403

12-2032

37.071

95.

1.6

0.000

0.000

0.000

0.000

50.636

1610.099

1030.405

12-2033

29.762

94.

1.5

0.000

0.000

0.000

0.000

45.256

1655.354

1041.781

                     

12-2034

26.271

91.

1.5

0.000

0.000

0.000

0.000

40.596

1695.951

1051.058

12-2035

20.239

90.

1.2

0.000

0.000

0.000

0.000

36.663

1732.614

1058.675

12-2036

20.239

90.

1.2

0.000

0.000

0.000

0.000

33.068

1765.682

1064.921

12-2037

20.239

90.

1.2

0.000

0.000

0.000

0.000

29.719

1795.401

1070.023

                     

S Tot

1380.858

1861.

47.6

0.000

0.000

0.000

0.000

1795.401

1795.401

1070.023

After

67.189

2437.

3.2

0.000

0.000

0.000

0.000

257.981

2053.381

1092.895

Total

1448.048

4298.

50.8

0.000

0.000

0.000

0.000

2053.381

2053.381

1092.895

 

 

 

--------------------------------------------------------------------------------

 

 

APPENDIX

Explanatory Comments for Summary Tables

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

HEADINGS

Table I

Description of Table Information

Identity of Interest Evaluated

Property Description – Location

Reserve Classification and Development Status

Effective Date of Evaluation

 

FORECAST

     

(Columns)

     

(1) (11) (21)

Calendar or Fiscal years/months commencing on effective date.

(2) (3) (4)

Gross Production (8/8th) for the years/months which are economical. These are
expressed as thousands of barrels (Mbbl) and millions of cubic feet (MMcf) of
gas at standard conditions. Total future production, cumulative production to
effective date, and ultimate recovery at the effective date are shown following
the annual/monthly forecasts.

(5) (6) (7)

Net Production accruable to evaluated interest is calculated by multiplying the
revenue interest times the gross production. These values take into account
changes in interest and gas shrinkage.

(8)

Average (volume weighted) gross liquid price per barrel before deducting
production-severance taxes.

(9)

Average (volume weighted) gross gas price per Mcf before deducting
production-severance taxes.

(10)

Average (volume weighted) gross NGL price per barrel before deducting
production-severance taxes.

(12)

Revenue derived from oil sales -- column (5) times column (8).

(13)

Revenue derived from gas sales -- column (6) times column (9).

(14)

Revenue derived from NGL sales -- column (7) times column (10).

(15)

Revenue derived from hedge positions.

(16)

Total Revenue – sum of column (12) through column (15).

(17)

Production-Severance taxes deducted from gross oil, gas and NGL revenue.

(18)

Revenue after taxes – column (16) less column (17).

(19)

Ad Valorem taxes.

(20)

$/BOE6 – is the total of column (22), column (25), column (26), and column (27)
divided by Barrels of Oil Equivalent (“BOE”). BOE is net oil production column
(5) plus net gas production column (6) converted to oil at six Mcf gas per one
bbl oil plus net NGL production column (7) converted to oil at one bbl NGL per
0.65 bbls of oil.

(22)

Operating Expenses are direct operating expenses to the evaluated working
interest and may include combined fixed rate administrative overhead charges for
operated oil and gas producers known as COPAS.

(23)

Average gross wells.

(24)

Average net wells are gross wells times working interest.

(25)

Work-over Expenses are non-direct operating expenses and may include
maintenance, well service, compressor, tubing, and pump repair.

(26)

3rd Party COPAS are combined fixed rate administrative overhead charges for
non-operated oil and gas producers.

(27)

Other Deductions may include compression-gathering expenses, transportation
costs and water disposal costs.

(28)

Investments, if any, include re-completions, future drilling costs, pumping
units, etc. and may include either tangible or intangible or both, and the costs
for plugging and the salvage value of equipment at abandonment may be shown as
negative investments at end of life.

(29) (30)

Future Net Cash Flow is column (18) less the total of column (19), column (22),
column (25), column (26), column (27) and column (28). The data in column (29)
are accumulated in column (30). Federal income taxes have not been considered.

(31)

Cumulative Discounted Cash Flow is calculated by discounting monthly cash flows
at the specified annual rates.

 

MISCELLANEOUS

         

DCF Profile

•

The cumulative cash flow discounted at six different interest rates are shown at
the bottom of columns (30-31). Interest has been compounded monthly. The DCF’s
for the “Without Hedge” case may be shown to the left of the main DCF profile.

Life

•

The economic life of the appraised property is noted in the lower right-hand
corner of the table.

Footnotes

•

Comments regarding the evaluation may be shown in the lower left-hand footnotes.

Price Deck

•

A table of oil and gas prices, price caps and escalation rates may be shown in
the lower middle footnotes.

 

 

 

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APPENDIX

 

Methods Employed in the Estimation of Reserves

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The four methods customarily employed in the estimation of reserves are (1)
production performance, (2) material balance, (3) volumetric and (4) analogy.
Most estimates, although based primarily on one method, utilize other methods
depending on the nature and extent of the data available and the characteristics
of the reservoirs.

 

Basic information includes production, pressure, geological and laboratory data.
However, a large variation exists in the quality, quantity and types of
information available on individual properties. Operators are generally required
by regulatory authorities to file monthly production reports and may be required
to measure and report periodically such data as well pressures, gas-oil ratios,
well tests, etc. As a general rule, an operator has complete discretion in
obtaining and/or making available geological and engineering data. The resulting
lack of uniformity in data renders impossible the application of identical
methods to all properties, and may result in significant differences in the
accuracy and reliability of estimates.

 

A brief discussion of each method, its basis, data requirements, applicability
and generalization as to its relative degree of accuracy follows:

 

Production performance. This method employs graphical analyses of production
data on the premise that all factors which have controlled the performance to
date will continue to control and that historical trends can be extrapolated to
predict future performance. The only information required is production history.
Capacity production can usually be analyzed from graphs of rates versus time or
cumulative production. This procedure is referred to as "decline curve"
analysis. Both capacity and restricted production can, in some cases, be
analyzed from graphs of producing rate relationships of the various production
components. Reserve estimates obtained by this method are generally considered
to have a relatively high degree of accuracy with the degree of accuracy
increasing as production history accumulates.

 

Material balance. This method employs the analysis of the relationship of
production and pressure performance on the premise that the reservoir volume and
its initial hydrocarbon content are fixed and that this initial hydrocarbon
volume and recoveries therefrom can be estimated by analyzing changes in
pressure with respect to production relationships. This method requires reliable
pressure and temperature data, production data, fluid analyses and knowledge of
the nature of the reservoir. The material balance method is applicable to all
reservoirs, but the time and expense required for its use is dependent on the
nature of the reservoir and its fluids. Reserves for depletion type reservoirs
can be estimated from graphs of pressures corrected for compressibility versus
cumulative production, requiring only data that are usually available. Estimates
for other reservoir types require extensive data and involve complex
calculations most suited to computer models which makes this method generally
applicable only to reservoirs where there is economic justification for its use.
Reserve estimates obtained by this method are generally considered to have a
degree of accuracy that is directly related to the complexity of the reservoir
and the quality and quantity of data available.

 

Volumetric. This method employs analyses of physical measurements of rock and
fluid properties to calculate the volume of hydrocarbons in-place. The data
required are well information sufficient to determine reservoir subsurface
datum, thickness, storage volume, fluid content and location. The volumetric
method is most applicable to reservoirs which are not susceptible to analysis by
production performance or material balance methods. These are most commonly
newly developed and/or no-pressure depleting reservoirs. The amount of
hydrocarbons in-place that can be recovered is not an integral part of the
volumetric calculations but is an estimate inferred by other methods and a
knowledge of the nature of the reservoir. Reserve estimates obtained by this
method are generally considered to have a low degree of accuracy; but the degree
of accuracy can be relatively high where rock quality and subsurface control is
good and the nature of the reservoir is uncomplicated.

 

Analogy. This method, which employs experience and judgment to estimate
reserves, is based on observations of similar situations and includes
consideration of theoretical performance. The analogy method is a common
approach used for “resource plays,” where an abundance of wells with similar
production profiles facilitates the reliable estimation of future reserves with
a relatively high degree of accuracy. The analogy method may also be applicable
where the data are insufficient or so inconclusive that reliable reserve
estimates cannot be made by other methods. Reserve estimates obtained in this
manner are generally considered to have a relatively low degree of accuracy.

 

Much of the information used in the estimation of reserves is itself arrived at
by the use of estimates. These estimates are subject to continuing change as
additional information becomes available. Reserve estimates which presently
appear to be correct may be found to contain substantial errors as time passes
and new information is obtained about well and reservoir performance.