aquatic_ex1057.htm


    
      

    

     

    Exhibit
      10.57

     

    
       

       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

       

      


       

      


       

      


       

      


       

      ESTIMATED

       

      RESERVES
        AND FUTURE INCOME

       

      ATTRIBUTABLE
        TO CERTAIN

       

      LEASEHOLD
        INTERESTS

       

      


       

      


       

      


       

      AS
        OF

       

      JANUARY
        1, 2007

       

      


       

      


       

      


       

      


       

      


       

      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370
        -  HOUSTON, TEXAS 77079 - (281) 759-8860 - FAX: (281) 759-3513O
        WINNV.RALENSER.COM

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      TABLE
        OF
        CONTENTS

       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

       

      


      


       

      
        	
                DISCUSSION

              	 
	 	 
	
                ONE
                  LINE SUMMARIES

              	 
	 	 
	
                SUMMARY
                  OF ESTIMATED 8/8THS RESERVES.

              	
                A

              
	
                SUMMARY
                  OF NET RESERVES AND INCOME DATA

              	
                B

              
	
                SUMMARY
                  OF NET RESERVES AND INCOME DATA -

              	 
	
                RANKED
                  BY FUTURE NET INCOME DISCOUNTED AT 10%.

              	
                C

              
	 	 
	
                GRAND
                  SUMMARIES

              	 
	 	 
	
                 TOTAL
                  PROVED RESERVES........

              	
                1

              
	
                 PROVED
                  PRODUCING RESERVES...

              	
                2

              
	
                 PROVED
                  UNDEVELOPED RESERVES...

              	
                3

              
	
                POSSIBLE
                  UNDEVELOPED RESERVES...

              	
                4

              
	 	 
	
                LEASEHOLD
                  PROJECTIONS

              	 
	 	 
	
                SARGENT
                  SOUTH FIELD, MATAGORDA CO, TX

              	
                 5-22

              


      

      


       

      


       

      


       

      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370
        -  HOUSTON, TEXAS 77079 - (281) 759-8860 - FAX: (281) 759-3513O
        WINNV.RALENSER.COM

      
 

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      


      


       

      
        	
                R.
                  A. LENSER AND ASSOCIATES, INC.

                Consulting
                  Petroleum Engineers and Geologists

                 

              	
                Phone:  (281)
                  759-8860

                Fax:  (281)
                  759-3513

                www.ralenser.com

              


      

      


       

      11757
        KATY FREEWAY

      SUITE
        370

      HOUSTON,
        TEXAS 77079

       

      


      JUNE
        8,
        2007

       

      


      


      Aquatic
        Cellulose International Corp.

      121G
        Shuswap Street

      Salmon
        Arm B.C. V1E 4P2

      


      Attention
        Mr. Sheridan Westgarde

      


      Dear
        Mr.
        Westgarde:

      


      As
        requested, we have made an estimate of the reserves and future production
        and
        income attributable to certain leasehold interests of Aquatic Cellulose
        International Corp. As of January 1, 2007. This report is based on constant
        prices and costs as set forth in this letter. The subject properties are
        located
        in the Sargent South Field, Matagorda County, Texas. The results of this
        study
        are summarized below:

      


      


      Aquatic
        Cellulose International Corp.

      Estimated
        Net Reserves and Income Data

      Attributable
        to Certain Leasehold Interests

      As
        of
        January 1, 2007

      


      


      
        	 	 	
                Proved Proved

              	 	 	
                Total

              	 	 	 	 
	 	 	
                Producing

              	 	 	
                Undeveloped

              	 	 	
                Proved

              	 
	 	 	 	 	 	 	 	 	 	 
	
                Remaining
                  Reserves

              	 	 	 	 	 	 	 	 	 
	
                  Oil/Condensate
                  - MBbls

              	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 
	
                  Gas
                  - MMCF

              	 	 	
                44

              	 	 	 	
                205

              	 	 	 	
                249

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                 Income
                  Data

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Future
                  Gross Revenue

              	 	$	
                268,892

              	 	 	$	
                1,266,577

              	 	 	$	
                1,535,470

              	 
	
                    Deductions

              	 	 	
                52,781

              	 	 	 	
                493,308

              	 	 	 	
                546,089

              	 
	
                    Future
                  Net Income

              	 	$	
                216,111

              	 	 	$	
                773,269

              	 	 	$	
                989,390

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Discounted
                
FNI @ 10%	 	$	198,964	 	 	$	566,269	 	 	$	765,080	 


      

      


      From
        Landmark Graphics "Aries" (totals shown above may not add to the summary
        cash
        flow tables due to rounding).


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

      JUNE
        8,
        2007

      PAGE
        2

      


      


      


      


      
        	 	 	
                Possible

              	 
	 	 	
                Undeveloped

              	 
	 	 	 	 
	
                Remaining
                  Reserves

              	 	 	 
	 	 	 	 
	
                     Oil
                  / Condensate - MBbls

              	 	 	
                0

              	 
	
                     Gas
                  -MMCF

              	 	 	
                2,064

              	 
	 	 	 	 	 
	
                Income
                  Data

              	 	 	 	 
	
                     Future
                  Gross Revenue

              	 	$	
                12,737,834

              	 
	
                     Deductions

              	 	 	
                2,831,810

              	 
	
                    Future
                  Net Income

              	 	$	
                9,906,023

              	 
	 	 	 	 	 
	
                Discounted
                  FNI@410%

              	 	$	
                4,206,534

              	 


      

      


      The
        discounted future net income shown
        above is based on a discount rate of 10 percent per annum compounded monthly.
        Future net income was discounted at five other discount rates, which are
        compounded monthly. These data are shown on each estimated projection of
        future
        production and income presented in a later section of this report and are
        summarized as follows:

      


      


      
        	
                Discounted
                  Rate

              	 	
                Total

              	 	
                Total

              
	
                Percent

              	 	
                Proved

              	 	
                Possible

              
	 	 	 	 	 
	
                15

              	 	
                $  681,271

              	 	
                $3,008,440

              
	
                20

              	 	
                $  611,075

              	 	
                $2,245,689

              
	
                25

              	 	
                $  551,743

              	 	
                $1,732,406

              
	
                30

              	 	
                $  501,175

              	 	
                $1,371,250

              
	
                35

              	 	
                $  457,748

              	 	
                $1,107,834

              


      

      


      These
        data are presented for your
        information and should not be construed as our estimate of fair market
        value.

      


      Liquid
        Hydrocarbon Volumes are
        expressed in thousands of barrels (MBbls). One barrel is equivalent to 42
        United
        States gallons. Gas Volumes are expressed in millions of standard cubic feet
        (MMCF) at the contract temperature and pressure base of the state of
        Texas.

      


       

      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370
        -  HOUSTON, TEXAS 77079 - (281) 759-8860 - FAX: (281) 759-3513O
        WINNV.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

      JUNE
        8,
        2007

      PAGE
        3

      


      


      Reserve
        Definitions

      


      The
        proved reserves included herein
        conform to the definitions as set forth in the Securities and Exchange
        Commission's Regulation S-X Part 210.4-10 (A) as clarified by various Commission
        Staff Accounting Bulletins and to the definitions endorsed by the Society
        of
        Petroleum Engineers (SPE), the Society of Petroleum Evaluation Engineers
        (SPEE)
        and the World Petroleum Congresses (WPC). Definitions of these reserves are
        included immediately following this letter.

      


      Estimate
        of Reserves

      


      Estimates
        of reserves were prepared by
        the use of geological and engineering methods generally accepted by the
        petroleum industry. The method or combination of methods utilized in the
        analysis of each reservoir was tempered by experience in the area, stage
        of
        development, quality and completeness of basic data, and production
        history.

      


      Where
        applicable, the volumetric method
        was employed for determining the original quantities of hydrocarbons in place.
        Structural and isopachous maps were furnished by New Century Energy Corp.
        and,
        after evaluation by us, were accepted as correct. These data were used in
        determining reservoir volumes. In some cases drainage areas were assigned
        based
        on analogy. Electrical logs, core analysis, and other available data were
        used
        to determine representative values for porosity and interstitial water
        saturation. Reserves based upon volumetric calculations or other methods
        such as
        analogy with offset wells are usually subject to greater revision than those
        based upon production and/or pressure performance data. Therefore, it may
        be
        necessary to revise these estimates up or down in the future as more reliable
        engineering data becomes available.

      


      Reserves
        of depletion-type reservoirs
        or those whose performance disclosed reliable decline in production-rate
        trends
        or other diagnostic characteristics were estimated by the application of
        appropriate decline curves or other performance relationships. In the analysis
        of production decline curves, reserves were established only to a calculated
        economic limit.

      


      Estimate
        of Future Producing Rates

      


      Initial
        production rates were based on
        the current rates for those reservoirs now on production. If no production
        decline was established, a decline profile analogous to similar wells was
        used.
        If a decline trend was established, this trend was used as the basis for
        estimating future rates.

      


      R.
        A.
        TENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 - HOUSTON, TEXAS
        77079 - (281) 759-8860 - FAX: (281) 759-3513O WWW.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

      JUNE
        8,
        2007

      PAGE
        4

      


      Product
        Prices

      


      At
        the request of Aquatic Cellulose
        International Corp. This report was prepared using gas prices in effect on
        December 31, 2006 and provided by New Century Energy Corp.

      


      Gas
        Prices

      


      For
        the current report, New Century
        Energy Corp. Provided gas prices for each lease. The individual prices were
        held
        constant over the life of the reserves with no future price escalation due
        to
        inflation. The resulting overall average price for the gas reserves is $
        6.17
        Per MCF and accounts for 100.0 Percent of the future gross income from all
        proved reserves.

      


      Income
        Data

      


      The
        future gross revenue is determined
        before deduction of production and ad valorem taxes. Future net income is
        determined after deduction of the normal costs of operating the wells,
        development costs, production taxes and ad valorem taxes. The operating costs,
        and development costs were held constant with no future price escalation
        due to
        inflation. The future net income is before deduction of state and federal
        income
        taxes and has not been adjusted for outstanding loans, which may exist. It
        does
        not include any adjustment for cash on hand or undistributed
        income.

      


      Neither
        the salvage value of lease
        equipment nor the cost to abandon the properties has been considered in this
        study.

      


      Table
        a presents a summary of the
        8/8ths reserves, interests and prices for the subject properties by well.
        Table
        B presents a summary of net reserves and income data for the subject properties
        by well and Table C presents a summary of proved net reserves and income
        data
        ranked by 10% discounted future net income. Tables 1 through 4 are the Grand
        Summaries and Tables 5 through 22 are individual well cashflows alphabetically
        by well. Adjacent to each table, which represents our estimated projections
        for
        a particular property, is a production decline curve, which graphically
        illustrates past hydrocarbon production history and our estimated projection
        of
        future production.

      


      General

      


      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 there
        from
        and the actual costs related thereto could be more or less than the estimated
        amounts. Because of governmental policies and uncertainties of supply and
        demand, the actual sales volumes and the prices received from the reserves,
        along with the costs incurred in recovering such reserves, may vary from
        those
        assumptions included in this report. Also, estimates of reserves may increase
        or
        decrease as a result of future operations.

      


      R.
        A.
        TENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 - HOUSTON, TEXAS
        77079 - (281) 759-8860 - FAX: (281) 759-3513O
WWW.RALENSER.COM

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      AQUATIC
        CELLULOSE INTERNATIONAL CORP.

      JUNE
        8,
        2007

      PAGE
        5

      


      


      We
        are
        qualified to perform engineering evaluations and do not claim expertise in
        accounting or legal matters. As in all aspects of oil and gas evaluation,
        there
        are uncertainties inherent in the interpretation of engineering data and,
        therefore, our conclusions necessarily represent only our best-informed
        professional judgments.

      


      The
        titles to the properties have not been examined by R. A. Lenser and Associates,
        Inc. Nor has the actual degree or type of interest owned been independently
        confirmed. The data used in our estimates were obtained from new century
        energy
        corp. And were accepted as accurate. For the purposes of this report, a field
        inspection of the properties was not performed nor was the mechanical operation
        or condition of the wells and their related facilities examined. We have
        not
        investigated possible environmental liability related to the properties and,
        therefore, our estimates do not include any potential liability to restore
        and
        clean up any damages caused by past operations.

      


      We
        are
        independent petroleum engineers and geologists; 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 and are available for review.

      


      
        	 	
                VERY
                  TRULY YOURS,

              
	 	 
	 	
                R.
                  A. LENSER AND ASSOCIATES, INC.

              
	 	 
	 	
                /s/
                  Ronald A. Lenser

              
	 	
                 Ronald
                  A. Lenser

              
	 	
                Registered
                  Professional Engineer

              
	 	
                PE
                  No. 30558

              


      

      


      RAL/hmg

      


      


      


      


      


      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 - HOUSTON, TEXAS
        77079 - (281) 759-8860 - FAX: (281) 759-3513O WWW.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      PETROLEUM
        RESERVES DEFINITIONS

      


      SOCIETY
        OF PETROLEUM ENGINEERS (SPE)

      AND

      WORLD
        PETROLEUM CONGRESSES (WPC)

      


      Reserves

      


      Reserves
        are those quantities of
        petroleum* which are anticipated to be commercially recovered from known
        accumulations from a given date forward. All reserve estimates involve some
        degree of uncertainty. The uncertainty depends chiefly on the amount of reliable
        geologic and engineering data available at the time of the estimate and the
        interpretation of these data. The relative degree of uncertainty may be conveyed
        by placing reserves into one of two principal classifications, either proved
        or
        unproved. Unproved reserves are less certain to be recovered than proved
        reserves and may be further sub-classified as probable and possible reserves
        to
        denote progressively increasing uncertainty in their
        recoverability.

      


      The
        intent of the Society of Petroleum
        Engineers (SPE) and the World Petroleum Congresses (WPC) in approving additional
        classifications beyond proved reserves is to facilitate consistency among
        professionals using such terms. In presenting these definitions, neither
        organization is recommending public disclosure of reserves classified as
        unproved. Public disclosure of the quantities classified as unproved reserves
        is
        left to the discretion of the countries or companies involved.

      


      Estimation
        of reserves is done under
        conditions of uncertainty. The method of estimation is called deterministic
        if a
        single best estimate of reserves is made based on known geological, engineering,
        and economic data. The method of estimation is called probabilistic when
        the
        known geological, engineering, and economic data are used to generate a range
        of
        estimates and their associated probabilities. Identifying reserves as proved,
        probable, and possible has been the most frequent classification method and
        gives an indication of the probability of recovery. Because of potential
        differences in uncertainty, caution should be exercised when aggregating
        reserves of different classifications.

      


      Reserves
        estimates will generally be
        revised as additional geologic or engineering data becomes available or as
        economic conditions change. Reserves do not include quantities of petroleum
        being held in inventory, and may be reduced for usage or processing losses
        if
        required for financial reporting.

      


      Reserves
        may be attributed to either
        natural energy or improved recovery methods. Improved recovery methods include
        all methods for supplementing natural energy or altering natural forces in
        the
        reservoir to increase ultimate recovery. Examples of such methods are pressure
        maintenance, cycling, waterflooding, thermal methods, chemical flooding,
        and the
        use of miscible and immiscible displacement fluids. Other improved recovery
        methods may be developed in the future as petroleum technology continues
        to
        evolve.

      


      *Petroleum:
        for the purpose of these definitions, the term petroleum refers to naturally
        occurring liquids and gases which are predominately comprised of hydrocarbon
        compounds. Petroleum may also contain non-hydrocarbon compounds in which
        sulfur,
        oxygen, and/or nitrogen atoms are combined with carbon and hydrogen. Common
        examples of non-hydrocarbons found in petroleum are nitrogen,

      carbon
        dioxide, and hydrogen sulfide.

      


      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 -
        HOUSTON,  TEXAS 77079 - (281) 759-8860 - FAX: (281) 759-3513O
        WWW.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      Proved
        Reserves

      


                 Proved
        reserves are those quantities of petroleum which, by analysis of geological
        and
        engineering data, can be estimated with reasonable certainty to be commercially
        recoverable, from a given date forward, from known reservoirs and under current
        economic conditions, operating methods, and government regulations. Proved
        reserves can be categorized as developed or undeveloped.

      


      If
        deterministic methods are used, the
        term reasonable certainty is intended to express a high degree of confidence
        that the quantities will be recovered. If probabilistic methods are used,
        there
        should be at least a 90% probability that the quantities actually recovered
        will
        equal or exceed the estimate.

      


      Establishment
        of current economic conditions should include relevant historical petroleum
        prices and associated costs and may involve an averaging period that is
        consistent with the purpose of the reserve estimate, appropriate contract
        obligations, corporate procedures, and government regulations involved in
        reporting these reserves.

      


      In
        general, reserves are considered
        proved if the commercial producibility of the reservoir is supported by actual
        production or formation tests. In this context, the term proved refers to
        the
        actual quantities of petroleum reserves and not just the productivity of
        the
        well or reservoir. In certain cases, proved reserves may be assigned on the
        basis of well logs and/or core analysis that indicate the subject reservoir
        is
        hydrocarbon bearing and is analogous to reservoirs in the same area that
        are
        producing or have demonstrated the ability to produce on formation
        tests.

      


      The
        area
        of the reservoir considered as proved includes (1) the area delineated by
        drilling and defined by fluid contacts, if any, and (2) the undrilled portions
        of the reservoir that can reasonably be judged as commercially productive
        on the
        basis of available geological and engineering data. In the absence of data
        on
        fluid contacts, the lowest known occurrence of hydrocarbons controls the
        proved
        limit unless otherwise indicated by definitive geological, engineering or
        performance data.

      


      Reserves
        may be classified as proved if
        facilities to process and transport those reserves to market are operational
        at
        the time of the estimate or there is a reasonable expectation that such
        facilities will be installed. Reserves in undeveloped locations may be
        classified as proved undeveloped provided (1) the locations are direct offsets
        to wells that have indicated commercial production in the objective formation,
        (2) it is reasonably certain such locations are within the known proved
        productive limits of the objective formation, (3) the locations conform to
        existing well spacing regulations where applicable, and (4) it is reasonably
        certain the locations will be developed. Reserves from other locations are
        categorized as proved undeveloped only where interpretations of geological
        and
        engineering data from wells indicate with reasonable certainty that the
        objective formation is laterally continuous and contains commercially
        recoverable petroleum at locations beyond direct offsets.

      


      


      


      


      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 - HOUSTON, TEXAS
        77079 - (281) 759-8860 - FAX: (281) 759-3513O WWW.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      Proved
        Reserves (Continued)

      


      Reserves
        which are to be produced
        through the application of established improved recovery methods are included
        in
        the proved classification when (1) successful testing by a pilot project
        or
        favorable response of an installed program in the same or an analogous reservoir
        with similar rock and fluid properties provides support for the analysis
        on
        which the project was based, and, (2) it is reasonably certain that the project
        will proceed. Reserves to be recovered by improved recovery methods that
        have
        yet to be established through commercially successful applications are included
        in the proved classification only (1) after a favorable production response
        from
        the subject reservoir from either (a) a representative pilot or (b) an installed
        program where the response provides support for the analysis on which the
        project is based and (2) it is reasonable certain the project will
        proceed.

      


      Unproved
        Reserves

      


      Unproved
        reserves are based on geologic andior engineering data similar to that used
        in
        estimates of proved reserves; but technical, contractual, economic, or
        regulatory uncertainties preclude such reserves being classified as proved.
        Unproved reserves may be further classified as probable reserves and possible
        reserves.

      


      Unproved
        reserves may be estimated
        assuming future economic conditions different from those prevailing at the
        time
        of the estimate. The effect of possible future improvements in economic
        conditions and technological developments can be expressed by allocating
        appropriate quantities of reserves to the probable and possible
        classifications.

      


      Probable
        Reserves

      


      Probable
        reserves are those unproved reserves which analysis of geological and
        engineering data suggests are more likely than not to be recoverable. In
        this
        context, when probabilistic methods are used, there should be at least a
        50%
        probability that the quantities actually recovered will equal or exceed the
        sum
        of estimated proved plus probable reserves.

      


      In
        general, probable reserves may
        include (1) reserves anticipated to be proved by normal stepout drilling
        where
        sub-surface control is inadequate to classify these reserves as proved, (2)
        reserves in formations that appear to be productive based on well log
        characteristics but lack core data or definitive tests and which are not
        analogous to producing or proved reservoirs in the area, (3) incremental
        reserves attributable to infill drilling that could have been classified
        as
        proved if closer statutory spacing had been approved at the timeof the estimate,
        (4) reserves attributable to improved recovery methods that have been
        established by repeated commercially successful applications when (a)a project
        or pilot is planned but not in operation and

      


      


      R.
        A.
        LENSER AND ASSOCIATES, INC. - 11757 KATY FREEWAY - SUITE 370 - HOUSTON, TEXAS
        77079 - (281) 759-8860 - FAX: (281) 759-3513O WWW.RALENSER.COM


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

       (b)
        rock, fluid, and reservoir
        characteristics appear favorable for commercial application, (5) reserves
        in an
        area of the formation that appears to be separated from the proved area by
        faulting and the geologic interpretation indicates the subject area is
        structurally higher than the proved area, (6) reserves attributable to a
        future
        workover, treatment, re-treatment, change of equipment, or other mechanical
        procedures, where such procedure has not been proved successful in wells
        which
        exhibit similar behavior in analogous reservoirs, and (7) incremental reserves
        in proved reservoirs where an alternative interpretation of performance or
        volumetric data indicates more reserves than can be classified as
        proved.

      


      RESERVE
        STATUS CATEGORIES

      


      Reserve
        status categories define the development and producing status of wells and
        reservoirs.

      


      Developed:
        developed reserves are expected to be recovered from existing wells including
        reserves behind pipe. Improved recovery reserves are considered developed
        only
        after the necessary equipment has been installed, or when the costs to do
        so are
        relatively minor. Developed reserves may be subcategorized as producing or
        non-
        producing.

      


      Producing:
        reserves subcategorized as producing are expected to be recovered from
        completion intervals which are open and producing at the time of the estimate.
        Improved recovery reserves are considered producing only after the improved
        recovery project is in operation.

      


      Non-producing:
        reserves subcategorized as non-producing include shut-in and behind-pipe
        reserves.0

       

      Shut-in
        reserves are expected to be recovered from (1)  completion intervals
        which are open at the time of the estimate but  which have not started
        producing, (2) wells which were shut-in for  market conditions or
        pipeline connections, or (3) wells not capable of  production for
        mechanical reasons.

      


      Behind
        pipe reserves are expected to
        be recovered from zones in existing wells, which will require additional
        completion work or future recompletion prior to the start of
        production.

      


      Undeveloped
        reserves: undeveloped reserves are expected to be recovered: (1) from new
        wells
        on undrilled acreage, (2) from deepening existing wells to a different
        reservoir, or (3) where a relatively large expenditure is required to (a)
        recomplete an existing well or (b) install production or transportation
        facilities for primary or improved recovery projects.

      


      Approved
        by the board of directors, society of petroleum engineers (SPE),Inc. March
        7,
        1997

      


      


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