**Exhibit 99.1**

 
|                       | RYDER SCOTT COMPANY |       |   |                      |   |                     |
|-----------------------|---------------------|------------|--------|---------------------------|--------|--------------------------|
| PETROLEUM CONSULTANTS |                |       |   | FAX (713) 651-0849        |   |
|                  |                |       |   |                      |   |                     |   |
|  1100 LOUISIANA  |                | SUITE 3800 |   | HOUSTON, TEXAS 77002-5218 |   | TELEPHONE (713) 651-9191 |   |
|                       |                     |            |        |                           |        |                          |  |  |  |

 

February 9, 2005

 

Pogo Producing Company 

Post Office Box 2504 

Houston, Texas 77252-2504

 

Gentlemen:

 

At your request,we have prepared an estimate of the reserves, future production, and incomeattributable to certain leasehold and royalty interests of Pogo ProducingCompany (Pogo) as of January 1, 2005. The subject properties are located in thestates of Kansas, Louisiana, Mississippi, New Mexico, Oklahoma, Texas, and inthe state and federal waters offshore Louisiana and Texas. The internationalreserves are located offshore Thailand. The income data were estimated using theSecurities and Exchange Commission (SEC) requirements for future price and costparameters.

 

The estimatedreserves and future income amounts presented in this report are related tohydrocarbon prices. Hydrocarbon prices in effect at December 31, 2004 were usedin the preparation of this report as required by SEC rules; however, actualfuture prices may vary significantly from December 31, 2004 prices. Therefore,volumes of reserves actually recovered and amounts of income actually receivedmay differ significantly from the estimated quantities presented in thisreport. The results of this study are summarized below.

 

**SECPARAMETERS**

Estimated Net Reservesand Income Data 

Certain Leasehold andRoyalty Interests of

**Pogo Producing Company**As of January 1, 2005

 
| ** **                    | ** ** | **Proved**    | ** ** |
|-------------------------------|------------|---------------|------------|
| ** **                    | ** ** | **Developed** | ** ** | ** ** | ** ** | **Total** | ** ** |
| ** **                    | ** ** | **Producing** | ** ** | **Non -Producing** | ** ** | **Undeveloped** | ** ** | **Proved** | ** ** |
| ***Net  Remaining Reserves*** |       |          |       |   |   |   |   |   |   |
| Oil/Condensate -  MBBL        |       | 44,214        |       | 30,143 |   | 20,889 |   | 95,246 |   |
| Plant Products -  MBBL        |       | 7,958         |       | 3,390 |   | 2,882 |   | 14,230 |   |
| Gas – MMCF               |       | 221,042       |       | 108,436 |   | 169,260 |   | 498,738 |   |
| * *                      | * *   | * *      | * *   | * * | * * | * * | * * | * * | * * |
| ***Income  Data – M$***  |       |          |       |   |   |   |   |   |   |
| Future Gross  Revenue         |       | $             | 3,141,805  |   | $ | 1,816,240 |   | $ | 1,719,967 |   | $ | 6,678,012 |   |
| Deductions                    |       | 831,614       |       | 482,757 |   | 617,677 |   | 1,932,048 |   |
| Future Net  Income (FNI)      |       | $             | 2,310,191  |   | $ | 1,333,483 |   | $ | 1,102,290 |   | $ | 4,745,964 |   |
|                          |       |          |       |   |   |   |   |   |   |
| Discounted FNI @  10%         |       | $             | 1,672,870  |   | $ | 826,495 |   | $ | 708,523 |   | $ | 3,207,888 |   |

 

Liquidhydrocarbons are expressed in standard 42 gallon barrels. All gas volumes areexpressed in millions of cubic feet (MMCF) at the official temperature andpressure bases of the areas in which the gas reserves are located.

 

RYDER SCOTT COMPANYPETROLEUM CONSULTANTS

 

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The estimates ofthe reserves, future production, and income attributable to properties in thisreport were prepared using the economic software package Aries for Windows, acopyrighted program of Landmark Graphics. The program was used solely at therequest of Pogo. Ryder Scott has found this program to be acceptable, but notesthat certain summaries and calculations may vary due to rounding and may notexactly match the sum of the properties being summarized. Furthermore, one lineeconomic summaries may vary slightly from the more detailed cash flowprojections of the same properties, also due to rounding. The roundingdifferences are not material.

 

The future grossrevenue is after the deduction of production taxes. The deductions comprise thenormal direct costs of operating the wells, ad valorem taxes, recompletioncosts, development costs, and certain abandonment costs net of salvage. SRBtaxes on the Thailand properties were estimated by Pogo and included under the “Other”deductions column in the Thailand cash flow tables. The future net income isbefore the deduction of state and federal income taxes and generaladministrative overhead, and has not been adjusted for outstanding loans thatmay exist nor does it include any adjustment for cash on hand or undistributedincome. Liquid hydrocarbon reserves account for approximately 64 percent andgas reserves account for the remaining 36 percent of total future gross revenuefrom proved reserves.

 

The discountedfuture net income shown above was calculated using a discount rate of 10percent per annum compounded monthly. Future net income was discounted at fourother discount rates which were also compounded monthly. These results areshown on each estimated projection of future production and income presented ina later section of this report and in summary form below.

 

| ** **                 | ** ** | **Discounted Future Net Income – M$  As of January 1, 2005** | ** **             |
|----------------------------|------------|-------------------------------------------------------------------|------------------------|
| **Discount Rate  Percent** | ** ** | **Total  Proved**                                                 | ** **             |
|                       |       |                                                              |                   |
| 8                          |       |                                                              | $  3,408,629 |   |
| 12                         |       |                                                              | $  3,033,338 |   |
| 15                         |       |                                                              | $  2,809,087 |   |
| 18                         |       |                                                              | $  2,619,378 |   |

 

The results shownabove are presented for your information and should not be construed as ourestimate of fair market value.

 

***Reserves Includedin This Report***

 

The provedreserves included herein conform to the definition as set forth in theSecurities and Exchange Commission’s Regulation S-X Part 210.4-10 (a) asclarified by subsequent Commission Staff Accounting Bulletins.  The definition of proved reserves is includedunder the tab “Petroleum Reserves Definitions” in this report.

 

Because of thedirect relationship between volumes of proved undeveloped reserves anddevelopment plans, we include in the proved undeveloped category only reservesassigned undeveloped projects or locations that we have been assured willdefinitely be developed or drilled.

 

Pogo has interestsin certain fields or leases that may contain substantial additional reservesthat are not included in this report. A portion of these reserves may qualifyas either probable or possible reserves, but this study was limited to provedreserves at Pogo’s request. Pogo has active

 

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exploratory and development drilling programs that may result in thediscovery or reclassification of significant additional volumes.

 

The various reserve status categories are definedunder the tab “Petroleum Reserves Definitions” in this report. The developed non-producingreserves included herein are composed of the behind pipe and shut incategories.

 

***Estimates of R**eserves***

 

A significantportion of the reserves included in this report was estimated using variousperformance methods. The reserves estimated by performance methods utilizedextrapolations of various historical data in those cases where such data weredefinitive in our opinion. Reserves were estimated by the volumetric method oranalogy in those cases where the historical performance data was inconclusiveor for reservoirs that have not yet begun production.  A significant portion of reserves attributedto the Thailand properties are based on volumetric analysis or analogy toperformance of other wells in the Gulf of Thailand.

 

The reservesincluded in this report are estimates only and should not be construed as beingexact quantities. They may or may not be actually recovered, and if recovered,the revenues therefrom and the actual costs related thereto could be more orless than the estimated amounts. Moreover, estimates of reserves may increaseor decrease as a result of future operations.

 

***Future ProductionRates***

 

Initial productionrates are based on the current producing rates for those wells now onproduction. Test data and other related information were used to estimate theanticipated initial production rates for those wells or locations that are notcurrently producing. If no production decline trend has been established,future production rates were held constant until a decline in ability toproduce was anticipated. An estimated rate of decline was then applied todepletion of the reserves. If a decline trend has been established, this trendwas used as the basis for estimating future production rates. For reserves notyet on production, sales were estimated to commence at an anticipated datefurnished by Pogo.

 

The futureproduction rates from wells now on production may be more or less thanestimated because of changes in market demand or allowables set by regulatorybodies. Wells or locations that are not currently producing may start producingearlier or later than anticipated in our estimates of their future productionrates.

 

***Hydrocarbon Prices***

 

Pogo furnished uswith hydrocarbon prices in effect at December 31, 2004 and with its forecastsof future prices which take into account SEC and Financial Accounting StandardsBoard (FASB) rules, current market prices, contract prices, and fixed anddeterminable price escalations where applicable.

 

In accordance withFASB Statement No. 69, December 31, 2004 market prices were determined usingthe daily oil price or daily gas sales price (“spot price”) adjusted foroilfield or gas gathering hub and wellhead price differences (e.g. grade,transportation, gravity, sulfur and BS&W) as appropriate. Also inaccordance with SEC and FASB specifications, changes in market pricessubsequent to December 31, 2004 were not considered in this report.

 

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For hydrocarbonproducts sold under contract, the contract price including fixed anddeterminable escalations, exclusive of inflation adjustments, was used untilexpiration of the contract. Upon contract expiration, the price was adjusted tothe current market price for the area and held at this adjusted price to depletionof the reserves.

 

***Costs***

 

Operating costsfor the leases and wells in this report are based on the operating expensereports of Pogo or estimates by Pogo and include only those costs directlyapplicable to the leases or wells. When applicable, the operating costs includea portion of general and administrative costs allocated directly to the leasesand wells under terms of operating agreements. No deduction was made forindirect costs such as general administration and overhead expenses, loanrepayments, interest expenses, and exploration and development prepayments thatare not charged directly to the leases or wells.

 

Development costswere furnished to us by Pogo and are based on authorizations for expenditurefor the proposed work or actual costs for similar projects. The estimated netcost of abandonment after salvage was included for all offshore propertieswhere abandonment costs net of salvage are significant. Abandonment costs werealso included for other properties where the net cost of abandonment isexpected to exceed any salvage value. The estimates of the net abandonmentcosts furnished by Pogo were accepted without independent verification.

 

The initialoperating costs for each property were based on the current operating costs orestimated costs for each property. In most cases, these costs were heldconstant for the life of each property. However, in certain cases, theoperating cost is comprised of a fixed and variable component. The variablecomponent is typically related to well count or production throughput.Historically, the variable costs decline as the field is produced.

 

***General***

 

Table A presents aone line summary of proved reserve and income data for each of the subjectproperties which are ranked according to their future net income discounted at10 percent per year. Table B presents a one-line summary of gross and netreserves and income data for each of the subject properties.  Table C presents a one-line summary of initialbasic data for each of the subject properties, Volume 1 presents Pogo companysummaries.  Volumes 2 through 8 presentprojections of production and income by years beginning January 1, 2005 foreach of Pogo’s divisions and are further broken down by field, then by lease orwell.

 

While it mayreasonably be anticipated that the future prices received for the sale ofproduction and the operating costs and other costs relating to such productionmay also increase or decrease from existing levels, such changes were, inaccordance with rules adopted by the SEC, omitted from consideration in makingthis evaluation.

 

The estimates ofreserves presented herein were based upon a detailed study of the properties inwhich Pogo owns an interest; however, we have not made any field examination ofthe properties. No consideration was given in this report to potentialenvironmental liabilities that may exist nor were any costs included forpotential liability to restore and clean up damages, if any, caused by pastoperating practices. Pogo has informed us that they have furnished us all ofthe accounts, records, geological and engineering data, and reports and otherdata required for this investigation. The ownership interests, prices, andother factual data furnished by Pogo were accepted without

 

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independent verification.  Theestimates presented in this report are based on data available through December31, 2004.

 

Pogo has assuredus of their intent and ability to proceed with the development activities includedin this report, and that they are not aware of any legal, regulatory orpolitical obstacles that would significantly alter their plans.

 

Neither RyderScott Company nor any of our employees have any interest in the subjectproperties and neither the employment to make this study nor the compensationis contingent on our estimates of reserves and future income for the subjectproperties.

 

This report wasprepared for the use and benefit of Pogo Producing Company and may not be putto other use without our prior written consent for such use.  The data, work papers, and maps used in thisreport are available for examination by authorized parties in our offices.  Please contact us if we can be of furtherservice.

 
|   | Very truly yours,             |
|--------|-------------------------------|
|   |                          |
|   | **RYDER SCOTT COMPANY, L.P.** |
|   |                          |
|   | /s/ Robert M. Wagner          |   |
|   | Robert M. Wagner, P.E.        |
|   | Senior Vice President         |

 

RMW/pl

 

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