**Exhibit99.1**

 

 

4849 Greenville Avenue, Suite 1150,Dallas, Texas 75206, USA

**T**+1 214 987 1042**F**+1 214 987 1047 **W**www.rpsgroup.com/energy

 

16 September 2010

 

The Directors

Cubic Energy, Inc.

9870 Plano Road

Dallas, Texas 75238

 

Dear Directors:

 

Cambrian Consultants (CC)America, Inc. d/b/a RPS completed a Securities and Exchange Commission(SEC) evaluation of the oil and gas reserves owned by Cubic Energy, Inc.(Cubic) in the Johnson Branch, Bethany Longstreet, and Caspiana fields ofnorthern Louisiana effective 1 July 2010 and dated 16 September 2010.RPS performed this evaluation in accordance with the SEC reserves definitionsas can be found at the United States Government Printing Office website www.gpoaccess.gov.SEC reserves evaluations consider only proved reserves.  Proved reserves generally fall into threesub-categories, which include Proved Developed Producing (PDP), ProvedDeveloped Non-Producing (PDNP) and Proved Undeveloped (PUD).  Product pricing used in this report was basedon an average of first day of the month prices over the year and have been heldconstant for the life of the wells. A differential was calculated based onactual prices received by Cubic for June and the average posted price forJune. This differential was applied against the yearly average.

 

The results of thisevaluation are summarized below:

 

**TOTAL PROVED**

 
| ** **       | ** ** | ** **   | ** ** | ** **      | ** ** | **NET**            | ** ** | **NET 10%**   | ** ** |
|------------------|------------|--------------|------------|-----------------|------------|--------------------|------------|--------------------|------------|
| ** **       | ** ** | **NRI**      | ** ** | **CAPITAL**     | ** ** | **UNDISCOUNTED**   | ** ** | **DISCOUNTED**     | ** ** |
| **RESERVES**     | ** ** | **RESERVES** | ** ** | **EXPENDITURE** | ** ** | **CASH FLOW** | ** ** | **CASH FLOW** | ** ** |
| **CATEGORY**     | ** ** | **MMcfe**    | ** ** | **$M**          | ** ** | **$M**             | ** ** | **$M**             | ** ** |
| **PDP**          | ** ** | **1,355**    | ** ** | **0**           | ** ** | **4,097**          | ** ** | **3,407**          | ** ** |
| **PDNP**         | ** ** | **1,314**    | ** ** | **39**          | ** ** | **5,536**          | ** ** | **4,517**          | ** ** |
| **PUD**          | ** ** | **26,491**   | ** ** | **32,774**      | ** ** | **81,105**         | ** ** | **56,833**         | ** ** |
| **TOTAL PROVED** | ** ** | **29,160**   | ** ** | **32,813**      | ** ** | **90,737**         | ** ** | **64,757**         | ** ** |

 
| **NOTES:1.** |   | **Results  are net to Cubic interests and are net of severance and ad valorem taxes.  Applicable royalties have been deducted from these volumes.** |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| **2. ** |   | **The above  estimates are pre-corporate income tax figures. Corporate income tax  liabilities, if any, have not been deducted.**                   |
| **3. ** |   | **Undiscounted  cash flow and 10% discounted cash flow are net of all production costs and  capital investments.**                                  |
| **4. ** |   | **No risk  factors have been applied to any of the reserves or cash flow figures quoted  above.**                                                   |
| **5. ** |   | **Mcf of  gas equivalent is calculated using the conversion 1 bo to 6 Mcfe and 1 Mcf to  1 Mcfe.**                                                  |

 

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The study was based on datasupplied by Cubic, on public domain information and on nonproprietary data fromin-house files.  The supplied data wasreviewed for reasonableness from a technical perspective. As is common in oilfield situations, basic physical measurements taken over time cannot beverified independently in retrospect. As such, beyond the application of normalprofessional judgment, such data must be accepted as representative.

 

Operating costs werereviewed for non-recurring items and altered if necessary. Previous months runstatements were reviewed to determine taxes and oil and gas pricingdifferentials. A development plan in the form of AFEs was supplied by Cubicthat included drilling costs and the timing associated with each item.

 

All three fields in thestudy are in northern Louisiana.  In theJohnson Branch Field, Cubic has several wells drilled through the shale,proving the formation exists in the field. Chesapeake has drilled the first horizontalwell in the formation, the 2-Alt, proving the economic viability of producingthe shale using horizontal wells. Haynesville reserves were based on declinecharacteristics determined by generating a type curve for the horizontalHaynesville wells in the area of the Johnson Branch and Caspiana fields.

 

Reserves estimates were madeusing industry-accepted methodology including extrapolation of performancetrends, volumetrics, and statistical analysis of analogs. The evaluators’professional judgment and experience was used to select the most appropriatemethod and to determine the reasonableness of the results. The estimates weremade in accordance with the reserves definitions as endorsed by the SEC. Thereserves definitions allow for changes in category as information is gathered andas producing history is accumulated.  Assuch, the volume and class of reserves is expected to change and be revisedwith time. A substantial portion of these reserves are for undevelopedlocations or wells that lack sufficient production histories to perform declinecurve analysis. These estimates are generally subject to greater revision thanwells with substantial production history. These methods were deemedappropriate for the purpose of the report.

 

Net oil and gas reserves arethose estimated quantities of crude oil, natural gas, and natural gas liquidsattributed to the evaluated interests (after deduction of applicable royaltiesand overriding royalties) that are considered to be economically recoverableunder the economic conditions modeled. It is implicit that good oil field practices are maintained in order toeffect recovery of the estimated reserves.

 

Because of governmentalpolicies and uncertainties of supply and demand, the sales rates, pricesreceived for the reserves, and costs incurred in recovering such reserves mayvary from assumptions made while preparing the report. Estimates of reservesmay increase or decrease as a result of future operations, market conditions,or changes in regulations.

 

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RPS personnel who preparedthis report are degreed professionals with the appropriate qualifications andexperience to complete the project brief. RPS and its staff do not claim expertise in accounting, legal and environmentalmatters, and opinions on such matters do not form part of this report.

 

Best regards,

 
| /s/ James L. Merkel          |   |
|------------------------------|--------|
|                         |
| James L. Merkel              |
| Principal Reservoir  Analyst |
|                         |
| REF:JLM/wwe/1038             |

 

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