Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Oil
and Gas Disclaimer:
BOEs
have been converted on the basis of 6 thousand cubic feet (“Mcf”) of natural gas to 1 bbl. BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 barrel is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the
value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent
of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 barrel would be misleading as an indication of value.
Investors
are urged to consider closely the disclosures and risk factors in the Company’s Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and in the other reports and filings with the SEC, available from the Company’s offices or website. These forms
can also be obtained from the SEC via the internet at www.sec.gov.
Glossary
of Oil and Gas Terms:
In
this document, the abbreviations set forth below have the following meanings:
|
BOE
|
barrels
of oil equivalent
|
BOPD
|
barrels
of oil per day
|
|
Bbl
|
barrel
|
Bcf
|
billion
cubic feet
|
|
BOEPD
|
barrels
of oil equivalent per day
|
BTU
|
British
Thermal Unit
|
|
BPD
|
barrels
per day
|
GWR
|
Gas
water ratio
|
|
Mcf
|
thousand
cubic feet
|
Mmcf
|
million
cubic feet
|
|
MSTB
|
thousand
stock tank barrels
|
MMbbl
|
million
barrels
|
|
Mcf/Stb
|
thousand
cubic feet per stock tank barrels
|
MBOE
|
thousand
barrels of oil equivalent
|
|
Mmbtu
|
millions
British Thermal Units (BTU)
|
NGL
|
natural
gas liquids
|
|
NCF
|
net
cash flow
|
OGIP
|
original
gas in place
|
|
PBP
|
proved
behind pipe
|
PDP
|
proved
developed producing
|
|
PoR
|
Point
of Rocks
|
PUD
|
proved
undeveloped
|
|
PV10
|
present
value at 10% discount rate
|
SEC
|
Securities
and Exchange Commission
|
|
%
yr
|
percent
(decline) per year
|
|
|
Gas
volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of
gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices. BOEs may be misleading, particularly
if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
Below
are explanations of some commonly used terms in the oil and gas business and in this report.
Field.
An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological
structural feature and/or stratigraphic condition.
Possible
reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. The
SEC provides a complete definition of possible reserves in Rule 4-10(a)(17) of Regulation S-X.
Probable
reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but that,
together with proved reserves, are as likely as not to be recovered. The SEC provides a complete definition of probable reserves
in Rule 4-10(a)(18) of Regulation S-X.
Proved
developed reserves. In general, reserves that can be expected to be recovered from existing wells with existing equipment
and operating methods. The SEC provides a complete definition of developed oil and gas reserves in Rule 4-10(a)(6) of Regulation
S-X.
Proved
reserves. Those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated
with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic
conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire,
unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are
used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain
that it will commence the project within a reasonable time.
(i)
The area of the reservoir considered as proved includes:
(A)
The area identified by drilling and limited by fluid contacts, if any, and
(B)
Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain
economically producible oil or gas on the basis of available geoscience and engineering data.
(ii)
In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH)
as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower
contact with reasonable certainty.
(iii)
Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an
associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience,
engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
(iv)
Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to,
fluid injection) are included in the proved classification when:
(A)
Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a
whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology
establishes the reasonable certainty of the engineering analysis on which the project or program was based; and
(B)
The project has been approved for development by all necessary parties and entities, including governmental entities.
(v)
Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined.
Proved
undeveloped reserves. In general, reserves that are expected to be recovered from new wells on undrilled acreage or from existing
wells where a relatively major expenditure is required for recompletion. The SEC provides a complete definition of undeveloped
oil and gas reserves in Rule 4-10(a)(31) of Regulation S-X.
Reserves.
Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible,
as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must
be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed
means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.
Working
interest. The operating interest that gives the owner the right to drill, produce and conduct operating activities on the
property and a share of production and requires the owner to pay a share of the costs of drilling and production operations.