Attached files
file | filename |
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10-K - FORM 10-K - COMSTOCK RESOURCES INC | d71139e10vk.htm |
EX-21 - EX-21 - COMSTOCK RESOURCES INC | d71139exv21.htm |
EX-32.2 - EX-32.2 - COMSTOCK RESOURCES INC | d71139exv32w2.htm |
EX-31.2 - EX-31.2 - COMSTOCK RESOURCES INC | d71139exv31w2.htm |
EX-31.1 - EX-31.1 - COMSTOCK RESOURCES INC | d71139exv31w1.htm |
EX-23.1 - EX-23.1 - COMSTOCK RESOURCES INC | d71139exv23w1.htm |
EX-23.2 - EX-23.2 - COMSTOCK RESOURCES INC | d71139exv23w2.htm |
EX-10.4 - EX-10.4 - COMSTOCK RESOURCES INC | d71139exv10w4.htm |
EX-10.14 - EX-10.14 - COMSTOCK RESOURCES INC | d71139exv10w14.htm |
EX-32.1 - EX-32.1 - COMSTOCK RESOURCES INC | d71139exv32w1.htm |
Exhibit 99.1
Lee Keeling and Associates, Inc.
Petroleum Consultants
TULSA OFFICE First Place Tower 15 East Fifth Street Suite 3500 Tulsa, Oklahoma 74103-4350 (918) 587-5521 Fax: (918) 587-2881 |
HOUSTON OFFICE Kellog Brown and Root Tower 601 Jefferson Ave. Suite 3790 Houston, Texas 77002-7912 (713) 651-8006 Fax: (281) 754-4934 |
February 9, 2010
Comstock Resources, Inc.
5300 Town and Country Boulevard, Ste. 500
Frisco, Texas 75034
5300 Town and Country Boulevard, Ste. 500
Frisco, Texas 75034
Attention:
|
Mr. M. Jay Allison | |||||
President and C.E.O. | ||||||
RE: | Estimated Reserves and | |||||
Future Net Revenue | ||||||
Comstock Resources, Inc. | ||||||
Constant Prices and Expenses | ||||||
(Revised 2009 SEC Pricing) | ||||||
Gentlemen: |
In accordance with your request, we have prepared an estimate of net reserves and future net
revenue to be realized from the interests owned by Comstock Resources, Inc. (Comstock) for 2009
year end reporting. These interests are in oil and gas properties located in the states of
Arkansas, Kansas, Kentucky, Louisiana, Mississippi, New Mexico, Oklahoma, Texas, and Wyoming.
Reserves estimated by us reflect all of Comstocks corporate reserves. The
effective date of this estimate is December 31, 2009. It was completed February 9, 2010, and the
results are summarized as follows:
ESTIMATED REMAINING | NET GAS* | FUTURE NET REVENUE | ||||||||||||||||||
NET RESERVES | EQUIVALENT | Present Worth | ||||||||||||||||||
RESERVE | Oil | Gas | Total | Disc.@10% | ||||||||||||||||
CLASSIFICATION | (Barrels) | (MCF) | (MCFE) | (M$) | (M$) | |||||||||||||||
Proved Developed |
||||||||||||||||||||
Producing |
3,220.284 | 301,149.438 | 320,471.125 | 504,073.000 | 425,366.406 | |||||||||||||||
Non-Producing |
1.980 | 22,987.037 | 22,998.920 | 56,363.695 | 37,984.148 | |||||||||||||||
Behind-Pipe |
1,672.187 | 42,965.676 | 52,998.793 | 140,988.953 | 48,952.852 | |||||||||||||||
Sub-Total |
4,894.451 | 367,102.151 | 396,468.838 | 701,425.648 | 512,303.406 | |||||||||||||||
Proved Undeveloped |
2,319.926 | 315,286.625 | 329,206.219 | 256,017.344 | -23,189.504 | |||||||||||||||
Total All Reserves |
7,214.377 | 682,388.776 | 725,675.057 | 957,442.992 | 489,113.902 | |||||||||||||||
* | Net Gas Equivalent is calculated based on a conversion factor of 6 MCF of Gas per BBL of Oil. |
Future net revenue is the amount, exclusive of state and federal income taxes, which will
accrue to Comstocks interest from continued operation of the properties to depletion. It should
not be construed as a fair market or trading value.
No attempt has been made to quantify or otherwise account for any accumulative gas production
imbalances that may exist. Neither has an attempt been made to determine whether the wells and
facilities are in compliance with various governmental regulations, nor have costs been included in
the event they are not.
This report consists of various summaries. Schedule No. 1 presents summary forecasts of annual
gross and net production, severance and ad valorem taxes, operating income, and net revenue by
reserve type. Schedule No. 2 is a sequential listing of the individual properties based on
discounted future net revenue. Schedule No. 3 is a sequential listing of the individual properties
based on discounted future net revenue by reserve category. An alphabetical one-line summary by
property is presented on Schedule No. 4. A one-line listing of the individual properties, ordered
by reserve category, state and project, is presented on Schedule No. 5. A geographical one-line
summary by state, project and lease is shown on Schedule No. 6.
CLASSIFICATION OF RESERVES
Reserves assigned to the various leases and/or wells have been classified as either proved
developed or proved undeveloped in accordance with the definitions of the proved reserves as
promulgated by the Securities and Exchange Commission (SEC). These are as follows:
Proved Developed Oil and Gas Reserves are reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods. Additional oil and gas
expected to be obtained through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of primary recovery should be
included as proved developed reserves only after testing by a pilot project or after the
operation of an installed program has confirmed through production response that increased recovery
will be achieved.
Proved Undeveloped Oil and Gas Reserves are 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. Reserves on undrilled acreage shall be limited to those drilling units
offsetting productive units that are reasonably certain of production when drilled. Proved
reserves for other undrilled units can be claimed only where it can be demonstrated with certainty
that there is continuity of production from the existing productive formation. Under no
circumstances should estimates for proved undeveloped reserves be attributable to any acreage for
which an application of fluid injection or other improved recovery technique is contemplated,
unless such techniques have been proved effective by actual tests in the area and in the same
reservoir.
Proved Developed Oil and Gas Reserves attributed to the subject leases have been further
classified as proved developed producing, proved developed non-producing and proved developed
behind-pipe.
Proved Developed Producing Reserves are those reserves expected to be recovered from
currently producing zones under continuation of present operating methods.
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Proved Developed Non-Producing Reserves are those reserves expected to be recovered from
zones that have been completed and tested but are not yet producing due to situations including,
but not limited to, lack of market, minor completion problems that are expected to be corrected, or
reserves expected from future stimulation treatments based on analogy to nearby wells.
Proved Developed Behind-Pipe Reserves are those reserves currently behind the pipe in
existing wells that are considered proved by virtue of successful testing or production in
offsetting wells.
ESTIMATION OF RESERVES
The majority of the subject wells have been producing for a considerable length of time. Reserves
attributable to wells with a well-defined production and/or pressure decline trend were based upon
extrapolation of that trend to an economic limit and/or abandonment pressure.
Reserves anticipated from new wells were based upon volumetric calculations or analogy with similar
properties, which are producing from the same horizons in the respective areas. Structural
position, net pay thickness, well productivity, gas/oil ratios, water production, pressures, and
other pertinent factors were considered in the estimation of these reserves.
Reserves assigned to behind-pipe zones and undeveloped locations have been estimated based on
volumetric calculations and/or analogy with other wells in the area producing from the same
horizon.
There are proved undeveloped reserves assigned to locations that will not be developed within five
years because company resources are focused on developing the deeper Haynesville zone and deferring
development of the shallower Cotton Valley zones in the same area.
FUTURE NET REVENUE
Oil Income
Income from the sale of oil was estimated using the average price received for oil sold from the
subject properties the first day of each month during 2009. These prices were provided by the
staff of Comstock. The average price, $61.18 per barrel, was held constant throughout the life of
each property. Provisions were made for state severance and ad valorem taxes where applicable.
Gas Income
Income from the sale of gas was also estimated using the average price received for gas sold from
the subject properties the first day of each month during 2009. These prices were provided by the
staff of Comstock. In certain instances, it was necessary to adjust prices to reflect the
difference between gas sales volumes and produced volumes. The average price, $3.87 per million
cubic feet, was held constant throughout the life of each property. Provisions were also made for
state severance and ad valorem taxes where applicable.
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Projected produced gas volumes from Double A Wells Field wells were reduced to sales volumes
based on actual shrinkage data as provided by Comstock.
Operating Expenses
Operating expenses were based upon actual operating costs charged by the respective operators as
supplied by the staff of Comstock or were based upon the actual experience of the operators in the
respective areas. For leases operated by Comstock, monthly lease operating expenses do not include
overhead charges. All expenses have been held constant throughout the life of each lease.
Future Expenses and Abandonment Costs
As provided by Comstock, provisions have been made for future expenses required for drilling,
recompletion and/or abandonment costs. These costs have been held constant from current estimates.
QUALIFICATIONS OF LEE KEELING AND ASSOCIATES, INC.
Lee Keeling and Associates, Inc. has been offering consulting engineering and geological services
to integrated oil companies, independent operators, investors, financial institutions, legal firms,
accounting firms and governmental agencies since 1957. Its professional staff is experienced in
all productive areas of the United States, Canada, Latin America and many other foreign countries.
The firms reports are recognized by major financial institutions and used as the basis for oil
company mergers, purchases, sales, financing of projects and for registration purposes with
financial and regulatory authorities throughout the world.
GENERAL
Information upon which this estimate of net reserves and future net revenue has been based was
furnished by the staff of Comstock or was obtained by us from outside sources we consider to be
reliable. This information is assumed to be correct. No attempt has been made to verify title or
ownership of the subject properties. Interests attributed to wells to be drilled at undeveloped
locations are based on current ownership. Leases were not inspected by a representative of this
firm, nor were the wells tested under our supervision; however, the performance of the majority of
the wells was discussed with employees of Comstock.
This report has been prepared utilizing all methods and procedures regularly used by petroleum
engineers to estimate oil and gas reserves for properties of this type and character, and we have
used all methods and procedures necessary to prepare this report. The recovery of oil and gas
reserves and projection of producing rates are dependent upon many variable factors including
prudent operation, compression of gas when needed, market demand, installation of lifting
equipment, and remedial work when required. The reserves included in this report have been based
upon the assumption that the wells will be operated in a prudent manner under the same conditions
existing on the effective date. Actual production results and future well data may yield
additional facts, not presently available to us, which may require an adjustment to our estimates.
The assumptions, data, methods and procedures used in connection with the preparation of this
report are appropriate for the purpose served by this report.
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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 therefrom and
the actual costs related thereto could be more or less than the estimated amounts. As in all
aspects of oil and gas estimation, there are uncertainties inherent in the interpretation of
engineering data and, therefore, our conclusions necessarily represent only informed professional
judgments.
The projection of cash flow has been made assuming constant prices. There is no assurance that
prices will not vary. For this reason and those listed in the previous paragraph, the future net
cash from the sale of production from the subject properties may vary from the estimates contained
in this report.
It should be pointed out that regulatory authorities could, in the future, change the allocation of
reserves allowed to be produced from a particular well in any reservoir, thereby altering the
material premise upon which our reserve estimates may be based.
The information developed during the course of this investigation, basic data, maps and worksheets
showing recovery determinations are available for inspection in our office.
We appreciate this opportunity to be of service to you.
Very truly yours, |
||||
/s/ LEE KEELING AND ASSOCIATES, INC. | ||||
LEE KEELING AND ASSOCIATES, INC. | ||||
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