Attached files
file | filename |
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10-K - FORM 10-K - GASCO ENERGY INC | d71351e10vk.htm |
EX-32 - EX-32 - GASCO ENERGY INC | d71351exv32.htm |
EX-31 - EX-31 - GASCO ENERGY INC | d71351exv31.htm |
EX-23.2 - EX-23.2 - GASCO ENERGY INC | d71351exv23w2.htm |
EX-23.1 - EX-23.1 - GASCO ENERGY INC | d71351exv23w1.htm |
Exhibit 99.1
January 18, 2010
Mr. Mark A. Erickson
Gasco Energy, Inc.
Suite 100
8 Inverness Drive East
Englewood, Colorado 80112
Gasco Energy, Inc.
Suite 100
8 Inverness Drive East
Englewood, Colorado 80112
Dear Mr. Erickson:
In accordance with your request, we have estimated the proved reserves and future revenue, as of
December 31, 2009, to the Gasco Energy, Inc. (Gasco) interest in certain oil and gas properties
located in Carbon, Duchesne, and Uintah Counties, Utah. It is our understanding that the proved
reserves estimated in this report constitute all of the proved reserves owned by Gasco. The
estimates in this report have been prepared in accordance with the definitions and guidelines of
the U.S. Securities and Exchange Commission (SEC) and, with the exception of the exclusion of
future income taxes, conform to the FASB Accounting Standards Codification Topic 932, Extractive
ActivitiesOil and Gas. Definitions are presented immediately following this letter. This report
has been prepared for Gascos use in filing with the SEC.
We estimate the net reserves and future net revenue to the Gasco interest in these properties, as
of December 31, 2009, to be:
Net Reserves | Future Net Revenue ($) | |||||||||||||||
Oil | Gas | Present Worth | ||||||||||||||
Category | (Barrels) | (MCF) | Total | at 10% | ||||||||||||
Proved Developed Producing |
377,492 | 34,398,860 | 52,111,100 | 30,492,900 | ||||||||||||
Proved Developed Non-Producing |
73,366 | 9,831,090 | 14,353,000 | 5,068,500 | ||||||||||||
Proved Undeveloped(1) |
0 | 0 | 0 | 0 | ||||||||||||
Total Proved |
450,858 | 44,229,950 | 66,464,100 | 35,561,400 |
(1) | There are no proved undeveloped reserves at the prices and costs used in this report. |
The oil reserves shown include crude oil and condensate. Oil volumes are expressed in barrels that
are equivalent to 42 United States gallons. Gas volumes are expressed in thousands of cubic feet
(MCF) at standard temperature and pressure bases.
The estimates shown in this report are for proved reserves. As requested, probable and possible
reserves that exist for these properties have not been included. This report does not include any
value that could be attributed to interests in undeveloped acreage beyond those tracts for which
undeveloped reserves have been estimated. Reserves categorization conveys the relative degree of
certainty; reserves subcategorization is based on development and production status. The estimates
of reserves and future revenue included herein have not been adjusted for risk.
Future gross revenue to the Gasco interest is prior to deducting state production taxes and ad
valorem taxes. Future net revenue is after deductions for these taxes, future capital costs, and
operating expenses but before consideration of federal income taxes. The future net revenue has
been discounted at an annual rate of 10 percent to determine its present worth. The present worth
is shown to indicate the effect of time on the value of money and should not be construed as being
the fair market value of the properties.
For the purposes of this report, we did not perform any field inspection of the properties, nor did
we examine the mechanical operation or condition of the wells and facilities. We have not
investigated possible environmental liability related to the properties; therefore, our estimates
do not include any costs due to such possible liability. Also, our estimates do not include any
salvage value for the lease and well equipment or the cost of abandoning the properties.
Prices used in this report are based on the 12-month unweighted arithmetic average of the
first-day-of-the-month price for the period January through December 2009. For oil volumes, the
average Plains Marketing, L.P. Utah Black Wax posted price of $46.26 per barrel is adjusted for
quality and a local price differential. For condensate volumes, the average Plains Marketing, L.P.
Wyoming Southwestern area posted price of $46.98 per barrel is adjusted for quality and a local
price differential. For gas volumes, the average Platts Northwest (Wyoming pool) spot price of
$3.06 per MMBTU is adjusted by lease for energy content and transportation fees. All prices are
held constant throughout the lives of the properties.
Lease and well operating costs used in this report are based on operating expense records of Gasco.
These costs include the per-well overhead expenses allowed under joint operating agreements along
with estimates of costs to be incurred at and below the district and field levels. Headquarters
general and administrative overhead expenses of Gasco are included to the extent that they are
covered under joint operating agreements for the operated properties. Lease and well operating
costs are held constant throughout the lives of the properties. Capital costs are included as
required for workovers, new development wells, and production equipment. The future capital costs
are held constant to the date of expenditure.
We have made no investigation of potential gas volume and value imbalances resulting from
overdelivery or underdelivery to the Gasco interest. Therefore, our estimates of reserves and
future revenue do not include adjustments for the settlement of any such imbalances; our
projections are based on Gasco receiving its net revenue interest share of estimated future gross
gas production.
The reserves shown in this report are estimates only and should not be construed as exact
quantities. Proved reserves are those quantities of oil and gas which, by analysis of engineering
and geoscience data, can be estimated with reasonable certainty to be economically producible. If
the reserves are recovered, the revenues therefrom and the costs related thereto could be more or
less than the estimated amounts. Because of governmental policies and uncertainties of supply and
demand, the sales rates, prices received for the reserves, and costs incurred in recovering such
reserves may vary from assumptions made while preparing this report. Also, estimates of reserves
may increase or decrease as a result of future operations.
For the purposes of this report, we used technical and economic data including, but not limited to,
well logs, geologic maps, well test data, production data, historical price and cost information,
and property ownership interests. The reserves in this report have been estimated using
deterministic methods; these estimates have been prepared in accordance with generally accepted
petroleum engineering and evaluation principles. We used standard engineering and geoscience
methods, or a combination of methods, such as performance analysis, volumetric analysis, and
analogy, that we considered to be appropriate and necessary to establish reserves quantities and
reserves categorization that conform to SEC definitions and guidelines. In evaluating the
information at our disposal concerning this report, we have excluded from our consideration all
matters as to which the controlling interpretation may be legal or accounting, rather than
engineering and geoscience. As in all aspects of oil and gas evaluation, there are uncertainties
inherent in the interpretation of engineering and geoscience data; therefore, our conclusions
necessarily represent only informed professional judgment.
The titles to the properties have not been examined by Netherland, Sewell & Associates, Inc.
(NSAI), nor has the actual degree or type of interest owned been independently confirmed. The data
used in our estimates were obtained from Gasco, public data sources, and the nonconfidential files
of NSAI and were accepted as accurate. Supporting geoscience, field performance, and work data are
on file in our office. The technical persons responsible for preparing the reserves estimates
presented herein meet the requirements regarding qualifications,
independence, objectivity, and confidentiality set forth in the Standards Pertaining to the
Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum
Engineers. We are independent petroleum engineers, geologists, geophysicists, and petrophysicists;
we do not own an interest in these properties and are not employed on a contingent basis.
Sincerely, NETHERLAND, SEWELL & ASSOCIATES, INC. Texas Registered Engineering Firm F-002699 |
||||
By: | /s/ C.H. (Scott) Rees III | |||
C.H. (Scott) Rees III, P.E. | ||||
Chairman and Chief Executive Officer | ||||
By:
|
/s/ Craig H. Adams | By: | /s/ William J. Knights | |||||||
Craig H. Adams, P.E. 68137 | William J. Knights, P.G. 1532 | |||||||||
Vice President | Vice President | |||||||||
Date Signed: January 18, 2010 | Date Signed: January 18, 2010 |
CHA:JDH