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EX-32 - EX-32 - WARREN RESOURCES INCa2196970zex-32.htm
EX-23.1 - EX-23.1 - WARREN RESOURCES INCa2196970zex-23_1.htm
EX-23.2 - EX-23.2 - WARREN RESOURCES INCa2196970zex-23_2.htm
EX-31.1 - EX-31.1 - WARREN RESOURCES INCa2196970zex-31_1.htm
EX-31.2 - EX-31.2 - WARREN RESOURCES INCa2196970zex-31_2.htm
10-K - 10-K - WARREN RESOURCES INCa2196970z10-k.htm

Exhibit 99.1

 

WILLIAMSON PETROLEUM CONSULTANTS, INC.

TEXAS REGISTERED ENGINEERING FIRM F-81

303 VETERANS AIRPARK LANE, SUITE 1100

MIDLAND, TEXAS 79705

PHONE: 432-685-6100

FAX: 432-685-3909

E-MAIL: WPC@WPC-INC.COM

 

March 2, 2010

 

Warren Resources, Inc.

34th Floor

1114 Avenue of the Americas

New York, New York  10036

 

Attention Mr. Norman F. Swanton

 

Gentlemen:

 

Subject:

Evaluation of Oil and Gas Reserves

 

to the Interests of

 

Warren Resources, Inc.

 

Effective December 31, 2009

 

for Disclosure to the

 

Securities and Exchange Commission

 

Williamson Project 9.9370

 

Williamson Petroleum Consultants, Inc. performed the subject engineering evaluation effective December 31, 2009 at your request for the purpose of an annual update of the subject properties and to be used in Securities and Exchange Commission (SEC) filings. This evaluation was completed February 4, 2010. The properties evaluated represent 100 percent of the value of oil and gas interests owned by Warren and are located in the states of California, New Mexico, North Dakota, Texas, and Wyoming with the majority of the value in California.

 

Proved reserves and future net revenue from oil and gas properties were evaluated in accordance with the Definitions of Oil and Gas Reserves from 17 CFR § 210.4-10. Following is a summary of the results of the proved evaluation effective December 31, 2009:

 

 

 

PROVED
DEVELOPED
PRODUCING

 

PROVED
DEVELOPED
NONPRODUCING

 

PROVED
UNDEVELOPED

 

TOTAL
PROVED

 

 

 

 

 

 

 

 

 

 

 

Net Reserves to the Evaluated Interests:

 

 

 

 

 

 

 

 

 

Oil/Condensate, MBBL

 

7,932.725

 

0.000

 

2,288.620

 

10,221.346

 

Gas, MMCF

 

49,867.797

 

0.000

 

13,031.740

 

62,899.535

 

 

 

 

 

 

 

 

 

 

 

Future Net Revenue, M$:

 

 

 

 

 

 

 

 

 

Undiscounted

 

303,827.656

 

0.000

 

106,595.242

 

410,422.906

 

Discounted Per Annum at 10.00 Percent

 

191,449.484

 

0.000

 

49,842.488

 

241,292.016

 

 

Note: Due to the method of rounding, Total Proved may not equal PDP + PDNP + PU.

 



 

No study was made to determine the existence of oil and gas reserves that would be categorized as probable or possible. Oil reserves are expressed in thousands of United States (U.S.) barrels (MBBL) of 42 U.S. gallons. Gas volumes are expressed in millions of cubic feet (MMCF) at 60 degrees Fahrenheit and at the legal pressure base that prevails in the state in which the reserves are located. No adjustment of the individual gas volumes to a common pressure base has been made.

 

Net income to the evaluated interests is the future net revenue after consideration of royalty revenue payable to others, taxes, operating expenses, investments, salvage values, abandonment costs, and net profit interests, as applicable. The future net revenue is before federal income tax and excludes consideration of any encumbrances against the properties if such exist. No estimate of fair market value was made.

 

All data utilized in the preparation of this report with respect to interests, reversionary status, oil and gas prices, gas contract terms, operating expenses, investments, salvage values, abandonment costs, net profit interests, well information, and current operating conditions, as applicable, were provided by Warren. Production data were obtained from both public records and the client. The dates of first production for nonproducing properties were based on estimates by Warren and the actual dates may vary from those estimated.

 

Average first of the month index prices for January through December 2009 were used in this evaluation as follows:

 

PRODUCT

 

INDEX PRICE

 

$/BBL or
$/MMBTU

 

PROPERTIES

Oil

 

WTI Cash price

 

61.18

 

All

Gas

 

Henry Hub Cash price

 

3.833

 

Excludes Wyoming

Gas

 

Colorado Interstate Cash price

 

3.035

 

Wyoming

 

Oil and gas differentials were calculated using wellhead prices provided by Warren.

 

All capital and operating costs were provided by Warren. Operating expenses were provided for a minimum of ten months ending no earlier than August 2009 for all properties. All available data for each property were used to determine average recurring expenses which are billable to the working interest owners. Expenses for workovers, well stimulations, and other maintenance were not included in the operating expenses unless such work was expected on a recurring basis. Judgments for the exclusion of the nonrecurring expenses were made by Warren. For new and developing properties where data were unavailable, operating expenses were estimated by Warren based on analogy with similar properties. For California properties, Warren provided operating cost models which separated expenses between fixed costs, well costs, and fluid production costs.

 

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State production taxes have been deducted at the published rates as appropriate.   Average county ad valorem taxes were deducted for those properties located in states for which the data were available or calculated based on data provided by Warren.

 

Williamson used all engineering and geological evaluation methods and procedures considered necessary to prepare this evaluation. The estimates of reserves contained in this report were determined by accepted industry methods. Methods utilized in this report include extrapolation of historical production trends, analogy to similar properties, and volumetric calculations. Where sufficient production history and other data were available, reserves for producing properties were determined by extrapolation of historical production trends. Analogy to similar properties or volumetric calculations were used for nonproducing properties and those producing properties which lacked sufficient production history and other data to yield a definitive estimate of reserves. Reserves projections based on analogy are subject to change due to subsequent changes in the analogous properties or subsequent production from the evaluated properties. Volumetric calculations are often based upon limited log and/or core analysis data and incomplete reservoir fluid and formation rock data. Since these limited data must frequently be extrapolated over an assumed drainage area, subsequent production performance trends or material balance calculations may cause the need for significant revisions to the estimates of reserves.

 

The reserves projections in this evaluation are based on the use of the available data and accepted industry engineering methods. Future changes in any operational or economic parameters or production characteristics of the evaluated properties could increase or decrease their reserves. Unforeseen changes in market demand or allowables set by various regulatory agencies could also cause actual production rates to vary from those projected. It should be emphasized that with the current economic uncertainties, fluctuation in market conditions could significantly change the economics of the properties included in this report.

 

All data have been reviewed for reasonableness and, unless obvious errors were detected, have been accepted as correct. It should be emphasized that revisions to the projections of reserves and economics included in this report may be required if the provided data are revised for any reason. No inspection of the properties was made as this was not considered within the scope of this evaluation. No investigation was made of any environmental liabilities that might apply to the evaluated properties, and no costs are included for any possible related expenses.  Warren did not request Williamson to assess the risks associated with regulatory issues for the properties evaluated. Neither salvage values nor abandonment costs were included in this evaluation.

 

Williamson reserves the right to alter any of the reserves projections and the associated economics included in this evaluation in any future evaluations based on additional data that may be acquired.

 

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Williamson is an independent consulting firm and does not own any interests in the oil and gas properties covered by this report. No employee, officer, or director of Williamson is an employee, officer, or director of Warren. Neither the employment of nor the compensation received by Williamson is contingent upon the values assigned to the properties covered by this report.

 

Yours very truly,

 

WILLIAMSON PETROLEUM CONSULTANTS, INC.

 

 

/s/ Roy C. Williamson

 

Roy C. Williamson, Jr., P.E.

 

RCW/JDS/RCH/thb

 

Attachments

 

 

Williamson Petroleum Consultants, Inc.

 

F-81

 

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