Exhibit 99.1

 

 

 

 

 

 

lilis energy, Inc.

 

ESTIMATED RESERVES

AND FUTURE NET REVENUE

 

PROVED RESERVES

 

As Of December 31, 2014

 

 

 

 

 

 

 

 

March 10, 2015

 

Lilis Energy, Inc.

1900 Grant Street, Suite 720

Denver, Colorado 80203

 

Attn:	Mr. Abraham Mirman
	Chief Executive Officer

 

Re: Estimated Reserves and Future Net Revenue,

Lilis Energy, Inc.

As of December 31, 2014

 

Gentlemen:

 

At the request of Lilis Energy, Inc. (“Lilis”), the firm of Ralph E. Davis Associates, Inc. (“Davis”) of Houston, Texas has prepared an estimate of the oil and natural gas reserves and future net revenue associated with specific leaseholds in which Lilis owns certain interests. The purpose of this report is to present a summary of the Proved Developed Producing and Undeveloped reserves that in our opinion meet the criteria for proved reserve volumes in keeping with the directives of the Securities and Exchange Commission as detailed later in this report.

 

Davis has reviewed 100% of Lilis’s proved developed and undeveloped properties located in the Denver Julesberg Basin of the United States. This report presents our assessment of those reserves as of the effective date of this report, December 31, 2014, having completed the evaluation of said estimate of reserves based upon the information presented within this report, on March 9, 2015.

 

The reserves associated with this review have been classified in accordance with the definitions of the Securities and Exchange Commission as found in Part 210—Form and Content of and Requirements for Financial Statements, Securities Act of 1933, Securities Exchange Act of 1934, Public Utility Holding Company Act of 1935, Investment Company Act of 1940, Investment Advisers Act of 1940, and Energy Policy and Conservation Act of 1975, under Rules of General Application § 210.4-10 Financial accounting and reporting for oil and gas producing activities pursuant to the Federal securities laws and the Energy Policy and Conservation Act of 1975. A summation of these definitions is included as a portion of this letter.

 

We have also estimated the future net revenue and discounted present value associated with these reserves as of December 31, 2013 utilizing a scenario of non-escalated product prices as well as non-escalated costs of operations, i.e., prices and costs were not escalated above current values as detailed later in this report. The present value is presented for your information and should not be construed as an estimate of the fair market value.

 

1717 St. James Place, Suite 460      Houston, Texas 77056      Office 713-622-8955      Fax 713-626-3664      www.ralphedavis.com

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 3
As of December 31, 2014

 

The results of our study related to our estimate of the Total Proved Reserves attributable to Lilis and remaining to be produced as of December 31, 2014 are as follows:

 

Non Escalated Pricing Scenario

Estimated Reserves and Future Net Income

Net to Lilis Energy, Inc.

As of December 31, 2014

 

		Producing				Undeveloped				Total
Net Reserves
Oil/Condensate-MBbls			50.2				849.5				899.7
Gas-MMCF			197.1				4,040.1				4,237.2
NGL-MBbls			-				-				-
Income Data (M$)
Future Gross Revenue		$	5,476.5			$	90,688.7			$	96,165.3
Total Taxes		$	555.0			$	7,422.8			$	7,977.8
Operating Costs		$	1,370.7			$	13,546.6			$	14,917.3
Capital Costs		$	0.0			$	28,388.2			$	28,388.2
Future Net Income (FNI)		$	3,550.8			$	41,331.2			$	44,881.9
FNI @ 10%		$	2,340.5			$	20,913.9			$	23,254.4

 

Note: There may be differences in the addition as a result of computer program rounding of numbers.

 

Liquid volumes are expressed in thousands of barrels (MBbls) of stock tank oil. Gas volumes are expressed in millions of standard cubic feet (MMSCF) at the official temperature and pressure bases of the areas wherein the gas reserves are located.

 

The economic cash flow presentation of the above volumes and revenues are presented for the individual reserve classifications, as well as appropriate summaries, as Exhibit No. I.

 

DISCUSSION

 

The scope of this study was to prepare an estimate of the proved reserves attributable to Lilis’s ownership position in the subject properties. Reserve estimates were prepared by Davis using acceptable evaluation principles for each source and were based in large part on the basic information supplied by Lilis.

 

The quantities presented herein are estimated reserves of oil and natural gas volumes that geologic and engineering data demonstrate can be recovered from known reservoirs under current economic conditions with reasonable certainty. Proved undeveloped locations are scheduled to be drilled such that the investment cost will be fully recovered prior to recovery of the estimated reserve volume. Reserves classified as undeveloped are scheduled for future drilling beginning in 2015. The undrilled locations have been reviewed on an individual well location basis. The estimates of these recoverable reserves are based on volumetric estimates.

 

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 4
As of December 31, 2014

 

The estimated future net revenue and discounted present value associated with the reserves as of December 31, 2014 were prepared utilizing a pricing scenario that is detailed later in this report.

 

This evaluation has been prepared in accordance with the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” as proclaimed by the Society of Petroleum Engineers, the SPE Standards.

 

DATA SOURCE

 

Basic well and field data used in the preparation of this report were furnished by Lilis or were obtained from commercial sources or from Davis’ own database of information. Records as they pertain to factual matters such as acreage controlled the number and depths of wells, reservoir pressure and production history, the existence of contractual obligations to others and similar matters were accepted as presented.

 

Additionally, the analyses of these properties utilized not only the basic data on the subject wells but also data on analogous properties as provided. Well logs, ownership interest, revenues received from the sale of products and operating costs were furnished by Lilis Energy. No physical inspection of the properties was made nor any well tests conducted at this time.

 

Costs of operations were provided by Lilis or the operator of the properties on a well by well basis. These costs were reviewed by Davis and are considered to be reasonable. Capital costs were also provided by Lilis, including drilling, completion and well stimulation costs anticipated as necessary to recover estimated reserve volumes from new and existing wells. These costs were compared to actual costs of recently drilled wells, taking into account depth of future wells to be drilled. The capital costs included in this report are also considered to be reasonable.

 

OWNERSHIP

 

Ownership interests in the subject properties have been furnished by Lilis Energy and accepted by Davis without independent verification.

 

RESERVE ESTIMATES

 

The estimate of reserves included in this report is based primarily upon production history or analogy with wells in the area producing from the same or similar formations. In addition to individual well production history, well test information when available was utilized in the evaluation. Geologic and seismic data were reviewed with Lilis personnel to establish reasonableness to the interpretations and a consistent basis for the volumetric estimates of hydrocarbons originally in place in each of the respective field areas. Individual well production histories were analyzed and forecast until a calculated economic limit.

 

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 5
As of December 31, 2014

 

Estimates of reserves to be recovered from undrilled locations are based upon not only the ultimate reserve of existing Lilis wells, but also completions by other operators in the area of interest. Studies of analogous completions have resulted in the development of an average completion than can be anticipated for a specific area, as well as a production profile that recovers the estimated ultimate reserve. This methodology has been utilized in this evaluation.

 

Proved undeveloped reserves estimated for the Lang properties in which Lilis has a significant working interest position have increased substantially over those volumes similarly booked in previous years. Prior to 2013 development of the Codell and Niobrara formations was scheduled to be accomplished by a series of vertical wellbores on relatively tight spacing but with limited areal drainage. Development of the Lang area acreage, being the Bruegman and Mojack wells, is scheduled to be accomplished by a series of horizontal wells drilled with a planned 5,000 foot lateral extension in each of the targeted Niobrara formations, and a 10,000 later in the Codell formation respectively.

 

Horizontal well development of the Lang acreage will require separate wellbores for the Codell and Niobrara formations. Each well will also require Lilis to pool it’s acreage with offset owners in order to effect multiple wellbores, each with either a 5,000 foot lateral extension or a 10,000 foot lateral, all to be drilled from a single surface pad site. The result will be fewer wellbores with significantly increased recoverable reserves per wellbore in comparison to the previous estimates of proved reserves.

 

Estimates of proved reserves in the Sawyer acreage area in southeastern Wattenberg have become more defined in the past year with increased activity by offset operators. Successful completions in offset acreage tracts have established both Niobrara and Codell as drillable proved locations on the Lilis acreage.

 

Additional development potential was based upon geological interpretations; seismic indications of individual structures and well log analysis of know indicators of production. Well spacing was based upon historical activity in the same reservoirs in nearby fields. In all cases, proved undeveloped locations were limited to a direct offset to a proved developed producing well or unit or successful well test in the same reservoir.

 

The accuracy of reserve estimates is dependent upon the quality of available data and upon the independent geological and engineering interpretation of that data. Reserve volumes presented in this report are based upon the available data and are calculated using all methods and procedures as we considered necessary under the circumstances to prepare this report and are believed to be reasonable; however, future reservoir performance may justify revision of these estimates. The various methods and procedures used in the evaluation of the subject properties are considered appropriate for an audit of the subject properties.

 

It should be noted that all reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geological and engineering data available at the time of the estimate and the interpretation of these data. These reserves have been determined using methods and procedures widely accepted within the industry and are believed to be appropriate for the purposes of this report. In our opinion, we used all methods and procedures necessary under the circumstances to prepare this report.

 

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 6
As of December 31, 2014

 

Regulations in the Oil and Gas industry are constantly changing to meet new safety and environmental concerns, in addition to the possibility of some market regulations which have occasionally occurred historically. State, Local or Federal Regulations, such as upon hydraulic fracturing, or drill/production site security and safety, environmental regulations of spills noxious emissions, greenhouse gases, and drill site location, wildlife protections and extensive permitting processes, sometimes with multiple agencies or governments, in the future may all adversely affect the ability of the Registrant to recover the estimated reserves, as well as potentially rendering the reserves uneconomic, in certain, as yet undetermined, circumstances. To the best of the engineers belief, none of the reserves described in this report are negatively impacted as of the date of this report, by any such current regulations.

 

PRODUCING RATES

 

For the purpose of this report, estimated reserves are scheduled for Lilis primarily on the basis of actual producing rates or appropriate well test information. They were prepared giving consideration to engineering and geological data such as reservoir pressure, anticipated producing mechanisms, the number and types of completions, as well as past performance of analogous reservoirs.

 

These and other future rates may be subject to regulation by various agencies, changes in market demand or other factors; consequently, reserves recovered and the actual rates of Lilis may vary from the estimates included herein. Scheduled dates of future well completions may vary from that provided by Lilis Energy due to changes in market demand or the availability of materials and/or capital; however, the timing of the wells and their estimated rates of production are reasonable and consistent with established performance to date.

 

PRICING PROVISIONS AND DIFFERENTIALS

 

Prices utilized in the evaluation results presented in the letter portion of this report and summarized in the various tables included in this evaluation were furnished by Lilis. Prices received for products sold, adjustments due to the BTU content of the gas, shrinkage for transportation, measuring or the removal of liquids, the liquid yield from gas processed, etc., were accepted as presented.

 

The unit price used throughout this report for crude oil, condensate and natural gas is based upon the appropriate price in effect the first trading of each month during the previous twelve calendar months through December 2014, and averaged for the time period.

 

Crude Oil and Condensate - The unit price used throughout this report for crude oil and condensate is based upon the average of prices for the previous twelve months as indicated above. An average crude oil price for West Texas Intermediate crude of $94.56 per barrel was held constant throughout the producing life of the properties. A pricing differential from this posted price was determined for the individual producing properties to account for location and grade of crude based upon historical sales information and was utilized in this evaluation. This pricing differential was similarly held constant. The average price realized for liquid reserves, crude oil and condensate, over the producing life of the properties, was $81.714 per barrel, and represents the combined effect due to the adjustments for location and quality differentials such as transportation, quality and gravity. Prices for liquid reserves scheduled for initial production at some future date were estimated using current prices on the same properties.

 

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 7
As of December 31, 2014

 

Natural Gas - The unit price used throughout this report for natural gas is based upon the average of prices for previous twelve months as indicated above. An average gas price of $4.55 per MMBTU represented the Henry Hub BTU adjusted natural gas price and was held constant throughout the producing life of the properties. The average price realized for natural gas reserves over the producing life of the properties, was $5.344 per MLMBTU, and represents the combined effect due to the adjustments for location and quality differentials such as transportation and the BTU (heating value) of the gas. Prices for gas reserves scheduled for initial production at some future date were estimated using this same price differential

 

FUTURE NET INCOME

 

Future net income is based upon gross income from future production, less direct operating expenses and taxes (production, severance, ad valorem or other). Estimated future capital for development and work-over costs was also deducted from gross income at the time it will be expended. No allowance was made for depletion, depreciation, income taxes or administrative expense.

 

Direct lease operating expense includes direct cost of operations of each lease or an estimated value for future operations based upon analogous properties. Lease operating expense and/or capital costs for drilling and/or major work over expense were not escalated throughout the remaining producing life of the properties. Neither the cost to abandon properties nor the salvage value of equipment was considered in this report.

 

Future net income has been discounted for present worth at values ranging from 0 to 100 percent using continuous discounting. In this report the future net income is discounted at a primary rate of ten (10.0) percent.

 

GENERAL

 

Lilis Energy, Inc. has provided access to all of its accounts, records, geological and engineering data, reports and other information as required for this evaluation. The ownership interests, product classifications relating to prices and other factual data were accepted as furnished without verification.

 

No consideration was given in this report to either gas contract disputes including take or pay demands or gas sales imbalances.

 

No consideration was given in this report to potential environmental liabilities which may exist, nor were any costs included for potential liability to restore and clean up damages, if any, caused by past operating practices.

 

 

 

Estimated Reserves and Future Net Revenue	March 10, 2015
Lilis Energy, Inc.	Page | 8
As of December 31, 2014

 

Neither Ralph E. Davis Associates, Inc. nor any of its employees have any interest in Lilis Energy Company, Inc. or any other related company or the properties reported on herein. The employment and compensation to make this study are not contingent on our estimate of reserves. The technical persons responsible for preparing the estimates presented herein meet the requirements regarding qualifications, independence, objectivity and confidentiality set forth in the SPE standards.

 

This report has been prepared for public disclosure by Lilis Energy Company, Inc. in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.

 

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please feel free to contact us if we can be of further service.

 

We appreciate the opportunity to be of service to you in the matter of this report and will be glad to address any questions or inquiries you may have.

 

	Very truly yours,
	RALPH E. DAVIS ASSOCIATES, INC.
	\s\ Allen C. Barron, P.E.
	Allen C. Barron, P. E.
	President

 

 

Securities and Exchange Commission

Definitions of Reserves

 

The following information is taken from the United States Securities and Exchange Commission:

 

PART 210—FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

 

Rules of General Application

§ 210.4-10   Financial accounting and reporting for oil and gas producing activities pursuant to the Federal securities laws and the Energy Policy and Conservation Act of 1975.

 

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.

 

Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

 

Proved Oil and Gas Reserves

Proved oil and gas reserves are those quantities of oil and 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.

 

 

Securities and Exchange Commission	Page 2
§ 210.4-10   Definitions (of Reserves)
Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter

 

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

 

Reasonable certainty. If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

 

Reliable technology. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

 

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

 

(i) When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

 

(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.

 

(iii) Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

 

Possible Reserves

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.

 

(i) When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.

 

(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.

 

(iii) Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

 

(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.

 

(v) Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.

 

 

Securities and Exchange Commission	Page 3
§ 210.4-10   Definitions (of Reserves)
Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter

 

(vi) Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

 

Developed Oil and Gas Reserves

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

 

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

 

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

 

Undeveloped Oil and Gas Reserves

Undeveloped oil and gas reserves are reserves of any category 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.

 

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

 

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

 

(iii) Under no circumstances shall estimates for 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 projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

 

Additional Definitions:

 

Deterministic Estimate

The method of estimating reserves or resources is called deterministic when a single value for each parameter (from the geoscience, engineering, or economic data) in the reserves calculation is used in the reserves estimation procedure.

 

Probabilistic Estimate

The method of estimation of reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience and engineering data) is used to generate a full range of possible outcomes and their associated probabilities of occurrence.

 

Reasonable Certainty

If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

 

 

LILIS ENERGY INC	DATE	: 03/09/2015
TOTAL PROVED	TIME	: 15:59:28
AS OF 01/01/2015	DBS	: DEMO
SEC NON-ESCALATED EVALUATION	SETTINGS	: RED_JAN15
	SCENARIO	: RED_JAN15

 

R E S E R V E S     A N D     E C O N O M I C S

 

AS OF DATE: 01/2015

 

END MO-		GROSS  OIL PRODUCTION				GROSS  GAS PRODUCTION				NET  OIL PRODUCTION				NET  GAS PRODUCTION				NET OIL PRICE				NET GAS PRICE				NET OIL SALES				NET GAS SALES				TOTAL NET SALES
YEAR		MBBLS				MMCF				MBBLS				MMCF				$/BBL				$/MCF				M$				M$				M$
12-2015			311.722				905.121				99.908				208.745				81.706				5.518				8163.110				1151.824				9314.934
12-2016			620.378				2005.275				237.637				692.994				81.669				5.321				19407.609				3687.244				23094.855
12-2017			289.364				1261.882				109.104				413.125				81.685				5.332				8912.186				2202.962				11115.149
12-2018			193.215				992.731				70.544				317.770				81.698				5.336				5763.245				1695.643				7458.887
12-2019			146.544				838.822				52.208				265.176				81.707				5.338				4265.753				1415.409				5681.163
12-2020			118.694				735.839				41.445				230.858				81.715				5.338				3386.707				1232.388				4619.096
12-2021			100.095				660.800				34.358				206.307				81.722				5.339				2807.831				1101.385				3909.216
12-2022			86.753				602.637				29.339				187.542				81.728				5.339				2397.801				1001.227				3399.027
12-2023			76.466				553.479				25.444				171.763				81.734				5.339				2079.604				917.013				2996.617
12-2024			67.063				510.048				21.946				157.847				81.741				5.339				1793.887				842.720				2636.608
12-2025			60.745				470.834				19.729				145.286				81.745				5.339				1612.743				775.648				2388.390
12-2026			55.342				434.853				17.866				133.740				81.749				5.339				1460.499				713.991				2174.490
12-2027			50.646				401.714				16.273				123.114				81.752				5.339				1330.319				657.250				1987.569
12-2028			46.393				371.128				14.792				113.333				81.756				5.338				1209.317				605.026				1814.343
12-2029			42.140				342.896				13.113				104.331				81.762				5.338				1072.179				556.958				1629.137
12-2030			38.866				316.835				12.072				96.046				81.764				5.338				987.050				512.716				1499.766
12-2031			35.849				292.777				11.113				88.419				81.767				5.338				908.707				471.994				1380.701
12-2032			33.068				270.566				10.231				81.400				81.769				5.338				836.596				434.512				1271.108
12-2033			30.504				250.060				9.419				74.938				81.772				5.338				770.220				400.013				1170.233
12-2034			28.141				231.126				8.672				68.991				81.774				5.338				709.123				368.257				1077.380
S TOT			2431.989				12449.424				855.211				3881.725				81.704				5.344				69874.492				20744.180				90618.680
AFTER			165.494				1463.318				44.516				355.516				81.897				5.347				3645.695				1900.900				5546.593
TOTAL			2597.482				13912.742				899.727				4237.241				81.714				5.344				73520.195				22645.080				96165.273

 

 

END MO-		AD VALOREM TAX				PRODUCTION TAX				DIRECT OPER EXPENSE				INTEREST PAID				CAPITAL REPAYMENT				EQUITY INVESTMENT				FUTURE NET CASHFLOW				CUMULATIVE CASHFLOW				CUM. DISC. CASHFLOW
YEAR		M$				M$				M$				M$				M$				M$				M$				M$				M$
12-2015			739.186				31.194				191.447				0.000				0.000				27188.238				-18835.133				-18835.133				-17863.416
12-2016			1833.938				70.872				622.700				0.000				0.000				1200.000				19367.344				532.212				-1090.205
12-2017			875.523				71.071				640.427				0.000				0.000				0.000				9528.128				10060.340				6420.664
12-2018			588.077				44.825				638.102				0.000				0.000				0.000				6187.882				16248.222				10855.034
12-2019			448.338				31.953				636.708				0.000				0.000				0.000				4564.164				20812.387				13828.469
12-2020			364.856				24.256				635.871				0.000				0.000				0.000				3594.113				24406.500				15957.080
12-2021			309.051				19.138				635.369				0.000				0.000				0.000				2945.658				27352.158				17543.049
12-2022			268.935				15.509				635.068				0.000				0.000				0.000				2479.516				29831.674				18756.678
12-2023			237.415				12.017				623.547				0.000				0.000				0.000				2123.638				31955.312				19701.641
12-2024			209.610				6.846				573.056				0.000				0.000				0.000				1847.096				33802.406				20448.816
12-2025			189.928				5.938				573.056				0.000				0.000				0.000				1619.469				35421.875				21044.359
12-2026			172.954				5.220				573.056				0.000				0.000				0.000				1423.260				36845.137				21520.168
12-2027			158.112				4.640				573.056				0.000				0.000				0.000				1251.761				38096.895				21900.600
12-2028			144.447				3.637				565.856				0.000				0.000				0.000				1100.403				39197.301				22204.633
12-2029			130.176				0.807				529.856				0.000				0.000				0.000				968.299				40165.602				22447.842
12-2030			119.834				0.763				529.856				0.000				0.000				0.000				849.313				41014.910				22641.771
12-2031			110.317				0.722				529.856				0.000				0.000				0.000				739.807				41754.719				22795.340
12-2032			101.557				0.683				529.856				0.000				0.000				0.000				639.013				42393.730				22915.928
12-2033			93.494				0.646				529.856				0.000				0.000				0.000				546.237				42939.969				23009.637
12-2034			86.073				0.611				529.856				0.000				0.000				0.000				460.841				43400.809				23081.508
S TOT			7181.819				351.347				11296.454				0.000				0.000				28388.238				43400.809				43400.809				23081.508
AFTER			443.511				1.124				3620.826				0.000				0.000				0.000				1481.133				44881.945				23254.391
TOTAL			7625.330				352.471				14917.280				0.000				0.000				28388.238				44881.941				44881.945				23254.391

 

		OIL				GAS									P.W. %				P.W., M$
GROSS WELLS			22.0				0.0			LIFE, YRS.		39.25				5.00				31555.918
GROSS ULT., MB & MMF			2937.108				15739.652			DISCOUNT %		10.00				8.00				26163.836
GROSS CUM., MB & MMF			339.625				1826.910			UNDISCOUNTED PAYOUT, YRS.		1.97				10.00				23254.391
GROSS RES., MB & MMF			2597.483				13912.742			DISCOUNTED PAYOUT, YRS.		2.15				12.00				20758.898
NET RES., MB & MMF			899.727				4237.241			UNDISCOUNTED NET/INVEST.		2.58				15.00				17618.379
NET REVENUE, M$			73520.188				22645.078			DISCOUNTED NET/INVEST.		1.87				18.00				15031.921
INITIAL PRICE, $			81.718				5.377			RATE-OF-RETURN, PCT.		63.43				30.00				8068.712
INITIAL N.I., PCT.			11.459				4.895			INITIAL W.I., PCT.		45.903				60.00				440.802
																80.00				-1826.590
																260.00				-5558.546

 

Ralph E. Davis Associates, Inc.

Texas Registered Engineering Firm F-1529