Attached files
Exhibit 99.1
Document Control
PEDEVCO
Corp. Reserve Report Issued January 6th 2017
Run
Using a January 1st, 2017 As Of Date On the Petroleum Properties of
PEDEVCO Corp.
Prepared
by South Texas Reservoir Alliance LLC
State
of Texas Registration Number F-13460
Prepared
by Michael Rozenfeld, State of Texas Professional Engineer
#107701
Signature:
STXRA
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Page 2 of 9
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January 2017
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Disclosures
This report is provided to PEDEVCO Corp (“PEDCO”) using
reserve and contingent resource definitions and disclosure
guidelines contained in the Securities and Exchange Commission
(SEC), Society of Petroleum Engineers (SPE), World Petroleum
Council (WPC), and American Association of Petroleum Geologists
(AAPG).
This report utilizes assumptions, data, methods and procedures that
are appropriate for the purpose served by the report as required by
the Securities and Exchange Commission. Significant data was
collected and examined using volumetric calculations and decline
curve analysis. Offset production, logs, maps, analog information
and accounting statements were all studied.
This report covers one hundred percent (100%) of the reserves of
PEDCO. All of the reserves of PEDCO are located in Weld
County, Colorado. This report covers PEDCO’s directly
owned working and net revenue interest in its wholly owned
subsidiary Red Hawk Petroleum, LLC.
New regulations could have an adverse effect on the reserves
calculated in this report. Importantly a ban on hydraulic
fracturing in the area could significantly decrease or eliminate
this report’s reserves.
South Texas Reservoir Alliance LLC (“STXRA”) has used
all methods and procedures as it considers necessary under the
circumstances to prepare this report.
Michael Rozenfeld supervised or performed all of the relevant
technical work during the creation of this report. He is a
member of South Texas Reservoir Alliance LLC, a Delaware Limited
Liability Company. STXRA is certified professional engineering
company in the state of Texas. STXRA’s state of Texas
registration number is F-13460. Michael Rozenfeld has a B.S. degree
in Petroleum Engineering from the University of Texas at Austin. He
is a registered professional engineer in the state of Texas. His
state of Texas professional engineering number is 107701. Michael
Rozenfeld has ten years of experience in creating reserve reports
and completing reserve analysis for conventional and unconventional
fields in the United States.
STXRA
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January 2017
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Scope of Investigation
This
report is an appraisal, as of January 1st, 2017, of the
extent and value of the proved, probable and possible crude oil,
condensate, and natural gas reserves of properties owned PEDCO. The
reserves and resources recorded on the ‘as of’ date
were calculated using the current field economic and productivity
conditions. Changes to these conditions may significantly affect
reserves. The reserves
presented in this report have been prepared in accordance with
guidelines set by the Securities and Exchange Commission, the World
Petroleum Council, the American Association of Petroleum
Geologists, and the Society of Petroleum Evaluation Engineers. The
reserves estimated for this report are for producing wells,
undeveloped locations and behind pipe volumes of oil and
gas.
STXRA
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January 2017
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Summary
The
estimated net proved reserves, as of January 1st, 2017, of the
properties appraised are summarized as follows, and expressed in
thousands of barrels (MBBL) or millions of cubic feet
(MMCF):
Category
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Net Oil
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Net Gas
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NPV Undiscounted
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NPV Discounted 10%
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Reserves (MBBL)
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Reserves (MMCF)
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(M$)
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(M$)
|
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TOTAL (Proved + Probable + Possible)
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3,057.95
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12,947.10
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66,651.28
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22,682.20
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Proved Developed Producing (PDP)
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391.15
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1,199.47
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7,672.11
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5,667.88
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Proved Behind Pipe (PDNP)
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0.00
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0.00
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0.00
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0.00
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Proved Undeveloped (PUD)
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2,199.54
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9,853.77
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44,806.03
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13,486.66
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TOTAL PROVED
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2,590.69
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11,053.24
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52,478.14
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19,154.54
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Probable Developed Producing (PDP)
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57.45
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179.02
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1,413.03
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911.29
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Probable Behind Pipe (PDNP)
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0.00
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0.00
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0.00
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0.00
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Probable Undeveloped (PUD)
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115.08
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328.44
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4,225.05
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1,699.89
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TOTAL PROBABLE
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172.53
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507.46
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5,638.08
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2,611.18
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Possible Developed Producing (PDP)
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38.30
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106.51
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553.44
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136.56
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Possible Behind Pipe (PDNP)
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0.00
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0.00
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0.00
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0.00
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Possible Undeveloped (PUD)
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256.43
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1,279.89
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7,981.62
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779.92
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TOTAL POSSIBLE
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294.73
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1,386.40
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8,535.06
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916.48
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Reserves
estimated in this report are expressed as gross and net reserves.
Gross reserves are defined as the total estimated petroleum to be
produced from these properties after the specified as of date. Net
reserves are defined as that portion of the gross reserves
attributable to the interests owned by PEDCO after deducting all
interests owned by others. This report presents values that were
estimated for reserves using reasonable estimated costs and prices
calculated using the average of the first day of every month in the
year prior.
STXRA
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January 2017
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Values
shown in this report for reserves are expressed in terms of
estimated future gross revenue, future net revenue, and present
worth. Future gross revenue is that revenue which will accrue to
the appraised interests from the production and sale of the
estimated net reserves. Future net revenue is calculated by
deducting estimated production taxes, ad valorem taxes, operating
expenses, transportation costs, and capital costs from the future
gross revenue. All costs presented in this report are based on
current market conditions and best engineering judgment and are
subject to change. Operating expenses include field operating
expenses, transportation expenses, compression charges, and an
allocation of overhead that directly relates to production
activities. Future income taxes were not taken into account in the
preparation of these estimates. Present worth is defined as future
net revenue discounted at a specified arbitrary discount rate
compounded monthly over the expected period of realization. In this
report, present worth values using a discount rate of 10 percent
are reported in detail.
Estimates
of oil, condensate, and natural gas reserves and future net revenue
should be regarded only as estimates that may change as further
production history and additional information becomes available.
Not only are such reserves and revenue estimates based on that
information which is currently available, but such estimates are
also subject to the uncertainties inherent in the application of
judgmental factors in interpreting such information.
Information
used in the preparation of this report was obtained from PEDCO and
from public sources.
STXRA
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January 2017
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Estimation of Reserves
Estimates
of reserves were prepared by the use of standard geological and
engineering methods generally accepted by the petroleum industry.
The method or combination of methods used in the analysis of each
reservoir was tempered by experience with similar reservoirs, stage
of development, quality and completeness of basic data, and
production history. Decline curve analysis was the primary method
used to calculate reserves in place.
Reserves
were estimated for 28 undeveloped locations and current producers
identified by PEDCO. The locations are generally well positioned to
develop the acreage available in accordance with the geologic
interpretation. Consideration was given to information on offset
producing wells to determine the categorization of reserves for
each location.
Oil
reserves estimated herein are those to be recovered by normal lease
separation. Gas volumes estimated herein are expressed as wet gas
and sales gas. Wet gas is defined as the total gas to be produced
before reductions for volume loss due to fuel and flare consumption
and reduction for plant processing. Sales gas is defined as that
portion of the wet gas to be produced from the reservoirs, measured
at the point of delivery, after reduction for fuel usage, flare,
and shrinkage resulting from field separation and plant processing,
if applicable. Gross gas volumes are reported as wet gas. Net
volumes are reported as sales gas. All gas volumes are expressed at
standard temperature and pressure.
STXRA
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Valuation of Reserves
This
report has been prepared using industry standard price and cost
assumptions. The oil price was based on historical EIA reported
Cushing spot prices for the previous twelve months. The gas price
was based on historical EIA reported Henry Hub spot prices for the
previous twelve months. The price of each commodity was determined
on the first day of each of the prior months and then averaged
together to yield one oil price and one gas price. Oil and gas
offsets were calculated by comparing the historical pricing to
current lease operating, gas statements, and oil contracts provided
by PEDCO along with current deductions and current gains for items
such as crude & gas quality, processing, and transportation.
All prices were held flat throughout all future dates. The
following illustrates the prices and offsets used in this
report:
For Red
Hawk Petroleum:
Oil Price ($/Bbl)
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Oil Price Offset ($/Bbl)
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Realized Oil Price ($/Bbl)
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Gas Price ($/MMbtu)
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Gas Price Offset ($/MCF)
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Effective Gas Price ($/Mcf)
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42.75
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-3.15
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$39.6
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$2.48
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-.61
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$1.87
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Operating Expenses and Capital Costs
All
costs presented in this report are based on current market
conditions and best engineering judgment and are subject to change.
Operating expenses were based on historical prices seen in both
operated and non-operated field areas that the PDP, PUD and PDNP is
located.
Comments on the Independence of South Texas Reservoir
Alliance
In
creation of this report South Texas Reservoir Alliance (STXRA)
served as an independent third party contractor. South Texas
Reservoir Alliance LLC has a non-exclusive consulting contract with
PEDCO. The compensation from this contract is paid in cash
once a month using hourly billings provided to PEDCO by
STXRA.
To
further clarify STXRA:
1.
Is not on the board
of PEDCO
2.
Has zero control
over PEDCO and serves solely in the capacity as a
consultant
3.
Has no voting power
over PEDCO
4.
STXRA works on an
arm’s length basis from PEDCO
5.
STXRA is a private
company with 100% of its ownership held by certain employees of
STXRA.
STXRA
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January 2017
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Definitions and Guidelines for Petroleum Resources
The
reserves and presented in this report have been prepared in
accordance with the Securities and Exchange Commission, the World
Petroleum Council, the American Association of Petroleum
Geologists, and the Society of Petroleum Evaluation Engineers.
Links to these definitions and guidelines can be found
here:
http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title17/17cfr210_main_02.tpl
http://www.spe.org/industry/reserves.php
STXRA
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January 2017
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