Attached files
file | filename |
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EX-32.1 - EX-32.1 - Atlas Growth Partners, L.P. | agp-ex321_8.htm |
EX-31.2 - EX-31.2 - Atlas Growth Partners, L.P. | agp-ex312_10.htm |
EX-31.1 - EX-31.1 - Atlas Growth Partners, L.P. | agp-ex311_7.htm |
EX-23.1 - EX-23.1 - Atlas Growth Partners, L.P. | agp-ex231_12.htm |
EX-21.1 - EX-21.1 - Atlas Growth Partners, L.P. | agp-ex211_6.htm |
EX-14.1 - EX-14.1 - Atlas Growth Partners, L.P. | agp-ex141_306.htm |
10-K - 10-K - Atlas Growth Partners, L.P. | agp-10k_20201231.htm |
EXHIBIT 99.1
VSO PETROLEUM CONSULTANTS, INC.
550 CLUB DR., SUITE 100
MONTGOMERY, TEXAS 77316
TELEPHONEFACSIMILE
713-904-1212713-659-6909
March 15, 2021
Atlas Growth Partners, L.P.
Mr. Christopher Walker
425 Houston Street, Suite 300 Fort Worth, TX 76102
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RE: |
Estimate of Proved Reserves and Net Revenue as of January 1, 2021 using SEC Year-End 2020 Pricing |
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Dear Mr. Walker:
Pursuant to your request, VSO Petroleum Consultants, Inc. (“VSO”) has prepared estimates of Future Net Reserves and Net Revenues associated with the Proved oil and gas interests owned by Atlas Growth Partners, L.P. (“AGP”) located in the Eagle Ford Shale formation, Atascosa County, Texas. Estimates of Proved Reserves were prepared in accordance with the definitions and regulations of the U.S. Securities and Exchange Commission (“SEC”). This report has been prepared for AGP’s use in filing with the SEC; in our opinion the assumptions, data, methods, and procedures used in the preparation of this report are appropriate for such purpose. The results of this evaluation are summarized below, and a discussion of our analysis follows:
Estimated Proved Reserves and Future Net Revenue As of January 1, 2021 using YE SEC 2020 Pricing Net to Atlas Growth Partners L.P.
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Net |
Reserves |
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Reserve |
Oil, |
NGL, |
Gas, |
Net Rev., |
Exp. & |
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Undisc. |
FNR Disc. |
Category |
MBbl |
MBbl |
MMCF |
M$ |
Tax, M$ |
Capex, M$ |
FNR, M$ |
at 10%, M$ |
PDP |
410 |
64 |
340 |
$ 15,410 |
$9,815 |
$497 |
$5,098 |
$3,788 |
PDNP |
24 |
4 |
19 |
$886 |
$647 |
$111 |
$128 |
$108 |
Total Proved |
433 |
67 |
359 |
16,296 |
10,462 |
608 |
5,226 |
3,896 |
ASSUMPTIONS:
Proved Developed Producing (“PDP”): VSO estimated future net PDP reserves based upon the extrapolation of established decline trends on a well-by-well basis.
Proved Developed Non-Producing (“PDNP”): VSO was provided an AFE from the company and has scheduled the associated capital that is necessary, per the company, to bring the non- producing well back online. This capital spend is scheduled to occur in July 2021, with the well
Atlas Growth Partners, L.P. Page 2 of 4
March 15, 2021
returning to production the same month. The future net reserves are modeled such that the well returns to the same production levels prior to shut in and follows the prior historical decline trend of the well.
Oil and Gas Prices: The hydrocarbon prices used in the preparation of this report are based upon the 2020 first day of month 12-month arithmetic average as regulated by the SEC. Year End SEC 2020 pricing was held flat for the life of the asset and these prices are displayed in the table below. Please note that actual future prices may vary significantly from those utilized in this report.
SEC 2020 Pricing
Oil,Gas,
$/Bbl$/Mcf
$39.54$1.99
Product Price Differentials: VSO reviewed Lease Operating Statements (“LOS”) provided by AGP and compared actual received wellhead pricing from the LOS to benchmark oil and gas prices in effect during each production month. As the net LOS had a 2-month lag on costs, VSO honored the trailing 12-month average (November 2019 – October 2020), for oil, gas, and NGL differentials and arrived at -$4.97/bbl, -$0.24/Mcf and 26% of oil price, respectively. Oil, gas, and NGL differentials were held constant for the life of the property.
Operating Expenses: VSO reviewed the historical trailing twelve-month average LOE that was provided to calculate future well operating expenses. After review, VSO accepted the operating expense assumptions that were provided by AGP. Variable costs, including water disposal and chemicals, were modeled on a per unit basis (dollar per barrel produced) in the Lease Operating Expense (“LOE”) forecast. In addition, gas transportation and marketing expenses were modeled on a per unit basis (dollar per Mcf) and included in the LOE forecast. No inflation adjustment or escalation factors were utilized in the forecasts for future operating expenses.
Abandonment Costs: VSO modeled $50,000 per well in abandonment capital for PDP and PDNP cases, per the company’s guidance. VSO has no opinion on the validity or accuracy of the values.
Capital Expenditures: VSO utilized capital costs provided by AGP and has no opinion on the validity or accuracy of the values.
Ownership: VSO utilized working interest and revenue interests provided by AGP and has no opinion on the validity or accuracy of the values.
State and Federal Taxes: The cash flow projections herein reflect state severance and Ad Valorem taxes, but do not account for Federal Income Tax. We have not reviewed the properties as to gas balance status, environmental, or regulatory compliances.
Atlas Growth Partners, L.P. Page 3 of 4
March 15, 2021
RESERVES ESTIMATES:
The methods used in this evaluation are based on accepted engineering standards. Reserve categories were assigned based on the Society of Petroleum Engineers definitions designated as Petroleum Resources Management System (PRMS) attached.
Reserve quantities were estimated by extrapolation of established production trends. VSO utilized information provided by AGP including monthly and daily well production reports, plant statements, lease operating statements, historic monthly product sales volumes, sales revenues, and operating expenses.
Reserve estimates were made using the stated assumptions, standard engineering methods, and reasonable engineering judgment. They do not necessarily reflect actual volumes recovered, production rates achieved, product prices and revenues received or expenses incurred in the future; those quantities may vary significantly from these estimates. The amounts of undiscounted future net income and discounted future net income should not be interpreted as fair market values for these interests.
There are significant uncertainties in estimating reserves, future rates of production, and the timing and amount of future costs. Oil and gas reserves estimates must be recognized as a subjective process that cannot be measured in an exact way and estimates of others may differ materially from those estimates of VSO. Production data subsequent to the date of these estimates may warrant revisions of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and gas that are ultimately recovered.
VSO is an independent petroleum consulting firm founded in 1992 and does not own any interests in the oil and gas properties covered by this report or this evaluation. Neither the employment of nor the compensation received by VSO is contingent upon the values assigned to the properties covered by the report or this evaluation.
ENVIRONMENTAL AND REGULATORY:
The wells evaluated herein, may be subject to various levels of governmental controls and regulations. These controls and regulations may include matters relating to land tenure, drilling, production practices, environmental protection, marketing and pricing policies that are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of reserves actually recovered and amounts of income actually received to differ significantly from the estimated quantities in this report.
No consideration was given in this report to potential environmental liabilities that may exist concerning the properties evaluated. There are no costs included in this evaluation for potential
Atlas Growth Partners, L.P. Page 4 of 4
March 15, 2021
liability for restoration and to clean up damages, if any, caused by past or future operating practices.
EXHIBITS:
Included in this report is a one-line summary, followed by individual well estimated production and cash flow projections which are summarized by reserve category.
Thank you for the opportunity to prepare this evaluation. Should you have any questions concerning the report, please do not hesitate to call.
Yours truly,
VSO Petroleum Consultants, Inc.
Texas Registered Engineering Firm No: 7807
SEC Definitions
DEFINITIONS OF OIL AND GAS RESERVES
Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)
The following definitions are set forth in U.S. Securities and Exchange Commission SEC) Regulation S-X Section 210.4-10(a). Also included is supplemental information from (1) the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers, (2) the FASB Accounting Standards Codification Topic 932, Extractive Activities - Oil and Gas, and (3) the SEC's Compliance and Disclosure Interpretations.
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(1) |
Acquisition of properties. Costs incurred to purchase, lease or otherwise acquire a property, including costs of lease bonuses and options to purchase or lease properties, the portion of costs applicable to minerals when land including mineral rights is purchased in fee, brokers' fees, recording fees, legal costs, and other costs incurred in acquiring properties. |
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(2) |
Analogous reservoir. Analogous reservoirs, as used in resources assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature, and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of Interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, an "analogous reservoir” refers to a reservoir that shares the following characteristics with the reservoir of interest: |
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(i) |
Same geological formation (but not necessarily in pressure communication with the reservoir of interest); |
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(ii) |
Same environment of deposition; |
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(iii) |
Similar geological structure; and |
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(iv) |
Same drive mechanism. |
Instruction to paragraph (a)(2): Reservoir properties must, in the aggregate, be no more favorable in the analog than in the reservoir of interest.
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(3) |
Bitumen. Bitumen, sometimes referred to as natural bitumen, is petroleum in a solid or semi-solid state in natural deposits with a viscosity greater than 10,000 centipoise measured at original temperature in the deposit and atmospheric pressure, on a gas free basis. In its natural state it usually contains sulfur, metals, and other non-hydrocarbons. |
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