EX-99.4 7 exhibit99-4.htm SUMMARY PRO FORMA COMBINED NATURAL GAS, OIL AND NATURAL GAS LIQUIDS RESERVE DATA OF VANGUARD NATURAL RESOURCES, LLC AS OF DECEMBER 31, 2009 exhibit99-4.htm
Exhibit 99.4
Summary Pro Forma Combined
Natural Gas, Oil and Natural Gas Liquids
 Reserve Data

 
 
The following tables set forth summary pro forma information with respect to Vanguard's and Encore's pro forma combined estimated net proved and proved developed natural gas, oil and natural gas liquids reserves as of December 31, 2009. This pro forma information gives effect to the acquisition of the Encore Interests as if it occurred on December 31, 2009. The Vanguard pro forma combined reserves include the noncontrolling interest in the Encore reserves of approximately 53.2% at December 31, 2009. Future exploration, exploitation and development expenditures, as well as future commodity prices and service costs, will affect the reserve volumes attributable to the acquired properties and the standardized measure of discounted future net cash flows.

 
 
Estimated quantities of natural gas, oil and natural gas liquids reserves as of December 31, 2009

   
Gas (MMcf)
  
   
Vanguard historical
    
Encore historical
    
Vanguard pro forma combined
  
Net proved reserves
                  
January 1, 2009
     81,237       78,011       159,248  
Revisions of previous estimates
     (36,569 )     (7,164 )     (43,733 )
Extensions, discoveries and other
     3,191       1,112       4,303  
Purchases of reserves in place
     39,832       18,837       58,669  
Production
     (4,542 )     (6,097 )     (10,639 )
December 31, 2009
     83,149       84,699       167,848  

 
   
Oil and Natural Gas Liquids (MBbls)
  
   
Vanguard historical
    
Encore historical
    
Vanguard pro forma combined
  
Net proved reserves
                  
January 1, 2009
     4,547       27,278       31,825  
Revisions of previous estimates
     –       3,987       3,987  
Extensions, discoveries and other
     66       2       68  
Purchases of reserves in place
     5,810       –       5,810  
Production
     (460 )     (2,337 )     (2,797 )
December 31, 2009
     9,963       28,930       38,893  

 
 
   
Vanguard historical
    
Encore historical
    
Vanguard pro forma combined
  
Estimated proved reserves:
                  
Natural Gas (MMcf)
     83,149       84,699       167,848  
Oil and Natural Gas Liquids (MBbls)
     9,963       28,930       38,893  
MBOE
     23,821       43,047       66,868  
                         
Estimated proved developed reserves:
                        
Natural Gas (MMcf)
     54,129       78,379       132,508  
Oil and Natural Gas Liquids (MBbls)
     7,126       26,341       33,467  
MBOE
     16,148       39,404       55,552  
 


 
1
 
The standardized measure of discounted future net cash flows relating to the combined proved gas, oil and natural gas liquids reserves at December 31, 2009 is as follows (in thousands):

   
Vanguard historical
  
Encore historical
  
Vanguard pro forma
combined
    
Future cash inflows
  
$
846,196
  
$
1,879,504
  
$
2,725,700
    
Future production costs
  
(362,386
)
(819,352
)
(1,181,738
)
  
Future development costs
  
(95,297
)
(46,852
)
(142,149
)
  
Future abandonment costs, net of salvage
  
–
  
(29,339
)
(29,339
)
  
Future net income tax expense
  
–
  
(1,217
)
(1,217
)
  
Future net cash flows
  
388,513
  
982,744
  
1,371,257
    
10% annual discount for estimated timing of cash flows
  
(209,840
)
(488,243
)
(698,083
)
  
Standardized measure of discounted future net cash flows
  
$
178,673
  
$
494,501
  
$
673,174
  
(a)

(a) The total Vanguard pro forma combined standardized measure includes approximately $263.1 million attributable to the noncontrolling interest of Encore.

For the December 31, 2009 calculations in the preceding table, estimated future cash inflows from estimated future production of proved reserves were computed using the average natural gas and oil price based upon the 12-month average price of $3.87 and $3.83 per MMBtu for natural gas and $ 61.04 and $61.18 per barrel of crude oil for Vanguard and Encore historical, respectively, adjusted for quality, transportation fees and a regional price differential.

The following are the principal sources of change in the combined standardized measure of discounted future net cash flows (in thousands):

   
Vanguard historical
  
Encore historical
  
Vanguard pro forma combined
  
Sales and transfers, net of production costs
  
$
(29,313
)
$
(95,270
)
  
(124,583
)
Net changes in prices and production costs
  
(21,697
)
153,083
  
131,386
  
Extensions discoveries and improved recovery, less related costs
  
1,673
  
1,588
  
3,261
  
Changes in estimated future development costs
  
2,557
  
(3,527
)
(970
)
Previously estimated development costs incurred during the period
  
5,825
  
4,732
  
10,557
  
Revision of previous quantity estimates
  
(64,155
)
65,300
  
1,145
  
Accretion of discount
  
19,007
  
32,662
  
51,669
  
Purchases of reserves in place
  
80,776
  
19,136
  
99,912
  
Net change in income taxes
  
–
  
(457
)
(457
)
Change in production rates, timing and other
  
(6,073
)
(9,368
)
(15,441
)
Net change in standardized measure
  
$
(11,400
)
$
167,879
  
$
156,479
  
Standardized measure, January 1, 2009
    
190,073
    
326,622
    
516,695
  
Standardized measure, December 31, 2009
  
$
178,673
  
$
494,501
  
$
673,174
(a)

(a) The total Vanguard pro forma combined standardized measure includes approximately $263.1 million attributable to the noncontrolling interest of Encore.


 
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