EX-99.2 6 d70898exv99w2.htm EX-99.2 exv99w2
Exhibit 99.2
Cawley, Gillespie & Associates, Inc.

petroleum consultants
         
AUSTIN OFFICE:   MAIN OFFICE:   HOUSTON OFFICE:
9601 AMBERGLEN BLVD., SUITE 117   306 WEST 7TH STREET, SUITE 302   1000 LOUISIANA, SUITE 625
AUSTIN, TEXAS 78729   FORT WORTH, TEXAS 76102-4987   HOUSTON, TEXAS 77002-5008
(512) 249-7000   (817) 336-2461   (713) 651-9944
FAX (512) 233-2618   FAX (817) 877-3728   FAX (713) 651-9980
February 10, 2010
Mr. Ron Hooper
Permian Basin Royalty Trust
901 Main Street, 17th Floor
Dallas, Texas 75202 — 3714
Re:   A Report of Proved Reserves
Riverhill Energy Corporation
Texas Royalty Properties
Permian Basin Royalty Trust Interests
As of December 31, 2009

Pursuant to the Guidelines of the
Securities and Exchange Commission
for Reporting Corporate Reserves
and Future Net Revenue
Dear Mr. Hooper:
     As requested, we are submitting estimates of proved reserves and forecasts of economics attributable to the above captioned interests. The Texas Royalty Properties are located in 33 counties across Texas and contain approximately 303,000 gross (51,000 net) producing acres. This evaluation groups the Texas Royalty Properties into 136 separate royalty entities.
     Composite reserve estimates and economic forecasts for the Permian Basin Royalty Trust Interests are within this volume (Volume IV) in Table I. The present worth values in Table I should not be construed to represent an estimate of fair market value by Cawley, Gillespie & Associates, Inc.
     The Permian Basin Royalty Trust consists of two major groups of properties, the Waddell Ranch Properties and the Texas Royalty Properties. The Cawley, Gillespie & Associates, Inc.

 

 

Mr. Ron Hooper
February 10, 2010
Page 2
evaluation of the entire Permian Basin Royalty Trust is presented in four volumes. The evaluation results of the Texas Royalty Properties interests referred to as the “Permian Basin Royalty Trust Interests” are presented within this volume (Volume IV). As requested, the portion of the Texas Royalty Properties attributable to the Total Controlled Interests are presented in Volume III. The evaluation results of the Waddell Ranch Properties Total Controlled Interests and Waddell Ranch Properties Permian Basin Royalty Trust Portion are presented in Volumes I and II, respectively.
     The detailed forecasts of reserves and economics are presented in the attached tables. Table I is a composite forecast of proved developed producing reserves. Table II is a summary of proved developed producing reserves showing estimates of ultimate recovery, gross and net reserves, ownership, revenue, expenses, net income and discounted cash flow for the individual properties. Individual reserve forecasts are presented in the Arabic numbered tables. Page 1 of Appendix II explains the type of data in these tables. Table II groups royalty entities together primarily by county. The individual fields are presented in alphabetical order by county name.
     Production data was supplied by Schlumberger IPM and Riverhill Energy Corporation in the form of net royalty oil and gas production by accounting entity. The accounting entities are consolidated into royalty properties for the purpose of forecasting future net reserves. For this report, the accounting entities were consolidated into 136 royalty evaluations. Certain entities have been identified as being within major fields and public information regarding these fields has been used to determine future rates and remaining reserves. The future net reserves for the remaining entities have been forecast by analysis of the past net production trends with extrapolation to an estimated final production rate equal to approximately one-tenth to one-fifth of the current rate. Reserve evaluation methods and definitions of reserves are explained and defined on pages 2 and 3, respectively, of Appendix II.
     The Trust has instructed Cawley, Gillespie & Associates, Inc. as to the method by which reserves and net revenue should be allocated to the Permian Basin Royalty Trust Interests in preparing reserve reports and economic forecasts for the Texas Royalty Properties. A thorough explanation of the allocation formula is included in Appendix I.
     December 31, 2009 oil and gas prices of $55.38/BBL and $6.27/MCF, respectively, were determined pursuant to the Securities and Exchange Commission regulations effective January 1, 2010, and applied to every entity. These prices were forecast to remain constant throughout the life of the entity. Ad valorem taxes have been included as operating expenses without escalation.
     These estimates were prepared in accordance with applicable published rules and regulations of the Securities and Exchange Commission using the described prices. All estimates represent our best judgment based on the data available at the time of preparation. It should be realized that the reserves actually recovered, the revenue derived therefrom and the total costs incurred could be more or less than the estimated amounts and may be subject to revision when additional data becomes available.

 

 

Mr. Ron Hooper
February 10, 2010
Page 3
     The reserve estimates were based on interpretations of factual data furnished by you, Schlumberger IPM or Riverhill Energy Corp. Net production, prices, and ownership were supplied by you, Schlumberger IPM or Riverhill Energy Corp. and were accepted as furnished. To some extent information from public records has been used to check or supplement these data. The basic engineering and geological data were utilized subject to third party reservations and qualifications. Nothing has come to our attention that would cause us to believe that we are not justified in relying on such data.
     An on-site inspection of these properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities been examined nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have not been included.
Submitted,
CAWLEY, GILLESPIE & ASSOCIATES, INC.
Texas Registered Engineering Firm F-693
/s/ Cawley, Gillespie & Associates, Inc.
CGA:rp

 

 

Engineering Data
Table I — Proved
Composite of Reserve Estimates and Economic Forecasts
Permian Basin Royalty Trust Interests — Texas Royalty Properties
Proved Developed Producing Reserves
Various Counties, Texas
As of December 31, 2009
                                                                                       
Effective Date     1/01/2010                                
$M     Net Production     Net Revenue Prices
Year     Oil (Mbbls)   Gas (MMcf)   NGL (Mbbls)     Oil (M$)   Gas (M$)   NGL (M$)   Other (M$)     Oil ($/bbl)   Gas ($/MCF)   NGL ($/bbl)
                   
2010
       257.010       402.000       0.000         14233.290       2520.540       0.000       0.000         55.380       6.270       0.000  
2011
       236.920       371.700       0.000         13120.690       2330.600       0.000       0.000         55.380       6.270       0.000  
2012
       218.330       343.920       0.000         12091.270       2156.420       0.000       0.000         55.380       6.270       0.000  
2013
       201.330       318.430       0.000         11149.870       1996.570       0.000       0.000         55.380       6.270       0.000  
2014
       185.770       295.010       0.000         10288.000       1849.730       0.000       0.000         55.380       6.270       0.000  
2015
       171.500       273.480       0.000         9498.170       1714.740       0.000       0.000         55.380       6.270       0.000  
2016
       158.430       253.670       0.000         8774.290       1590.550       0.000       0.000         55.380       6.270       0.000  
2017
       146.410       235.410       0.000         8108.420       1476.030       0.000       0.000         55.380       6.270       0.000  
2018
       135.380       218.600       0.000         7497.690       1370.650       0.000       0.000         55.380       6.270       0.000  
2019
       125.260       203.110       0.000         6936.940       1273.550       0.000       0.000         55.380       6.270       0.000  
2020
       115.910       188.820       0.000         6419.510       1183.920       0.000       0.000         55.380       6.270       0.000  
2021
       107.310       175.590       0.000         5943.220       1100.980       0.000       0.000         55.380       6.270       0.000  
2022
       99.380       163.290       0.000         5504.100       1023.870       0.000       0.000         55.380       6.270       0.000  
2023
       92.120       152.020       0.000         5101.610       953.180       0.000       0.000         55.380       6.270       0.000  
2024
       85.420       141.330       0.000         4730.690       886.180       0.000       0.000         55.380       6.270       0.000  
S Total
       2336.480       3736.380       0.000         129397.760       23427.510       0.000       0.000                            
After
       809.570       1500.710       0.000         44834.330       9409.500       0.000       0.000                            
Total
       3146.120       5237.170       0.000         174232.100       32837.070       0.000       0.000                            
Last Year
       809.570       1500.710       0.000         44834.330       9409.500       0.000                                    
S Total
       2336.480       3736.380       0.000         129397.760       23427.510       0.000                                    
Diff
       0.000       0.000       0.000         0.000       0.000       0.000                                    
 
     OK     OK     OK       OK     OK     OK                                    
                   
Total
       3146.050       5237.090       0.000         174232.090       32837.010       0.000                                    
Diff
       0.070       0.080       0.000         0.010       0.060       0.000     Total Revenue                         207069.200  
 
     ERR     ERR     OK       ERR     ERR     OK     Total Taxes                         9332.740  
                   
                                                                                         
$M     Wells     Taxes     Expenses     Cumulative Net Cash Flow
Year     Net     Production (M$)   Ad Valorem (M$)     Operating (M$)   Workover (M$)   COPAS (M$)   Other (M$)   Capital (M$)     Undiscounted (M$)   Discounted @ 10%
                         
2010
       0.000         751.520       0.000         0.000       0.000       0.000       0.000       0.000         16002.320       15263.390  
2011
       0.000         693.250       0.000         0.000       0.000       0.000       0.000       0.000         30760.350       28060.250  
2012
       0.000         639.440       0.000         0.000       0.000       0.000       0.000       0.000         44368.590       38787.410  
2013
       0.000         590.190       0.000         0.000       0.000       0.000       0.000       0.000         56924.830       47785.480  
2014
       0.000         545.080       0.000         0.000       0.000       0.000       0.000       0.000         68517.480       55337.800  
2015
       0.000         503.700       0.000         0.000       0.000       0.000       0.000       0.000         79226.690       61680.320  
2016
       0.000         465.750       0.000         0.000       0.000       0.000       0.000       0.000         89125.780       67010.070  
2017
       0.000         430.820       0.000         0.000       0.000       0.000       0.000       0.000         98279.420       71490.450  
2018
       0.000         398.760       0.000         0.000       0.000       0.000       0.000       0.000         106749.000       75259.130  
2019
       0.000         369.300       0.000         0.000       0.000       0.000       0.000       0.000         114590.200       78431.010  
2020
       0.000         342.110       0.000         0.000       0.000       0.000       0.000       0.000         121851.500       81101.300  
2021
       0.000         317.060       0.000         0.000       0.000       0.000       0.000       0.000         128578.700       83350.260  
2022
       0.000         293.920       0.000         0.000       0.000       0.000       0.000       0.000         134812.700       85244.900  
2023
       0.000         272.710       0.000         0.000       0.000       0.000       0.000       0.000         140594.800       86842.430  
2024
       0.000         253.030       0.000         0.000       0.000       0.000       0.000       0.000         145958.700       88189.680  
S Total
                 6866.640       0.000         0.000       0.000       0.000       0.000       0.000         145958.700       88189.680  
After
                 2466.040       0.000         0.000       0.000       0.000       0.000       0.000         197736.400       94948.930  
Total
                 9332.740       0.000         0.000       0.000       0.000       0.000       0.000         197736.400       94948.930  
Last Year
                 2466.040       0.000         0.000       0.000       0.000       0.000       0.000                    
S Total
                 6866.640       0.000         0.000       0.000       0.000       0.000       0.000                    
Diff
                 0.000       0.000         0.000       0.000       0.000       0.000       0.000                    
 
               OK     OK       OK     OK     OK     OK     OK                    
                         
Total
                 9332.680       0.000         0.000       0.000       0.000       0.000       0.000                    
Diff
                 0.060       0.000         0.000       0.000       0.000       0.000       0.000                    
 
               ERR     OK       OK     OK     OK     OK     OK                    
                         

 

 

SEC Flat Pricing
                 
       Year   Cushing WTI   Henry Hub
2010
     61.18       3.830  
Thereafter
   Flat     Flat  
Cap
     61.18       3.830