EX-99.1 8 c98257exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(WRIGHT & COMPANY, INC. LOGO)
February 8, 2010
EnerVest Operating, L.L.C.
300 Capitol Street, Suite 200
Charleston, WV 25301
ATTENTION: Mr. Kenneth Mariani
         
 
  SUBJECT:   Evaluation of Oil and Gas Reserves
 
      To the Interests of Belden & Blake Corporation
 
      In Certain Properties Located in Various States
 
      Pursuant to the Requirements of the
 
      Securities and Exchange Commission
 
      Effective January 1, 2010
Job 09.1136
At the request of EnerVest Operating, L.L.C. (EnerVest), Wright & Company, Inc. (Wright) has performed an evaluation to estimate proved and unproved reserves and associated cash flow and economics from certain properties to the interests of Belden & Blake Corporation (Belden & Blake). This evaluation was authorized by Mr. Kenneth Mariani of EnerVest, agent of Belden & Blake. Pojections of the reserves and cash flow to the evaluated interests were based on specified economic parameters, operating conditions, and government regulations considered applicable at the effective date and are pursuant to the financial reporting requirements of the Securities and Exchange Commission (SEC). It is the understanding of Wright that the purpose of this evaluation is for inclusion in relevant registration statements or other filings to the Securities and Exchange Commission (SEC). The following is a summary of the results of the evaluation effective January 1, 2010.
                                                 
                    Total     Total     Total        
    Proved Developed     Proved     Proved     Proved     Total  
Belden & Blake Corporation   Producing     Nonproducing     Developed     Undeveloped     (PDP, PDNP     Unproved  
SEC Parameters   (PDP)     (PDNP)     (PDP & PDNP)     (PUD)     & PUD)     (Probable)  
Net Reserves to the Evaluated Interests
                                                
Oil, MbbI:
     3,396.259       41.342       3,437.601       1,010.544       4,448.145       29.691  
Gas, MMcf:
     147,074.375       4,920.931       151,995.266       10,980.055       162,975.328       93.357  
Gas Equivalent, MMcfe
(6 Mcf = 1 bbl)
     167,451.929       5,198.983       172,620.872       17,043.319       189,664.198       271.503  
 
      
Cash Flow (BTAX), M$
                                                
Undiscounted:
     471,773.938       13,887.985       485,661.906       37,490.254       523,152.250       1,139.071  
Discounted at 10% Per Annum:
     215,201.141       4,031.734       219,232.797       8,266.571       227,499.391       540.986  
It should be noted that some minor differences between the total summaries may exist due to rounding techniques in the ARIES™ software program.
Twelve Cadillac Drive • Suite 260
Brentwood, Tennessee 37027
(615) 370-0755 Fax (615) 370-0756
mail@wrightandcompany.com

 

 

 

Mr. Kenneth Mariani
EnerVest Operating, L.L.C.
February 8, 2010
Page 2
It is the understanding of Wright that EnerVest is the agent for EnerVest Energy Institutional Fund X which acquired the stock of the previous owner of Belden & Blake in 2005. In addition to acting as agent for Belden & Blake, EnerVest also acts as agent on behalf of the fund. It is also the understanding of Wright that Belden & Blake remains a corporation under the laws of the state of Ohio.
The properties evaluated in this report are located in the states of Michigan, New York, Ohio, and Pennsylvania. According to Belden & Blake, the total proved and unproved reserves included in this evaluation represent 100 percent of the reported total proved and unproved reserves of Belden & Blake.
Proved oil and gas reserves are those quantities of oil and gas which can be estimated with reasonable certainty to be economically producible under existing economic conditions, operating methods, and government regulations. As specified by the SEC regulations, when calculating economic producibilty, the base product price must be the 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the prior 12-month period. The benchmark base prices used for this evaluation were $3.866 per million British thermal unit (MMBtu) for natural gas at Henry Hub, LA, and $61.18 per barrel for West Texas Intermediate oil at Cushing, OK. These benchmark prices were adjusted for energy content, quality and basis differential, as appropriate. Prices for oil and gas were held constant for the life of the properties.
Oil and other liquid hydrocarbons are expressed in thousands of United States (U.S.) barrels (Mbbl), one barrel equaling 42 U.S. gallons. Gas volumes are expressed in millions of standard cubic feet (MMcf) at 60 degrees Fahrenheit and at the legal pressure base that prevails in the state in which the reserves are located. No adjustment of the individual gas volumes to a common pressure base has been made.
Net income to the evaluated interests is the cash flow after consideration of royalty revenue payable to others, standard state and county taxes, operating expenses, and investments as applicable. The cash flow is before federal income tax (BTAX) and excludes consideration of any encumbrances against the properties if such exist. The cash flow (BTAX) was discounted at an annual rate of 10.00 percent (PCT) in accordance with the reporting requirements of the SEC.
The estimates of reserves contained in this report were determined by acceptable industry methods and to the level of detail that Wright deemed appropriate. Where sufficient production history and other data were available, reserves for producing properties were determined by extrapolation of historical production or sales trends. Analogy to similar producing properties was used for development projects and for those properties that lacked sufficient production history to yield a definitive estimate of reserves. When appropriate, Wright may have also utilized volumetric calculations and log correlations in the determination of estimated ultimate recovery (EUR). These calculations are often based upon limited log and/or core analysis data and incomplete reservoir fluid and formation rock data. Since these limited data must frequently be extrapolated over an assumed drainage area subsequent production performance trends or material balance calculations may cause the need for significant revisions to the estimates of reserves.
Oil and gas reserves were evaluated for the proved developed producing (PDP), proved developed nonproducing (PDNP), proved undeveloped (PUD), and probable (PROB) reserves categories. The summary classification of total proved reserves combines the PDP, PDNP, and PUD categories. In preparing this evaluation, no attempt has been made to quantify the element of uncertainty associated with any category. Reserves were assigned to each category warranted. Wright is not aware of any local, state, or federal regulations that would preclude Belden & Blake from continuing to produce from currently active wells or to fully develop those properties included in this report.

 

 

 

Mr. Kenneth Mariani
EnerVest Operating, L.L.C.
February 8, 2010
Page 3
There are significant uncertainties inherent 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 might differ materially from those of Wright. The accuracy of any reserves estimate is a function of the quantity and quality of available data and of subjective interpretations and judgments. It should be emphasized that production data subsequent to the date of these estimates or changes in the analogous properties may warrant revisions of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and gas that ultimately are recovered.
All data utilized in the preparation of this report were provided by Belden & Blake. No inspection of the properties was made as this was not considered to be within the scope of this evaluation. Wright has not independently verified the accuracy and completeness of information and data furnished by Belden & Blake with respect to ownership interests, oil and gas production or sales, historical costs of operation and development, product prices, or agreements relating to current and future operations and sales of production. Wright requested and received detailed information allowing Wright to check and confirm any calculations provided by Belden & Blake with regard to product pricing, appropriate adjustments, lease operating expenses, and capital investments for drilling the undeveloped locations. Furthermore, if in the course of Wright’s examination something came to our attention that brought into question the validity or sufficiency of any information or data, we did not rely on such information or data until we had satisfactorily resolved our questions relating thereto or independently verified such information or data. In accordance with the requirements of the SEC, all operating costs were held constant for the life of the properties.
It should be noted that neither salvage values nor abandonment costs were included in the economic parameters in accordance with the instructions of Belden & Blake. It was assumed that any salvage value would be directly offset by the cost to abandon the property. Wright has not performed a detailed study of the abandonment costs or the salvage values and offers no opinion as to Belden & Blake’s assumptions.
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 liability for restoration and to clean up damages, if any, caused by past or future operating practices.
Wright is an independent petroleum consulting firm founded in 1988 and does not own any interests in the oil and gas properties covered by this report. No employee, officer, or director of Wright is an employee, officer, or director of Belden & Blake or EnerVest, nor does Wright or any of its employees have direct financial interest in Belden & Blake or EnerVest. Neither the employment of nor the compensation received by Wright is contingent upon the values assigned or the opinions rendered regarding the properties covered by this report.
This report is solely for the information of Belden & Blake and for the information and assistance of its independent public accountants in connection with their review of and report upon the financial statements of Belden & Blake and for reporting disclosures as required by the SEC. Notwithstanding, Wright understands and authorizes that this estimation of reserves may be included along with certain financial presentations on behalf of Belden & Blake. This report should not be used, circulated, or quoted for any other purpose without the express written consent of the undersigned, an officer of Wright, or except as required by law.

 

 

 

Mr. Kenneth Mariani
EnerVest Operating, L.L.C.
February 8, 2010
Page 4
The professional qualifications of the petroleum consultants primarily responsible for the evaluation of the reserves and economics information discussed in this report meet the standards of Reserves Estimator as defined in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information as promulgated by the Society of Petroleum Engineers.
It has been a pleasure to serve you by preparing this evaluation. All related data will be retained in our files and are available for your review.
         
  Very truly yours,

Wright & Company, Inc.
 		  
  By:   /s/ D. Randall Wright    
    D. Randall Wright   
    President   
DRW/RS/EKL/RBW