Increased value for proved reserves/Negative oil price effect as of 31 December 2017
Mannheim/Denver. The present value of the reserves (future cash flow discounted at 10%, so-called PV 10) of Cub Creek Energy (CCE) and Elster Oil & Gas (EOG) amounted to USD 169 million as of 31 December 2017 (previous year: USD 162 million) for proved reserves and USD 28 million (previous year: USD 91 million) for probable reserves. Therefore, proved reserves have increased and probable reserves have been significantly reduced. Proved reserves have increased to 17.5 million barrels of oil equivalent (BOE) (previous year: 12.1 million BOE), while probable reserves fell to 7.1 million BOE (previous year: BOE 11.7 million).
The changes are due to several variables of which some are listed below:
- Part of the reserves have been produced and therefore not shown in the reserves anymore. 2017 Cashflow after royalites, production taxes and LOE amounted to around 43 million USD.
- The average NYMEX oil prices over the next 10 years, which were used to calculate PV10 values, were around 5,5% lower on 31 December 2017 than on 31 December 2016.
- The stronger than expected decline in production, especially at the Vail and Markham pad, led to a decrease of the reserve value and a more conservative estimate for Cub Creek’s reserves.
Cub Creek Energy Reserves: Cub Creek Energy Reserves: For the net acreage of Cub Creek Energy (CCE) Ryder Scott calculated Proved Reserves of 14.45 million BOE and Probable Reserves of 7.07 million BOE.
Current promulgated reserve values are based on 12/31/2017 NYMEX Strip Pricing for CCE. Proved and Probable Reserves result in the following value:
| Reserve Category | Revenue (USD million) |
FNI** Undiscounted (USD million) |
FNI** Discounted at 10% (USD million) |
| Proved developed | 91.145 | 59.275 | 45.337 |
| Proved undeveloped | 435.448 | 155.568 | 62.569 |
| Probable | 257.330 | 90.707 | 28.421 |
Elster Oil & Gas Reserves: For the total net acreage of Elster Oil & Gas (EOG), Ryder Scott calculated Proved Reserves of 3.07 million BOE. Based on 12/31/2017 NYMEX Strip Pricing EOG Proved and Probable Reserves have the following value:
| Reserve Category | Revenue (USD million) |
FNI** Undiscounted (USD million) |
FNI** Discounted at 10% (USD million) |
| Proved developed | 14.054 | 8.010 | 5.705 |
| Proved developed, not producing | 88.728 | 68.957 | 50.497 |
| Proved undeveloped | 16.513 | 8.808 | 5.217 |
The total combined reserve levels being reported by Deutsche Rohstoff through its EOG and CCE subsidiaries are as follows: net Proved Reserves of 17.52 million BOE and net Probable Reserves of 7.07 million BOE. Based on 12/31/2017 NYMEX Strip Pricing these combined reserve values have the following value:
| Reserve Category | Revenue (USD million) |
FNI** Undiscounted (USD million) |
FNI** Discounted at 10% (USD million) |
| Proved developed | 105.199 | 67.285 | 51.042 |
| Proved developed, not producing | 88.728 | 68.957 | 50.497 |
| Proved undeveloped | 451.961 | 164.376 | 67.786 |
| Probable | 257.330 | 90.707 | 28.421 |
*Natural gas is converted to oil equivalent using a factor of 6,000 cubic feet of natural gas per one barrel of oil equivalent.
**Future Net Income (FNI) is defined as revenues minus partner interest, royalty, development costs, operating costs, and severance tax.
Mannheim, 5 March 2018
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