An independent third-party reserve audit undertaken by Collarini Associates (Collarini), based upon NYMEX strip pricing on March 31, 2009 and using methodology approved by the Society of Petroleum Engineers (SPE), estimates total proved reserves at 5.269 million barrels of oil (MMBO) plus 51.462 billion cubic feet of gas (BCFG), or 83.1 billion cubic feet of gas equivalent (BCFE), a 5% increase since year-end 2008, with a net present value at a 10% discount rate (PV10) of future cash flows of $315.6 million. Proved developed producing (PDP) reserves account for about 16% of the total with PV10 of $51 million, a 42.7% increase since year-end 2008.
In addition to the aforementioned proved reserves, Saratoga Resources has probable reserves of 2.718 MMBO plus 48.826 BCFG, or 65.1 BCFE, with PV10 of $219.5 million, and possible reserves of 5.968 MMBO plus 69.063 BCFG, or 104.8 BCFE, with PV10 of $248.3 million, all of which have been independently audited by Collarini.
“The increase in PDP reserves is attributable to Saratoga Resources recent development program which involved 5 recompletions that added more than 800 barrels of oil equivalent production per day (BOEPD) for a total outlay of $416,000 with a 23 day payout. The company has identified more than fifteen similar operations that it wishes to undertake in 2009, subject to new debtor-in-possession (“DIP”) financing to supplement existing working capital,” stated Andy C. Clifford, Saratoga Resources president.
“Despite the difficult operating environment that has existed since late-2008 and our decision to seek protection under Chapter 11, we continue to increase production at our fields through low-risk development of our low hanging fruit, as well as full field studies at Grand Bay, Vermilion 16 and the Main Pass and Breton Sound fields.”
