PRIMEENERGY CORPORATION AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION

CAPITALIZED COSTS RELATING TO

OIL AND GAS PRODUCING ACTIVITIES

Years Ended December 31, 2011 and 2010

(Unaudited)


	As of December 31,
(Thousands of dollars)	2011		2010
Developed oil and gas properties	$	492,393	$	453,145
Unproved oil and gas properties		—		698

		492,393		453,843
Accumulated depreciation, depletion and valuation allowance		355,643		310,809

Net capitalized costs	$	136,750	$	143,034

COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION,

EXPLORATION AND DEVELOPMENT ACTIVITIES

Years Ended December 31, 2011 and 2010

(Unaudited)


	Year Ended December 31,
(Thousands of dollars)	2011		2010
Acquisition of Properties Developed	$	273	$	—
Undeveloped	$	146	$	727
Exploration Costs	$	38	$	91
Development Costs	$	38,820	$	12,936

STANDARDIZED MEASURE OF DISCOUNTED FUTURE

NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES

Years Ended December 31, 2011 and 2010

(Unaudited)


	As of December 31,
(Thousands of dollars)	2011			2010
Future cash inflows	$	1,113,603		$	907,142
Future production and development costs		(597,395	)		(524,204	)
Future income tax expenses		(148,283	)		(101,501	)

Future net cash flows		367,925			281,437
10% annual discount for estimated timing of cash flows		(183,417	)		(134,953	)

Standardized measure of discounted future net cash flows	$	184,508		$	146,484

PRIMEENERGY CORPORATION AND SUBSIDIARIES

STANDARDIZED MEASURE OF DISCOUNTED FUTURE

NET CASH FLOWS AND CHANGES THEREIN

RELATING TO PROVED OIL AND GAS RESERVES

Years Ended December 31, 2011 and 2010

(Unaudited)

The following are the principal sources of change in the standardized measure of discounted future net cash flows during 2011 and 2010:


	Year Ended December 31,
(Thousands of dollars)	2011			2010
Sales of oil and gas produced, net of production costs	$	(59,133	)	$	(50,279	)
Net changes in prices and production costs		77,637			106,693
Extensions, discoveries and improved recovery		49,108			100,570
Revisions of previous quantity estimates		8,579			(7,270	)
Net change in development costs		(30,834	)		(82,113	)
Reserves sold		—			(4,633	)
Accretion of discount		14,648			10,274
Net change in income taxes		(20,342	)		(30,047	)
Changes in production rates (timing) and other		(1,639	)		547

Net change		38,024			43,742
Standardized measure of discounted future net cash flow:
Beginning of year		146,484			102,742

End of year	$	184,508		$	146,484

RESERVE QUALITY INFORMATION

Years Ended December 31, 2011 and 2010

(Unaudited)


	As of December 31,
	2011						2010
	Oil (Mbbls.)			Gas (MMcf)			Oil (Mbbls.)			Gas (MMcf)
Proved Developed and Undeveloped Reserves:
Beginning of year		7,885			53,346			6,087			45,413
Extensions, discoveries and improved recovery		1,296			5,491			4,053			16,658
Revisions of previous estimates		300			(441	)		(911	)		173
Reserves sold		—			—			(717	)		(2,959	)
Production		(628	)		(5,000	)		(627	)		(5,939	)

End of year		8,853			53,396			7,885			53,346

Proved Developed Reserves		6,418			43,631			5,233			41,946

See accompanying Notes to Supplementary Information

PRIMEENERGY CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS FROM OIL AND GAS PRODUCING ACTIVITIES

Years Ended December 31, 2011 and 2010

(Unaudited)


	Year Ended December 31,
(Thousands of dollars)	2011		2010
Revenue:
Oil and gas sales	$	96,030	$	85,263

Costs and Expenses:
Lease operating expenses		36,897		34,984
Exploration costs		38		91
Depreciation and depletion		42,282		40,218
Income tax expense		3,200		1,900

		82,417		77,193

Results of Operations From Producing Activities (excluding corporate overhead and interest costs)	$	13,613	$	8,070

See accompanying Notes to Supplementary Information

PRIMEENERGY CORPORATION AND SUBSIDIARIES

NOTES TO SUPPLEMENTARY INFORMATION

(Unaudited)

1. Presentation of Reserve Disclosure Information

Reserve disclosure information is presented in accordance with generally accepted accounting principles. The Company's reserves include amounts attributable to non-controlling interests in the Partnerships. These interests represent less than 10% of the Company's reserves.

2. Determination of Proved Reserves

The estimates of the Company's proved reserves were determined by an independent petroleum engineer in accordance with generally accepted accounting principles. The estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development and other factors. Estimated future net revenues were computed by reserves, less estimated future development and production costs based on current costs.

3. Results of Operations from Oil and Gas Producing Activities

The results of operations from oil and gas producing activities were prepared in accordance with generally accepted accounting principles. General and administrative expenses, interest costs and other unrelated costs are not deducted in computing results of operations from oil and gas activities.

4. Standardized Measure of Discounted Future Net Cash Flows and Changes Therein Relating to Proved Oil and Gas Reserves

The standardized measure of discounted future net cash flows relating to proved oil and gas reserves and the changes of standardized measure of discounted future net cash flows relating to proved oil and gas reserves were prepared in accordance with generally accepted accounting principles.

Future cash inflows are computed as described in Note 2 by applying current prices to year-end quantities of proved reserves.

Future production and development costs are computed estimating the expenditures to be incurred in developing and producing the oil and gas reserves at year-end, based on year-end costs and assuming continuation of existing economic conditions.

Future income tax expenses are calculated by applying the year-end U.S. tax rate to future pre-tax cash inflows relating to proved oil and gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences and tax credits and allowances relating to the proved oil and gas reserves.

Future net cash flows are discounted at a rate of 10% annually (pursuant to applicable guidance) to derive the standardized measure of discounted future net cash flows. This calculation does not necessarily represent an estimate of fair market value or the present value of such cash flows since future prices and costs can vary substantially from year-end and the use of a 10% discount figure is arbitrary.

5. Changes in Reserves

The 2011 and 2010 extensions and discoveries reflect the successful drilling activity in the Company's West Texas area.