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UNAUDITED SUPPLEMENTAL OIL AND GAS INFORMATION | 12 Months Ended
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Dec. 31, 2016
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
UNAUDITED SUPPLEMENTAL OIL AND GAS INFORMATION |
| 16. | UNAUDITED SUPPLEMENTAL OIL AND GAS INFORMATION
Oil and Gas Reserves (Unaudited) Proved reserves are estimated quantities of oil, NGLs and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Oil and gas prices used are the average price during the 12-month period prior to the effective date of the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements. Proved developed reserves are reserves that can reasonably be expected to be recovered through existing wells with existing equipment and operating methods. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available. Proved oil and gas reserve quantities at December 31, 2016, 2015 and 2014 and the related discounted future net cash flows before income taxes are based on the estimates prepared by Jane E. Trusty for 2016 and 2015 and by Cawley, Gillespie & Associates, Inc. for 2014. Such estimates have been prepared in accordance with guidelines established by the Securities and Exchange Commission. All of the Company’s estimated proved reserves are located in the United States. The Company’s estimated quantities of proved oil and gas reserves and changes in net proved reserves are summarized below for the years ended December 31, 2016, 2015 and 2014:
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | Oil |  |  | Gas |  |  | Oil |  |  | Gas |  |  | Oil |  |  | Gas |
|  | (bbls) |  |  | (mcfe) (1) |  |  | (bbls) |  |  | (mcfe) (1) |  |  | (bbls) |  |  | (mcfe) (1) |
Total proved reserves: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserve quantities, beginning of year |  |  | 1,615,180 |  |  |  | 2,477,930 |  |  |  | 4,119,736 |  |  |  | 3,211,245 |  |  |  | 3,459,713 |  |  |  | 2,371,908 |
Revisions of previous estimates |  |  | (795,459 | ) |  |  | (584,494 | ) |  |  | (2,377,364 | ) |  |  | (206,912 | ) |  |  | (262,570 | ) |  |  | 802,241 |
Discoveries and extensions |  |  | 23,841 |  |  |  | 20,336 |  |  |  | 94,458 |  |  |  | 27,102 |  |  |  | 1,583,292 |  |  |  | 1,006,659 |
Sale of minerals in place |  |  | (53,853) |  |  |  | (57,258) |  |  |  | - |  |  |  | - |  |  |  | (330,871 | ) |  |  | (156,482 | )
Production |  |  | (132,429 | ) |  |  | (477,351 | ) |  |  | (221,650 | ) |  |  | (553,505 | ) |  |  | (329,828 | ) |  |  | (813,081 | )
Reserve quantities, end of year |  |  | 657,280 |  |  |  | 1,379,163 |  |  |  | 1,615,180 |  |  |  | 2,477,930 |  |  |  | 4,119,736 |  |  |  | 3,211,245 |
Proved developed reserves, end of year |  |  | 657,280 |  |  |  | 1,379,163 |  |  |  | 1,248,750 |  |  |  | 2,068,190 |  |  |  | 1,754,668 |  |  |  | 1,892,446 |
| (1) | Mcf equivalents (Mcfe) consist of natural gas reserves in mcf plus NGLs converted to mcf using a factor of 6 mcf for each barrel of NGL.
Standardized Measure (Unaudited) The Company computes a standardized measure of future net cash flows and changes therein relating to estimated proved reserves in accordance with authoritative accounting guidance. The assumptions used to compute the standardized measure are those prescribed by the FASB and the SEC. These assumptions do not necessarily reflect the Company’s expectations of actual revenues to be derived from those reserves, nor their present value amount. The limitations inherent in the reserve quantity estimation process, as discussed previously, are equally applicable to the standardized measure computations since these reserve quantity estimates are the basis for the valuation process. Future cash inflows and production and development costs are determined by applying prices and costs, including transportation, quality, and basis differentials, to the year-end estimated future reserve quantities. The following prices as adjusted for transportation, quality, and basis differentials were used in the calculation of the standardized measure:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Oil per Bbl |  | $ | 42.75 |  |  | $ | 43.54 |  |  | $ | 85.63 |
Gas per Mcfe (1) |  | $ | 2.48 |  |  | $ | 3.36 |  |  | $ | 8.84 |
| (1) | Consists of the weighted average price for natural gas in mcf plus NGL’s converted to mcf using a factor of 6 mcf for each barrel of NGL.
Future operating costs are determined based on estimates of expenditures to be incurred in developing and producing the proved reserves in place at the end of the period using year-end costs and assuming continuation of existing economic conditions. Estimated future income taxes are computed using the current statutory income tax rates, including consideration for estimated future statutory depletion. The resulting future net cash flows are reduced to present value amounts by applying a 10 percent annual discount factor. The standardized measure of discounted future net cash flows relating to the Company’s proved oil and gas reserves is as follows as of December 31, 2016, 2015 and 2014:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Future cash inflows |  | $ | 27,769 |  |  | $ | 78,646 |  |  | $ | 381,156 |
Future cash outflows: |  |  |  |  |  |  |  |  |  |  |  |
Production costs |  |  | (18,814) |  |  |  | (44,685 | ) |  |  | (149,450 | )
Development costs |  |  | - |  |  |  | (8,050 | ) |  |  | (70,770 | )
Income taxes |  |  | - |  |  |  | - |  |  |  | (12,719 | )
Future net cash flows |  |  | 8,955 |  |  |  | 25,911 |  |  |  | 148,217 |
10% annual discount factor |  |  | (2,208) |  |  |  | (8,143 | ) |  |  | (66,328 | )
Standardized measure of discounted future net cash flows |  | $ | 6,747 |  |  | $ | 17,768 |  |  | $ | 81,889 |
Changes in Standardized Measure (Unaudited) The changes in the standardized measure of future net cash flows relating to proved oil and gas reserves for the years ended December 31, 2016, 2015 and 2014 are as follows:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Standardized measure, beginning of year |  | $ | 17,768 |  |  | $ | 81,889 |  |  | $ | 104,853 |
Sales of oil and gas, net of production costs |  |  | (3,102 | ) |  |  | (2,944 | ) |  |  | (21,741) |
Net changes in prices and production costs |  |  | (9,248 | ) |  |  | (96,586 | ) |  |  | (17,376) |
Changes in estimated future development costs |  |  | 6,590 |  |  |  | 51,998 |  |  |  | (1,869) |
Extensions and discoveries |  |  | 167 |  |  |  | 2,260 |  |  |  | 14,706 |
Sale of minerals in place |  |  | (78) |  |  |  | - |  |  |  | (13,339) |
Revisions in previous quantity estimates |  |  | (6,791 | ) |  |  | (27,693 | ) |  |  | (4,815) |
Previously estimated development costs incurred |  |  | - |  |  |  | - |  |  |  | 7,175 |
Net changes in income taxes |  |  | - |  |  |  | 3,306 |  |  |  | 6,924 |
Accretion of discount |  |  | 1,777 |  |  |  | 8,189 |  |  |  | 10,090 |
Changes in timing and other |  |  | (336 | ) |  |  | (2,651 | ) |  |  | (2,719) |
Standardized measure, end of year |  | $ | 6,747 |  |  | $ | 17,768 |  |  | $ | 81,889 |

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- Definition The entire disclosure for oil and gas producing industries. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=68064819&loc=d3e61555-109447 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 235 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68064819&loc=d3e61526-109447 + Details
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