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Ralph E. Davis Associates, Inc. is involved in the preparation of reserve reports for corporate planning, regulatory filings, competent person’s reports, acquisition and sales analyses and fiscal year-end statements. Additionally, the firm has evaluated various oil and gas assets of properties throughout the world for exploration and development programs and assisted clients in getting reserves certified within the regulatory framework of the host country.
Field studies of both conventional and non conventional reserves and/or resources are performed on a routine basis, and the firm is active performing evaluations for clients with fiscal year ends during the calendar year as well as at the traditional year-end reserve reporting schedule.
Ralph E. Davis Associates, Inc. continues to perform evaluations of existing fields in the international energy sector, for both private companies and those reporting to stock exchanges responsible for the regulation of public companies. In addition, the firm has worked with companies in the evaluation and preparation of supportive materials such as a Competent Person’s Report (CPR) for application to foreign exchanges for initial financial offerings. During the last year the Davis firm has completed two CPR’s for companies with offerings scheduled for the Alternative Investment Market (the AIM) on the London Exchange. In addition, Davis has prepared updated asset evaluations or reserve reports for public energy companies traded on both the United States and foreign exchanges.
Davis personnel presented two seminars in China at the request of companies wishing to expand their knowledge into the international energy sector, and who recognized the need for training related to the evaluation of acquisition projects, reserve determinations and regulatory compliance in the international securities markets. Presentations were made addressing the variations in certification requirements between local country reserve definitions, those of the international professional societies and the U.S. Securities and Exchange Commission.
Discussions and negotiations had been in progress for almost a year when the firm was contracted to perform a reservoir evaluation of certain producing fields in Pakistan. The project involved analysis of the productive reservoirs, determination of recoverable reserves and an analysis of the completion and surface facilities. The success of the project was such that annual updates of the analysis were performed for subsequent years.
Evaluations of projects in China, Kazakhstan and India have also been completed. Additional reserve certification evaluations and reports were prepared for client companies with operations in Argentina, Brazil, Columbia, Ecuador, Peru and Guatemala, with filings made with the U.S. SEC and public exchange organizations in London and Toronto.
The Davis firm has also been responsible for preparing several development programs for concessions in South America. The programs are designed to identify and increase proved reserves by drilling specific well locations in untested areas. Personnel with the firm have also participated in presentations to financial organizations seeking to participate in the development programs.
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Davis has evaluated the potential for both reserves and resources in several emerging shale plays both within the United States and several South American countries. The studies included properties under active development and those acreage holdings anticipated to be productive once various contingencies are met and exploration or development can begin.
One project required Davis to complete a study to determine the resource potential underlying several hundred thousand acres in New York and Western Pennsylvania. Particular attention was paid to the wet and/or dry gas potential in both the Marcellus and Utica shale groups that would be encountered. The client company had acquired approximately 2000 producing wells and was interested in putting together a development program to fully exploit the shale potential being targeted throughout the area. The initial analysis of the shales was then reviewed after additional development in the trend area of Ohio contributed to the anticipated potential for the area.
An evaluation of the resource potential of undeveloped acreage was made for different clients with holdings in several of the major shale plays in the U.S. In addition to the study of the Marcellus and Utica shales mentioned previously, Davis has evaluated the Eaglebine in East Texas, the Eagleford in South Central Texas, the Barnett in Texas as well as in Montana and North Dakota, the Bakken in North Dakota and the Niobrara in the Colorado-Wyoming areas of the Western U.S. DJ Basin.
The firm has also estimated the resource potential of a defined shale play in Columbia and an extensive shale play in the Neuquen Basin of Argentina where client companies are actively drilling wells to better define the recoverable potential of the reservoirs. An additional Davis client with significant acreage holdings in northern Europe has seen several exploratory wells drilled by a major oil company in a similar attempt to define the potential for ultimate development in the area.
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 RRalph E, Davis Associates, Inc. performed a resource assessment of an area encompassing almost a million acres in the Eastern United States. The area is one in which the client has both leased and fee acreage in an area of historical coal development. Portions of the area have already been mined so the mined coal interval was excluded. Shallower and deeper intervals remain for well development and these intervals were evaluated as to their volumetric determined coal volume and potential for coalbed methane production based upon limited desorption data.
The company has evaluated production from the largest coalbed methane gas producing coal mine in the world and routinely provided the client firm with reserve information for its public filings. The active mine and surrounding area encompasses almost 200,000 acres with gas production from as many as fifty individual coal intervals above the interval targeted for mining. Additional smaller mines have been studied for the development and production of coalbed methane for both economic considerations as well as safety concerns associated with de-gassing the mine for ongoing operations.
Davis reviewed the ongoing development program of a coalbed methane project in Queensland, Australia. A Davis client had a minor interest position in several areas that are in various stages of development while current gas production was being expanded to supply the Brisbane commercial market. Based upon the Davis evaluation the client sold its interest in the project to the operator.
The firm has completed an analysis of a producing coalbed methane project in the United States. Current production is from over five hundred wells and the study was to determine the potential of infield development to recovery additional reserves not originally recovered under the existing development program.
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Davis had undertaken various studies of sand reservoirs in order to evaluate both the potential for gas in place, recoverable reserves and to achieve a tight gas sand designation from regulatory authorities.
One project has required log and petrophysicialanalysis of a massive sand sequence to identify similar depositional packages within the overall interval, and to estimate original gas in place and the recovery potential using frac techniques directed at the individual sand packages. The 20,000 acre block under development for gas reserves has been severelyimpacted by low gas prices in the western U.S.
The Davis firm determined the resource potential underlying several thousand acres under lease by a client company in the Western U.S. Several productive tight gas sand reservoirs and an oil play were evaluated to determine not only the usual 3P potential of the properties, but also the upside that may exist under areas classified as only resource potential. Davis performeda petrophysicial analysis and geological study to calculate the hydrocarbons in place and then estimate the recovery potential based upon various methods of development.
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Davis had undertaken the study of a private company’s gas production in the Appalachian Basin. The reserves of the existing wells were estimated and a database of some five thousand plus wells reviewed to compare the client’s success to date to nearby production. A geologic study of individual producing reservoirs was incorporated into the study to correlate volumetric determined gas-in-place to estimated recoverable reserves. Several hundred undrilled locations have been identified and a development program targeting the better areas was prepared as part of the overall study.
The company has been involved in an ongoing evaluation of several resource plays in the Western United States on behalf of a client company. The client has commenced a development program that utilizes Davis’ evaluation of the reservoirs and their reserve potential. Undrilled locations have been identified and the reserve potential based upon petrophysicial analysis and performance data have been estimated.
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 Annual reserve evaluations for client companies are spread out during the calendar year, with some clients having their fiscal year end at mid-year, the end of the third quarter or at calendar year end. Davis performs the reserve evaluations both as an annual review, as quarterly reviews with drilling and completion activity brought forward to year end, and throughout the year on specific property areas in order to effectively work with a large number of properties.
The reserve evaluations include the reviewing of decline curves on producing wells, evaluating new well completions and assessing the potential of undrilled locations. Geological mapping and volumetric determinations are performed on many properties as part of the evaluation process. The Davis company will utilize either the Aries, PHDWin or OGRE reserve evaluation systems, making all appropriate scheduling changes and running economics on the final analyses. The results will be utilized in SEC 10K filings for public companies, as well as reportsutilized in meeting financial reporting requirements.
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Ralph E. Davis Associates, Inc. has reviewed literally Billions of dollars of offered oil and gas properties during the past several years. The firm's activities have ranged from total and complete analysis of a package and development of a bid offering for a client with a limited technical staff, to working with a client company's acquisition team to facilitate the analysis of a large complex offering. The Davis experience in reviewing and valuing assets being offered either in direct negotiation or in competitively bid situations, enables the client company to utilize the Davis team as an extension of their own in-house capability.
The offerings evaluated include both producing and non-producing properties throughout the United States and Canada, as well as several producing concessions in South America. These potential acquisitions ranged in value from $10 Million to well over a Billion dollars in size, and Davis' clients have been successful in bidding and negotiating on several of the packages. The Davis firm played an integral part of each acquisition analysis and bid preparation.
Certain of the offerings included significant behind pipe and offset drilling potential, especially targeting reservoirs that were not the primary zones of completion. The Davis firm analyzed the available data as it related to possible drainage of the secondary zones from the occasional completions, frac activity in the primary zones and commingling of producing horizons. Geological software was utilized to prepare maps reflecting the potential in these secondary zones and to identify areas that could not be classified as proved due to limitations in the data.
Identification of non-proved reserves and the necessary capital to develop the properties, thereby moving non-proved reserves into the proved category as part of the reserve replacement process, played an integral part of the acquisition analysis. The confirmation of the non-proved reserve potential was a critical part of the evaluation of several enhanced recovery projects including active steamflood operations and extensive holdings in various shale plays.
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Two members of the firm were involved in providing expert analysis concerning properties in litigation. On project that has actually spanned several years of analysis by the Davis firm, required the review of over 100,000 pages of documentation related to reserves developed and produced, in relationship to claims made by the developer to the investment community. The project required Davis company services up until the time the settlement was finally achieved outside of a trial.
Another litigation project concerned reserves that could not be produced from wells in the deepwaters of the Gulf of Mexico following damage to a sub-sea pipeline during a hurricane. Additional claims were made that certain reserves were lost due to possible water encroachment into the reservoirs during the time period the wells were off production due to repair to the pipeline system. Davis supplied engineering analysis that disproved the potential for water encroachment resulting in lost reserves, and established a basis for the value of the delayed production once the pipeline system was repaired.
An additional project involved review of settlement proceedings that had been negotiated in a federal court hearing. Davis analyzed the terms of the settlement and testified as to whether ornot the provisions of the class action settlement involving the oil and gas properties were arrived at fairlyand in good faith.
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