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FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 4, 1997
REGISTRATION NO. ________________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-SB
GENERAL FORM OF REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of
the Securities Exchange Act of 1934
_________________
PAN WESTERN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
OKLAHOMA 73-1130486
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 SOUTH BOULDER AVENUE
SUITE 300
TULSA, OKLAHOMA 74119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 582-4957
_________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class to be Registered
------------------- ------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE
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PAN WESTERN ENERGY CORPORATION
FORM 10-SB
________________________________________________________
TABLE OF CONTENTS
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PART I
Page
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Glossary of Terms............................................. 3
Item 1. Description of Business....................................... 5
Item 2. Management's Discussion and Analysis or Plan of Operation..... 17
Item 3. Description of Property....................................... 25
Item 4. Security Ownership of Certain Beneficial Owners and Management 29
Item 5. Directors, Executive Officers, Promoters and Control Persons.. 30
Item 6. Executive Compensation........................................ 32
Item 7. Certain Relationships and Related Transactions................ 36
Item 8. Description of Securities..................................... 37
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters......................... 41
Item 2. Legal Proceedings............................................. 42
Item 3. Changes in and Disagreements with Accountants................. 42
Item 4. Recent Sales of Unregistered Securities....................... 42
Item 5. Indemnification of Directors and Officers..................... 43
PART F/S
Audited Financial Statements.................................. 44
PART III
Item 1. Index to Exhibits............................................. 45
Item 2. Description of Exhibits....................................... 45
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Certain statements in this Registration Statement under the captions
"Item 1. Description of Business", "Item 2. Management's Discussion and Analysis
or Plan of Operation" and "Item 3. Description of Property", and elsewhere in
this Registration Statement constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry trends and results, to be materially
different from any future results, trends, performance, or achievements
expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, among others, the following: general
economic and business conditions; oil and gas and other industry conditions and
trends, including supply and demand; fluctuations in the prices for oil, gas and
refined products; competition; import protection and regulation (including the
implementation of the World Trade Organization and North American Free Trade
Agreement); the loss of any significant customers; changes in business strategy
or development plans; availability, terms and deployment of debt and equity
capital; quality of management; business abilities and judgment of personnel;
availability of qualified personnel; changes in or the failure to comply with
government regulations (including environmental regulation); and other factors
referenced in this Registration Statement. See "Item 1. Description of Business
- - Cautionary Statement and Risk Factors."
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GLOSSARY OF TERMS
The following are definitions of certain technical terms used throughout
this Registration Statement in connection with the oil and gas exploration and
development business of the Company.
"Bbl" - One stock tank barrel or 42 U.S. Gallons liquid volume, usually
used herein in reference to crude oil or other liquid hydrocarbons.
"Boe" - Equivalent barrels of oil and, with reference to natural gas,
natural gas equivalents are determined using the ratio of six Mcf of natural gas
to one Bbl of crude oil, condensate or natural gas liquids.
"Common Stock" - The common stock of the Company, par value $0.01 per
share.
"Company" - Pan Western Energy Corporation, an Oklahoma corporation.
"Developed acreage" - The number of acres which are allocated or assignable
to producing wells or wells capable of production.
"Development well" - A well drilled within a presently proved productive
area of an oil or natural gas reservoir, as indicated by reasonable
interpretation of available data, with the objective of completing in that
reservoir.
"Exploratory well" - A well drilled either in search of a new, undiscovered
pool or oil or natural gas, or to extend the known limits of a field under
development.
"Gross acres or gross wells" - The total acres or wells, as the case may
be, in which an entity has an interest, either directly or through an affiliate.
"Lease" - Full or partial interests in an oil and gas lease, oil and gas
mineral rights, fee rights or other rights, authorizing the owner thereof to
drill for, reduce to possession and produce oil and natural gas upon payment of
rentals, bonuses and/or royalties. Oil and gas leases are generally acquired
from private landowners and federal and state governments.
"MBbl" - One thousand barrels of crude oil or other liquid hydrocarbons.
"Mcf" - One thousand cubic feet of natural gas expressed, where gas sales
contracts are in effect, in terms of contractual temperature and pressure bases
and, where contracts are nonexistent, at 60 degrees Fahrenheit and 14.65 pounds
per square inch absolute.
"MMcf" - One million cubic feet of natural gas expressed, where gas sales
contracts are in effect, in terms of contractual temperature and pressure bases
and, where contracts are nonexistent, at 60 degrees Fahrenheit and 14.65 pounds
per square inch absolute.
"Net; net revenue interest" - Production or revenue that is owned by the
respective person and produced for its interest after deducting royalties and
other similar interests.
"Net acres or wells" - A party's interest in acres or wells calculated by
multiplying the number of gross acres or gross wells in which such party has an
interest by the fractional interest of such party in each such acre or well.
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"Operating costs" - The expenses of producing oil or natural gas from a
formation, consisting of the costs incurred to operate and maintain wells and
related equipment and facilities, including labor costs, repair and maintenance,
supplies, insurance, production, severance and cost production excise taxes.
"Preferred Stock" - The preferred stock of the Company, par value $0.05 per
share.
"Producing reserves" - Proven developed reserves expected to be produced
from existing completion intervals open for production in existing wells.
"Productive well" - A well that is producing oil or natural gas or that is
capable of production.
"Prospect" - An area in which a party owns or intends to acquire one or
more oil and natural gas interests which is geographically defined on the basis
of geological data and which is reasonably anticipated to contain at least one
reservoir of oil, gas or other hydrocarbons.
"Proven undeveloped reserves" - Proven reserves which can be expected to be
recovered from new wells on undeveloped acreage or from existing wells where a
relatively major expenditure is required for recompletion.
"Royalty interest" - An interest in an oil and gas property entitling the
owner to a share of oil and gas production free of the costs of production.
"Working interest" - The operating interest under a lease which gives the
owner the right to drill, produce and conduct operating activities on the
property and a share of production, subject to all royalty interests.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Pan Western Energy Corporation (the "Company") is an independent oil and
gas company engaged in the acquisition, development and production of oil and
gas in the United States. The Company was incorporated in 1981 under the laws
of the State of Oklahoma with the objective of exploring for, developing,
producing and managing oil and gas reserves. Early efforts of the Company
focused on exploratory drilling in Oklahoma, Colorado, Kansas, Nebraska and
Texas. Since 1989, the Company has focused primarily on the acquisition of
producing oil and gas properties in Oklahoma and Texas. During 1995 and 1996,
the Company acquired the producing oil and gas properties of six limited
partnerships in which the Company was the general partner. These producing
properties, along with producing properties acquired from others during the same
period, significantly increased the Company's asset base.
The Company currently owns and operates producing oil and gas properties
located in the states of Texas and Oklahoma and owns royalty interests in 14
non-operated wells located in the state of Ohio. Daily gross production from
109 wells operated by the Company in these states currently averages
approximately 234 Bbls of oil and 1,395 Mcf of gas. Total daily production from
both operated and non-operated wells, net to the Company's interest, currently
averages approximately 175 Bbls of oil and 788 Mcf of gas from a total of 68 net
wells.
In seeking to acquire additional oil and gas properties, the Company
focuses primarily on properties with producing oil and gas reserves which it
believes have potential for additional exploitation through additional
development and enhanced recovery via lateral completions and improved operating
techniques rather than highly speculative exploration efforts. The Company
intends to focus its acquisition program on producing properties in which the
Company will become the operator following acquisition, allowing the Company to
maintain a low cost operating structure. The Company will also seek properties
that are underdeveloped, overly burdened with expenses or owned by financially
troubled companies. Management intends to focus on oil and gas properties
located in the mid-continent region of the United States where Company personnel
are best able to draw on their prior oil and gas experience. The Company
intends to acquire properties using internally generated cash flow, bank
borrowings and, when appropriate, Common Stock of the Company.
The Company's principal offices are located at 1850 South Boulder Avenue,
Suite 300, Tulsa, Oklahoma 74119 and its telephone number is (918) 582-4957.
CAUTIONARY STATEMENT AND RISK FACTORS
Cautionary Statement Regarding Forward-Looking Statements. In the interest
of providing the Company's shareholders and potential investors with certain
information regarding the Company, including management's assessment of the
Company's future plans and operations, certain statements set forth in this
Registration Statement contain or are based on the Company's projections or
estimates of revenue, income, earnings per share and other financial items or
relate to management's future plans and objectives or to the Company's future
economic and financial performance. All such statements, other than statements
of historical fact, contained in this Registration Statement, including
statements in "Item 1. Description of Business, Item 2. Management's Discussion
and Analysis or Plan of Operation and Item 3. Description of Property" generally
are accompanied by words such as "anticipate," "believe," "intend," "estimate,"
"project" or "expect" or similar statements. Such statements are "forward-
looking statements" within the meaning of Section 27A of the Securities Act
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of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and are made pursuant to and in reliance on the safe harbor provisions
of such sections.
Although any forward-looking statements contained in this Registration
Statement or otherwise expressed by or on behalf of the Company are, to the
knowledge and in the judgment of the officers and directors of the Company,
reasonable and expected to prove true, management is not able to predict the
future with certainty and no assurance can be given that such statements will
prove correct. Forward-looking statements involve known and unknown risks and
uncertainties which may cause the Company's actual performance and financial
results in future periods to differ materially from any projection, estimate or
forecasted result. These risks and uncertainties include, among other things:
general economic and business conditions; oil and gas industry conditions and
trends; volatility of oil and gas prices; product supply and demand; market
competition; risks inherent in the Company's oil and gas operations; imprecision
of reserve estimates; the Company's ability to replace and expand oil and gas
reserves; the Company's ability to generate sufficient cash flow from operations
to meet its current and future obligations; the Company's ability to access and
terms of external sources of debt and equity capital; and such other risks and
uncertainties described from time to time in the Company's periodic reports and
filings with the Securities and Exchange Commission. These and other risks are
described elsewhere in this Registration Statement and will be described from
time to time in the Company's future filings with the Securities and Exchange
Commission. Accordingly, shareholders and potential investors are cautioned
that certain events or circumstances could cause actual results to differ
materially from those projected, estimated or predicted. In addition, forward-
looking statements are based on management's knowledge and judgment as of the
date of this Registration Statement, and the Company does not intend to update
any forward-looking statements to reflect events occurring or circumstances
existing hereafter.
History of Losses; Accumulated Deficit. For the fiscal years ended
December 31, 1996 and 1995, the Company incurred net losses of $252,444 and
$364,092 respectively. At December 31, 1996, the Company had an accumulated
deficit of $880,537 and its working capital deficit was $1,361,893. It is
expected that the Company will continue to experience losses in the near term.
The Company's ability to achieve profitability and generate cash flow will be
dependent upon obtaining additional debt or equity capital and acquiring or
developing additional oil and gas properties. There can be no assurance that
the Company will be able to do so. See "Item 2. Management's Discussion and
Analysis or Plan of Operation" and the Company's Financial Statements included
elsewhere in this Registration Statement.
Limited Available Capital; Need for Additional Financing. Without raising
additional capital, the Company will be unable to acquire additional producing
oil and gas properties and its ability to develop its existing oil and gas
properties will be limited to the extent of available cash flow. Accordingly,
in order for the Company to achieve its business objective and achieve
profitable operations, it will be necessary to generate additional cash flow
from operations, raise additional capital or enter into joint oil and gas
development arrangements. Management intends to fund future acquisitions and
develop its oil and gas reserves using cash flow from operations as well as
borrowings, public and private sales of debt and equity securities and joint oil
and gas development arrangements, among other possible sources. The Company has
no present arrangements for future borrowings and its cash flow from operations
is not expected to be adequate to provide the funds needed for these purposes.
There can be no assurance the Company will be able to raise additional funds in
sufficient amounts to allow the Company to successfully implement its present
business strategy of additional oil
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and gas property acquisitions or the development of its existing oil and gas
reserves. No assurance can be given as to the availability or terms of any
additional financing or joint development arrangements or that such terms as are
available may not be dilutive to the interests of the Company's shareholders.
Industry Conditions; Impact on Company's Profitability. The profitability
and revenues of the Company are dependent, to a significant extent, upon
prevailing market prices for oil and gas. In the past, oil and gas prices and
markets have been volatile. Prices are subject to wide fluctuations in response
to changes in supply of, and demand for, oil and gas, market uncertainty and a
variety of additional factors that are beyond the control of the Company. Such
factors include world political conditions, weather conditions, government
regulations, the price and availability of alternative fuels and overall
economic conditions. Crude oil and natural gas prices have increased
significantly over the past 12 months. Any decline from current oil or gas
prices would have a material adverse effect on the Company's revenues and
operating income and might, under certain conditions, require a write-down of
the book value of the Company's oil and gas properties.
Acquisition Strategy. The Company must acquire producing properties or
locate and develop new oil and gas reserves to replace those being depleted by
production. Without acquisition of producing properties or successful drilling
and exploration activities, the Company's reserves and revenues will decline as
reserves are depleted by production from existing properties. Subject to the
availability of sufficient capital, the Company intends to acquire additional
producing oil and gas properties, although no funds are currently available to
the Company for this purpose. Although the Company engages in discussions
regarding the acquisition of additional properties on a regular basis, as of the
date of this Registration Statement the Company has no agreements or
understandings to acquire any other properties and there can be no assurance
that the Company will be able to identify and acquire additional producing oil
and gas properties that will prove to be profitable to the Company. The process
of integrating acquired properties into the Company's operations may result in
unforeseen difficulties and may require a disproportionate amount of
management's attention and the Company's resources. In connection with
acquisitions, the Company could become subject to significant contingent
liabilities arising from the exploration and development activities conducted on
the acquired properties to the extent the Company assumes, or an acquired entity
becomes liable for, unknown or contingent liabilities or in the event that such
liabilities are imposed on the Company under theories of successor liability.
See "Acquisition and "Exploitation Activities" and "Production".
Reliance on Estimates of Proved Reserves; Depletion of Reserves. There are
numerous uncertainties inherent in estimating quantities of proved oil and gas
reserves and in projecting future rates of production and timing of development
expenditures, including many factors beyond the control of the Company. The oil
and gas reserve data set forth in this Registration Statement represents
estimates only. Oil and gas reserve engineering is a subjective process of
estimating underground accumulations of oil and gas that cannot be measured in
an exact manner, and estimates by other engineers might differ from those
included in this Registration Statement. The accuracy of any reserve estimate
is a function of the quality of available data and of engineering and geological
interpretation and judgment. This Registration Statement contains estimates of
the Company's proved oil and gas reserves and the projected future net revenue
therefrom, which have been prepared by an independent petroleum engineering
firm. Actual future production, oil and gas prices, revenue, capital
expenditures, taxes and operating expenses may vary substantially from those
assumed in making estimates, and the Company's reserves may be subject to
material upward or downward revision. In addition, the Company's ability to
develop its reserves will be dependent upon the timely availability of capital
for this purpose without
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which the Company's ability to produce the projected amounts of oil and gas will
be adversely affected, thereby adversely affecting the projected future net
revenue. See "Reserves".
Dependence on Other Operators. With respect to wells not operated by the
Company in which it owns an interest, the operators are, in some cases,
privately-held companies which may have limited financial resources. If a third
party operator experiences financial difficulty and fails to pay for materials
and services in a timely manner, the wells operated by such third party
operators could be subject to material and workmen's liens. In such event, the
Company would incur costs in discharging such liens. The Company has no reason
to believe that its current operators are experiencing significant financial
difficulties.
Competition. The oil and gas industry is highly competitive. The Company
competes with major integrated and independent oil and gas companies in
acquiring oil and gas properties. Many competitors have resources substantially
exceeding the resources of the Company. See "Competition".
Acquisition and Production Risks. The successful acquisition and
exploitation of producing oil and gas properties requires an assessment of the
recoverable reserves, future oil and gas prices, operating costs, the existence
of potential environmental and other liabilities and other factors. Such
assessments are necessarily inexact and their accuracy is inherently uncertain.
Although the Company's management will perform a review of the assets of all
proposed acquisitions which management believes to be consistent with standard
industry practices, such reviews are inherently incomplete. The Company intends
to focus its due diligence efforts on the properties that management believes
contain the majority of the value in a proposed acquisition and sample the
balance of included properties. Even an in-depth review of all properties and
records of a proposed acquisition will not necessarily reveal existing or
potential problems or risks nor will it permit the Company to become
sufficiently familiar with the properties to fully assess their deficiencies,
liabilities and capabilities. Inspections are not likely to be performed on
each and every well, and potential environmental problems are not necessarily
observable even when an inspection is undertaken. Although the Company's
management has substantial experience in the oil and gas business, the
particular oil and gas assets that the Company may acquire may be unfamiliar.
Operational and Environmental Hazards; Insurance. The oil and gas industry
involves a number of operating risks, such as the risks of fire, blowouts,
explosions, cratering, pipe failure, casing collapse and abnormally pressured
formations, the occurrence of any of which could materially and adversely affect
the Company. The business is also subject to environmental hazards including
oil and saltwater spills, gas leaks, ruptures and discharges of toxic gases.
These risks could result in substantial losses to the Company due to injury and
loss of life, severe damage to and destruction of property and equipment,
pollution and other environmental damage, and suspension of operations. As the
owner of working interests in its oil and gas properties, the Company bears its
proportionate share of the obligations and liabilities arising out of the
exploration and development of those properties. Generally, owners of working
interests in oil and gas properties are jointly and severally liable for all
such obligations and liabilities. As a result, there exists a risk that the
Company could become liable for amounts in excess of its proportionate share of
such obligations and liabilities, although generally the Company would have a
right of contribution against the other working interest owners. In accordance
with customary industry practices, the Company maintains insurance against some,
but not all, of such risks and losses. The occurrence of such an event not
fully covered by insurance could have a material adverse effect on the financial
position and operations of the Company. The Company does
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not carry insurance covering environmental impairment liabilities. The Company
can provide no assurance that the insurance it carries will be adequate to cover
any loss or exposure to liability, or that such insurance will continue to be
available on terms acceptable to the Company. See "Operational Hazards and
Insurance".
Government Regulation. The Company's business is subject to extensive
federal, state and local laws and regulations relating to the exploration for,
development, production, marketing and transmission of oil and gas, as well as
environmental and safety matters. Such laws and regulations have generally
become more stringent in recent years, often imposing greater liability on a
larger number of potentially responsible parties. Because the requirements
imposed by such laws and regulations are frequently changed, the Company is
unable to predict the ultimate cost of compliance with such requirements. The
states of Oklahoma and Texas have adopted revisions to its production allowable
rules under which they regulate the quantities of natural gas which producers
may produce within their respective borders. Legislation has recently been
introduced in the United States Congress to restrict the ability of states to
regulate the production of natural gas. It is impossible at this time to
determine the effect, if any, these developments may have on the natural gas
industry as a whole. However, the Company does not believe these developments
will materially affect its operations. There is no assurance that federal,
state or local laws and regulations enacted in the future will not adversely
affect the Company's ability to explore for, produce and market oil and natural
gas. See "Regulation."
Reliance on Key Personnel. The Company is dependent upon the services of
Sid L. Anderson, President; Buddie E. Livingston, II, its Vice President of
Operations, and Vincent R. Kemendo, its Vice President of Finance. The loss of
the services of any of these individuals could have a material adverse effect
upon the Company. The Company does not maintain insurance on the lives of
Messrs. Anderson, Livingston, or Kemendo. See "Item 5. Directors, Executive
Officers, Promoters and Control Persons."
Authorization and Discretionary Issuance of Preferred Stock; Anti-takeover
Provisions. The Company's Certificate of Incorporation authorizes the issuance
of Preferred Stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without shareholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of holders of the Company's
Common Stock. In the event of issuance, the Preferred Stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company, which could have the effect of discouraging
bids for the Company and thereby prevent shareholders from receiving a premium
for their shares over the then-current market prices. Although the Company has
no present intention to issue any additional shares of its Preferred Stock,
there can be no assurance that the Company will not do so in the future.
The Oklahoma General Corporation Act includes provisions which are intended
to encourage persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with the Company's Directors rather than pursue
non-negotiated takeover attempts. These existing takeover provisions may have a
significant effect on the ability of a shareholder to benefit from certain kinds
of transactions that may be opposed by the incumbent Directors.
Qualification Requirements for Nasdaq Securities. There is currently no
trading market for the Common Stock of the Company. For the Company's Common
Stock to be eligible for initial
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inclusion on Nasdaq, the Company must, among other things, maintain at least
$4,000,000 in total assets, and have at least $2,000,000 of capital and surplus.
In addition, the bid price of the Common Stock must be at least $3.00 per share,
the market value of the outstanding Common Stock must be at least $1,000,000 and
there must be at least 300 holders of the Common Stock. The Company does not
currently meet these requirements and there can be no assurance that the
Company's Common Stock will meet the requirements for inclusion on Nasdaq in the
future. It is currently anticipated that trading, if any, in the Common Stock
will be conducted in the over-the-counter market on the OTC Bulletin Board, a
NASD-sponsored inter-dealer quotation system, or in what are commonly referred
to as the "pink sheets." As a result, a shareholder may find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, the
Company's Common Stock. In addition, the Company's Common Stock is currently
subject to a Commission rule that imposes additional sales practice requirements
on broker-dealers who sell such securities to persons other than established
customers and accredited investors. For transactions covered by this rule, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the Company's Common Stock and the ability of shareholders to sell their shares
of Common Stock in the secondary market. See "Part II, Item 1. Market Price and
Dividends on the Registrant's Common Equity and Other Shareholder Matters."
Dividends Unlikely. The Company has never declared or paid dividends on
its Common Stock and currently does not intend to pay dividends in the
foreseeable future. The Company currently intends to follow a policy of
retaining all earnings, if any, to finance the expansion and development of its
business. In any event, future dividend policy will depend upon the Company's
earnings, financial condition, working capital requirements, and will be at the
discretion of the Board of Directors.
BUSINESS STRATEGY
The Company's business strategy has been and will continue to be the
acquisition of producing oil and gas properties and exploitation of those
properties to maximize production and ultimate reserve recovery. The Company's
present business strategy is to concentrate on expanding its asset base and cash
flow primarily through emphasis on the following activities:
. Acquiring additional producing oil and gas properties, including
properties with potential for developmental drilling to maintain a
significant inventory of undeveloped prospects and to enhance the
Company's foundation for future growth;
. Increasing production cash flow and asset value by developing the
Company's proven undeveloped reserves;
. Building on the Company's existing base of operations by concentrating
its development activities in its primary operating areas of Texas and
Oklahoma;
. Serving as operator of its wells to ensure technical performance and
reduce costs;
. Expanding its relationships with major and large independent oil and
gas companies to access their producing as well as undeveloped
properties, seismic data and financial
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resources;
. Managing financial risk and mitigating technical risk by:
. drilling in known productive trends with multi-horizon geologic
potential;
. diversifying investment over a large number of wells in the
Company's primary operating areas;
. developing properties that provide a balance between short and
long reserve lives;
. Using, where appropriate, the horizontal drilling technology licensed
by the Company from Amoco Corporation to enhance recovery of oil and
gas from producing properties;
. Offering horizontal drilling services on a contract basis to third
parties using the horizontal drilling technology licensed by the
Company from Amoco Corporation; and
. Maintaining low general and administrative expenses and increasing
economies of scale to reduce per unit Operating Costs and reserve
addition costs.
ACQUISITION AND EXPLOITATION ACTIVITIES
Acquisitions. Historically, the Company has allocated a substantial
portion of its capital expenditures to the acquisition of producing oil and gas
properties. During fiscal years 1996 and 1995, the Company acquired 706,949 and
1,843,970 Mcf of natural gas and 428,519 and 1,258,830 Bbls of oil for total
costs of approximately $222,000 and $2,246,000 respectively. These acquisitions
represent a cost of $0.41 per Boe in 1996 and $1.43 per Boe in 1995. The
Company has financed its acquisitions primarily through cash flow, bank
borrowings and issuance of Common Stock.
To the extent that it has the capital resources to do so, the Company
intends to continue to pursue a business strategy that emphasizes reserve
additions through acquisitions. The Company intends to focus its acquisition
program on producing properties which it believes have potential for additional
exploitation through additional development and enhanced recovery via lateral
completions and improved operating techniques. The Company will seek properties
that are underdeveloped, overly burdened with expenses or owned by financially
troubled companies. Management intends to focus on properties located in the
mid-continent region of the United States, primarily in the states of Texas and
Oklahoma, where Company personnel are best able to draw on their prior oil and
gas experience. It is anticipated that a majority of the potential acquisition
opportunities will be internally generated by Company personnel, although some
opportunities may be brought to the Company by non-employee Directors or
stockholders of the Company. The Company does not currently have any plans to
engage professional firms or consultants that specialize in acquisitions but may
do so in the future. The Company may utilize any one or a combination of lines
of credit with banks, public and private sales of debt and equity securities,
joint oil and gas development arrangements and internally-generated cash flow to
finance its acquisition efforts. No assurance can be given that sufficient
external or internal funds will be available to fund the Company's desired
acquisitions.
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The Company maintains its own land, geological, petroleum engineering and
accounting staff which participate in evaluating prospective acquisitions. The
Company utilizes an acquisitions screening approach using applicable engineering
and geological criteria in the review and evaluation process. This evaluation
process helps to form the basis of the purchase price for a potential
acquisition. The Company generally considers the following in its decision-
making process: discounted future net revenues, payout, dollars per proven
barrels of oil and/or Mcf of gas and other potential behind pipe zones or
drilling opportunities. The Company will continue to weigh the comparative
value of various methods of reserve acquisitions and employ the method it
believes is most advantageous in any given transaction. After the acquisition
of oil and gas properties, management generally develops a reservoir depletion
plan to maximize production rates, ultimate reserve recovery and cash flow
generation. Such plans consider field operating procedures, workovers,
recompletions, secondary recovery implementation, additional drilling and such
other procedures as the situation dictates.
The Company does not have a specific budget for the acquisition of oil and
gas properties since the timing and size of acquisitions are difficult to
forecast. However, the Company is constantly reviewing acquisition
possibilities.
Development Activities. The Company concentrates its acquisition efforts
on proved producing properties which demonstrate a potential for significant
additional development through workovers, behind-pipe recompletions, secondary
recovery operations, the drilling of development or infill wells, and other
exploitation activities which the Company may find appropriate. The Company has
pursued an active workover and recompletion program on the properties it has
acquired and intends to continue its workover and recompletion program in the
future as properties acquired warrant. In connection with oil and gas property
acquisitions, properties are reviewed and evaluated by the Company with a view
toward taking the appropriate actions to maximize production. Such actions may
include repair or replacement of equipment or more extensive efforts such as
recompletion in a different producing zone or implementation of secondary
recovery operations. The expenditures required for the Company's workover and
recompletion program have historically been financed, and it is expected that
they will continue to be financed, by borrowings and internally generated funds.
Exploratory drilling has been minimal to date. The Company reviews
exploration proposals from other companies and individuals and may from time to
time participate in certain ventures where the risk-reward ratio is sufficiently
high to warrant capital outlays. The Company does not anticipate generating
exploration projects utilizing its own staff at the present time. Consequently,
exploratory drilling within the United States will likely only remain a small
part of the Company's business.
PRODUCTION
The Company owns and operates producing oil and gas properties located in
the states of Texas and Oklahoma and owns royalty interests in 14 non-operated
wells located in the state of Ohio. The Company continuously evaluates the
profitability of its oil, gas and related activities and has a policy of
divesting itself of unprofitable oil and gas properties or areas of operation
that are not consistent with its operating philosophy.
The Company operates 109 producing wells and owns non-operated interests in
14 producing wells and units in these states. Oil and gas sales from the
Company's producing oil and gas properties
12
<PAGE>
accounted for substantially all of the Company's revenues for the years ended
December 31, 1995 and 1996.
The following summarizes the Company's principal areas of oil and gas
production activity.
<TABLE>
<CAPTION>
AVERAGE AVERAGE NUMBER OF NET PROVED
LOCATION WORKING NET REVENUE PRODUCING RESERVES
FIELD NAME (COUNTY, STATE) INTEREST INTEREST WELLS EQUIVALENT BBLS.
- ---------- --------------- --------- ------------ --------- ----------------
<S> <C> <C> <C> <C> <C>
Flowers Stonewall, TX 100.00% 87.50% 16 458,864
Noble and 97.98% 78.94% 20 537,018
Antelope Garfield, OK
Pegs Hills Borden, TX 100.00% 80.00% 5 78,594
Higgins West Lipscomb, TX 100.00% 82.20% 8 1,058,187
Kellin Lipscomb, TX 100.00% 87.50% 2 347,322
Centrahoma Coal, OK 83.02% 65.54% 12 642,480
Bowlegs Seminole, OK 100.00% 87.50% 2 88,749
Fitts Pontotoc, OK 81.97% 64.92% 13 44,000
Hardscrabble Lincoln, OK 28.16 22.27% 5 21,443
</TABLE>
OIL AND GAS PARTNERSHIPS
The Company is the sole general partner in Pan Western 1986 Drilling
Program, Ltd. limited partnership ("1986 Program") and Pan Western 1987
Production Program, Ltd. limited partnership ("1987 Program"), whose purposes
are the acquisition, drilling, development, production, marketing and operation
of oil and gas properties. As general partner, the Company is entitled to
18.57% and 15% of the current earnings or losses for the 1986 and 1987 Programs,
respectively, and is also entitled to a "back-in" interest upon payout. For
additional information regarding these partnerships, See Note 3 to the Company's
Consolidated Financial Statements elsewhere in this Registration Statement.
HORIZONTAL DRILLING
The Company has entered into a license agreement with Amoco Corporation for
a patented short-radius horizontal drilling and completion technology. The
technology is designed to permit enhanced recovery of oil and gas from producing
formations which have high bottom hole pressures but low permeability. This
technology has been used in several oil and gas fields at both foreign and
domestic locations. The Company currently plans to use this technology to
maximize recoverable oil and gas reserves on a number of the Company's
properties and to offer the technology as a service to other oil and gas
producers. The Company intends to offer its customers a complete package of
services needed to complete a short-radius horizontal extension without having
to rely on several different contractors as is the case with most of the other
companies offering horizontal drilling services. The Company plans to offer
these services through its wholly-owned subsidiary, Lateral Completion
Technologies, Inc. ("LCT"). The Company will require additional capital to fund
the start-up operations of LCT. No assurance can be given that such capital
will be available on terms satisfactory to the Company.
13
<PAGE>
MARKETING
The availability of a market for oil and gas produced or marketed by the
Company is dependent upon a number of factors beyond its control which cannot be
accurately predicted. These factors include the proximity of wells to, and the
available capacity of, natural gas pipelines, the extent of competitive domestic
production and imports of oil and gas, the availability of other sources of
energy, fluctuations in seasonal supply and demand, and governmental regulation.
In addition, there is always the possibility that new legislation may be enacted
which would impose price controls or additional taxes upon crude oil or natural
gas, or both. In the event a productive gas well is completed in an area that is
distant from existing gas pipelines, the Company may allow the well to remain
shut-in until a pipeline is extended to the well or until additional wells are
drilled to establish the existence of sufficient producing reserves to justify
the cost of extending existing pipelines to the area. It appears that the United
States is emerging from a period of oversupply of natural gas which has, and may
still, cause delays, restrictions or reductions of natural gas production and
which in the past has adversely affected gas prices. Oversupplies of natural gas
can be expected to recur from time to time and may result in depressed gas
prices and in the gas producing wells of the Company being shut-in.
Since the early 1970's the supply and market price for crude oil has been
significantly affected by policies adopted by the member nations of OPEC.
Members of OPEC establish among themselves prices and production quotas for
petroleum products from time to time with the intent of manipulating the global
supply and price levels for crude oil. In addition, Canada recently revised its
laws affecting the exportation of natural gas to the United States. Mexico also
continues to fine tune its import/export policies. The oil and gas policies of
the United States, Canada and Mexico are impacted by the Canadian/U.S. Free
Trade Agreement, the General Agreement on Tariffs and Trade, and the North
American Free Trade Agreement. These factors are expected to increase
competition and may adversely affect the price of natural gas in certain areas
of the United States. The Company is unable to predict the effect, if any,
which OPEC, Canadian and Mexican policies, and emerging international trade
doctrines will have on the amount of, or the prices received for, oil and
natural gas produced and sold by the Company.
Changes in oil and natural gas prices significantly affect the revenues and
cash flow of the Company and the value of its oil and gas properties.
Significant declines in the prices of oil and natural gas could have a material
adverse effect on the business and financial condition of the Company. The
Company is unable to predict accurately whether the price of oil and natural gas
will rise, stabilize or decline in the future.
Substantially all of the Company's crude oil and condensate production is
sold at posted prices under short term contracts, as is customary in the
industry. The most significant purchasers of the Company's oil and gas
production during the year ended December 31, 1996 were Conoco Oil Company, Sun
Oil Company, Total Petroleum, Inc., and Octagon Resources, Inc. which accounted
for 18%, 16%, 15% and 11% of the Company's total oil and gas revenues,
respectively. No other purchaser of crude oil or natural gas during this period
exceeded 10% of the Company's oil and gas sales.
The Company's gas production is sold primarily on the spot market or under
market sensitive long term agreements with a variety of purchasers, including
intrastate and interstate pipelines, their marketing affiliates, independent
marketing companies and other purchasers who have the ability to
14
<PAGE>
move the gas under firm transportation agreements.
COMPETITION
Competition in the acquisition of producing oil and gas properties and in
the exploration and production of oil and gas is intense. In seeking to obtain
desirable producing properties, new leases and exploration prospects, the
Company faces competition from both major and independent oil and gas companies
as well as from numerous individuals. Many of these competitors have financial
and other resources substantially in excess of those available to the Company.
Increases in worldwide energy production capability and decreases in energy
consumption as a result of conservation efforts have brought about substantial
surpluses in energy supplies in recent years. This, in turn, has resulted in
substantial competition for markets historically served by domestic natural gas
resources both with alternate sources of energy and among domestic gas
suppliers. As a result, there have been reductions in oil and gas prices,
widespread curtailment of gas production and delays in producing and marketing
gas after it is discovered. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and the emergence of
various types of gas marketing companies and other aggregators of gas supplies.
As a consequence, gas prices, which were once effectively determined by
government regulation, are now largely established by market competition.
Competitors of the Company in this market include other producers, gas pipelines
and their affiliated marketing companies, independent marketers, and providers
of alternate energy supplies.
REGULATION
The oil and gas industry is extensively regulated by federal, state and
local authorities. Legislation affecting the oil and gas industry is under
constant review for amendment or expansion. Numerous departments and agencies,
both federal and state, have issued rules and regulations applicable to the oil
and gas industry and its individual members, some of which carry substantial
penalties for the failure to comply. The regulatory burden on the oil and gas
industry increases its cost of doing business and, consequently, affects its
profitability. Inasmuch as such laws and regulations are frequently amended or
reinterpreted, the Company is unable to predict the future cost or impact of
complying with such regulations.
Exploration and Production. Exploration and production operations of the
Company are subject to various types of regulation at the federal, state and
local levels. Such regulation includes requiring permits for the drilling of
wells, maintaining bonding requirements in order to drill or operate wells, and
regulating the location of wells, the method of drilling and casing wells, the
surface use and restoration of properties upon which wells are drilling and
producing, and the plugging and abandoning of wells. The Company's operations
are also subject to various conservation matters. These include the regulation
of the size of drilling and spacing units or proration units, the density of
wells which may be drilled, and the unitization or pooling of oil and gas
properties or interests. In this regard, some states allow the forced pooling
or integration of tracts to facilitate exploration while other states rely on
voluntary pooling of lands and leases. In addition, state conservation laws
establish maximum
15
<PAGE>
rates of production from oil and gas wells, generally prohibit the venting or
flaring of gas, and impose certain requirements regarding the rate of
production. The effect of these regulations is to limit the amounts of oil and
gas the Company can produce from its wells, and to limit the number of wells or
the locations at which the Company can drill.
The states of Oklahoma and Texas have adopted or are considering revisions
to their production allowable rules under which they regulate the quantities of
natural gas which may be produced within their borders. The stated rationale
behind such prorationing legislation and rulemaking is the conservation of
natural resources, prevention of waste and protection of the correlative rights
of oil and gas interest owners by limiting production to the available market.
It is impossible at this time to determine the effect, if any, these
developments may have on the natural gas industry as a whole. The Company does
not believe the developments will materially affect its operations.
Certain of the Company's oil and gas leases are granted by the federal
government and administered by various federal agencies. Such leases require
compliance with detailed federal regulations and orders which regulate, among
other matters, drilling and operations on these leases and calculation of
royalty payments to the federal government. The Mineral Lands Leasing Act of
1920 places limitations on the number of acres under federal leases that may be
owned in any one state. While the Company does not have a substantial federal
lease acreage position in any state or in the aggregate, the Company does own
interests in federal oil and gas leases which produce amounts of oil and gas
material to the Company The Mineral Lands Leasing Act of 1920 and related
regulations also may restrict a corporation from holding title to federal
onshore oil and gas leases if stock of such corporation is owned by citizens of
foreign countries which are not deemed reciprocal under such Act. Reciprocity
depends, in large part, on whether the laws of the foreign jurisdiction
discriminate against a United States person's ownership of rights to minerals in
such jurisdiction. The purchase of shares in the Company by citizens of foreign
countries who are not deemed to be reciprocal under such Act could have an
impact on the Company's ownership of federal leases.
The Company's operations are subject to extensive federal, state and local
laws and regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment. Permits are
required for various of the Company's operations, and these permits are subject
to revocation, modification and renewal by issuing authorities. Governmental
authorities have the power to enforce compliance with their regulations, and
violations are subject to fines, injunctions or both. It is possible that
increasingly strict requirements will be imposed by environmental laws and
enforcement policies thereunder. The Company is also subject to laws and
regulations concerning occupational safety and health. It is not anticipated
that the Company will be required in the near future to expend amounts that are
material in the aggregate to the Company's overall operations by reason of
environmental or occupational safety and health laws and regulations, but
inasmuch as such laws and regulations are frequently changed, the Company is
unable to predict the ultimate cost of compliance.
Natural Gas Sales and Transportation. Federal legislation and regulatory
controls have historically affected the price of the gas produced by the Company
and the manner in which such production is marketed. The transportation and
sale for resale of gas in interstate commerce are regulated pursuant to the
Natural Gas Act of 1938 (the "NGA") and the Natural Gas Policy Act of 1978 (the
"NGPA") and Federal Energy Regulatory Commission ("FERC") regulations
promulgated
16
<PAGE>
thereunder. Since 1978, maximum selling prices of certain categories of gas,
whether sold in interstate or intrastate commerce, have been regulated pursuant
to the NGPA. The NGPA established various categories of gas and provided for
graduated deregulation of price controls of several categories of gas and the
deregulation of sales of certain categories of gas. All price deregulation
contemplated under the NGPA has already taken place.
TITLE TO PROPERTIES
As is customary in the oil and gas industry, the Company performs a minimal
title investigation before acquiring oil and gas properties, which generally
consists of obtaining a title report from legal counsel covering title to the
major properties (for example, properties comprising at least 80% by value of
the acquired properties) and due diligence reviews by independent landmen of the
remaining properties. The Company believes that it has satisfactory title to
such properties in accordance with standards generally accepted in the oil and
gas industry. A title opinion is obtained prior to the commencement of any
drilling operations on such properties. The Company's properties are subject to
customary royalty interests, liens incident to operating agreements, liens for
current taxes and other burdens which the Company believes do not materially
interfere with the use of or affect the value of such properties. Substantially
all of the Company's oil and gas properties are and will continue to be
mortgaged to secure borrowings under the Company's credit facilities.
OPERATIONAL HAZARDS AND INSURANCE
The operations of the Company are subject to all risks inherent in the
exploration for and production of oil and gas, including such natural hazards as
blowouts, cratering and fires, which could result in damage or injury to, or
destruction of, drilling rigs and equipment, formations, producing facilities or
other property, or could result in personal injury, loss of life or pollution of
the environment. Any such event could result in substantial expense to the
Company which could have a material adverse effect upon the financial condition
of the Company to the extent it is not fully insured against such risk. The
Company carries insurance against certain of these risks but, in accordance with
standard industry practice, the Company is not fully insured for all risks,
either because such insurance is unavailable or because the Company elects not
to obtain insurance coverage because of cost. Although such operational risks
and hazards may to some extent be minimized, no combination of experience,
knowledge and scientific evaluation can eliminate the risk of investment or
assure a profit to any company engaged in oil and gas operations.
EMPLOYEES
The Company employs a total of seven full time personnel at its offices in
Tulsa, Oklahoma and one field employee in the state of Texas. The Company also
engages the services of 17 additional contract field personnel. The Company
believes its relations with its employees and contractors are excellent.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The selected financial information set forth below is derived from the
audited Consolidated Financial Statements of the Company appearing elsewhere in
this Registration Statement and should
17
<PAGE>
be read together with management's discussion and analysis set forth below and
the Company's Consolidated Financial Statements, including the notes thereto.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Oil and gas sales.......................... $ 1,675,193 $ 983,841
Operating income........................... 122,524 168,691
----------- ----------
Total revenue.............................. 1,797,717 1,152,532
Lease operating costs...................... 725,432 473,927
Depreciation, depletion, and amortization.. 318,556 302,618
Interest expense........................... 233,411 97,252
Salaries and wages......................... 375,482 273,953
General and administrative................. 378,535 364,280
Loss before income taxes................... (252,444) (368,437)
Net loss................................... (252,444) (364,092)
Net loss per common share.................. (.08) (.13)
BALANCE SHEET DATA:
Working capital (deficit).................. (1,361,893) (820,247)
Property and equipment, net................ 2,930,856 2,924,166
Total assets............................... 3,626,212 3,224,312
Current portion of long-term debt and
notes payable............................ 1,338,665 650,719
Long-term debt............................. 1,072,469 1,434,445
Stockholders' equity....................... 554,330 553,968
</TABLE>
RESULTS OF OPERATIONS
The Company follows the "successful efforts" method of accounting for its
oil and gas properties whereby costs of productive wells and productive leases
are capitalized and depleted on a unit-of-production basis over the life of the
remaining proved reserves. Depletion of capitalized costs is provided on a
well-by-well basis. Exploratory expenses, including geological and geophysical
expenses and annual delay rentals, are charged to expense as incurred.
Exploratory drilling costs, including the cost of stratigraphic test wells, are
initially capitalized, but charged to expense if and when the well is determined
to be unsuccessful.
The factors which most significantly affect the Company's results of
operations are (i) the sale prices of crude oil and natural gas, (ii) the level
of oil and gas sales, (iii) the level of lease operating expenses, (iv) the
level of exploratory activities, and (v) the level of and interest rates on
borrowings. Total sales volumes and the level of borrowings are significantly
impacted by the degree of success the Company experiences in its efforts to
acquire oil and gas properties and its ability to maintain or increase
production from existing oil and gas properties through its development and
production enhancement activities. The following table reflects certain
historical operating data for the periods presented.
18
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1996 1995
---------- ----------
<S> <C> <C>
NET SALES VOLUMES:
Oil (Bbls) 56,871 38,177
Natural gas (Mcf) 263,123 215,956
Oil equivalent (Boe) 100,725 74,170
AVERAGE SALES PRICES:
Oil (per Bbl) $ 20.85 $ 18.34
Natural gas (per Mcf) 1.86 1.31
OPERATING EXPENSES PER BOE OF NET
SALES:
Lease operating $ 7.20 $ 6.39
General, administrative and other 9.99 10.04
Depreciation, depletion and 3.16 4.08
amortization
</TABLE>
Relatively modest changes in either oil or gas prices significantly impact
the Company's results of operations and cash flow and could significantly impact
the Company's borrowing capacity. Prices received by the Company for sales of
oil and natural gas have fluctuated significantly from period to period. The
Company's ability to maintain current borrowing capacity and to obtain
additional capital on attractive terms is substantially dependent on oil and gas
prices. Domestic spot oil prices have ranged from a low of approximately $11 per
barrel in July 1986 to a high of approximately $40 per barrel in October 1991,
with a current price of approximately $18.50 per barrel. The fluctuations in
oil prices during these periods reflect market uncertainty regarding OPEC's
ability to control the production of its member countries, as well as concerns
related to the global supply and demand for crude oil. Since the end of the
Gulf War in early 1991, crude oil prices have experienced continued weakness,
primarily as a result of OPEC's inability to maintain disciplined production
quotas by member countries and the uncertainty associated with Iraq's return to
the crude oil export market. These factors continue to overhang the market and
will create significant price volatility for the foreseeable future.
Natural gas prices received by the Company fluctuate generally with changes
in the spot market price for gas. Spot market gas prices have generally
declined in recent years because of lower worldwide energy prices as well as
excess deliverability of natural gas in the United States. However, natural gas
prices have rebounded recently and appear to be poised for further
strengthening. Domestic spot natural gas prices have ranged from a low of
approximately $0.90 per Mcf in January 1992 to a high of approximately $4.44 per
Mcf in December 1996, with a current price of approximately $3.25 per Mcf.
Environmental concerns coupled with recent increases in the use of natural gas
to produce electricity have combined to improve prices. As part of continued
deregulation of natural gas, U.S. pipelines have been made more accessible to
both buyers and sellers of natural gas and, as a result, natural gas will be
able to more effectively compete for market share with other end-use energy
forms.
The Company's principal source of cash flow is the production and sale of
its crude oil and natural gas reserves, which are depleting assets. Cash flow
from oil and gas sales depends upon the
19
<PAGE>
quantity of production and the price obtained for such production. An increase
in prices permits the Company to finance its operations to a greater extent with
internally generated funds. A decline in oil and gas prices reduces the cash
flow generated by the Company's operations, which in turn reduces the funds
available for servicing debt, acquiring additional oil and gas properties and
exploring for an developing new oil and gas reserves.
In addition to the foregoing, the results of the Company's operations vary
due to seasonal fluctuations in the sales prices and volumes of natural gas. In
recent years, natural gas prices have been generally higher in the fall and
winter. Due to these seasonal fluctuations, results of operations for
individual annual and quarterly periods may not be indicative of results which
may be realized on an annual basis.
The following events have directly affected the comparability of the
results of operations and financial position of the Company during the periods
presented:
. Effective April 1, 1995, the Company acquired all of the limited
partners' interests in four oil and gas limited partnerships in which
it was the sole general partner and liquidated the partnerships. In
addition, effective April 1, 1995, the Company acquired approximately
74% and 96% of the limited partners' interest in two additional oil
and gas limited partnerships in which the Company was also the sole
general partner. The consideration paid by the Company for these
limited partnership interests was 1,349,900 shares of the Company's
Common Stock, $8,392 in cash, and the assumption of approximately
$611,000 in partnership debt. The stock was valued at approximately
$1,267,000 based upon the estimated value of the partnerships' oil and
gas reserves.
. On December 1, 1995, the Company purchased the 50% partnership
interest it did not already own in South Boulder Associates, Ltd. and
liquidated the partnership. The Company previously owned a 50%
interest in this partnership and was the general partner. South
Boulder Associates, Ltd. owned the office building located at 1850
South Boulder Avenue, Tulsa, Oklahoma which is the location of the
executive offices of the Company. The purchase price for this
partnership interest was $50,000 in cash and the assumption of
approximately $168,000 in partnership debt.
. In December 1995, the Company acquired the producing oil and gas
property known as the West Flowers Unit, located in Stonewall County,
Texas. The Company paid $625,000 for this property and expended an
additional $134,485 in capitalized costs during the year ended
December 31, 1996. Sales of oil and gas from this property accounted
for approximately 21% of the oil and gas revenues and approximately
18% of the lease operating expense of the Company during the year
ended December 31, 1996.
. In January 1996, the Company acquired the producing oil and gas
property known as the Northwest Antelope Mississippi Chat Unit,
located in Noble and Garfield Counties, Oklahoma. The Company paid
$152,500 for this property and incurred an additional $218,113 in
capitalized costs on the property during the year ended December 31,
1996. Sales of oil and gas from this property accounted for
approximately 9% of the oil and gas revenues and approximately 18% of
the lease
20
<PAGE>
operating expenses of the Company for the year ended December 31,
1996.
. In May 1996, the Company acquired the remaining limited partnership
interests which it had not acquired in April 1995 in two oil and gas
limited partnerships which the Company then liquidated. The
consideration paid for these interests was 46,320 shares of Common
Stock which was valued at approximately $59,000 based on the estimated
value of the partnership oil and gas assets acquired.
Year ended December 31, 1996 compared to year ended December 31, 1995.
Total revenues for the year ended December 31, 1996 increased 55.9% to
$1,797,717 compared to $1,152,532 for the year ended December 31, 1995. Oil and
gas revenues increased from $983,841 for the year ended December 31, 1995 to
$1,675,193 for the year ended December 31, 1996. These increases were
attributable to both increases in production and increases in average prices
received during the year. Average prices received by the Company were $20.85
per Bbl of oil and $1.86 per Mcf of gas during fiscal 1996 compared to $18.34
per Bbl of oil and $1.31 per Mcf of gas received during fiscal 1995.
Oil and gas production for the year ended December 31, 1996 was 18,694 Bbls
and 47,167 Mcf higher than production volumes experienced during the prior year.
These production increases were primarily attributable to the production from
producing oil and gas properties purchased in December 1995 and January 1996.
Production from the Northwest Antelope Mississippi Chat Unit, which the Company
acquired in January 1996, amounted to 4,919 Bbls of oil and 21,029 Mcf of gas
during fiscal 1996 and production from the West Flowers Unit, which the Company
acquired in December 1995, amounted to 16,294 Bbls of oil and 4,627 Mcf of gas
during fiscal 1996.
Operating income declined from $168,891 during the year ended December 31,
1995 to $122,524 during the year ended December 31, 1996. The decline is
attributable to the loss of operating revenues received from the various limited
partnerships which were acquired by the Company in April 1995. Prior to their
acquisition, the Company had charged these partnerships for administrative
overhead and field supervision in connection with the Company's activities in
operating the wells for the partnerships. The Company continues to charge third
party working interest owners these overhead fees on a monthly basis on wells
that the Company operates.
Lease operating expenses increased from $473,927 during 1995 to $725,432
during the year ended December 31, 1996. Lease operating expense is comprised
of the normal and recurring expenses incurred in the operation of oil and gas
wells, production taxes, compression and dehydration fees and transportation
costs. Normal and recurring lease operating expense increased from $410,198 in
fiscal 1995 to $624,074 during fiscal 1996. Oil and gas properties acquired
during December 1995 and January 1996 accounted for approximately $238,200 of
this increase while normal lease operating expense on wells the Company owned
during both fiscal 1995 and 1996 declined by approximately $24,300 due to more
efficient operating procedures. Production taxes during 1996 amounted to
$96,939 compared to $57,446 in the prior year. The increase in taxes is a
direct result of increased revenue from oil and gas sales experienced during the
year ended December 31, 1996. Compression and dehydration fees increased from
$1,889 during fiscal 1995 to $3,304 during fiscal 1996 and transportation costs
paid by the Company declined to $1,114 during fiscal 1996 from $4,394 during the
prior year.
Compensation expense increased from $273,953 during fiscal 1995 to $375,482
during fiscal
21
<PAGE>
1996. Approximately $70,000 of this increase is a result of the inclusion of a
full year's salary for two executive officers who joined the Company in
September and December 1995. The remainder of the increase is attributable to
increases in compensation to existing employees.
Depreciation, depletion and amortization expense for the year ended
December 31, 1996 was $318,556 compared to $302,618 for the prior year.
Depletion of oil and gas assets is based on a unit of production method and
support equipment is depreciated over its estimated useful life. The increase
is attributable to both increased production of oil and gas during 1996 and
increased capitalized costs being depleted during the year. The increase in
capitalized costs is primarily attributable to the purchase of producing oil and
gas properties during December 1995 and January 1996.
General and administrative expenses for the year ended December 31, 1996
increased to $378,535 from $364,280 for the prior year reflecting primarily
increases in professional fees, insurance costs, and travel and transportation
costs.
Other expense increased from $106,191 in 1995 to $252,156 in 1996. This
increase is comprised primarily of the loss from operations for the office
building which the Company owns and the increase in interest expense. During
December 1995, the Company acquired the remaining outside interest in the
partnership which owned the office building in which its executive offices are
located. During fiscal 1995, the Company paid rent to this partnership in the
amount of $25,800. Interest expense increased from $97,252 during fiscal 1995
to $233,411 during fiscal 1996. The increase is attributable to both the debt
assumed when the Company acquired the oil and gas limited partnerships during
the year and the additional debt incurred to purchase producing oil and gas
properties acquired in December 1995 and January 1996.
Year ended December 31, 1995 compared to year ended December 31, 1994. The
Company's operations for the year ended December 31, 1995 include nine months of
activity of six oil and gas limited partnerships in which the company was the
general partner. These partnership interests were acquired from the limited
partners in exchange for Common Stock of the Company effective April 1, 1995.
Total revenues were $1,152,532 for the year ended December 31, 1995
compared to $811,202 for the year ended December 31, 1994. This represents a
42% increase in total revenues for the period. Oil and gas revenues for the
period ended December 31, 1995 were $983,841 with $700,408 coming from oil sales
and $283,433 from gas sales. Oil sales were based on the sale of 38,177 barrels
at an average price of $18.34 per barrel. Gas sales were based on the sale of
215,956 Mcf at an average price of $1.31 per Mcf. Operating income, which
consists of revenues received from other working interest holders in wells that
the Company operates including reimbursement of allocated Company overhead,
field supervision overhead, and compressor fee income, amounted to $168,691 for
the year ended December 31, 1995 compared to $255,638 for the year ended
December 31, 1994. The decline in operating income during the year ended
December 31, 1995 was almost entirely attributable to the loss of revenues from
the limited partnerships which were acquired by the Company in fiscal 1995.
Lease operating expenses for the year ended December 31, 1995 were $473,927
compared to $251,024 for the year ended December 31, 1994. This increase is
primarily a result of the inclusion of lease operating expenses associated with
the oil and gas properties owned by the limited partnerships acquired by the
Company in fiscal 1995. Lease operating expenses include production taxes paid,
22
<PAGE>
compression and dehydration charges, transportation fees paid, and normal
operating expenses incurred.
Depreciation, depletion and amortization expenses increased to $302,618 for
the year ended December 31, 1995 from $109,214 for the prior year. The increase
is primarily a result of depreciation and depletion expenses incurred on oil and
gas properties which were previously owned by the limited partnerships acquired
by the Company.
General and administrative and compensation expense were $638,233 during
the year ended December 31, 1995 compared with $693,509 for the year ended
December 31, 1994. The reduction in these expenses is primarily a result of a
decrease in bad debt expense associated with non-payment of invoices by outside
working interest owners on wells operated by the Company.
Interest expense for the year ended December 31, 1995 amounted to $97,252
compared to $41,640 for the year ended December 31, 1994. This increase is
attributable to the assumption, by the Company, of notes payable which were
previously liabilities of the limited partnerships acquired by the Company.
Net gain on the sale of assets during the year ended December 31, 1995
amounted to $5,777 compared to $113,112 for the year ended December 31, 1994.
During the year ended December 31, 1994 the Company sold three oil and gas
properties to third parties and realized significant gains on the sale. During
the year ended December 31, 1995 the Company sold a greater number of oil and
gas properties, but the properties sold had been developed by the Company, were
approaching the end of their economic lives, and were sold at lower prices for
only slight losses or gains.
CAPITAL RESOURCES AND LIQUIDITY
The Company's capital requirements relate primarily to the acquisition of
developed oil and gas properties and undeveloped leasehold acreage and
exploration and development activities. In general, because the Company's oil
and gas reserves are depleted by production, the success of its business
strategy is dependent upon a continuous acquisition and exploration and
development program.
The domestic spot price for crude oil has ranged from $11.00 to $40.00 per
barrel over the past ten years. To the extent that crude oil prices continue
fluctuating in this manner, the Company expects material fluctuations in
revenues from quarter to quarter which, in turn, could adversely affect the
Company's ability to timely service its debt to its principal banks and fund its
ongoing operations and could, under certain circumstances, require a write-down
of the book value of the Company's oil and gas reserves.
Since the Company is engaged in the business of acquiring producing oil and
gas properties, from time to time it acquires certain non-strategic and marginal
properties in some of its purchases. A portion of the Company's on-going
profitability is related to the disposition of these non-strategic properties on
a regular basis. The Company expects to continue to pursue sales of these
types of properties in the future. In most cases the revenue from these
properties is insignificant and in many cases does not exceed the lease
operating expense. As a result, a portion of the Company's capital resources
are generated by the sale of assets from continuing operations. Sales of non-
strategic and
23
<PAGE>
minor interests oil and gas properties accounted for $7,326 in losses during
fiscal 1996 and $5,777 in gains during fiscal 1995.
Capital Expenditures. The timing of most of the Company's capital
expenditures is discretionary. Currently there are no material long-term
commitments associated with the Company's capital expenditure plans.
Consequently, the Company has a significant degree of flexibility to adjust the
level of such expenditures as circumstances warrant. The Company primarily uses
internally generated cash flow and proceeds from the sale of oil and gas
properties to fund capital expenditures, other than significant acquisitions,
and to fund its working capital needs. If the Company's internally generated
cash flows should be insufficient to meet its debt service or other obligations,
the Company may reduce the level of discretionary capital expenditures or
increase the sale of non-strategic oil and gas properties in order to meet such
obligations. The level of the Company's capital expenditures will vary in
future periods depending on energy market conditions and other related economic
factors. The Company anticipates that its cash flow will be sufficient to fund
its operations and debt service at their current levels for the next year.
Substantially all of the Company's capital expenditures have been made to
acquire oil and gas properties. During the year ended December 31, 1995, the
Company completed five acquisitions of oil and gas properties for a cost of
approximately $2,246,000, including the value of the oil and gas properties
acquired by the Company in connection with the acquisition of 100% of the
limited partners' interest in four limited partnerships and approximately 74%
and 97% of the limited partners' interest in two additional limited
partnerships, respectively, for a total of 1,349,900 shares of the Company's
Common Stock, $8,392 in cash and the assumption of approximately $611,000 in
partnership debt. During the year ended December 31, 1996, the Company
completed three acquisitions of oil and gas properties for a cost of
approximately $222,000, including the value of the remaining limited partners'
interest in the two limited partnerships which were not 100% acquired in fiscal
1995. These remaining limited partnership interests were acquired for 46,320
shares of the Company's Common Stock. The Company's strategy is to continue to
expand its reserve base principally through acquisitions of producing oil and
gas properties. As a result, it is likely that capital expenditures will exceed
cash provided by operating activities in years where significant growth occurs
in the Company's oil and gas reserve base. In such cases, additional external
financing will be required.
The Company intends to continue its practice of reserve replacement and
growth through the acquisition of producing oil and gas properties, although at
this time it is unable to predict the number and size of such acquisitions, if
any, which will be completed. The Company's ability to finance its oil and gas
acquisitions is determined by its cash flow from operations and available
sources of debt and equity financing.
Financing Arrangements. To date, the Company has financed its acquisitions
of oil and gas properties primarily through bank borrowings and issuance of
Common Stock. At December 31, 1996, the Company was indebted to three principal
lenders in the aggregate amount of $2,176,603. Aggregate monthly payments on
this indebtedness are approximately $63,000 and interest rates range from 8.6%
to 10.0%. At maturity of this indebtedness, which will occur from May 1997 to
March 2001, principal amounts due will range from $25,000 to $682,000. The
Company anticipates that at maturity it will be able to refinance this
indebtedness as necessary on satisfactory terms. Substantially all of the
Company's oil and gas properties are subject to mortgages granted to secure this
debt.
24
<PAGE>
The Company owns the office building in Tulsa, Oklahoma in which its
executive offices are located. The Company financed the acquisition of this
building through borrowing from a bank. At December 31, 1996, the Company was
indebted to this bank in the principal amount of $210,969. This loan bears
interest at the rate of 9.5% per year, and requires monthly payments of $2,261,
with approximately $175,000 due at maturity in March 2001. The Company has
granted a mortgage on the building to secure this debt.
For additional information regarding the indebtedness of the Company at
December 31, 1996, see Note 5 to the Company's Consolidated Financial Statements
elsewhere in this Registration Statement.
SEASONALITY
The results of operations of the Company are somewhat seasonal due to
seasonal fluctuations in the price for crude oil and natural gas. Recently,
crude oil prices have been generally higher in the third calendar quarter and
natural gas prices have been generally higher in the first calendar quarter.
Due to these seasonal fluctuations, results of operations for individual
quarterly periods may not be indicative of results which may be realized on an
annual basis.
INFLATION AND PRICES
In recent years, inflation has not had a significant impact on the
Company's operations or financial condition. The generally downward pressure on
oil and gas prices during most of such periods has been accompanied by a
corresponding downward pressure on costs incurred to acquire, develop and
operate oil and gas properties as well as the costs of drilling and completing
wells on properties.
ITEM 3. DESCRIPTION OF PROPERTY
OIL AND GAS PROPERTIES
All of the Company's oil and gas properties, reserves and activities are
located onshore in the continental United States in the states of Texas and
Oklahoma. There are no quantities of oil or gas produced by the Company which
are subject to long-term supply or similar agreements with foreign governmental
authorities.
Oil and Gas Reserves. Sycamore Resources, LLC ("Sycamore Resources)", an
independent petroleum engineering consulting firm, has made estimates of the
Company's oil and gas reserves as of January 1, 1997. Sycamore Resources' report
covers the estimated present value of future net cash flows before income taxes
(discounted at 10%) attributable to the Company's proved developed reserves, as
well as its proved undeveloped reserves and estimated future net cash flows from
such reserves. The Sycamore Resources report includes the Company's oil and gas
properties located in the state of Kansas which have subsequently been sold, and
does not include the Company's royalty interests in 14 wells located in the
state of Ohio which are not material to the Company's total oil and gas
reserves.
25
<PAGE>
The quantities of the Company's proved reserves of oil and natural gas
presented below include only those amounts which the Company reasonably expects
to recover in the future from known oil and gas reservoirs under existing
economic and operating conditions. Proved developed reserves are limited to
those quantities which are recoverable commercially at current prices and costs,
under existing regulatory practices and with existing technology. Accordingly,
any changes in prices, operating and development costs, regulations, technology
or other factors could significantly increase or decrease estimates of the
Company's proved developed reserves. The Company's proved undeveloped reserves
include only those quantities which the Company reasonably expects to recover
from the drilling of new wells based on geological evidence from offsetting
wells. The risks of recovering these reserves are higher from both geological
and mechanical perspectives than the risks of recovering proved developed
reserves.
Set forth below are estimates of the Company's net proved reserves and
proved developed reserves and the estimated future net revenues from such
reserves and the present value thereof based upon the standardized measure of
discounted future net cash flows relating to proved oil and gas reserves in
accordance with the provisions of Statement of Financial Accounting Standards
No. 69. "Disclosures about Oil and Gas Producing Activities." Estimated future
net cash flows from proved reserves are determined by using estimated quantities
of proved reserves and the periods in which they are expected to be developed
and produced based on economic conditions at the date of the report. The
estimated future production is priced at current prices at the date of the
report. The resulting estimated future cash inflows are then reduced by
estimated future costs to develop and produce reserves based on cost levels at
the date of the report. No deduction has been made for depletion, depreciation
or income taxes or for indirect costs, such as general corporate overhead.
Present values were computed by discounting future net revenues at 10% per
annum.
The following table sets forth estimates of the proved oil and natural gas
reserves of the Company as of January 1, 1997, as evaluated by Sycamore
Resources.
<TABLE>
<CAPTION>
Oil (Bbls) Gas (Mcf)
--------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Developed Undeveloped Total Developed Undeveloped Total
Oklahoma --------- ----------- --------- --------- ----------- ---------
Texas 658,373 0 658,373 2,588,536 2,476,810 5,065,346
Kansas(1) 563,520 1,023,781 1,587,301 1,325,861 918,874 2,244,735
33,010 0 33,010 0 0 0
Total --------- --------- --------- --------- --------- ---------
1,254,903 1,023,781 2,278,684 3,914,397 3,395,684 7,310,081
========= ========= ========= ========= ========= =========
</TABLE>
_______________________
(1) Subsequent to January 1, 1997 the Company sold its oil and gas properties
in the state of Kansas. See "Sale of Kansas Oil and Gas Properties."
The following table sets forth amounts as of December 31, 1996 determined
in accordance with the requirements of the applicable accounting standards, of
the estimated future net cash flows from production and sale of the proved
reserves attributable to the Company's oil and gas properties before income
taxes and the present value thereof. Benchmark prices used in determining the
future net cash flow estimates as of January 1, 1997 were $24.25 per barrel for
oil and $2.78 per Mcf for gas.
26
<PAGE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
--------------------------------
(IN THOUSANDS)
PROVED PROVED TOTAL
DEVELOPED UNDEVELOPED PROVED
RESERVES RESERVES RESERVES
--------- ----------- --------
<S> <C> <C> <C>
Estimated future net cash
flows from proved
reserves before income
taxes $28,701 $28,360 $57,061
Present value of estimated
future net cash flows from
proved reserves before
income taxes (discounted
at 10%) $16,947 $19,359 $36,306
</TABLE>
The estimation of oil and gas reserves is a complex and subjective process
which is subject to continued revisions as additional information becomes
available. Reserve estimates prepared by different engineers from the same data
can vary widely. Therefore, the reserve data presented herein should not be
construed as being exact. Any reserve estimate depends in part on the quality
of available data, engineering and geologic interpretation, and thus represents
only an informed professional judgment. Subsequent reservoir performance may
justify upward or downward revision of such estimate.
Estimates of the Company's proved reserves have never been filed or
included in reports to any federal authority or agency.
For further information on reserves, costs relating to oil and gas
activities, and results of operations from producing activities, see Note 16 to
the Company's Consolidated Financial Statements - Supplementary Financial
Information About Oil and Gas Producing Activities (unaudited).
Productive Wells and Acreage. The following table sets forth the Company's
producing wells and Developed Acreage assignable thereto at December 31, 1996.
<TABLE>
<CAPTION>
PRODUCTIVE WELLS
----------------------------------------
DEVELOPED ACREAGE OIL GAS TOTAL
- ------------------- ----------- ----------- ------------
GROSS NET GROSS NET GROSS NET GROSS NET
- ----- --- ----- --- ----- ---- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C>
16,141 13,578 80 53.38 43 14.63 123 68.01
</TABLE>
Productive wells consist of producing wells and wells capable of
production, including gas wells awaiting pipeline connections to commence
deliveries and oil wells awaiting connection to production facilities. Wells
which are completed in more than one producing horizon are counted as one well.
Of the gross wells reported above, nine had multiple completions.
At December 31, 1996, the Company held no undeveloped acres.
27
<PAGE>
Production, Unit Prices and Costs. The following table set forth
information with respect to production and average unit prices and costs for the
periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
PRODUCTION:
Gas (Mcf) 263,123 215,956
Oil (Bbls) 56,871 38,177
AVERAGE SALES
PRICES:
Gas (per Mcf) $ 1.86 $ 1.31
Oil (per Bbl) 20.85 18.34
AVERAGE LEASE
OPERATING
COSTS PER BOE (1) 7.20 6.39
</TABLE>
____________________________________
(1) The components of production costs may vary substantially among wells
depending on the methods of recovery employed and other factors, but
generally include production taxes, lease overhead, maintenance and repair,
labor and utilities.
Drilling Activity. During the years ended December 31, 1995 and 1996, the
Company did not drill or participate in the drilling of any exploratory or
development wells. To the extent the Company engages in drilling activities in
the future other than horizontal drilling activities (See "Item 1. Description
of Business - Horizontal Drilling"), all such activities will be conducted with
independent contractors. The Company currently owns no drilling equipment.
Sale of Kansas Oil and Gas Properties. Effective February 1, 1997, the
Company sold all of its producing oil and gas properties in the state of Kansas.
This sale included 7 gross (5.6 net) wells which had average daily gross
production of 20.5 (12.9 net) barrels of oil per day. Total proved developed
oil reserves at December 31, 1996 amounted to 33,010 barrels of oil. There were
no proved undeveloped oil reserves associated with these properties. The sale
price received by the Company was $120,000 which resulted in a gain on sale of
assets of approximately $52,000.
OFFICE FACILITIES
The Company owns the office building in Tulsa, Oklahoma in which its
executive offices are located. The Company occupies approximately 2,862 square
feet of space in this building with the remaining 5,724 square feet available
for rental to third parties. At present, approximately 1,430 square feet are
unoccupied. The building is subject to a mortgage in the current principal
amount of $210,969 payable in monthly installments of $2,261 until March 2001 at
which time the balance of approximately $175,000 will be due. The Company
believes this facility is adequate for its present requirements. Except for
this office building, the Company owns no material properties other than its oil
and gas properties.
28
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On February 18, 1997, the Company declared a four-for-one stock split in
the form of a stock dividend payable to the Company's shareholders of record on
April 1, 1997. All references to outstanding shares, share ownership and per
share amounts in this Registration Statement are presented giving effect to such
stock dividend.
As of March 17, 1997, the Company had 3,233,560 issued and outstanding
shares of Common Stock, the Company's only class of equity securities issued and
outstanding. The following table sets forth, as of March 17, 1997, the number
and percentage of shares of Common Stock of the Company owned beneficially by
(i) each director of the Company, (ii) each Named Officer of the Company named
in the Summary Compensation Table in Item 6 below, (iii) all directors and
executive officers of the Company as a group, and (iv) each person known to the
Company to own of record or beneficially more than five percent of the Company's
Common Stock. Except as otherwise indicated, the persons named in the table have
sole voting and investment power with respect to the shares indicated. As of
March 17, 1997, the Company had 153 holders of Common Stock of record.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS(1)
- ------------------------ ------------------ -------------------
<S> <C> <C>
Sid L. Anderson(2) 1,327,000 39.3%
Clayton E. Woodrum(3) 67,350 2.1%
Buddie E. Livingston, II(2) 32,000 1.0%
Vincent R. Kemendo(2) 94,500 2.9%
C. Dennis McKittrick(4) 29,705 1.0%
B. E. (Bud) Livingston(2) 15,000 *
Anthony I. Ciciola(2) 15,000 *
Pangloss International, 481,250 13.9%
S.A. (5)
All Executive Officers and 1,580,555 44.7%
Directors as a group (7
persons)(2)(3)(4)
</TABLE>
_________________________________________
* less than one percent
(1) Based upon 3,233,560 issued and outstanding shares of Common Stock at March
17, 1997. Shares of Common Stock which an individual or group has the right
to acquire within 60 days pursuant to the exercise of options, warrants, or
other convertible securities are deemed to be outstanding for the purpose
of computing the percentage ownership of such individual or group, but are
not deemed to be outstanding for the purpose of computing the percentage
29
<PAGE>
ownership of any other individual or group shown in the table.
(2) Includes (a) with respect to Mr. Anderson, 139,500 shares issuable to him
upon exercise of presently exercisable options; (b) with respect to Mr.
Livingston, II 32,000 shares issuable to him upon exercise of presently
exercisable options; (c) with respect to Mr. Kemendo, 32,000 shares
issuable to him upon exercise of presently exercisable options; (d) with
respect to Mr. Livingston, 15,000 shares issuable to him upon exercise of
presently exercisable options; and (e) with respect to Mr. Ciciola, 15,000
shares issuable to him upon exercise of presently exercisable options.
(3) Includes 17,850 shares held by Mr. Woodrum's spouse and 49,500 shares
issuable to Mr. Woodrum upon exercise of presently exercisable options.
(4) Includes 12,205 shares held by Southern Financial Group, Inc., a company of
which Mr. McKittrick is President and Chief Executive Officer, and 17,500
shares issuable to Mr. McKittrick upon exercise of presently exercisable
options.
(5) Includes 225,000 shares issuable to Pangloss Holdings, S.A. upon exercise
of presently exercisable Common Stock purchase warrants.
There are no arrangements known to management which may result in a change
in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the executive officers and directors of the
Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
------ ----- ----------
<S> <C> <C>
Sid L. Anderson 50 Chairman of the Board, President and
Chief Executive Officer
Clayton E. Woodrum 57 Executive Vice President, Secretary
and Director
Buddie E. Livingston, II 42 Vice President - Operations
Vincent R. Kemendo 42 Vice President and Chief Financial
Officer
C. Dennis McKittrick 47 Director
B. E. (Bud) Livingston 70 Director
Anthony I. Ciciola 50 Director
</TABLE>
The Company's Directors will serve until the next annual meeting of
shareholders and until their successors are elected and qualified. Officers are
elected at thee annual meeting of the Board of Directors following the annual
meeting of shareholders and serve at the discretion of the Board.
30
<PAGE>
Directors of the Company do not receive any compensation for serving in their
capacity as directors, but are reimbursed for out-of-pocket expenses incurred in
attending meetings.
Sid L. Anderson. Mr. Anderson has served as Chairman of the Board of
Directors and President of the Company since its organization in 1981. From 1977
to 1981, Mr. Anderson was engaged in the private practice of law, specializing
in taxation. From 1972 to 1977 Mr. Anderson was employed as a tax manager with
Peat, Marwick, Mitchell & Co. in Tulsa, Oklahoma. Mr. Anderson received his
Bachelor of Business Administration in Accounting and his Juris Doctor degrees
from the University of Oklahoma in 1969 and 1972, respectively. Mr. Anderson was
admitted to the Oklahoma Bar Association in 1972 and became a Certified Public
Accountant in Oklahoma in 1974. Mr. Anderson is currently a member of the
Natural Gas Committee and is a former Director of the Oklahoma Independent
Petroleum Association. He is also a member of the Executive Advisory Board for
the College of Business Administration at the University of Tulsa and a Regent
of Rogers University. Mr. Anderson is a Trustee and former Chairman of the Tulsa
Industrial Authority.
Clayton E. Woodrum. Mr. Woodrum has been a principal in the financial
consulting firm of Woodrum, Wilson, Kemendo & Cuite, P.C. and its predecessors,
located in Tulsa, Oklahoma since 1986. Mr. Woodrum received his Bachelor of
Science degree in Accounting in 1963 from Kansas State University and became a
Certified Public Accountant in Oklahoma in 1965.
Buddie E. Livingston, II. Mr. Livingston joined the Company on September 1,
1995. From 1981 through August, 1995 Mr. Livingston was production
superintendent for KATO Operating Company located in Bristow, Oklahoma. From
1975 to 1981 Mr. Livingston was employed by Sun Oil Company, USA as a senior
engineer and production specialist and worked in sun's domestic and
international operations. Mr. Livingston attended the University of South
Louisiana. Mr. Livingston is the son of Mr. B. E. (Bud) Livingston, a Director
of the Company.
Vincent R. Kemendo. Mr. Kemendo joined the Company on December 26, 1995.
Prior to that, since 1991, Mr. Kemendo was a consultant with the consulting firm
of Woodrum, Shoulders, Kemendo & Evanson in Tulsa, Oklahoma. From 1988 to 1991,
Mr. Kemendo was employed as Controller for Mathews Auto Electric, Inc., an auto
parts warehousing operation. From 1983 to 1988, Mr. Kemendo was Vice President-
Budgeting and Administration for Fitzgerald, DeArman & Roberts, Inc., a regional
brokerage firm with corporate headquarters in Tulsa, Oklahoma. Prior to that
time Mr. Kemendo was employed by Cotton Petroleum Corporation as Coordinator of
Financial Analysis. Mr. Kemendo received his Bachelor of Science in Business
Administration degree from Drake University in 1977 and received his Masters of
Business Administration from Oklahoma State University in 1978.
C. Dennis McKittrick. Mr. McKittrick was elected a Director of the Company
in July 1993. Mr. McKittrick is Executive Vice President of Southern Financial
Group, Inc., an investment banking firm headquartered in Columbia, South
Carolina. From 1988 to 1992, Mr. McKittrick was Executive Vice President of
McCarley and Associates, an investment banking firm headquartered in Greenville,
South Carolina. Prior to 1988, Mr. McKittrick was First Vice President and
Partner of Johnson, Lane, Space, Smith and Co., Inc., an investment banking firm
headquartered in Savannah, Georgia.
B. E. (Bud) Livingston. Mr. Livingston was elected a Director of the
Company in June 1996. Since 1979, Mr. Livingston has been President of his own
oil and gas production companies, KATO
31
<PAGE>
Operating Company and Livingston Oil Company, and has performed independent
consulting services for other oil and gas companies. From 1948 through 1978, Mr.
Livingston was employed by Sunray Oil Corporation in a number of positions the
most recent of which was Manager of Operations - Mid-Continent Region. Mr.
Livingston is the father of Buddie E. Livingston, II, the Vice President -
Operations for the Company.
Antony I. Ciciola. Mr. Ciciola is the Chairman and Chief Executive Officer
of American Glove Corporation located in Amsterdam, New York. Since 1992, Mr.
Ciciola has been a principal of Hospimed Distribution, Inc., an enterprise that
manufactures and distributes disposable hospital, medical and non-medical
products. Since 1987, he has been President of Taulen Consultant, Inc., a
company specializing in the design and setup of manufacturing facilities. From
1975 to 1993, Mr. Ciciola was President of Action Pipe Fabrication, Inc., a
major fire protection and automatic sprinkler fabrication and contractor in the
Province of Quebec, Canada. Mr. Ciciola graduated from Ahuntsic College in 1968
with a degree in collegial studies in fluid dynamics, piping and gears. Mr.
Ciciola is a Canadian citizen and resides in Montreal, Canada.
ITEM 6. EXECUTIVE COMPENSATION
The table below sets forth, in summary form, (1) the compensation paid, for
the years shown, to Sid L. Anderson, the Company's President, and the two other
highest-paid executive officers of the Company serving as executive officers on
December 31, 1996 (the "Named Officers"); (2) the stock options and stock
appreciation rights granted to the Named Officers for the years shown; and (3)
long-term payouts and other compensation to the Named Officers for the years
shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Awards Options/ Payouts Compensation
Position Year ($) ($) ($)(1) ($) SARs (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sid L. Anderson, 1996 150,000 6,250 94,347(2) --- --- --- ---
Chairman of the Board 1995 58,333 --- 110,573(3) --- --- --- ---
and President 1994 --- --- 160,928(4) --- --- --- ---
Buddie E. Livingston, II 1996 48,000 2,000 --- --- --- --- 216
Vice President of 1995 --- --- --- --- --- --- ---
Operations(5) 1994 --- --- --- --- --- --- ---
Vincent R. Kemendo 1996 40,000 1,667 --- --- --- --- ---
Vice President of 1995 667 --- --- --- --- --- ---
Finance(6) 1994 --- --- --- --- --- --- ---
</TABLE>
______________________________
(1) Except as noted, none of the executive officers listed received perquisites
or other personal benefits that exceeded the lesser of $50,000 or 10
percent of the salary and bonus for such officers.
32
<PAGE>
(2) Includes a $75,370 guaranty fee paid to Mr. Anderson (see "Employment
Agreements") and a total of $18,977 paid by the Company to or on behalf of
Mr. Anderson for country club dues, automobile allowance and lease expense
and life insurance premiums.
(3) Includes a $30,000 guaranty fee (see "Employment Agreements") and $54,350
in consulting fees paid to Mr. Anderson and a total of $26,233 paid by the
Company on behalf of Mr. Anderson for country club dues, automobile lease
expense and life insurance premiums.
(4) Includes $135,200 in consulting fees paid to Mr. Anderson and a total of
$25,728 paid by the Company on behalf of Mr. Anderson for country club
dues, automobile lease expense and life insurance premiums.
(5) Mr. Livingston joined the Company as a full time employee on January 1,
1996.
(6) Mr. Kemendo joined the Company on December 26, 1995.
BONUS PLAN
The Company has an incentive compensation bonus plan in effect for certain
salaried employees other than its President. The annual bonus pool is equal to
10% of annual net income of the Company in excess of $100,000. The plan is
currently administered and allocated among the eligible employees by the
Company's Board of Directors. No distributions have been made from this plan
since its inception.
STOCK OPTIONS
Director Stock Option Plan. The Company has adopted a Directors' Stock
Option Plan pursuant to which non-employee Directors of the Company may be
granted options to purchase shares of Common Stock of the Company. The total
number of shares which may be issued pursuant to this plan is 150,000 shares of
Common Stock. The plan provides that the exercise price of options granted
pursuant to the plan shall not be less than the fair market value of the shares
of Common Stock on the date of grant and that options granted are exercisable
for the lesser of ten years from the date of grant or 30 days following
termination as a member of the Company's Board of Directors. The plan is
administered by the Board of Directors. Through December 31, 1996, options to
purchase 15,000 shares of the Company's Common Stock at an exercise price of
$1.30 per share had been granted under this plan. In January 1997 additional
options to purchase a total of 50,000 shares of Common Stock at an exercise
price of $1.40 per share were granted under the plan to the four non-employee
Directors of the Company. The total number of options granted under this Plan as
of the date of this Registration Statement is 65,000 options with exercise
prices ranging from $1.30 to $1.40 per share of Common Stock.
Employee Stock Option Plan. The Company has adopted an Employee Stock
Option Plan pursuant to which employees and any other persons who perform
substantial services for or on behalf of the Company may be granted options to
purchase shares of Common Stock of the Company. Directors who are also employees
are eligible to receive options under this plan. The total number of shares
which may be issued pursuant to this plan is 100,000 shares of Common Stock. The
plan provides that the exercise price of options granted pursuant to the plan
shall not be less than the fair
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market value of the shares of Common Stock on the date of grant and that options
granted are exercisable for the lesser of ten years from the date of grant or 30
days following termination of employment with the Company. The plan is
administered by the Board of Directors. Through December 31, 1996, no options
had been granted under this plan.
During the years ended December 31, 1996 and 1995 (i) no restricted stock
awards were granted, (ii) no stock options or stock appreciation rights were
granted, (iii) no options or stock appreciation rights were exercised, and (iv)
no awards under any long-term incentive plan were made to any officer or
employee of the Company.
The following table sets forth information relating to the exercises of
stock options by each of the Company's officers and directors during the year
ended December 31, 1996 and the value of unexercised stock options as of
December 31, 1996.
AGGREGATED OPTION EXERCISES IN THE FISCAL
YEAR ENDED DECEMBER 31, 1996 AND
DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
OPTION EXERCISES
DURING YEAR
ENDED DECEMBER 31, 1996 NUMBER OF SECURITIES
-----------------------
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED VALUE DECEMBER 31, 1996 AT DECEMBER 31, 1996
-------------------------- ---------------------------------
NAME ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ------------ --------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sid L. Anderson None None --- 7,500(1) --- $5,250
Clayton E. Woodrum None None --- 7,500(2) --- 5,250
Buddie E. Livingston II None None --- --- --- ---
Vincent R. Kemendo None None --- --- --- ---
C. Dennis McKittrick None None --- 7,500(2) --- 5,250
B. E. (Bud) Livingston None None --- --- --- ---
Anthony I. Ciciola None None --- --- --- ---
</TABLE>
- --------------------
(1) Reflects options granted in July 1993 not under either of the Company's
option plans, exercisable at $1.30 per share.
(2) Reflects options granted in July 1993 under the Company's Directors' Stock
Option Plan, exercisable at $1.30 per share.
Recently Granted Options. Effective January 21, 1997, the Company granted
options to purchase a total of 570,000 shares of Common Stock to certain
officers of the Company. These options were not granted under either of the
Company's stock option plans. The options granted vest at 40% on date of grant,
30% one year from the date of grant and the remaining 30% two years from the
date of grant. These options must be exercised during the holder's employment
with the Company or within 30 days of termination of employment. In addition,
the holder waives all rights to exercise any vested options granted if
employment by the Company is terminated for cause.
In addition, effective January 21, 1997 the Company granted options to
purchase a total of 50,000 shares of Common Stock to four non-employee directors
of the Company. These options were issued under the Company's Director's Stock
Option Plan and are fully vested as of the date of grant.
The table below sets forth, in summary form, (i) the name of each person
receiving a grant of stock options from the Company effective January 21, 1997;
(ii) the number of securities underlying the options; (iii) the percent such
grant represents of the total options granted to employees effective
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<PAGE>
January 21, 1997; and (iv) the per-share exercise price of the options granted.
OPTION GRANTS EFFECTIVE JANUARY 21, 1997
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS EXERCISE OR
OPTIONS/SARS GRANTED BASE PRICE
NAME GRANTED JANUARY 21, 1997 ($/SHARE)
---- ------------ ---------------- -----------
<S> <C> <C> <C>
Sid L. Anderson 330,000 53% 1.40
Clayton E. Woodrum 90,000 15% 1.40
Buddie E. Livingston II 80,000 13% 1.40
Vincent R. Kemendo 80,000 13% 1.40
C. Dennis McKittrick 10,000 2% 1.40
B. E. (Bud) Livingston 15,000 2% 1.40
Anthony I. Ciciola 15,000 2% 1.40
------- ----
Total 620,000 100%
======= ====
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Sid L. Anderson,
President of the Company. The term of Mr. Anderson's Employment Agreement
continues until the later of October 31, 2000 or so long as Mr. Anderson is a
personal guarantor of any of the Company's debt. Under this Agreement, Mr.
Anderson receives a base salary of $150,000 per year, plus additional annual
incentive compensation in an amount equal to 10% of the Company's annual audited
pre-tax net income in excess of $150,000. In addition, Mr. Anderson is entitled
to participate in all benefit programs the Company makes available to employees.
The Agreement also provides for the payment to Mr. Anderson of an automobile
allowance of $1,000 per month, and such other benefits as may be determined from
time to time by the Board of Directors of the Company. In addition, under the
terms of a separate Guaranty Fee Agreement between Mr. Anderson and the Company,
Mr. Anderson is entitled to a semi-annual payment of an amount equal to the
greater of $15,000 or 3% of the aggregate amount of Company indebtedness
guaranteed personally by him. To secure payment of this fee, the Company has
granted Mr. Anderson a security interest in the Company's equipment, inventory,
fixtures, receivables and other assets. Mr. Anderson's Employment Agreement
provides that the Company has the right to terminate the Agreement at any time
upon written notice and, unless the Agreement has been terminated for cause, as
defined, the Company is obligated to pay Mr. Anderson the compensation payable
for the remainder of the term of the Agreement, including any incentive
compensation, vacation pay or accrued employee benefits. Mr. Anderson has the
right to terminate his employment with the Company upon 30 days written notice
in which event, the Company is only obligated to compensate him under the terms
of the Agreement up to the date of termination. The Agreement also contains
provisions restricting Mr. Anderson from engaging in business activities in
competition with the Company.
The Company has also entered into employment agreements with Buddie E.
Livingston, II, and Vincent R. Kemendo pursuant to which they are employed by
the Company as Vice
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President - Operations and Vice President - Finance, respectively. The
agreements with Messrs. Livingston and Kemendo expire on December 31, 2000,
unless extended by the Company's Board of Directors. Under these agreements,
Messrs. Livingston and Kemendo receive base salaries of $48,000 and $40,000 per
year, respectively. In addition, Messrs. Livingston and Kemendo are entitled to
participate in all benefit programs the Company makes available to employees.
Under their agreements, Messrs. Livingston and Kemendo are eligible to
participate in the Company's incentive compensation bonus plan. See "Bonus
Plan". The Company has the right to terminate each of these employment
agreements upon written notice and, unless the agreement has been terminated for
cause, as defined, the Company is obligated to pay the terminated individual the
compensation payable for the remainder of the term of his agreement, including
any incentive compensation, vacation pay or accrued employee benefits. Messrs.
Livingston and Kemendo each have the right to terminate their employment
agreements with the Company upon 30 days written notice to the Company in which
event the Company is only obligated to compensate the individual up to the date
of termination. Each of the Employment Agreements also contain certain
provisions restricting Messrs. Livingston and Kemendo from engaging in business
activities in competition with the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Until December 1, 1995, the Company leased its executive offices in Tulsa
Oklahoma from a partnership in which the Company was a general partner and owned
a 50% interest. During 1995, $25,800 was paid to the partnership as rent.
Effective December 1, 1995, the Company acquired the remaining 50% interest in
the partnership for $50,000 in cash and assumption of approximately $168,000 of
partnership debt. The partnership was then liquidated. See "Item 3. Description
of Properties - Office Facilities".
Through August 1995, the Company sold gas produced from certain wells it
operates to a gas marketing company owned by Sid L. Anderson, Chairman of the
Board, President and Chief Executive Officer of the Company. Such sales for the
year ended December 31,1995 were approximately $89,000. The gas marketing
company collected a 3% commission on the resale of such gas, which was utilized
to pay income and other taxes of the gas marketing company. Effective September
1, 1995, the Company began to sell gas produced from the wells to an
unaffiliated purchaser.
In 1995, the Company began paying a fee to Sid L. Anderson, Chairman of the
Board, President and Chief Executive Officer of the Company, pursuant to the
terms of a Guaranty Fee Agreement. Under the terms of this Agreement, Mr.
Anderson receives an annual fee for guaranteeing Company debt equal to the
greater of $15,000 or 3% of the guaranteed debt. During 1996 and 1995, fees paid
to Mr. Anderson under this Agreement were approximately $76,000 and $30,000,
respectively. See "Item 6. Executive Compensation - Employment Agreements".
The Company incurs fees for tax and accounting services provided by a firm
in which Clayton E. Woodrum, Executive Vice President and a Director of the
Company, is a partner. Amounts paid by the Company to this firm during 1996 and
1995 were $39,943 and $34,476, respectively. In addition, during 1996, the
Company issued a total of 35,700 shares of Common Stock to this firm in payment
for services rendered. The value assigned to this stock, $49,980, was based on
billings received from the firm. At the request of the firm, 17,850 of these
shares were issued to Pat Woodrum, spouse of Clayton E. Woodrum, and 17,850 of
these shares were issued to Andrea Kemendo, spouse of a
36
<PAGE>
partner in the firm.
During October, 1995 the Company purchased two producing oil and gas
properties from KATO Operating Company ("KATO"), Livingston Oil and other
third parties for a purchase price of $975,000. Subsequent to this
transaction, Mr. B. E. Livingston, who is the President and owner of both
KATO and Livingston Oil, was elected as a Director of the Company. The
producing properties purchased consisted of a field containing 10 producing
wells and several shut-in wells and a group of five producing leases which
contain a total of nine producing wells. Additionally, in January, 1996 the
Company purchased a producing oil and gas property from several individuals
and entities, including an affiliate of KATO, for $152,000. KATO was the
operator of the property purchased and the interest acquired from the KATO
affiliate amounted to a 2.03% working interest in the property. These
transactions were reviewed by the Board of Directors and were determined,
based on negotiations that occurred at the time, to be on terms no less
favorable to the Company than could have been obtained at the time and
under the same circumstances from non-affiliated persons.
During 1995, the Company paid $5,000 to McKittrick and Associates and
paid $20,000 and issued 12,205 shares of Common Stock, valued at $1.39 per
share, to Southern Financial Group, Inc. for investment banking services
rendered in connection with the acquisition by the Company of limited
partner interests in six limited partnerships in which the Company was the
sole general partner. Mr. C. Dennis McKittrick, a Director of the Company,
is the President of McKittrick and Associates and President and Chief
Executive Officer of Southern Financial Group, Inc. Management believes,
based on negotiations that occurred at the time, that these transactions
were no less favorable to the Company than could have been obtained at the
time and under the same circumstances from non-affiliated persons.
Pursuant to an agreement signed in February 1996, B. E. (Bud)
Livingston, a member of the Company's Board of Directors, will provide
evaluation and reservoir engineering services to the Company with respect
to oil and gas wells in Coal County, Oklahoma and Borden and Stonewall
Counties, Texas in exchange for an amount equal to the net of a percentage
of the net revenue interest and a percentage of the lease operating
expenses attributable to certain producing oil and gas wells located in
Garfield and Noble Counties, Oklahoma. During 1996, no amounts were paid by
the Company to Mr. Livingston pursuant to this Agreement.
ITEM 8. DESCRIPTION OF SECURITIES
On February 18, 1997, the Company declared a four-for-one stock split
in the form of a stock dividend payable to the Company's shareholders of
record on April 1, 1997. All references to outstanding shares, share
ownership and per share amounts in this Registration Statement are
presented giving effect to such stock dividend.
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, par value $0.01 per share ("Common Stock"), and
25,000,000 shares of Preferred Stock, par value $0.05 per share ("Preferred
Stock"). As of the date of this Registration Statement, the Company had
3,233,560 issued and outstanding shares of Common Stock, excluding
1,081,250 shares held by the Company as treasury stock. No shares of
Preferred Stock are issued and outstanding as of the effective date of this
Registration Statement.
37
<PAGE>
The following description of certain matters relating to the capital stock
of the Company is a summary and is qualified in its entirety by the provisions
of the Company's Certificate of Incorporation and Bylaws, copies of which have
been filed with the Securities and Exchange Commission as exhibits to this
Registration Statement.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders of the Company. In addition, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the preferential right to receive dividends with
respect to any Preferred Stock that from time to time may be outstanding. In the
event of the dissolution, liquidation or winding up of the Company, the holders
of Common Stock are entitled to share ratably in all assets remaining after
payment of all liabilities of the Company and subject to the prior distribution
rights of the holders of any Preferred Stock that may be outstanding at that
time. The holders of Common Stock do not have cumulative voting rights or
preemptive or other rights to acquire or subscribe for additional, unissued or
treasury shares. All outstanding shares of Common Stock are fully paid and
nonassessable.
PREFERRED STOCK
The Board of Directors has the authority to issue 25,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
qualifications, privileges, limitations or restrictions of each such series
without any further vote or action by the shareholders, including the dividend
rights, dividend rate, conversion rights, voting rights, terms of redemption
(including sinking fund provisions), redemption price or prices, liquidation
preferences and the number of shares constituting any series or the designations
of such series. No shares of Preferred Stock have ever been issued, and the
Company has no present plans to issue any Preferred Stock.
STOCKHOLDER ACTION
Pursuant to the Company's Certificate of Incorporation, with respect to any
act or action required of or by the holders of the Company's Common Stock, the
affirmative vote of the holders of a majority of the issued and outstanding
Common Stock entitled to vote thereon is sufficient to authorize, affirm, ratify
or consent to such act or action, except as otherwise provided by law.
The Bylaws of the Company provides that shareholders may take certain
action without the holding of a meeting by written consent or consents signed by
the holders of a majority of the outstanding shares of the capital stock of the
Company entitled to vote thereon. Prompt notice of the taking of any action
without a meeting by less than unanimous consent of the stockholders will be
given to those stockholders who do not consent in writing to the action. The
purposes of this provisions are to facilitate action by stockholders and to
reduce the corporate expense associated with annual and special meetings of
stockholders. Pursuant to rules and regulations of the Commission, if
stockholder action is taken by written consent, the Company will be required to
send each stockholder entitled to vote on the matter acted on, but whose consent
was not solicited, an information statement containing information substantially
similar to that which would have been contained in a proxy statement.
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<PAGE>
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The Company's authorized but unissued capital stock consists of 21,766,440
shares of Common Stock (including 1,081,250 shares held in treasury) and
25,000,000 shares of Preferred Stock. One of the effects of the existence of
authorized but unissued capital stock may be to enable the Board of Directors to
render more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby to protect the continuity of the Company's management. If in the due
exercise of its fiduciary obligations, for example, the Board of Directors were
to determine that a takeover proposal was not in the Company's best interests,
such shares could be issued by the Board of Directors without stockholder
approval in one or more private offerings or other transactions that might
prevent or render more difficult or costly the completion of the takeover
transaction by diluting the voting or other rights of the proposed acquirer or
insurgent stockholder or stockholder group, by creating a substantial voting
block in institutional or other hands that might undertake to support the
position of the incumbent Board of Directors, by effecting an acquisition that
might complicate or preclude the takeover, or otherwise. In this regard, the
Company's Certificate of Incorporation grants the board of Directors broad power
to establish the rights and preferences of the authorized and unissued shares of
Preferred Stock, one or more series of which could be issued entitling holders
to vote separately as a class on any proposed merger or consolidation, to
convert shares of Preferred Stock into a larger number of shares of Common Stock
or other securities, to demand redemption at a specified price under prescribed
circumstances related to a change in control, or to exercise other rights
designed to impede a takeover. The issuance of shares of Preferred Stock
pursuant to the Board's authority described above could decrease the amount of
earnings and assets available for distribution to holders of Common Stock, and
adversely affect the rights and powers, including voting rights, of such holders
and may have the effect of delaying, deferring or preventing a change in control
of the Company. The Board of Directors does not currently intend to seek
stockholder approval prior to any issuance of authorized but unissued stock,
unless otherwise required by law.
CERTIFICATE OF INCORPORATION AND BYLAWS
Under Oklahoma law, the exclusive power to adopt, amend and repeal bylaws
of a corporation is conferred solely upon the shareholders unless the
corporation's certificate of incorporation also confers such power upon its
Board of Directors. Under the Company's Certificate of Incorporation, the Board
of Directors has been granted this power. The Company's Bylaws also provide
that the number of directors shall be no fewer than three and no greater than
nine as fixed from time to time by resolution of the board of Directors. These
provisions, in addition to the existence of authorized but unissued capital
stock, may have the effect, either alone or in combination with each other, of
making more difficult or discouraging an acquisition of the Company deemed
undesirable by the Board of Directors.
OKLAHOMA TAKEOVER STATUTES
Upon this Registration Statement becoming effective, the Company will
become subject (unless the Company's Certificate of Incorporation is amended by
the Company's shareholders to be excluded) to the control share provisions of
Section 1090.1 of the Oklahoma General Corporation Act ("OGCA"). Generally, and
subject to various conditions and exceptions, the control share provisions of
the OGCA deny voting rights to "control shares" of a public company meeting
certain jurisdictional
39
<PAGE>
nexus requirements. "Control shares" are shares acquired by a person that, when
added to other shares owned by the "acquiring person," have voting power in the
election of directors within any of the following ranges: 20% or more but less
than 33 1/3%; 33 1/3% or more but less than a majority; or a majority or more.
Full voting rights may be returned by resolution of the shareholders approved by
a majority vote of all voting power, excluding interested shares.
The Company is also subject to Section 1090.3 of the OGCA which in general,
prevents an "interested shareholder" from engaging in a "business combination"
with an Oklahoma corporation for three years following the date such person
became an interested shareholder, unless (i) prior to the date such person
became an interested shareholder, the board of directors of the corporation
approved the transaction in which the interested shareholder became an
interested shareholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested shareholder's
becoming an interested shareholder, the interested shareholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held (x) by directors who are also officers of the
corporation and (y) by employee stock plans that do not provide employees with
the rights to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer); or (iii) on or subsequent to
the date of the transaction in which such person became an interested
shareholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of shareholders by the affirmative
vote of the holders of two-thirds of the outstanding voting stock of the
corporation now owned by the interested shareholder. Under Section 1090.3, the
restrictions described above do not apply to certain business combinations
proposed by an interested shareholder following the announcement or notification
of one of a number of extraordinary transactions involving the corporation and a
person who had not been an interested shareholder during the previous three
years or who became an interested shareholder during the previous three years or
who became an interested holder with the approval of a majority of the
corporation's directors, if such extraordinary transaction is approved or not
opposed by a majority of the directors who were directors prior to any person
becoming an interested stockholder during the previous three years or were
recommended for election or elected to succeed such directors by a majority of
such directors.
Section 1090.3 defines a "business combination" to include (i) any merger
or consolidation involving the corporation and an interested stockholder, (ii)
any sale, transfer, pledge or other disposition involving an interested
stockholder of 10% or more of the assets of the corporation, (iii) subject to
certain exceptions, any transaction which results in the issuance or transfer by
the corporation of any stock of the corporation to an interested stockholder,
(iv) any transaction involving the corporation which has the effect of
increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested shareholder or (v) the receipt
by an interested shareholder of any loans, guarantees, pledges or other
financial benefits provided by or through the corporation. In addition, Section
1090.3 defines an "interested shareholder" as any entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by such an entity
or person.
SHAREHOLDER REPORTS
The Company will furnish to its shareholders annual reports containing
audited financial statements reported on by independent auditors for each fiscal
year. Quarterly reports containing unaudited financial information for the
first three quarters of each fiscal year will be furnished to a
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<PAGE>
shareholder upon request.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
The shares of Common Stock of the Company have limited transferability and
there is no established trading market for the Company's Common Stock. Further,
there can be no predictions or assurance as to whether a trading market may
ultimately develop in the Company's Common Stock. The Company has no present
plans or intentions to initiate any public offering of its Common Stock or other
securities in the foreseeable future, nor has the Company agreed to register any
of its outstanding shares of Common Stock under the Securities Act on behalf of
any shareholder. To the extent that a public trading market develops in the
Company's Common Stock after the effective date of this Registration Statement,
such market would be in the general over-the-counter securities market.
HOLDERS
In addition to the 3,233,560 shares of Common Stock currently issued and
outstanding, there are outstanding options to purchase a total of 642,500 shares
of Common Stock at exercise prices ranging from $1.30 to $1.40 per share. Of
these options, 300,500 are currently exercisable. In addition, there are
outstanding warrants to purchase 225,000 shares of Common Stock at exercise
prices ranging from $1.20 to $1.60 per share.
As of March 17, 1997, the Company had 153 holders of record of its Common
Stock.
DIVIDENDS
The Company has never paid any dividends on its Common Stock. The Company
expects to retain all available earnings generated by its operations for the
development and growth of its business and does not anticipate paying any cash
dividends in the foreseeable future. Any future determination as to the payment
of dividends will be made at the discretion of the Board of Directors and will
depend on a number of factors, including the future earnings, capital
requirements, financial condition and future prospects of the Company,
restrictions in the Company's current or future financing agreements and such
other factors as the Board of Directors may deem relevant.
TRANSFER AGENT
The Company currently serves as its own transfer agent for the Company's
Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least two years, including an "affiliate",
41
<PAGE>
is entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (i) 1% of the then outstanding shares of the Company's
Common Stock or (ii) an amount equal to the average weekly reported volume of
trading in such shares during the four calendar weeks preceding such sale.
Sales under Rule 144 are also subject to certain manner of sale limitations,
notice requirements and the availability of current public information about the
Company. A person (or persons whose shares are aggregated) who is not deemed an
"affiliate" of the Company and who has beneficially owned Restricted Shares for
at least three years is entitled to sell such shares under Rule 144 without
regard to these volume or other limitations. Restricted shares properly sold in
reliance on Rule 144 are thereafter freely tradable without restriction or
registration under the Securities Act, unless thereafter held by an "affiliate"
of the Company.
Of the 3,233,560 shares of the Company's Common Stock outstanding,
1,418,750 are eligible for sale under Rule 144 immediately following the
effective date of this Registration Statement. Substantially all of the
remaining 1,814,810 outstanding shares of Common Stock which are currently
subject to Rule 144 resale restrictions will be eligible for resale under Rule
144 commencing in November 1997 through January 1999.
No predictions can be made of the effect, if any, of future public sales of
restricted shares or the availability of restricted shares for sale in the
public market. Sales of substantial amounts of Common Stock under Rule 144
could adversely affect prevailing market prices.
ITEM 2. LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceeding.
From time to time the Company is a defendant in various legal proceedings which
are considered routine litigation incidental to the Company's business, the
disposition of which management does not anticipate will have a material effect
on the financial position or result of operations of the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Within the three-year period immediately preceding the filing date of this
Registration Statement, the Company issued securities not registered under the
Securities Act of 1933 (the "Securities Act") as set forth below. In each such
transaction, an exemption from registration was claimed under Sections 3(b) or
4(2) of the Securities Act and regulations promulgated thereunder because no
public offering was involved and the securities were purchased for investment
and not with a view to the distribution thereof. No underwriter was involved in
any of the stock transactions discussed below nor were any underwriting
discounts, except as noted, or commission paid. Each certificate representing
shares issued bears a restrictive legend and stop transfer instructions were
entered on the Company's stock transfer records with respect thereto.
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In November 1995 (effective April 1, 1995) the Company exchanged a total of
1,337,695 newly issued shares of Common Stock, valued at $0.95 per share, $8,293
in cash and assumption of approximately $611,000 in debt for (i) 100% of the
limited partners' interests in four Oklahoma limited partnerships, (ii) 96% of
the limited partners' interest in an Oklahoma limited partnership, and (iii) 74%
of the limited partners' interest in an Oklahoma limited partnership. Effective
May 31, 1996, the Company acquired the remaining limited partners' interests in
the latter two partnerships in exchange for 46,320 newly issued shares of the
Company's Common Stock, valued at $0.95 per share. The Company was the sole
general partner in each of these partnerships which owned oil and gas properties
in the states of Oklahoma, Texas and Kansas. The shares were issued to
approximately 90 limited partners in exchange for their limited partner
interests. Subsequent to completion of the exchange, each of the partnerships
was liquidated and the oil and gas properties were conveyed to the Company as
the sole remaining partner. The Company paid $5,000 to McKittrick and
Associates and $20,000 and 12,205 newly issued shares of Common Stock to
Southern Financial Group, Inc. as investment banking fees for their assistance
in completing the exchange. C. Dennis McKittrick, President of McKittrick and
Associates and President and Chief Executive Officer of Southern Financial
Group, Inc., is a Director of the Company.
In November 1995 the Company issued 168,750 shares of Common Stock to
Pangloss International, S.A. in partial payment of indebtedness of the Company.
For the purpose of this transaction, the Common Stock was valued at $0.33 per
share.
During the period of January through November 1996 the Company issued a
total of 126,640 shares of Common Stock to 33 persons for a purchase price of
$1.40 per share paid in cash.
In March 1996 the Company sold 87,500 shares of Common Stock to Pangloss
International, S.A. for a purchase price of $1.20 per share paid in cash.
In January 1997 the Company issued a total of 35,700 shares of Common Stock
in payment for tax and accounting services rendered by the firm of Woodrum,
Wilson, Kemendo & Cuite, P.C. at a value of $1.40 per share. At the request of
the firm, 17,850 of these shares were issued to Andrea Kemendo, spouse of a
partner in the firm, and 17,850 of these shares were issued to Pat Woodrum. Pat
Woodrum is the wife of Clayton E. Woodrum, a partner with the firm and Executive
Vice President and a Director of the Company.
The Company is currently conducting a private placement for up to 75,000
shares of the Company's Common Stock for a purchase price of $2.00 per share.
The offering period extends to March 31, 1997.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended and Restated Certificate of Incorporation of the Company
authorizes and the Amended and Restated Bylaws of the Company provide that the
Company shall indemnify its officers and directors to the fullest extent
permitted by applicable law. Section 1031 of the Oklahoma General Corporation
Act (the "OGCA") provides, in general, that each director and officer of a
corporation may be indemnified against expenses (including attorneys' fees,
judgments, fines and amounts paid in
43
<PAGE>
settlement) actually and reasonably incurred in connection with the defense or
settlement of any threatened, pending or completed legal proceedings in which he
is involved by reason of the fact that he is or was a director of officer of
such corporation, if he acted in good faith in a manner that he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceedings, if he had no reasonable
cause to believe that his conduct was unlawful. If the legal proceeding,
however, is by or in the right of the corporation, the director or officer may
not be indemnified in respect of any claim, issue or manner as to which he shall
have been adjudged to be liable to the corporation unless a court determines
otherwise.
As permitted by Section 1006 of OGCA, the Amended and Restated Certificate
of Incorporation of the Company provides that no director of the Company shall
be personally liable to the Company or its stockholders for monetary damages for
breach of his fiduciary duty as a director, provided, however, that such
provision shall not apply to any liability of a director (1) for any breach of a
director's duty of loyalty to the Company or its stockholders, (2) for acts or
omissions that are not in good faith or involve intentional misconduct or a
knowing violation of the law, (3) under Section 1053 of the OGCA or (4) for any
transaction from which the director derived an improper personal benefit.
PART F/S
The Consolidated Financial Statements of the Company as of December 31,
1996 and 1995 included in this Registration Statement have been audited by an
independent auditor whose report is included elsewhere in this Registration
Statement.
44
<PAGE>
PART III
ITEMS 1 AND 2. INDEX TO AND DESCRIPTION OF EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2. Charter and Bylaws
2.1 Amended and Restated Certificate of Incorporation
2.2 Amended and Restated Bylaws
3. Instruments Defining the Rights of Security Holders
Not Applicable
5. Voting Trust Agreement
Not Applicable
6. Material Contracts
6.1 Employment Agreement dated November 1, 1995 between Pan
Western Energy Corporation and Sid L. Anderson
6.2 Guaranty Fee Agreement dated November 1, 1995 between Pan
Western Energy Corporation and Sid L. Anderson
6.3 Security Agreement dated November 1, 1995 between Pan Western
Energy Corporation and Sid L. Anderson
6.4 Employment Agreement dated February 19, 1996 between Pan
Western Energy Corporation and Buddie E. Livingston, II
6.5 Employment Agreement dated February 24, 1996 between Pan
Western Energy Corporation and Vincent R. Kemendo
6.6 Technical Information and Patent License Agreement dated July
11, 1996 between Pan Western Energy Corporation and Amoco
Corporation
6.7 Pan Western Energy Corporation 1992 Directors' Stock Option
Plan
6.8 Pan Western Energy Corporation 1992 Employee Stock Option Plan
6.9 Letter Agreement dated February 6, 1996 between Pan Western
Energy Corporation and Bud E. Livingston
7. Material Foreign Patents
Not Applicable
8. Additional Exhibits
8.1 Sycamore Resources, LLC report on Pan Western Energy
Corporation oil and gas reserves as of January 1, 1997
8.2 Consent of Sycamore Resources, LLC
45
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company has caused this Registration Statement to be signed by the undersigned,
thereunto duly authorized.
PAN WESTERN ENERGY CORPORATION
(Registrant)
Date: April 4, 1997
By: /s/ SID L. ANDERSON
--------------------------------------------------
Sid L. Anderson, President
46
<PAGE>
PAN WESTERN ENERGY CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1996 AND 1995, AND
INDEPENDENT AUDITORS' REPORT
<PAGE>
[LOGO OF DELOITTE & TOUCHE LLP APPEARS HERE]
[LETTERHEAD OF DELOITTE & TOUCHE LLP APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Pan Western Energy Corporation:
We have audited the accompanying consolidated balance sheets of Pan Western
Energy Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Pan Western Energy Corporation
and subsidiaries at December 31, 1996 and 1995 and the consolidated results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 21, 1997
Tulsa, Oklahoma
<PAGE>
PAN WESTERN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 232,699 $ 15,683
Restricted cash 103,995 -
Receivables:
Trade, net of allowance of $11,080 283,095 247,570
Due from stockholder 1,594 -
Due from affiliated partnerships 1,187 6,781
Income tax receivable 14,950 14,950
---------- ----------
Total current assets 637,520 284,984
---------- ----------
Property and equipment:
Oil and gas properties (successful efforts method) 3,474,363 3,218,328
Other property and equipment 374,932 369,046
---------- ----------
3,849,295 3,587,374
Less accumulated depreciation and depletion 918,439 663,208
---------- ----------
Net property and equipment 2,930,856 2,924,166
---------- ----------
Other assets 57,836 15,162
---------- ----------
$3,626,212 $3,224,312
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 472,412 $ 250,764
Undistributed oil and gas revenues 149,276 165,936
Due to affiliated partnership 7,540 8,069
Accrued liabilities 31,520 29,743
Current portion of long-term debt 1,338,665 650,719
---------- ----------
Total current liabilities 1,999,413 1,105,231
Long-term debt 1,072,469 1,434,445
Minority interests in consolidated partnerships - 130,668
---------- ----------
Total liabilities 3,071,882 2,670,344
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock ($.05 par value; authorized 25,000,000
shares; no shares issued or outstanding) - -
Common stock ($.01 par value; authorized 1996,
25,000,000 shares; 1995, 12,500,000 shares
issued 1996 - 4,314,810 shares; 1995 - 4,018,650 shares) 43,148 40,187
Additional paid-in capital 1,610,701 1,360,856
Accumulated deficit (880,537) (628,093)
Treasury stock (1,081,250 shares) (218,982) (218,982)
---------- ----------
Total stockholders' equity 554,330 553,968
---------- ----------
$3,626,212 $3,224,312
========== ==========
</TABLE>
See notes to financial statements.
-2-
<PAGE>
PAN WESTERN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
REVENUE:
Oil and gas sales $1,675,193 $ 983,841
Operating income 122,524 168,691
---------- ----------
1,797,717 1,152,532
---------- ----------
OPERATING EXPENSES:
Lease operating 725,432 473,927
Salaries and wages 375,482 273,953
Depreciation, depletion and amortization 318,556 302,618
General and administrative 378,535 364,280
---------- ----------
1,798,005 1,414,778
---------- ----------
OPERATING LOSS (288) (262,246)
---------- ----------
OTHER INCOME (EXPENSE):
Loss from rental operations, net (22,781) -
(Loss) gain on sale of assets, net (7,326) 5,777
Interest income 4,493 77
Interest expense (233,411) (97,252)
Equity in income (loss) of affiliated
partnerships 6,202 (9,935)
Minority interest in loss (earnings) of
consolidated partnerships 667 (4,858)
---------- ----------
(252,156) (106,191)
---------- ----------
LOSS BEFORE INCOME TAXES (252,444) (368,437)
Income tax benefit - 4,345
---------- ----------
NET LOSS $ (252,444) $ (364,092)
---------- ----------
NET LOSS PER SHARE $ (0.08) $ (0.13)
---------- ----------
WEIGHTED AVERAGE COMMON SHARES 3,141,035 2,772,836
========== ==========
</TABLE>
See notes to financial statements.
-3-
<PAGE>
PAN WESTERN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED TREASURY STOCKHOLDERS'
STOCK CAPITAL DEFICIT STOCK EQUITY
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1,
1995, AS ORIGINALLY
REPORTED $ 5,000 $ 352,836 $ (264,001) $ (106,481) $ (12,646)
Retroactive adjustment to
reflect additional shares to be
issued in four-for-one stock
split effected in the form of a
stock dividend in February,
1997 20,000 (20,000) - - -
--------- ---------- ----------- ----------- -----------
BALANCES, JANUARY 1,
1995, AS ADJUSTED 25,000 332,836 (264,001) (106,481) (12,646)
Issuance of stock 15,187 1,028,020 - - 1,043,207
Purchase of treasury shares - - - (112,501) (112,501)
Net loss - - (364,092) - (364,092)
--------- ---------- ----------- ----------- -----------
BALANCES, DECEMBER 31,
1995, AS ADJUSTED 40,187 1,360,856 (628,093) (218,982) 553,968
Issuance of stock 2,961 249,845 - - 252,806
Net loss - - (252,444) - (252,444)
--------- ---------- ----------- ----------- -----------
BALANCES, DECEMBER 31, 1996 $ 43,148 $1,610,701 $ (880,537) $ (218,982) $ 554,330
========= ========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-4-
<PAGE>
PAN WESTERN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (252,444) $ (364,092)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation, depletion and amortization 318,556 302,618
(Gain) loss on sale of assets, net 7,326 (5,777)
Equity in (income) loss of affiliated partnerships (6,202) 9,935
Minority interest in earnings of consolidated partnerships (667) 4,858
Bad debt expense 1,649 13,716
Credit for deferred income taxes - (4,345)
Stock issued for services 49,980 17,000
Increase in receivables (33,175) (30,034)
Increase in other assets (3,850) -
Increase in accounts payable 221,118 4,631
Increase in accrued liabilities 7,982 23,531
Increase (decrease) in undistributed oil and gas revenues (16,660) (18,157)
----------- -----------
Net cash provided by (used in) operating activities 293,613 (46,116)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (549,086) (1,042,488)
Purchase of certificate of deposit (103,995) -
Purchase of royalty (40,000) -
Proceeds from the disposal of oil and gas properties 8,219 232,399
Purchase of South Boulder Associates, Ltd. - (50,000)
Net cash acquired in partnership acquisitions - 57,409
----------- -----------
Net cash used in investing activities (684,862) (802,680)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 1,263,893 1,294,881
Repayment of long-term debt (937,924) (378,905)
Cash paid to acquire common stock - (112,501)
Proceeds from sale of common stock 282,296 56,250
----------- -----------
Net cash provided by financing activities 608,265 859,725
----------- -----------
NET INCREASE IN CASH 217,016 10,929
CASH, BEGINNING OF YEAR 15,683 4,754
----------- -----------
CASH, END OF YEAR $ 232,699 $ 15,683
----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 231,225 $ 87,254
----------- -----------
Income taxes paid $ - $ -
----------- -----------
</TABLE>
See notes to financial statements.
-5-
<PAGE>
PAN WESTERN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Pan Western Energy Corporation (the "Company") was organized
effective September 2, 1981 under the laws of the State of Oklahoma. The
purpose of the Company is the acquisition, drilling, development,
production and operation of oil and gas properties.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Company's majority-owned partnerships, Pan Western
1993-A Production Program, Ltd. and Pan Western 1993-C Production Program,
Ltd. The Company acquired the majority interest in these partnerships
effective April 1, 1995 and the remaining partnership interests were
acquired effective June 1, 1996. In 1996, the Company formed Lateral
Completion Technologies, Inc. ("LCT"), a wholly owned subsidiary. LCT did
not have any activities in 1996. All material intercompany transactions and
balances are eliminated in consolidation.
INVESTMENTS IN AFFILIATED PARTNERSHIPS - Investments in affiliated oil and
gas partnerships in which the Company owns less than a majority interest
are accounted for using the equity method, with amounts stated at original
cost, adjusted for the Company's share of undistributed earnings or losses.
Management regularly reviews the carrying amount of these investments for
impairment and will adjust the carrying amount when, based on these
reviews, they determine that such amount is not recoverable.
OIL AND GAS PROPERTIES - The Company follows the successful efforts method
of accounting for oil and gas producing activities. Costs to acquire
mineral interests in oil and gas properties, to drill and equip exploratory
wells that find proved reserves and to drill and equip development wells
are capitalized. Costs to drill exploratory wells that do not find proved
reserves, geological and geophysical costs, and costs of carrying and
retaining unproved properties are expensed.
Capitalized costs of producing oil and gas properties are depreciated and
depleted by the unit-of-production method. Support equipment is depreciated
over its estimated useful life.
On the sale or retirement of a complete unit of a proved property, the cost
and related accumulated depreciation, depletion, and amortization are
eliminated from the property accounts, and the resultant gain or loss is
recognized. On the retirement or sale of a partial unit of proved property,
the cost is charged to accumulated depreciation, depletion, and
amortization with a resulting gain or loss recognized in income.
Valuation allowances are provided if the net capitalized cost of oil and
gas properties exceed their estimated realizable value based on the
undiscounted future net revenues. Unproved oil and gas properties
-6-
<PAGE>
are periodically assessed for impairment of value and, if necessary, a loss
is recognized by providing an allowance.
OTHER PROPERTY AND EQUIPMENT - Other property and equipment is stated at
cost and is depreciated using accelerated methods over the estimated lives
of the respective assets which range from 5 to 27.5 years.
OPERATING INCOME - Operating income represents income earned by the Company
as operator of oil and gas properties and as general partner for certain
limited partnerships. Operating income consists primarily of administrative
overhead fees, field supervision charges and compressor charges.
INCOME TAXES - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes". SFAS No. 109 requires the recognition of deferred tax
liabilities and assets for the tax effects of (a) temporary differences
between tax bases and financial reporting bases of assets and liabilities,
and (b) operating loss and tax credit carryforwards. The Company records a
valuation allowance for the amount of net deferred tax assets when, in
management's opinion, it is more likely than not that such assets will not
be realized.
LONG-LIVED ASSET IMPAIRMENT - Effective January 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 121, "Accounting
for Impairment of Long-lived Assets and for Long-lived Assets to be
Disposed Of," ("SFAS 121"). SFAS 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. SFAS
121 also requires that assets to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. The adoption of SFAS 121
did not have a significant effect on the Company's consolidated financial
statements.
STOCK-BASED COMPENSATION - In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation." SFAS 123
establishes a fair value method and disclosure standards for stock-based
employee compensation arrangements, such as stock purchase plans and stock
options. It also applies to transactions in which an entity issues its
equity instruments to acquire goods or services from non-employees,
requiring that such transactions be accounted for based on fair value. As
allowed by SFAS 123, the Company will continue to follow the provisions of
Accounting Principles Board Opinion No. 25 for its stock-based employee
compensation arrangements.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Statement of Financial Accounting
Standards No. 107 "Disclosures about Fair Value of Financial Instruments"
requires disclosure regarding the fair value of financial instruments for
which it is practical to estimate that value. For accounts receivable and
accounts payable, the carrying amount approximates fair value because of
the short maturity of those instruments. The fair value of the Company's
long-term debt is estimated to approximate carrying value based on the
borrowing rates currently available to the Company for bank loans with
similar terms and maturities.
EARNINGS (LOSS) PER SHARE - Loss per share is calculated based on the
weighted average common shares outstanding retroactively adjusted for the
four-for-one stock split effected in the form of a stock dividend declared
by the Company on February 18, 1997 (see Note 10). Outstanding stock
options and warrants are not included in the computation since their effect
on loss per share is antidilutive.
RESTRICTED CASH - Restricted cash consists of a certificate of deposit that
serves as collateral on a line of credit with a bank.
-7-
<PAGE>
Reclassifications -Certain 1995 amounts have been reclassified to conform
with 1996 presentations.
2. PARTNERSHIP ACQUISITIONS
In 1995 and 1996, the company acquired several entities. These acquisitions
were accounted for using the purchase method and the purchase price was
allocated to assets acquired, primarily oil and gas properties, and
liabilities assumed based on their estimated fair values. The results of
operations of the entities have been included in the Company's consolidated
financial statements subsequent to the dates of acquisition.
Effective April 1, 1995, the Company acquired all of the limited partners'
interests in several oil and gas limited partnerships for which it was the
general partner and liquidated the partnerships. The partnership interests
acquired were: the Pan Western 1991-A Production Program, Ltd.; the Pan
Western 1991-B Production Program, Ltd.; the Pan Western 1992-B Production
Program, Ltd.; and the Pan Western 1993-B Production Program, Ltd.
In addition, effective April 1, 1995, the Company acquired 96% of the
limited partners' interest in the Pan Western 1993-A Production Program,
Ltd. ("1993-A"), and approximately 74% of the limited partners' interest in
the Pan Western 1993-C Production Program, Ltd. ("1993-C"). The Company is
the general partner in these partnerships.
The consideration paid by the Company for these limited partnership
interests consisted of 1,349,900 shares of the Company's common stock
(valued at approximately $1,267,000 based on the estimated value of the
partnerships' oil and gas reserves) and $8,392 in cash, and included
approximately $611,000 in partnerships' debt.
Effective May 31, 1996, the Company acquired the remaining interests in the
1993-A and 1993-C partnerships in exchange for 46,320 shares of the
Company's common stock (valued at approximately $59,000 based on estimated
value of the partnerships' oil and gas reserves).
On December 1, 1995, the Company purchased the remaining 50% partnership
interest in South Boulder Associates, Ltd. and liquidated the partnership.
The Company previously owned a 50% interest in this partnership and was the
general partner. South Boulder Associates, Ltd. owns and manages the office
building known as "Boulder on the Park", located at 1850 South Boulder
Avenue, Tulsa, Oklahoma. The purchase price paid for the remaining interest
was $50,000 in cash, and included approximately $168,000 in partnership
debt.
The following unaudited pro-forma information combines the results of
operations of the Company and the various partnerships discussed above, as
if the acquisitions had taken place on January 1, 1995, after giving effect
to the effect on depreciation and depletion based upon purchase amounts
allocated to producing oil and gas properties and other property.
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Total revenues $ 1,797,717 $ 1,309,230
------------ ------------
Net loss $ (253,726) $ (346,620)
------------ ------------
Net loss per common share $ (0.08) $ (0.13)
------------ ------------
</TABLE>
-8-
<PAGE>
The pro-forma information given above does not purport to be indicative of
the results that actually would have been obtained if the operations were
combined during the periods presented and is not intended to be a
projection of future results or trends.
3. INVESTMENTS IN AFFILIATED PARTNERSHIPS
The Company is general partner in Pan Western 1986 Drilling Program, Ltd.
("1986 Program"), Pan Western 1987 Production Program, Ltd. ("1987
Program") and Pan Western 1989-A Production Program Joint Venture ("1989-
A"), whose purpose is the acquisition, drilling, development, production,
marketing and operation of oil and gas leases. As general partner, the
Company is entitled to 18.57% and 15% of the current earnings or losses for
the 1986 and 1987 Programs, respectively, and is also entitled to a "back-
in" interest upon payout. The Company is entitled to a "back-in" interest
only on 1989-A.
The summary information below does not include information on the 1989-A
since the Company has never received a back-in interest.
Summary financial information for these partnerships as of and for the
years ended December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Total assets $ 54,045 $ 47,539
--------- ---------
Total liabilities $ 7,920 $ 30,736
Partners' capital 46,125 16,803
--------- ---------
Total liabilities and partners' capital $ 54,045 $ 47,539
--------- ---------
Revenue $ 28,126 $ 67,296
--------- ---------
Net income (loss) $ (2,603) $ (34,548)
--------- ---------
</TABLE>
During 1989, the Company's share of losses exceeded the carrying value of
its investment in the 1986 and 1987 Programs, and the equity method of
accounting was discontinued with no additional losses recorded by the
Company. However, during 1995, the total partners' capital of the 1986
Program became a deficit. Accordingly, as general partner, the Company
recorded additional losses under the equity method to the extent of the
1986 Programs' capital deficit. During 1996, the total partners' capital of
the 1986 Program became positive, and the additional losses previously
recorded by the Company were reversed. The Company's share of unrecorded
losses for the 1986 and 1987 Programs was approximately $31,255 and $25,600
at December 31, 1996 and 1995, respectively.
-9-
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S>
Proved oil and gas properties:
Leasehold costs $ 2,371,625 $ 2,468,279
Intangible drilling costs 19,769 28,318
Lease and well equipment 1,082,969 721,731
------------ ------------
3,474,363 3,218,328
------------ ------------
Other property and equipment:
Land and building 269,025 266,720
Automobiles 21,299 21,299
Office furniture, fixtures and equipment 84,608 81,027
------------ ------------
374,932 369,046
------------ ------------
3,849,295 3,587,374
Less: accumulated depreciation, depletion and amortization 918,439 663,208
------------ ------------
Net capitalized costs $ 2,930,856 $ 2,924,166
------------ ------------
Costs incurred in oil and gas property acquisitions and development
activities are as follows:
<CAPTION>
1996 1995
<S> <C> <C>
Property acquisitions $ 222,000 $ 2,246,000
Development costs 393,000 37,000
------------ ------------
Total costs incurred $ 615,000 $ 2,283,000
------------ ------------
</TABLE>
Property acquisition costs in 1996 and 1995 include approximately $59,000
and $1,267,000, respectively, representing amounts assigned to properties
acquired through the partnership transactions described in Note 2.
-10-
<PAGE>
5. LONG-TERM OBLIGATIONS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
10.00% note payable to bank due in monthly installments of $21,447,
including interest, through December 1997, with the balance of approx-
imately $682,000 due at maturity, secured by oil and gas properties $ 843,914 $1,000,000
10.00% $500,000 line-of-credit payable to bank due in monthly install-
ments of interest only through March 1997, at which time the out-
standing principal will convert to a five-year term loan, secured by oil
and gas leases and certificate of deposit held at bank. The
line-of-credit agreement prohibits the Company from incurring additional
debt without the bank's approval 349,713 -
10.00% note payable to bank due in monthly installments of $9,702,
including interest, through December 1999, with the balance of principal
and remaining accrued interest due at maturity, secured by oil and gas
properties 300,000 -
9.50% note payable to bank due in monthly installments of $2,261,
including interest, through March 2001, with the balance of approx-
imately $175,000 due at maturity, secured by real estate mortgage 210,969 -
10.00% at December 31, 1996 and 10.25% at December 31, 1995 note
payable to bank due in monthly installments of $3,233, including
interest, through January 2001, with any remaining principal due at
maturity, secured by oil and gas properties 129,774 -
10.00% note payable to bank due in monthly installments of $9,201,
including interest, through November 1997, secured by oil and
gas properties 101,237 195,614
9.75% note payable to bank due in monthly installments of $4,397,
including interest, through December 1998, with the balance of approx-
imately $9,000 due at maturity, secured by oil and gas properties 99,252 140,051
10.00% at December 31, 1996 and 10.25% at December 31, 1995 note
payable to bank due in monthly installments of $2,083 plus interest
through June 2000, secured by oil and gas properties 87,502 100,000
9.75% note payable to bank due in monthly installments of $3,302,
including interest, through December 1998, with the balance of approx-
imately $17,000 due at maturity, secured by oil and gas properties 83,535 113,350
9.50% note payable to bank due in monthly installments of $3,288,
including interest, through December 1998, with the balance of approx-
imately $6,000 due at maturity, secured by oil and gas properties 74,302 105,025
(Continued)
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
10.00% at December 31, 1996 and 10.25% at December 31, 1995 note
payable to bank due in monthly installments of $2,297, including
interest, through November 1998, with any remaining principal
due at maturity, secured by oil and gas property mortgages $ 51,445 $ 69,041
10.00% unsecured note payable to bank with principal due in
May 1997, with interest paid monthly 25,000 25,000
8.60% note payable to bank due in monthly installments of
$439, including interest, through December 2000, secured by
equipment 18,067 21,299
10.00% at December 31, 1996 and 10.25% at December 31, 1995
note payable to the bank due in monthly installments of $1,229,
including interest, through October 1997, with any remaining principal
due at maturity, secured by equipment 12,862 24,486
9.00% note payable to bank due in monthly installments of $1,860,
including interest, through June 1998, with the balance of approxi-
mately $149,000 due at maturity, secured by real estate mortgage,
prepaid in March 1996 - 167,615
Non-interest bearing note payable to Pangloss Holdings, due
January 1996 - 106,250
10.25% note payable to bank due in monthly installments of $1,593,
including interest, through September 1996, secured by oil and
gas properties - 14,328
21% note payable to Norwest Financial due in monthly installments
of $250, including interest, through August 1996 - 1,624
10.25% note payable to bank due in monthly installments of $503,
including interest, through March 1996, secured by equipment - 1,481
Capital lease obligations 23,562 -
------------ -----------
Total obligations 2,411,134 2,085,164
Less current portion 1,338,665 650,719
------------ ------------
$ 1,072,469 $ 1,434,445
------------ ------------
(Concluded)
</TABLE>
Substantially all of the Company's debt is guaranteed by the Company's
president and major stockholder. The aggregate maturities of long-term debt as
of December 31, 1996 are as follows: 1997 - $1,338,665; 1998 - $410,138; 1999
- - $252,307, 2000 - $143,517, 2001 - $249,046, and thereafter - $17,461.
-12-
<PAGE>
6. INCOME TAXES
Income tax benefit consists of the following for the years ended December
31, 1996 and 1995:
<TABLE>
<CAPTION>
Current Deferred Total
<S> <C> <C> <C>
1996:
Federal $ - $ - $ -
State - - -
---------- --------- ---------
$ - $ - $ -
========== ========= =========
1995:
Federal $ - $ (3,693) $ (3,693)
State - (652) (652)
---------- --------- ---------
- $ (4,345) $ (4,345)
========== ========= =========
</TABLE>
Deferred tax assets and liabilities at December 31, 1996 and 1995 are composed
of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax asset -
Net operating loss carryforward $ 242,277 $ 183,561
Less: Valuation allowance (229,247) (165,716)
----------- -----------
13,030 17,845
----------- -----------
Deferred tax liabilities:
Property basis differences - 7,319
Partnership investments
basis differences 13,030 10,526
----------- -----------
13,030 17,845
----------- -----------
Net deferred taxes $ - $ -
=========== ===========
</TABLE>
At December 31, 1996, the Company had net operating loss carryforwards of
approximately $561,000 which will expire during the years 2009 through
2011.
The difference between the Company's effective tax rate and the statutory
Federal income tax rate results from the valuation allowance established
for net operating loss carryforwards, the effect of state income taxes,
graduated Federal income tax rates, and nondeductible travel and
entertainment expenses.
7. RELATED PARTIES
Until December 1, 1995, the Company leased office space under an operating
lease from a partnership in which it had a 50% interest. Effective December
1, 1995, the Company acquired the remaining 50% interest in the partnership
(see Note 2). During 1995, $25,800 was paid to the partnership as rent.
Through August 1995, the Company sold gas produced from certain wells it
operates to a gas marketing company owned by the president of the Company.
Such sales for the years ended December 31, 1995 were approximately
$89,000. The gas marketing company collected a 3% commission on the resale
of
-13-
<PAGE>
such gas, which was utilized to pay income and other taxes of the gas
marketing company. No funds were paid to the president of the Company in
connection with these transactions.
In 1995, the Company began paying a fee to the Company president based on
the terms of a "Guaranty Fee Agreement". Under the agreement he receives an
annual fee for guaranteeing the Company debt equal to the greater of
$15,000 or 3% of the guaranteed debt. During 1996 and 1995, this fee was
approximately $76,000 and $30,000, respectively.
The Company incurs fees for accounting and consulting services provided by
a firm in which a board member of the Company is a partner. Such amounts
incurred during 1996 and 1995 were $39,943 and $34,476, respectively.
During 1996, the Company issued 35,700 shares of its common stock to this
firm for services rendered. The value assigned to this stock, $49,980, was
based on billings received from the firm.
During 1995 the Company paid $20,100 and issued 12,205 shares of Company
stock to a company for services related to the conversion of limited
partnership interests to common stock interests (see Note 2). The chief
executive officer of this Company is a member of the Company's board of
directors.
Pursuant to an agreement signed in February 1996, a director of the Company
will provide evaluation and reservoir engineering services to the Company
in exchange for an amount equal to the net of a percentage of the net
revenue interest of a certain well and a percentage of the lease operating
expenses attributable to the same well.
8. STOCK OPTION PLANS
The Company established the Pan Western Energy Corporation 1992 Directors
Stock Option Plan (the "Directors Plan") under which non-employee directors
of the Company may be granted options to purchase shares of common stock.
The plan provides that the option price shall be the fair value of the
common stock at the date granted and that options are exercisable for 10
years and 30 days from date granted. At December 31, 1996 and 1995, 135,000
and 127,500 shares were available for grant of stock options and options
covering 15,000 and 22,500 shares which were granted in July 1993 at $1.30
per share were exercisable at December 31, 1996 and 1995, respectively.
On January 21, 1997, the Board of Directors approved the grant of options
to acquire 50,000 shares of the Company's common stock at $1.40 per share
under the Directors Plan.
The 1992 Employee Stock Option Plan (the "Employee Plan") has also been
adopted by the Company's board of directors and approved by the
shareholders. There are 100,000 options available for grant under this Plan
and no options have been granted under the Plan.
Outstanding options granted under both the Directors and Employee Stock
Option Plans are terminated if the option holder ceases to be an employee
or director of the Company.
In July 1993, the Board of Directors approved the grant of options to the
Company's president to acquire 7,500 shares of common stock at $1.30 per
share (the estimated fair value at the date granted). These options are
exercisable at any time up to ten years from date of grant. On January 21,
1997, the Board of Directors approved the grant of options to certain
executive officers to acquire 570,000 shares of the Company's common stock
at $1.40 per share. These options vest at 40% on date of grant; 30% one
year from date of grant; and the remaining 30% two years from date of
grant. These options were not granted pursuant to the existing Employee
Plan.
-14-
<PAGE>
9. STOCK PURCHASE WARRANTS
In March 1996, Pangloss International, S.A. ("Pangloss") acquired 87,500
shares of the Company's common stock for $1.20 per share, and concurrently
was granted warrants to purchase 125,000 shares at $1.60 per share.
Pangloss was granted additional warrants in July 1996 to purchase 100,000
shares of the Company's common stock at $1.20 per share. These warrants
were issued in connection with a $105,000 loan from Pangloss that was
repaid in December 1996.
All of the warrants issued to Pangloss are exercisable at any time prior to
April 15, 2001.
10. STOCKHOLDERS' EQUITY
On June 20, 1996, the Company's stockholders approved amendments to the
Certificate of Incorporation to increase the authorized common stock to
25,000,000 shares, and to establish a class of preferred stock. The Board
of Directors was authorized to fix the rights and terms applicable to the
preferred stock prior to issuance.
On February 18, 1997, the Board of Directors approved a four-for-one stock
split effected in the form of a stock dividend. The record date for the
dividend is April 1, 1997. Common share, per share data, and stockholders'
equity amounts in the accompanying consolidated financial statements and
footnotes (unless otherwise indicated) have been retroactively adjusted to
reflect this stock split.
11. COMMITMENTS AND CONTINGENCIES
The Company has executed employment agreements with certain executive
officers which expire on the later of specified dates in the year 2000 or
the date to which the agreement has been extended; or, in the case of the
Company's president, as long as the president guarantees the Company's
debt. Under the terms of these agreements, the executives will receive
annual salaries aggregating $238,000. In addition, the Company's president
will receive incentive compensation equal to 10% of the Company's annual
pre-tax income in excess of $150,000. The other executive officers will
share in a bonus pool equal to 10% of the Company's net income in excess of
$100,000. In the event of the executives' termination without just cause,
as defined in the agreements, the Company must pay them these amounts for
the remaining term of the agreements.
The Company has received billings of approximately $178,000 from a law firm
which represented the Company in a lawsuit filed as plaintiff. The Company
eventually lost the suit and is disputing the amount of the law firm's
billing. The Company has not recorded a liability for approximately $88,000
of this billed amount.
12. SIGNIFICANT CUSTOMERS
There were four purchasers in 1996 which represented approximately 18%,
16%, 15% and 11% of the Company's total revenues. There were three
purchasers in 1995 which represented approximately 37%, 34% and 17% of the
Company's total revenues.
13. BUSINESS DEVELOPMENTS
During 1996, the Company acquired a license from Amoco Corporation to
utilize their patented short radius curve drilling technology. The patent
was originally issued in 1993. The Company paid $40,000 for the license and
will pay a scheduled royalty for its use in the future. The Company plans
to use the
-15-
<PAGE>
technology to develop reserves currently owned by the Company.
In addition, the Company intends to provide the technology to other
operators through a wholly owned subsidiary, Lateral Completion
Technologies, Inc., and develop reserves for other operators in return for
working and net revenue interests in those reserves. The Company is
currently pursuing financing alternatives to provide the funds needed to
fund the capital expenditures and initial operating costs of Lateral
Completion Technologies, Inc. These alternatives include a private
placement of debt or equity or a combination thereof.
14. SALE OF COMMON STOCK
The Company is currently attempting to sell 15,000 shares of its common
stock at $10 per share (75,000 shares at $2 per share after giving effect
to the stock split discussed in Note 10) through an offering pursuant to
Regulation D and Rule 504 of the Securities Act of 1933. Purchases of
common stock under this offering will be limited to 100 shares per
individual. The Company's sole purpose for this offering is to increase the
shareholder base to at least 300 in order to meet one of the requirements
imposed by NASDAQ to qualify for trading on the NASDAQ Small Cap Market.
15. REGISTRATION OF COMMON STOCK
The Company is in the process of preparing a Form-10-SB to be filed with
the Securities and Exchange Commission on or about March 15, 1997. The
purpose of this filing is to register all issued and outstanding shares of
the Company's common stock.
16. SUPPLEMENTAL INFORMATION ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
The following information summarizes the Company's net proved reserves of
oil and gas and the present values thereof for the years ended December 31,
1996 and 1995. The information presented for 1996 and 1995 is based upon
estimates prepared by Sycamore Resources, LLC, which was engaged to perform
an evaluation of the present value of estimated future net cash flows
before income tax (discounted at 10%). The information was prepared in
accordance with Statement of Financial Accounting Standards No. 69.
Prices of crude oil, condensate, and gas were those prices in effect at the
respective date. Estimated future production costs, which include lease
operating costs and severance taxes (estimated assuming existing economic
conditions will continue over the lives of the individual leases, with no
adjustment for inflation), have been deducted in arriving at the estimated
future net revenues. The present value amounts should not necessarily be
equated with fair market value of the Company's oil and gas reserves. All
reserves are located in the United States.
The reliability of any reserve estimate is a function of the quality of
available information and of engineering interpretation and judgment. These
reserves should be accepted with the understanding that subsequent drilling
activities or additional information might require their revision.
-16-
<PAGE>
The following schedules present certain data pertaining to the Company's proved
reserves at December 31, 1996 and 1995:
Estimated quantities of proved reserves:
<TABLE>
<CAPTION>
1996 1995
--------------------- ----------------------
Oil Gas Oil Gas
Bbls Mcf Bbls Mcf
<S> <C> <C> <C> <C>
Proved reserves:
Beginning of year 1,326,175 5,275,379 307,498 2,052,887
Reserves acquired through
acquisition of partnership
interests - - 222,153 306,519
Sales and transfers of
minerals in place - - (54,645) (65,778)
Revisions of previous estimates 580,861 1,590,876 (147,331) 1,660,256
Purchases of minerals in place 428,519 706,949 1,036,677 1,537,451
Production (56,871) (263,123) (38,177) (215,956)
--------- --------- --------- ---------
End of year 2,278,684 7,310,081 1,326,175 5,275,379
--------- --------- --------- ---------
Proved developed reserves,
end of year 1,254,903 3,914,395 650,397 1,977,237
--------- --------- --------- ---------
</TABLE>
Standardized measure of estimated discounted future net cash flows relating to
proved oil and gas reserves:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Future cash inflows $ 73,051,172 $ 30,050,737
Future development costs (3,958,105) (1,689,419)
Future production costs (12,031,762) (7,698,291)
------------- -------------
Future net cash flows, before income taxes 57,061,305 20,663,027
Future income taxes (21,144,475) (7,061,984)
------------- -------------
Futures net cash flows, after income taxes 35,916,830 13,601,043
10% annual discount for estimated timing
of cash flows (13,064,500) (4,990,047)
------------- -------------
Standardized measure of estimated discounted
future net cash flows $ 22,852,330 $ 8,610,996
------------- -------------
Estimated discounted future net cash flows
before income taxes $ 36,305,648 $ 13,082,029
------------- -------------
</TABLE>
-17-
<PAGE>
Changes in the standardized measure of estimated discounted future net cash
flows from proved oil and gas reserves:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Standardized measure, beginning of period $ 8,610,996 $ 1,326,317
Reserves acquired through acquisition of
partnership interests - 1,672,281
Sales of production, net of production costs (949,762) (509,914)
Net changes in prices and production costs 9,162,113 697,200
Purchases and sales of minerals in place, net 5,119,345 9,010,026
Changes in estimated future development costs (2,268,685) (1,163,068)
Revisions of previous quantity estimates 8,870,097 765,055
Accretion of discount 1,308,203 177,290
Net changes in income taxes (8,982,284) (4,024,447)
Timing and other 1,982,307 660,256
------------- ------------
$ 22,852,330 $ 8,610,996
============= ============
</TABLE>
-18-
<PAGE>
EXHIBIT 2.1
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[SEAL APPEARS HERE]
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
WHEREAS, the Amended and Restated Certificate of Incorporation of,
PAN WESTERN ENERGY CORPORATION
has been filed in the office of the Secretary of State as provided by the laws
of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHERE OF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 21ST
day of MARCH, 1997.
[SIGNATURE ILLEGIBLE]
[SEAL APPEARS HERE] ---------------------------------
SECRETARY OF STATE
[SIGNATURE ILLEGIBLE]
BY: ---------------------------------
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PAN WESTERN ENERGY CORPORATION
------------------------------
To the Secretary of State
of the State of Oklahoma:
The undersigned, Pan Western Energy Corporation, an Oklahoma corporation
(the "Corporation"), for the purposes of adopting an Amended and Restated
Certificate of Incorporation pursuant to Section 1080 of the Oklahoma General
Corporation Act ("Act"), hereby certifies that:
1. The name of the Corporation is "Pan Western Energy Corporation."
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Oklahoma on September 2, 1981.
3. Amendments to the Certificate of Incorporation of the Corporation were
filed with the Secretary of State of the State of Oklahoma on January 11,
1982 and December 31, 1996.
4. The amendments to the Corporation's Certificate of Incorporation, as
amended, effected by this Amended and Restated Certificate of Incorporation
are:
(a) to eliminate provisions providing for shareholder preemptive
rights and limiting shareholder rights to dissent;
(b) to add a provision for compromise or arrangement among creditors
and/or shareholders;
(c) to add a provision with respect to contracts and transactions
between the Corporation and officers and directors;
(d) to add a provision for the indemnity of officers, directors,
employees and agents;
(e) to add a provision for the exoneration of directors; and
(f) to otherwise amend and restate the provisions relating to the
capital structure and regulation of the internal affairs of the
Corporation;
5. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with Section 1080 of the Act after being proposed by
the directors and adopted by the shareholders by written consent in lieu of
a meeting duly executed by a majority of shareholders entitled to vote
thereon in the manner and as prescribed in Sections 1077 and 1073 of the
Act and restates, integrates, and further amends the Certificate of
Incorporation.
<PAGE>
6. The Certificate of Incorporation of Pan Western Energy Corporation is
hereby restated as further amended by this Certificate to read, in its
entirety, as follows:
CERTIFICATE OF INCORPORATION
OF
PAN WESTERN ENERGY CORPORATION
FIRST: The name of this Corporation shall be Pan Western Energy
Corporation.
SECOND: The name and address (including the street, number, city and
county) of the registered agent of the Corporation in the State of Oklahoma and
the address of the registered office of the Corporation in the State of
Oklahoma, which is the same as the address of the registered agent, are: Sid L.
Anderson, Suite 300, 1850 South Boulder Avenue, Tulsa, Oklahoma 74119.
THIRD: The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the
Oklahoma General Corporation Act, as amended, ("Act").
FOURTH: The duration of the Corporation shall be perpetual.
FIFTH: The total number of shares of stock which the Corporation shall
have authority to issue is Fifty Million (50,000,000) shares, consisting of
Twenty-Five Million (25,000,000) shares of Common Stock having a par value of
$0.01 per share and Twenty-Five Million (25,000,000) shares of Preferred Stock
having a par value of $0.05 per share.
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions hereof, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Oklahoma, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof. The authority of the Board
with respect to each series shall include, but not be limited to, determination
of the following:
(a) the number of shares constituting that series and the distinctive
designation of that series;
(b) the dividend rate on the shares of that series, whether dividends
shall be cumulative, and, so, from which date or dates, and the relative
right of priority, if any, of payment of dividends on shares of that
series;
(c) whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine; and
2
<PAGE>
(e) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or date upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates.
SIXTH: The business and affairs of the Corporation shall be managed by a
Board of Directors. Directors of the Corporation need not be Shareholders of the
Corporation and need not be elected by ballot unless required by the
Corporation's Bylaws.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of the Corporation.
EIGHTH: Meetings of the Shareholders of the Corporation may be held at
such place, either within or without the State of Oklahoma, as may be designated
in or by the Corporation's Bylaws. The books of the Corporation may be kept,
subject to applicable law, inside or outside the State of Oklahoma at such place
or places as may be designated from time to time by the Board of Directors or in
the Bylaws of the Corporation.
NINTH: To the extent permitted by the Act, no contract or transaction
between the Corporation and one or more of its Directors or Officers, or between
the Corporation and any other Corporation, partnership, association or other
organization in which one or more of its Directors or Officers are Directors or
Officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the Directors or Officers are present at or
participate in the meeting of the Board or Committee thereof which authorizes
the contract or transaction, or solely because the Directors or Officers or
their votes are counted for such purpose. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes the contract or transaction.
TENTH: To the extent and in the manner provided by the laws of the State
of Oklahoma, the Board of Directors is expressly authorized to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a Director, Officer, employee or agent of the Corporation or is
or was serving at the request of the Corporation as a Director, Officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred.
ELEVENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the Corporation or its shareholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 1053 of the Act, or (d) for any
transaction from which the director derived any improper personal benefit.
3
<PAGE>
Neither the amendment nor repeal of this Article 11, nor the adoption of any
provision of the Corporation's Certificate of Incorporation inconsistent with
this Article 11, shall eliminate or reduce the effect of this Article 11 in
respect of any matter occurring, or any cause of action, suit or claim that, but
for this Article 11, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
TWELFTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its Shareholders or any c!ass of them, any court of equitable
jurisdiction within the State of Oklahoma, on the application in a summary way
of the Corporation or of any creditor or Shareholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 1106 of the Oklahoma General Corporation Act or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 1100 of the Oklahoma General
Corporation Act, may order a meeting of the creditors or class of creditors,
and/or of the Shareholders or class of Shareholders of the Corporation, as the
case may be, to be summoned in such manner as the court directs. If a majority
in number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the Shareholders or class of Shareholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the compromise or arrangement and the reorganization, if sanctioned
by the court to which the application has been made, shall be binding on all the
creditors or class of creditors, and/or on all the Shareholders or class of
Shareholders, of the Corporation, as the case may be, and also on the
Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its President and attested by its Secretary, this 21st day of March,
1997.
ATTEST: PAN WESTERN ENERGY
CORPORATION
/s/ Clayton E. Woodrum /s/ Sidney L. Anderson
- -------------------------------- -----------------------------------
Clayton E. Woodrum, Secretary Sidney L. Anderson, President
(SEAL)
4
<PAGE>
EXHIBIT 2.2
AMENDED AND RESTATED
BY-LAWS
OF
PAN WESTERN ENERGY CORPORATION
________________________________________________________________________________
ARTICLE I
OFFICES
-------
The Registered Office of the Corporation shall be in the City of Tulsa,
County of Tulsa, State of Oklahoma. The Corporation may also have offices at
such other places, both within and without the State of Oklahoma, as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
SHAREHOLDERS
------------
Section 1. Meetings of Shareholders. All meetings of the Shareholders of
------------------------
the Corporation, for any purpose, shall be held at such place within or without
the State of Oklahoma as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
Section 2. Annual Meeting. The annual meeting of Shareholders shall be
--------------
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which the
Shareholders shall elect, by plurality vote, a Board of Directors and transact
such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual meeting
------------------------
stating the location, date and hour of the meeting shall be given to each
Shareholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 4. Special Meetings. Special meetings of the Shareholders, for any
----------------
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board,
President or Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of Shareholders owning a majority in
amount of the entire capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special meeting
-------------------------
stating the location, date and hour of the meeting and the purpose or purposes
for which the meeting is
<PAGE>
called, shall be given to each Shareholder entitled to vote thereat, not less
than ten nor more than sixty days before the date of the meeting.
Section 6. Closing of Transfer Books and Fixing Record Date. The Officer
------------------------------------------------
who has charge of the stock ledger of the Corporation shall prepare and make, at
least ten days before every annual meeting of Shareholders, a complete list of
the Shareholders entitled to vote at the Meeting, arranged in alphabetical
order, and showing the address of each shareholder and the number of shares
registered in the name of each Shareholder. Such list shall be open to the
examination of any Shareholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at a-
he place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the Meeting during the whole time thereof, and may
be inspected by any Shareholder who is present.
Section 7. Limitation on Business Transacted. Business transacted at any
---------------------------------
special Meeting of Shareholders shall be limited to the purposes stated in the
notice.
Section 8. Quorum. The holders of one third of the shares issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all Meetings of the Shareholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any Meeting of the Shareholders, the Shareholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Shareholder of record entitled to
vote at the meeting.
Section 9. Vote Required. When a quorum is present at any meeting, the
-------------
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, except the election of directors who shall be elected by a plurality of
the votes present in person or represented by proxy, or unless the question is
one upon which, by express provision of the statutes or of the Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 10. Voting. Unless otherwise provided in the Certificate of
------
Incorporation, each Shareholder shall, at every Meeting of the Shareholders, be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such Shareholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
2
<PAGE>
Section 11. Action by Consent. Any action required to be taken or which may
-----------------
be taken at any annual or Special Meeting of the Shareholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote there on were present and voted. Prompt notice of the taking of
the corporate action by the Shareholders without a meeting by less than
unanimous written consent shall be given to those Shareholders who have not
consented in writing.
ARTICLE III
DIRECTORS
---------
Section 1. General Powers. The business of the Corporation shall be
--------------
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the Shareholders.
Section 2. Number of Directors. The number of Directors which shall
-------------------
constitute the whole board shall be not less than three nor more than nine (9).
Within the limits specified, the number of Directors shall be determined by
resolution of the Board of Directors or by the Shareholders at an annual or
special meeting. The Directors shall be elected at the Annual Meeting of the
Shareholders, except as provided in Section 3 of this Article, and each Director
elected shall hold office until his successor is elected and qualified or until
removed. Directors need not be either Shareholders or residents of the State of
Oklahoma.
Section 3. Vacancies. Vacancies and newly created directorships resulting
---------
from any increase in the authorized number of Directors may be filled by a
majority of the Directors then in office, though less than a quorum, or by a
sole remaining Director, and the Directors so chosen shall hold office until the
next annual election or until their successors are duly elected and qualified,
unless sooner displaced. If there are no Directors in office, then an election
of Directors may be held in the manner provided by law.
Section 4. Meetings of Directors. The Board of Directors of the
---------------------
Corporation may hold meetings, both regular and special, either within or
without the State of Oklahoma.
Section 5. Annual Meeting. Regular meetings of the Board of Directors may
--------------
be held at such time and place as shall be determined by the Board of Directors
and if so determined, no notice thereof need be given. At least five (5) days
notice of all regular meetings shall be given stating the time, dale and
location of such meeting as well as the business to be conducted thereat.
3
<PAGE>
Section 6. Special Meetings. Special meetings of the board may be called
----------------
by the President on three (3) days' notice to each Director, either personally
or by mail or by telegram. Special meetings shall be called by the Chairman of
the Board, any Vice Chairman of the Board, the President, any Vice-President or
the Secretary in like manner and on like notice on the written request of two
Directors unless the board consists of less than three Directors in which case
special meetings shall be called by the Chairman of the Board, any Vice Chairman
of the Board, the President, any Vice-President or the Secretary in like manner
and on like notice on the written request of only one Director. Notice of such
meetings shall state the place, date, hour, and business to be conducted at such
meeting.
Section 7. Quorum. At all meetings of the board a majority of the
------
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Action Without Meeting. Unless otherwise restricted by the
----------------------
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any Committee thereof
may be taken without a meeting, if all members of the Board or Committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or Committee.
Section 9. Participation in Meeting by Conference Telephone. Unless
------------------------------------------------
otherwise restricted by the Certificate of Incorporation or these Bylaws,
members of the Board of Directors, or any Committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
Committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
Section 10. Committees of the Board of Directors. The Board of Directors,
------------------------------------
by a vote of the majority of all members of the Board of Directors, may from
time to time designate committees of the Board of Directors, each committee to
consist of two (2) or more of the directors, to serve at the pleasure of the
Board of Directors. Any committee so designated may exercise such power and
authority of the Board of Directors as the resolution so designating the
committee shall provide. In the absence or disqualification of any member of
any committee, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
by unanimous vote appoint another member of the Board of Directors to act at the
meeting in the place of the absent or disqualified member.
4
<PAGE>
Such committee or committees shall have the name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 11. Conduct of Business. Each committee may determine the
-------------------
procedural rules for meeting and conducting business and shall act in accordance
therewith, except as otherwise provided herein or required by law. One-third of
the members shall constitute a quorum unless the committee shall consist of two
(2) members, in which event one (1) member shall constitute a quorum. All
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceeding of such committee. All committees shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
Section 12. Executive Committee. This Corporation may have an Executive
-------------------
Committee composed of directors of this Corporation consisting of three members
appointed by the Board of Directors. This committee shall be designated the
"Executive Committee". Members of the Executive Committee shall serve until
terminated by the Board of Directors or their position is vacated by death or
resignation. Except as otherwise provided by law, the Executive Committee shall
have and may exercise all powers of the Board of Directors and the management of
the business and affairs of the Corporation shall be conducted by the Executive
Committee between meetings of the Board of Directors as if such actions were
regularly adopted and exercised by the Board of Directors.
Section 13. Salaries and Expenses of Directors. Unless otherwise restricted
----------------------------------
by the Certificate of Incorporation or these Bylaws, the Board of Directors
shall have the authority to fix the compensation of Directors. The Directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 14. Removal of Directors. Unless otherwise restricted by the
--------------------
Certificate of Incorporation or Bylaws, any Director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
shares entitled to vote at a regular or Special Meeting of Shareholders.
ARTICLE IV
NOTICES
-------
Section 1. Forms of Notice. Whenever, under the provisions of the statutes
---------------
or of the Certificate of Incorporation or of these Bylaws, notice is required to
be given to any Director or Shareholder, it shall not be construed to mean
personal notice. Such notice may be given
5
<PAGE>
in writing, by mail, addressed to such Director or Shareholder, at such person's
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Notice to Directors may also be
given by telegram and, in such case, shall be deemed given when delivered to the
sending telegram office.
Section 2. Waiver. Whenever any notice is required to be given under the
------
provisions of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
--------
Section 1. General. The Officers of the Corporation shall be chosen by the
-------
Board of Directors and shall, at a minimum, consist of a president and a
secretary. The Board of Directors may also choose additional officers,
including a chairman of the board, a vice chairman of the board, one or more
vice-presidents, a treasurer, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these Bylaws otherwise provide.
Section 2. Election of Officers. The Board of Directors at its first
--------------------
meeting and after each Annual Meeting of Shareholders shall choose, at a
minimum, a President and a Secretary.
Section 3. Other Officers. The Board of Directors may appoint such other
--------------
Officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 4. Salaries. The salaries of all Officers and agents of the
--------
Corporation shall be fixed by the Board of Directors.
Section 5. Term of Office. The Officers of the Corporation shall hold
--------------
office until their successors are chosen and qualify. Any Officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board of Directors.
Section 6. The Chairman of the Board. The Chairman of the Board, or, in
-------------------------
the absence of the Chairman, a Vice-Chairman of the Board of Directors, if
chosen, shall preside at all meetings of the Board of Directors, and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
6
<PAGE>
Section 7. The President. The President shall be the Chief Executive
-------------
Officer of the Corporation, shall preside at all meetings of the Shareholders
and the Board of Directors, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. The President shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other Officer or Agent of
the Corporation.
Section 8. The Vice-President. In the absence of the President or in the
------------------
event of the President's inability or refusal to act, the Vice-President (or in
the event there be more than one Vice-President, the Vice-Presidents in the
order designated by the Directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the President, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the President. The Vice-Presidents shall perform such other duties and have
such other powers as the Board of Directors may from time to time prescribe.
Section 9. The Secretary. The Secretary shall attend all meetings of the
-------------
Board of Directors and all meetings of the Shareholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the Shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or the President, under whose supervision he shall be.
The Secretary shall have custody of the corporate seal of the Corporation and
the Secretary, or an Assistant Secretary, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
Secretary's signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other Officer to affix the seal
of the Corporation and to attest the affixing by such persons's signature.
Section 10. The Assistant Secretary. The Assistant Secretary, or if there
-----------------------
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 11. The Treasurer. The Treasurer shall have the custody of the
-------------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors.
7
<PAGE>
Section 12. Reports. The Treasurer shall disburse the funds of the
-------
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all the Treasurer's transactions as Treasurer and of the financial
condition of the Corporation.
Section 13. Bond. The Treasurer, if required by the Board of Directors,
----
shall give the Corporation a bond (which shall be renewed at such intervals as
the Board requires) in such sum and with surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the Treasurer's office and for the restoration to the Corporation, in
case of the Treasurer's death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in the
Treasurer's possession or under the Treasurer's control belonging to the
Corporation.
Section 14. The Assistant Treasurer. The Assistant Treasurer, or if there
-----------------------
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES; TRANSFER;
RECORD DATE AND REGISTERED SHAREHOLDERS
---------------------------------------
Section 1. Stock Certificates. The shares of the Corporation shall be
------------------
represented by a certificate or certificates. Certificates shall be signed by,
or in the name of the Corporation by, the Chairman or Vice-Chairman of the Board
of Directors, or the President or a Vice-President and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation.
Section 2. Facsimile Signatures. Any or all of the signatures on a
--------------------
certificate may be facsimile. In case any Officer, Transfer Agent or Registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such Officer, Transfer Agent or Registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person was such Officer, Transfer Agent or Registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or certificated
shares, the Board
8
<PAGE>
of Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such person's legal representative, to advertise the same in
such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claims that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
Section 4. Transfer of Stock. Subject to transfer restrictions permitted
-----------------
by the General Corporation Law of the State of Oklahoma and restrictions on
transfer imposed by the Corporation to prevent possible violations of federal
and state securities laws, upon surrender to the Corporation or the Transfer
Agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. Fixing Record Date. In order that the Corporation may determine
------------------
the Shareholders entitled to notice of or to vote at any meeting of Shareholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less then ten days before
the date of such meeting, nor more than sixty days prior to any other action. A
determination of Shareholders of record entitled to notice of or to vote at a
meeting of Shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6. Registered Shareholders. The Corporation shall be entitled to
-----------------------
recognize the exclusive right of a person registered on its books as the owner
of shares for all purposes, including, without limitation, the right to receive
dividends and to vote on all issues submitted to a vote of Shareholders, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Oklahoma.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
---------
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
9
<PAGE>
Section 2. Reserve. Before payment of any dividend, there may be set aside
-------
out of any funds of the Corporation available for dividends such sum or sums as
the Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall present at each
----------------
annual meeting, and at any special meeting of the Shareholders when called for
by vote of the Shareholders, a full and clear statement of the business and
condition of the Corporation.
Section 4. Checks or Demands for Money. All checks or demands for money
---------------------------
and notes of the Corporation shall be signed by such Officer or Officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be as set
-----------
by resolution of the Board of Directors.
Section 6. Seal. The corporate seal shall have inscribed thereon the name
----
of the Corporation and, may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 7. Books of Account. The Corporation's Books of Account and other
----------------
records shall be kept at its principal place of business.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
-------------------------------
Section 1. Indemnification: Actions other than by the Corporation. The
------------------------------------------------------
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, other than
an action by or in the right of the corporation, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good Faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its
10
<PAGE>
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Indemnification: Actions by the Corporation. The corporation
-------------------------------------------
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
Section 3. Expenses and Attorneys' Fees. To the extent that a director,
----------------------------
officer, employee or agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
-------
1 or 2 of this Article VIII, or in defense of any claim, issue or matter
- - -
therein, he shall be indemnified against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection therewith.
Section 4. Authorization of Indemnification. Any indemnification under the
--------------------------------
provisions of Section 1 or 2 of this Article VIII, unless ordered by a court,
--------- -
shall be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 1 or 2 of this Article VIII. Such determination
--------- -
shall be made:
(1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding; or
(2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel
in a written opinion; or
(3) by the shareholders.
Section 5. Advance indemnification. Expenses incurred by an officer or
-----------------------
director in defending a civil or criminal action, suit or proceeding may be paid
by the corporation in
11
<PAGE>
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized by the provisions of this Article
VIII. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
Section 6. Non-Exclusive Indemnification. The indemnification provided by
-----------------------------
or granted pursuant to the other provisions in this Article VIII shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7. Insurance. The corporation shall have power to purchase and
---------
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VIII.
Section 8. Constituent Corporation. For purposes of this Article VIII,
-----------------------
references to "the corporation" shall include without limitation, in addition to
this corporation, any constituent corporation, including any constituent of a
constituent, absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VIII with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
Section 9. Other Enterprises. For purposes of this Article VIII,
-----------------
references to "other enterprises" shall include without limitation employee
benefit plans; references to "fines" shall include without limitation any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include without
limitation any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services, by such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
12
<PAGE>
in a manner "not opposed to the best interests of the corporation" as referred
to in this Article VIII.
Section 10. Continuation. The indemnification and advancement of expenses
------------
provided by, or granted pursuant to this Article VIII shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE IX
AMENDMENTS
----------
Section 1. These Bylaws may be altered, amended or repealed or new Bylaws
may be adopted by the Shareholders or by the Board of Directors, when such power
is conferred upon the Board of Directors by the Certificate of Incorporation at
any regular meeting of the Shareholders or of the Board of Directors or any
Special Meeting of the Shareholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal Bylaws is
conferred upon the Board of Directors by the Certificate of Incorporation, it
shall not divest or limit the power of the Shareholders to adopt, amend or
repeal Bylaws.
APPROVED and RATIFIED this 21st day of March, 1997.
PAN WESTERN ENERGY
CORPORATION
ATTEST:
(Seal)
By:/s/ Clayton E. Woodrum, Secretary By:/s/ Sid L. Anderson, President
--------------------------------- ---------------------------------
Clayton E. Woodrum, Secretary Sid L. Anderson, President
13
<PAGE>
EXHIBIT 6.1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of November 1, 1995, by
and between PAN WESTERN ENERGY CORPORATION, an Oklahoma corporation (the
"Corporation"), and SIDNEY L. ANDERSON, a resident of Tulsa, Oklahoma
("Anderson"), and is made with reference to the following:
A. Anderson serves the Corporation as President and Chief Executive
Officer without an Employment Agreement and has done so since the formation of
the Corporation September 2, 1981.
B. The parties desire to execute this Agreement to set forth the terms
and conditions of Anderson's employment hereinafter.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, the parties agree as follows:
1. Employment of Anderson, Title and Duties. The Corporation shall employ
----------------------------------------
Anderson and Anderson shall render services to and on behalf of the Corporation,
subject to the terms and conditions of this Agreement. Anderson shall devote
his full time and attention to the affairs of the Corporation. Anderson shall
have the title of President and Chief Executive Officer. Anderson's duties
shall be as specified in the by-laws of the Corporation and as directed from
time to time by unanimous vote of the Board of Directors of the Corporation.
2. Term of Employment. The term of this Agreement and Anderson's
------------------
employment pursuant hereto shall commence on the date first above written and
shall expire on the later of (a) October 31, 2000; or, (b) such other date to
which the term of employment has been extended pursuant to provisions of this
Agreement hereinafter set forth; or, (c) so long as Anderson is a personal
guarantor on any Corporation debt. The Agreement will automatically be extended
for an additional one (l) year period on November 1st of each subsequent year
commencing November 1, 1996. Unless otherwise agreed by the parties, all terms
and conditions of this Agreement, including the incentive compensation
arrangements contained in Section 3, shall continue during the extension period.
Anderson's employment may be terminated as specified in Section 6.
3. Compensation.
-------------
(a) Base Compensation and Fringe Benefits. As compensation for his
-------------------------------------
services rendered hereunder, the Corporation shall pay Anderson the following
annual base salary:
Year Base Salary
---- -----------
<PAGE>
<TABLE>
<S> <C>
1996 $150,000
1997 $150,000
1998 $150,000
1999 $150,000
2000 $150,000
</TABLE>
In addition, the Corporation shall pay normal employee fringe benefits,
including but not limited to an automobile allowance of $1,000 per month, from
which amount shall be deducted normal employee withholding and other applicable
employment taxes, and such other benefits as may from time to time be determined
by the Board of Directors of the Corporation. Anderson shall receive four weeks
vacation annually, which may be carried over one year. Salary shall be payable
in installments not less often than twice monthly. All of Anderson's previously
accrued vacation and other benefits as shown on the Corporation's books and
records shall continue and be included in this Agreement.
(b) Annual Incentive Compensation. As annual incentive compensation, the
-----------------------------
Corporation shall pay to Anderson annually an amount equal to ten percent (10%)
of all of the Corporation's pre-tax net profit, as defined in this Agreement, in
excess of $150,000. This amount shall be paid in cash to Anderson annually
within thirty (30) days following the Corporation's receipt of its annual
audited financial statements. Anderson's annual incentive compensation
hereunder shall be payable in all events unless and until Anderson's employment
is terminated under Section 6(a) hereof or as otherwise expressly provided
herein. Annual incentive compensation payable to Anderson in respect of the
Corporation's fiscal year 1996 shall not be prorated, but shall be prorated in
any other fiscal year of the Corporation in which Anderson is not employed
hereunder for the entire fiscal year. The Corporation's fiscal year is the
calendar year. No change in the Corporation's fiscal year will result in the
reduction of any amounts payable under this subsection. For purposes of this
Section 3 (b), the Corporation's pre-tax net profit in any year shall be that
shown on the Corporation's annual audited financial statements. This definition
is for the sole purpose of determining Anderson's annual incentive compensation
and shall have no effect on the Corporation's financial reporting. Anything to
the contrary set forth herein notwithstanding, this Section 3 (b) shall not be
construed to create any liability or obligation of Anderson to the Corporation
with regard to any period during the term hereof in which the Corporation's pre-
tax net profit fails to exceed the amounts set forth above.
4. Covenant Not to Compete. Anderson covenants and agrees that, during
-----------------------
the term of his employment and for a period of two (2) years thereafter, he will
not, directly or indirectly, engage in or become financially or otherwise
interested in any business in which the Corporation (or any affiliate) is now
engaged or in which it becomes engaged at any time during the term of Anderson's
employment with the Corporation relating to the primary business of the
Corporation. The area covered by this covenant includes the continental United
States. This covenant extends to Anderson, whether
<PAGE>
as a principal, agent, manager, employee, lessor, consultant, partner,
shareholder, director, officer or otherwise. This covenant does not extend to
Anderson's ownership of less than two percent (2%) of the voting interests in a
publicly held corporation. Anderson expressly acknowledges that his execution of
this covenant not to compete is a material factor in the Corporation's execution
of this Agreement; that its specific terms were bargained for; that this
covenant not to compete is of material import to the Corporation as the business
in which the Corporation is engaged is highly competitive; and that the covenant
not to compete does not constitute an unreasonable restriction on Anderson.
5. Disclosure of Information. It is agreed that any and all improvements,
-------------------------
discoveries or results of research, whether patentable or not, which are made,
discovered or invented by Anderson, any other employee, contractor, or
consultant to the Corporation, which relate in any manner to any products,
equipment, work or other business activity of the Corporation or any affiliated
corporation during the term of Anderson's employment, shall be and become the
exclusive property of the Corporation. Anderson expressly acknowledges that the
list of the Corporation's customers, its trade secrets and other information
pertaining to the patent rights, designs, methods, systems, improvements,
proprietary information, sales data, trademarks, products, and business affairs
of the Corporation, as the same may exist from time to time, are the sole
property of the Corporation (or its affiliated corporations as the case may be),
are strictly confidential, and shall be held in trust solely for the benefit and
use of the Corporation (or its affiliated corporations as the case may be). All
knowledge and information which Anderson may acquire by, from or through the
Corporation during the course of rendering services under this Agreement, or
from the employees or consultants to the Corporation (or of any affiliated
corporation as the case may be), with respect to any such information as is
specified above, and other confidential matters shall for all purposes, be
regarded as strictly confidential and held in trust and solely for the benefit
and use of the Corporation (or its affiliated corporations as the case may be).
Anderson covenants and agrees that he shall not, during the term of this
Agreement, or at any time after the termination hereof, disclose any such
information to any person, firm, corporation, association or other entity or
group of persons, for any reason or purpose whatsoever; provided, however, that
the covenants contained in this Section 5 shall not prevent Anderson from making
such disclosures (i) as may be necessary in the performance of the services
hereunder, (ii) as may be necessary to comply with legal process or
governmental order, or (iii) to the extent such information is already in the
public domain at the date of such disclosure.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. For just cause due to the fault of
--------------------------
Anderson, the Corporation may terminate Anderson's employment at any time upon
ten (10) days written notice to Anderson and the Corporation shall be obligated
to pay Anderson the compensation
<PAGE>
under Section 3 due him only up to the date of termination, including any
accrued employee benefits and/or vacation pay. As used in this Agreement, the
term "just cause" shall mean (i) Anderson shall engage in willful and material
misconduct in the performance or nonperformance of this Agreement; and (ii)
Anderson shall commit actual fraud or a felony criminal act on or after the date
of execution hereof, and any such act shall have been determined by the Board of
Directors to be materially harmful to the Corporation. Said Board action shall
only be taken after reasonable notice to Anderson and after having provided
Anderson an opportunity to present his position. Anderson's commission of fraud
or a felony criminal act shall be determined by a court of competent
jurisdiction or admitted by Anderson. Termination under this subsection 6(a)
shall result in the termination for future periods of all compensation otherwise
payable to Anderson under Section 3 (a), and shall render null and void ab
--
initio the Corporation's obligation to pay the incentive compensation specified
- ------
in Section 3 (b). Anderson's termination under this Section 6(a) shall not
affect Anderson's obligations under Sections 4 or 5 hereof.
(b) Termination Without Just Cause. The Corporation may terminate
------------------------------
Anderson's employment without just cause, but in such event the Corporation
shall be obligated to pay to Anderson the compensation otherwise payable under
Section 3(a) for the remainder of the term of his employment as determined in
Section 2, including any accrued employee benefits and/or vacation pay. Any
amount of such Section 3(a) compensation in a gross amount before withholding
taxes up to the greater of One Hundred Thousand Dollars ($100,000) or the amount
of Anderson's combined federal and estate income taxes, if any, resulting from
the Corporation's obligation to pay such remaining Section 3(a) compensation
which are due in the year of termination (or not later than the due date for the
filing of Anderson's individual income tax returns for such year), shall be paid
in cash thirty (30) days following the date of Anderson's termination. The
amount, if any, of Anderson's Section 3(a) compensation exceeding such amount
shall be paid in cash in two equal annual installments, on the first and second
anniversaries of Anderson's termination. No interest shall accrue on such
payments, and the Corporation shall deduct therefrom all normal employee
withholding taxes. If the Corporation terminates Anderson's employment under
this Section 6(b), the incentive compensation otherwise due to Anderson under
Section 3(b) shall be payable at the time(s) and in the form and manner set
forth in Section 3(b). Termination of Anderson's employment under this
subsection 6(b) shall not affect Anderson's obligations under Sections 4 or 5
hereof. The foregoing notwithstanding, Anderson may, within ninety (90) days
following the termination of his employment under this Section 3 (b), notify the
Corporation in accordance with Section 8(b) that he has determined to take
actions which would otherwise violate Section 4 hereof. In such case, and
subject to the following conditions, Anderson shall be relieved of his
obligations under Section 4 hereof. In order to be relieved of such Section 4
obligations, Anderson agrees that his compensation under Sections 3(a) and 3(b)
shall terminate as of the date of his termination, and
<PAGE>
Anderson shall forfeit and return to the Corporation any Section 3(a)
compensation and evidences of indebtedness of the Corporation therefor
applicable to periods after his termination; Anderson's Section 3(b)
compensation shall accrue only to the date of his termination and it shall be
paid as and when it would otherwise be paid under Section 3(b). Anderson may be
terminated under this Section 6(b) only by unanimous vote of the Board of
Directors of the Corporation, including Anderson if he is a director of the
Corporation at the time the vote is taken. The Corporation shall have the right
to prepay all or any part of any payments provided for in this Section 6(b) at
any time without penalty.
(c) Termination by Anderson. Anderson may terminate his employment at any
-----------------------
time on thirty (30) days prior written notice to the Corporation, end in such
event, the Corporation shall be obligated to pay Anderson his Section 3(a)
compensation only up to the date of termination, including any accrued employee
benefits and/or vacation pay. If Anderson dies during the term of this
Agreement, his compensation shall continue only to the date of his death. If he
becomes disabled such that he cannot perform his principal duties hereunder for
a period of longer than three (3) months, the Corporation may terminate his
employment after the end of such three (3) month period and in such event
Anderson's compensation shall terminate at such date. Termination under this
subsection 6(c) shall not affect Anderson's obligations under Sections 4 or 5.
If Anderson's employment terminates under this Section 6(c), the incentive
compensation otherwise due to Anderson under Section 3(b) shall accrue to the
date of termination of his employment under this Section 6(c). The Corporation
shall have the right to prepay all or any part of any payments provided for in
this Section 6(c) at any time without penalty.
7. Remedy for Breach.
-----------------
(a) Breach by Anderson. If Anderson breaches any agreement, provision,
------------------
covenant, duty or requirement made herein or required herein on his part, and
such breach is not cured or corrected within five (5) days following written
notice of the same from the Corporation, then the Corporation, in its sole
discretion, shall be entitled to (i) actual damages from Anderson for such
breach, (ii) specific performance of this Agreement by Anderson and an
injunction restraining Anderson from violating the terms of this Agreement,
(iii) terminate payment of the compensation described in Section 3 as of the
date of such breach (but only under the circumstances specified and to the
extent provided in Sections 6(a) or 6(b), as the case may be), and/or (iv)
terminate Anderson's employment for cause under Section 6(a) (but only under the
circumstances set forth therein), and (v) to the fullest extent permitted by
applicable law, recovery of its attorneys fees, court costs, and all related
expenses of litigation, together with pre- and post-judgment interest thereon.
Nothing herein shall be construed as prohibiting the Corporation from pursuing
any other remedies available to it for such breach or threatened breach
including the recovery of damages from any third party involved or associated
with
<PAGE>
such breach.
(b) Breach by Corporation. If the Corporation breaches any agreement,
---------------------
provision, covenant, duty or requirement made herein or required herein on its
part, then Anderson, in his sole discretion, shall be entitled to (i) actual
damages from the Corporation for such breach, (ii) specific performance of this
Agreement by the Corporation and an injunction restraining the Corporation from
violating the terms of this Agreement, and (iii) to the fullest extent permitted
by applicable law, recovery of his attorneys fees, court costs, and all related
expenses of litigation, together with pre- and post-judgement interest thereon.
Nothing herein shall be construed as prohibiting Anderson from pursuing any
other remedies allowed by law which may be available to him including the
recovery of damages from any third party involved or associated with such reach.
8. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
(b) Notices. All notices given under this Agreement shall be deemed to be
-------
effectively given when personally delivered to the party entitled to receive the
notice, or when placed in the United States Mails, registered or certified,
postage prepaid, at the addresses stated below:
Anderson: Sidney L. Anderson
1030 East 18th Street
Tulsa, Oklahoma 74120
The Corporation: Pan Western Energy Corporation
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
Either party may change his or its address for the purpose of notice by giving
notice of the change of address to the other party in accordance with the
provisions of this Section.
(c) Waiver and Modification. No waiver of any term of condition of this
-----------------------
Agreement shall be effective unless in writing signed by the waiving party. The
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other or subsequent breach of the same or
any other term or condition. This Agreement may only be modified in a writing
signed by both parties.
(d) Severability. The invalidity or unenforceability of any provision
------------
hereof shall in no way affect the validity or enforceability of any other
provision. In the event any court shall finally hold that the time or territory
or any other provisions con-
<PAGE>
tained herein constitutes an unreasonable restriction against Anderson, then
Anderson and the Corporation expressly agree that the provisions of this
Agreement shall not be rendered void but shall apply only as to such time,
territory or other extent as such court may judicially determine or indicate
constitutes a reasonable restriction under the circumstances involved.
(e) Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Oklahoma.
(f) Entire Agreement. The parties agree that this Agreement, shall be the
----------------
sole agreement between the parties respecting the employment of Anderson and his
noncompetition obligations to the Corporation. All prior written and oral
agreements respecting such subject matter are terminated.
(g) Time of Essence. Time is of the essence of this Agreement.
---------------
(h) Corporate Authority. The Corporation represents and warrants to
-------------------
Anderson that (i) all necessary corporate and shareholder action has been taken
on behalf of the Corporation to authorize the execution and delivery of this
Agreement by the undersigned officer of the Corporation and the satisfaction by
the Corporation of its obligations hereunder, (ii) the Corporation has the full
power and authority to enter into this Agreement and to perform hereunder, and
(iii) the Corporation's execution and delivery of this Agreement does not
violate or contravene any other agreement by which the Corporation is bound.
These representations and warranties shall survive the execution hereof.
(i) Anderson's Representations and Warranties. Anderson represents and
-----------------------------------------
warrants to the Corporation that (i) Anderson has the full power and authority
to enter into this Agreement and to perform hereunder, and (ii) Anderson's
execution and delivery of this Agreement does not violate or contravene any
other agreement by which Anderson is bound. These representations and
warranties shall survive the execution hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ATTEST: PAN WESTERN ENERGY CORPORATION
/s/ Crystal R. Leggett /s/ Clayton E. Woodrum
- ---------------------- -----------------------------------------
Secretary By: Clayton E. Woodrum
Executive Vice President
SIDNEY L. ANDERSON
/s/ Sidney L. Anderson
-----------------------------------------
An Individual
<PAGE>
EXHIBIT 6.2
GUARANTY FEE AGREEMENT
----------------------
THIS GUARANTY FEE AGREEMENT ("Agreement") is made as of November 1, 1995,
by and PAN WESTERN ENERGY CORPORATION, an Oklahoma corporation (the
"Corporation"), and SIDNEY L. ANDERSON, a resident of Tulsa, Oklahoma
("Anderson"), and is made with reference to the following:
A. Anderson is the sole guarantor of the Corporation's indebtedness and
obligations to State Bank and Trust Company, N.A., Tulsa, Oklahoma, First Bank
and Trust, Wagoner, Oklahoma, and other creditors of the Corporation.
B. The Corporation has not previously paid Anderson an annual guaranty
fee. In the parties' judgment, the Corporation should pay to Anderson an annual
guaranty fee so long as Anderson or any member of his immediate family is
required to guaranty the Corporation's obligations to any creditors of the
Corporation, including but not limited to the creditors named above.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in the Agreement, the parties agree as follows:
1. Guaranty Fee. So long as Anderson is required, as a condition to the
------------
granting of credit or the making of loans to the Corporation, to guaranty any
obligation or indebtedness of the Corporation to any creditor of the
Corporation, the corporation shall pay to Anderson, annually, a guaranty fee
equal to the greater of Fifteen Thousand Dollars ($15,000) or three percent (3%)
of the amount guarantied by him. For the purposes of this Agreement, the amount
guaranteed by Anderson shall include, without limitation, any undrawn amounts
under lines of credit extended to the Corporation and any accrued interest under
any outstanding loans to the extent covered by the agreements signed by Anderson
guarantying such obligations or indebtedness. The guaranty fed shall be paid in
cash in semi-annual installments on June 30 and December 31 of each year in
which Anderson's guaranty or guarantees are outstanding.
2. Guaranty Fee for Amounts Guarantied by Anderson's Family Members. If
----------------------------------------------------------------
any member of Anderson's immediate family, including his spouse or children, in
any, is required by any creditor of the Corporation to separately guaranty any
amounts owed to said creditor, such amounts shall be deemed to be guarantied by
Anderson for the purposes of this Agreement and a guaranty fee shall be paid to
Anderson in a like amount as set forth in Section 1 hereof if he is living at
the time the family member's guaranty is outstanding. If he is not living at the
time, the guaranty fee shall be paid to his family member. The foregoing
notwithstanding, if Anderson and his family member(s) are guarantying the same
indebtedness at the same time pursuant to guaranty agreements which are
effective at the same time and Anderson is collecting a guaranty fee pursuant to
Section l, then only one guaranty fee shall be paid in respect of
<PAGE>
said indebtedness. In such event, the guaranty fee shall be calculated based on
the highest amount guarantied. For example, if a creditor extends $1 million
there f,- and his spouse separately guarantees $500,000 of such obligations, the
guaranty fee payable to Anderson shall be based on $1 million.
3. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
(b) Notices. All notices given under this Agreement shall be deemed to be
-------
effectively given when personally delivered to the party entitled to receive the
notice, or when placed in the United States mails, registered or certified,
postage prepaid, at the addresses stated below:
Anderson: Sidney L. Anderson
1030 East 18th Street
Tulsa, Oklahoma 74120
The Corporation: Pan Western Energy Corporation
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
Either party may change his or its address for the purpose of notice by giving
notice of the change of address to the other party in accordance with the
provisions of this Section.
(c) Waiver and Modification. No waiver of any term or condition of this
-----------------------
Agreement shall be effective unless in writing signed by the waiving party. The
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other or subsequent breach of the same or
any other term or condition. This Agreement may only be modified in a writing
signed by both parties.
(d) Severability. The invalidity or unenforceability of any provision
------------
hereof shall in no way affect the validity or enforce-ability of any other
provision.
(e) Applicable Law. The Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Oklahoma.
(f) Entire Agreement. The parties agree that this Agreement and the
----------------
operative exhibits hereto shall be the sole agreement between the parties
respecting the within subject matter. All prior written and oral agreements
respecting such subject matter are superseded in full.
(g) Time of Essence. Time is of the essence of this
---------------
<PAGE>
Agreement.
(h) Corporate Authority. The Corporation represents and warrants to
-------------------
Anderson that (i) all necessary corporate and shareholder action has been taken
on behalf of the Corporation to authorize the execution and delivery of this
Agreement by the undersigned officer of the Corporation and the satisfaction by
the Corporation of its obligations hereunder, (ii) the Corporation has the full
power and authority to enter into this Agreement and to perform hereunder, and
(iii) the Corporation's execution and delivery of this Agreement does not
violate or contravene any other agreement by which the Corporation is bound.
These representations and warranties shall survive the Closing and all
deliveries hereunder.
(i) Anderson's Representations and Warranties. Anderson represents and
-----------------------------------------
warrants to the Corporation that (i) Anderson has the full power and authority
to enter into this Agreement and to perform hereunder, and (ii) Anderson's
execution and delivery of this Agreement does not violate or contravene any
other agreement by which Anderson is bound. These representations and
warranties shall survive the Closing and all deliveries hereunder.
(j) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
CORPORATION:
PAN WESTERN ENERGY CORPORATION
/s/ Clayton E. Woodrum
----------------------------------------
By: Clayton E. Woodrum
Executive Vice President
SIDNEY L. ANDERSON
/s/ Sidney L. Anderson
----------------------------------------
An Individual
<PAGE>
EXHIBIT 6.3
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT, made and entered into as of November 1, 1995 by
PAN WESTERN ENERGY CORPORATION with offices at 1850 South Boulder Avenue, Suite
300, Tulsa, Oklahoma 74119 (herein the "Debtor"). For good and valuable
consideration, the receipt of which is hereby acknowledged, the Debtor agrees to
grant to SIDNEY L. ANDERSON whose address is 1030 East 18th Street, Tulsa,
Oklahoma 74120 (herein the "Secured Party"), effective as of the Effective Date
(as herein defined), a security interest in and to the following described
property (herein collectively called the "collateral"), wherever located,
whether now or hereafter acquired, to wit:
All equipment in all of its forms, wherever located, now or hereafter existing,
and all parts thereof and all accessions thereto (herein collectively the
"Equipment"); all inventory in all of its forms, wherever located, now or
hereafter existing, and all accessions thereto and products thereof (herein
collectively the "Inventory"); each and every right of Debtor to the payment of
money, howsoever evidenced, now or hereafter existing (the "Receivables"); all
general intangibles of Debtor, whether now owned or hereafter acquired (herein
collectively the "General Intangibles"); all fixtures, trade fixtures and
leasehold improvements and any additions to, substitutions for, changes in or
replacements of the whole, or any part thereof, now or at any time hereafter
affixed to, attached to, placed upon or used in any way in connection with the
use, enjoyment and occupancy of or operations conducted upon or within the real
estate and improvements located thereon, which real estate is described on the
schedule attached hereto, marked Exhibit A and made a part hereof (herein
collectively the "Fixtures"); all other tangible and intangible property (the
"Other Property"); and all products and proceeds of any and all of the foregoing
Collateral (herein the "Proceeds").
This Agreement is made for the purpose of securing the payment of the
obligations of the Debtor under Section 3 of that certain Amended and restated
Employment Agreement (herein the "Employment Agreement") dated as of even date
herewith, between Debtor and Secured Party (herein referred to as the
"Obligation"), and the security interest described herein. The security
interest described herein is executory in nature; it shall become effective and
shall be deemed granted, automatically and without further action on the part of
either Debtor or Secured Party.
DEBTOR EXPRESSLY WARRANTS AND COVENANTS:
1. That except for the security interest to be granted hereby as of the
Effective Date, except for an identical security interest to be granted to
Michael B. Edwards as of the Effective Date identified in the security Agreement
of even date between Debtor, debtor therein, and Michael B. Edwards, secured
party therein, and except for security interests which may be granted from time
to time
<PAGE>
by Debtor to secure financing obtained by it in the ordinary course of its
business, Debtor is, or to the extent that this Agreement states that the
collateral is to be acquired after the date hereof, will be, the owner of the
Collateral free from any adverse lien, security interest or encumbrance; and
that the Debtor will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein.
2. Debtor holds the Collateral for use in its business and not for
consumer purposes.
3. The execution, delivery and performance hereof are within Debtor's
powers, as applicable, have been duly authorized, and are not in any
contravention of law or the terms of any indenture, agreement or undertaking to
which Debtor is a party, or by which it is bound.
4. Until default, Debtor may use the Collateral in any lawful manner not
inconsistent with this Agreement or with the terms or conditions of any policy
of insurance thereon.
5. At any time on or after the Effective Date, at the request of Secured
Party, Debtor will join with Secured Party in executing one or more financing
statements pursuant to the Oklahoma Uniform Commercial Code or other applicable
law in form satisfactory to Secured Party, and any continuation or termination
statement, in all public offices wherever filing is deemed by Secured Party to
be necessary or desirable.
6. To pay all taxes and assessments of every nature which may be levied
or assessed against the Collateral at any time on or after the Effective Date.
7. Not to permit or allow the Collateral to be attached or replevied at
any time on or after the Effective Date.
8. At its option, at any time on or after the Effective Date, Secured
Party may discharge taxes, liens or security interests or other encumbrances at
any time levied or placed on the Collateral and may pay for the repair of any
damage or injury and may pay for the maintenance and preservation of the
Collateral. Debtor agrees to reimburse Secured Party on demand for any payment
made or expense incurred by Secured Party pursuant to the foregoing
authorization. Until such reimbursement, the amount of any such payment shall
be added to the indebtedness owed by Debtor and shall be secured by this
Security Agreement.
9. That Debtor will, from and after the Effective Date, at Debtor's own
expense, insure the Collateral with a reliable insurance company against loss or
damage by fire, extended coverage and theft for an amount equal to the value of
said Collateral, and keep the same so insured continuously until the full amount
of the Obligation is paid.
<PAGE>
10. Debtor will pay Secured Party any and all costs and expenses incurred
in recovering possession of the Collateral and incurred in enforcing this
Security Agreement, and the same shall be secured by this Security Agreement.
11. That at no time on or after the Effective Date shall Debtor will not
use the Collateral in violation of any applicable statutes, regulations or
ordinances.
UNTIL DEFAULT Debtor may have possession of the Collateral and use it in
any lawful manner not inconsistent with this Security Agreement and the
Obligation and not inconsistent with any policy of insurance thereon, and upon
default Secured Party shall have the immediate right to possession of the
Collateral.
DEBTOR SHALL BE IN DEFAULT under this Security Agreement upon failure to
pay the Obligation in accordance with its terms after fifteen (15) days prior
written notice from Secured Party and an opportunity to cure the default within
such notice period.
UPON SUCH UNCURED DEFAULT and at any time thereafter, Secured Party shall
have the remedies of a secured party under the Nebraska Uniform Commercial Code
or other applicable law. Secured Party may require Debtor to assemble the
Collateral and deliver or make it available to Secured Party at a place to be
designated by Secured Party which is reasonable convenient to both parties.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, Secured Party will give
Debtor reasonable notice of the time and place of any public sale thereof or of
the time after which any private sale or any other intended disposition thereof
is to be made. The requirements of reasonable notice shall be met if such
notice is mailed, postage prepaid, to the address of Debtor shown at the
beginning of this agreement at least twenty days before the time of the sale or
disposition.
All proceeds of the sale of Collateral hereunder and all other moneys
received by Secured Party pursuant to the terms of this Security Agreement shall
be applied as follows:
FIRST: To the payment of all expenses incurred by Secured Party in
-----
connection with such sale, including, but not limited to, the expenses of
taking, advertising, processing, preparing and storing the Collateral to be
sold, all court costs and the fees and disbursements of legal counsel to Secured
Party in connection therewith, and to the repayment of all advances made by any
of Secured Party hereunder for the account of Debtor and the payment of all
costs and expenses paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder, to the extent that such advances,
costs and expenses shall not theretofore have been reimbursed to Secured Party
by Debtor; and
SECOND: To the payment in full of the obligation; and
------
<PAGE>
THIRD: The balance, if any, of such proceeds shall be paid to Debtor, its
-----
successors and assigns, or as a court of competent jurisdiction ray direct.
No waiver by Secured Party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. The taking of this
Security Agreement shall not waive or impair any other security said Secured
Party may have or hereafter acquire for the payment of the above indebtedness,
nor shall the taking of any such additional security waive or impair this
Security Agreement; but said Secured Party may resort to any security it may
have in the order it may deem proper, and notwithstanding any collateral
security, Security Party shall retain its right of set-off against Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all promises and duties of Debtor shall bind its
successors or assigns. If there be more than one Debtor, their liabilities
hereunder shall be joint and several.
IN WITNESS WHEREOF, the Debtor has executed this Security Agreement as of
the date and year first above written.
PAN WESTERN CORPORATION
/s/ Clayton E. Woodrum
-------------------------------------------
By: Clayton E. Woodrum
Executive Vice President
<PAGE>
EXHIBIT 6.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February 19, 1996,
by and between PAN WESTERN ENERGY CORPORATION, an Oklahoma corporation (the
"Corporation"), and BUDDIE E. LIVINGSTON, II., a resident of Bristow, Oklahoma
("Livingston"), and is made with reference to the following:
A. Livingston was employed by the Corporation as Vice President -
Operations effective January 1, 1996.
B. The parties desire to execute this Agreement to set forth the terms
and conditions of Livingston's employment hereinafter.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, the parties agree as follows:
1. Employment of Livingston, Title and Duties. The Corporation shall
------------------------------------------
employ Livingston and Livingston shall render services to and on behalf of the
Corporation, subject to the terms and conditions of this Agreement. Livingston
shall devote his full time and attention to the affairs of the Corporation.
Livingston shall have the title of Vice President - Operations. Livingston's
duties shall be as specified in the by-laws of the Corporation and as directed
from time to time by the Corporation's President and Chief Executive Officer and
its Board of Directors.
2. Term of Employment. The term of this Agreement and Livingston's
------------------
employment pursuant hereto shall commence on the date first above written and
shall expire on December 31, 2000; or, (b) such other date to which the term of
employment has been extended by the Corporation's Board of Directors.
3. Compensation.
-------------
(a) Base Compensation and Fringe Benefits. As compensation for his
-------------------------------------
services rendered hereunder, the Corporation shall pay Livingston the following
annual base salary:
<TABLE>
<CAPTION>
Year Base Salary
---- -----------
<S> <C>
1996 $48,000
1997 $48,000
1998 $48,000
1999 $48,000
2000 $48,000
</TABLE>
In addition, the Corporation shall pay normal employee fringe benefits,
including but not limited to the use of an automobile and me-
<PAGE>
dical insurance for said employee, from which amount shall be deducted normal
employee withholding and other applicable employment taxes, and such other
benefits as may from time to time be determined by the Board of Directors of the
Corporation. Livingston shall receive annually vacation time as specified in the
Corporation's Personnel Manual, which may be carried over one year. Salary shall
be payable in installments twice monthly.
(b) Annual Incentive Compensation. As annual incentive compensation, the
-----------------------------
Corporation will establish a bonus pool equal to ten percent (10%) of the
Corporation's net income in excess of $100,000 as reflected by the Corporation's
annual audited financial statements. This sum shall be paid to those
individuals participating in said bonus pool as incentive compensation within
forty five (45) days from the date the annual audited financial statements are
delivered to the Corporation's Board of Directors. The amount to be paid to
each individual participant shall be determined by the Corporation's Board of
Directors based upon recommendations made to it by the Corporation's Chief
Executive Officer. Livingston shall be eligible to participate in this bonus
pool. As further incentive compensation, Livingston shall be eligible to
participate in the Corporation's existing Employee Stock Option Plan.
4. Covenant Not to Compete. Livingston covenants and agrees that, during
-----------------------
the term of his employment and for a period of two (2) years thereafter, he will
not, directly or indirectly, engage in or become financially or otherwise
interested in any business I(Pounds)i which the Corporation (or any affiliate)
is now engaged or in which it becomes engaged at any time during the term of
Livingston's employment with the Corporation relating to the primary business of
the Corporation. The area covered by this covenant includes the Oklahoma and
its adjoining states. This covenant extends to Livingston, whether as a
principal, agent, manager, employee, lessor, consultant, partner, shareholder,
director, officer or otherwise. This covenant does not extend to Livingston's
ownership of less than two percent (2%) of the voting interests in a publicly
held corporation. Livingston expressly acknowledges that his execution of this
covenant not to compete is a material factor in the Corporation's execution of
this Agreement; that its specific terms were bargained for; that this covenant
not to compete is of material import to the Corporation as the business in which
the Corporation is engaged is highly competitive; and that the covenant not to
compete does not constitute an unreasonable restriction on Livingston. Excluded
from this Paragraph 4. are working interests, royalty interests and overriding
royalty interests owned by Livingston prior to the effective date of this
Agreement. Further, this Paragraph 4. will not apply to any working interests,
royalty interests or overriding royalty interests conveyed to Livingston as
inheritance.
5. Disclosure of Information. It is agreed that any and all improvements,
-------------------------
discoveries or results of research, whether patentable or not, which are made,
discovered or invented by Livingston, any other employee, contractor, or
consultant to the Corporation, which relate in any manner to any products,
equipment, work or oth-
<PAGE>
er business activity of the Corporation or any affiliated corporation during the
term of Livingston's employment, shall be and become the exclusive property of
the Corporation. Further, Livingston expressly acknowledges that the list of the
Corporation's customers, its trade secrets and other information pertaining to
the patent rights, designs, methods, systems, improvements, proprietary
information, sales data, trademarks, products, and business affairs of the
Corporation, as the same may exist from time to time, are the sole property of
the Corporation (or its affiliated corporations as the case may be), are
strictly confidential, and shall be held in trust solely for the benefit and use
of the Corporation (or its affiliated corporations as the case may be). All
knowledge and information which Livingston may acquire by, from or through the
Corporation during the course of rendering services under this Agreement, or
from the employees or consultants to the Corporation (or of any affiliated
corporation as the case may be), with respect to any such information as is
specified above, and other confidential matters shall for all purposes, be
regarded as strictly confidential and held in trust and solely for the benefit
and use of the Corporation (or its affiliated corporations as the case may be).
Livingston covenants and agrees that he shall not, during the term of this
Agreement, or at any time after the termination hereof, disclose any such
information to any person, firm, corporation, association or other entity or
group of persons, for any reason or purpose whatsoever; provided, however, that
the covenants contained in this Section 5 shall not prevent Livingston from
making such disclosures (i) as may be necessary in the performance of the
services hereunder, (ii) as may be necessary to comply with legal process or
governmental order, or (iii) to the extent such information is already in the
public domain at the date of such disclosure.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. For just cause due to the fault of
--------------------------
Livingston, the Corporation may terminate Livingston's employment at any time
upon ten (10) days written notice to Livingston and the Corporation shall be
obligated to pay Livingston the compensation under Section 3 due him only up to
the date of termination, including any accrued employee benefits and/or vacation
pay. As used in this Agreement, the term "just cause" shall mean (i) Livingston
shall engage in willful and material misconduct in the performance or
nonperformance of this Agreement; and (ii) Livingston shall commit actual fraud
or a felony criminal act on or after the date of execution hereof. Such action
shall only be taken after reasonable notice to Livingston and after having
provided Livingston an opportunity to present his position. Livingston's
commission of fraud or a felony criminal act shall be determined by a court of
competent jurisdiction or admitted by Livingston. Termination under this
subsection 6(a) shall result in the termination for future periods of all
compensation otherwise payable to Livingston under Section 3 (a), and shall
render null and void ab initio the Corporation's obligation to pay the incentive
-- ------
compensation specified in Section 3(b). Livingston's termination under this
Section 6(a) shall not affect Livingston's obligations under Sec-
<PAGE>
tions 4 or 5 hereof.
(b) Termination Without Just Cause. The Corporation may terminate
------------------------------
Livingston's employment without just cause, but in such event the Corporation
shall be obligated to pay to Livingston the compensation otherwise payable under
Section 3 (a) for the remainder of the term of his employment as determined in
Section 2, including any accrued employee benefits and/or vacation pay. Any
amount of such Section 3 (a) compensation in a gross amount before withholding
taxes up to the greater of One Hundred Thousand Dollars ($100,000) or the amount
of Livingston's combined federal and state income taxes, if any, resulting from
the Corporation's obligation to pay such remaining Section 3(a) compensation
which are due in the year of termination (or not later than the due date for the
filing of Livingston's individual income tax returns for such year), shall be
paid in cash thirty (30) days following the date of Livingston's termination.
The amount, if any, of Livingston's Section 3(a) compensation exceeding such
amount shall be paid in cash in two equal annual installments, on the first and
second anniversaries of Livingston's termination. No interest shall accrue on
such payments, and the Corporation shall deduct there from all normal employee
withholding taxes. If the Corporation terminates Livingston's employment under
this Section 6(b), the incentive compensation otherwise due to Livingston, if
any, under Section 3(b) shall be payable at the time(s) and in the form and
manner set forth in Section 3 (b). Termination of Livingston's employment under
this subsection 6(b) shall not affect Livingston's obligations under Sections 4
or 5 hereof. The foregoing notwithstanding, Livingston may, within ninety (90)
days following the termination of his employment under this Section 3 (b),
notify the Corporation in accordance with Section 8(b) that he has determined to
take actions which would otherwise violate Section 4 hereof. In such case, and
subject to the following conditions, Livingston shall be relieved of his
obligations under Section 4 hereof. In order to be relieved of such Section 4
obligations, Livingston agrees that his compensation under Sections 3(a) and
3(b) shall terminate as of the date of his termination, and Livingston shall
forfeit and return to the Corporation any Section 3(a) compensation and
evidences of indebtedness of the Corporation there for applicable to periods
after his termination; Livingston's Section 3(b) compensation shall accrue only
to the date of his termination and it shall be paid as and when it would
otherwise be paid under Section 3(b). Livingston may be terminated under this
Section 6(b) only by a seventy five percent (75%) vote of the Board of Directors
of the Corporation, including Livingston's if he is a director of the
Corporation at the time the vote is taken. The Corporation shall have the right
to prepay all or any part of any payments provided for in this Section 6(b) at
any time without penalty.
(c) Termination by Livingston. Livingston may terminate his employment at
-------------------------
any time on thirty (30) days prior written notice to the Corporation, and in
such event, the Corporation shall be obligated to pay Livingston his Section
3(a) compensation only up to the date of termination, including any accrued
employee benefits
<PAGE>
and/or vacation pay. If Livingston dies during the term of this Agreement, This
compensation shall continue only to the date of his death. If he becomes
disabled such that he cannot perform his principal duties hereunder for a period
of longer than three (3) months, the Corporation may terminate his employment
after the end of such three (3) month period and in such event Livingston's
compensation shall terminate at such date. Termination under this subsection
6(c) shall not affect Livingston's obligations under Sections 4 or 5. If
Livingston's employment terminates under this Section 6(c), the incentive
compensation otherwise due to Livingston under Section 3(b) shall accrue to the
date of termination of his employment under this Section 6(c). The Corporation
shall have the right to prepay all or any part of any payments provided for in
this Section 6(c) at any time without penalty.
7. Remedy for Breach.
-----------------
(a) Breach by Livingston. If Livingston breaches any agreement, provision,
--------------------
covenant, duty or requirement made herein or required herein on his part, and
such breach is not cured or corrected within five (5) days following - written
notice of the same from the Corporation, then the Corporation, in its sole
discretion, shall be entitled to (i) actual damages from Livingston for such
breach, (ii) specific performance of this Agreement by Livingston and an
injunction restraining Livingston from violating the terms of this Agreement,
(iii) terminate payment of the compensation described in Section 3 as of the
date of such breach (but only under the circumstances specified and to the
extent provided in Sections 6(a) or 6(b), as the case may be), and/or (iv)
terminate Livingston's employment for cause under Section 6(a) (but only under
the circumstances set forth therein), and (v) to the fullest extent permitted by
applicable law, recovery of its attorneys fees, court costs, and all related
expenses of litigation, together with pre- and post-judgment interest thereon.
Nothing herein shall be construed as prohibiting the Corporation from pursuing
any other remedies available to it for such breach or threatened breach
including the recovery of damages from any third party involved or associated
with such breach.
(b) Breach by Corporation. If the Corporation breaches any agreement,
---------------------
provision, covenant, duty or requirement made herein or required herein on its
part, then Livingston, in his sole discretion, shall be entitled to (i) actual
damages from the Corporation for such breach, (ii) specific performance of this
Agreement by the Corporation and an injunction restraining the Corporation from
violating the terms of this Agreement, and (iii) to the fullest extent permitted
by applicable law, recovery of his attorneys fees, court costs, and all related
expenses of litigation, together with pre- and post-judgement interest thereon.
Nothing herein shall be construed as prohibiting Livingston from pursuing any
other remedies allowed by law which may be available to him including the
recovery of damages from any third party involved or associated with such
breach.
<PAGE>
8. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
(b) Notices. All notices given under this Agreement shall be deemed to be
-------
effectively given when personally delivered to the party entitled to receive the
notice, or when placed in the United States Mails, registered or certified,
postage prepaid, at the addresses stated below:
Livingston: Buddie E. Livingston
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
The Corporation: Pan Western Energy Corporation
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
Either party may change his or its address for the purpose of notice by giving
notice of the change of address to the other party in accordance with the
provisions of this Section.
(c) Waiver and Modification. No waiver-of any term of condition of this
-----------------------
Agreement shall be effective unless in writing signed by the waiving party. The
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other or subsequent breach of the same or
any other term or condition. This Agreement may only be modified in a writing
signed by both parties.
(d) Severability. The invalidity or unenforceability of any provision
------------
hereof shall in no way affect the validity or enforce-ability of any other
provision. In the event any court shall finally hold that the time or territory
or any other provisions contained herein constitutes an unreasonable restriction
against Livingston then Livingston and the Corporation expressly agree that the
provisions of this Agreement shall not be rendered void but shall apply only as
to such time, territory or other extent as such court may judicially determine
or indicate constitutes a reasonable restriction under the circumstances
involved.
(e) Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Oklahoma.
(f) Entire Agreement. The parties agree that this Agreement, shall be the
----------------
sole agreement between the parties respecting the employment of Livingston and
his noncompetition obligations to the Corporation. All prior written and oral
agreements respecting such subject matter are terminated.
<PAGE>
(g) Time of Essence. Time is of the essence of this Agreement.
----------------
(h) Corporate Authority. The Corporation represents and warrants to
--------------------
Livingston that (i) all necessary corporate and shareholder action has been
taken on behalf of the Corporation to authorize the execution and delivery of
this Agreement by the undersigned officer of the Corporation and the
satisfaction by the Corporation of its obligations hereunder, (ii) the
Corporation has the full power and authority to enter into this Agreement and to
perform hereunder, and (iii) the Corporation's execution and delivery of this
Agreement does not violate or contravene any other agreement by which the
Corporation is bound. These representations and warranties shall survive the
execution hereof.
(i) Livingston's Representations and Warranties. Livingston represents and
-------------------------------------------
warrants to the Corporation that (i) Livingston has the full power and authority
to enter into this Agreement and to perform hereunder, and (ii) Livingston's
execution and delivery of this Agreement does not violate or contravene any
other agreement by which Livingston is bound. These representations and
warranties shall survive the execution hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ATTEST: PAN WESTERN ENERGY CORPORATION
/s/ Crystal R. Leggett /s/ Sid L. Anderson
- ------------------------- ------------------------------
Secretary By: Sid L. Anderson
President
BUDDIE E. LIVINGSTON
/s/ Buddie E. Livingston
----------------------------------------
An Individual
<PAGE>
EXHIBIT 6.5
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February 28th,
1996, by and between PAN WESTERN ENERGY CORPORATION, an Oklahoma corporation
(the "Corporation"), and VINCENT R. KEMENDO, a resident of Tulsa, Oklahoma
("Kemendo"), and is made with reference to the following:
A. Kemendo was employed by the Corporation as Chief Financial Officer and
Vice President - Finance effective January 1, 1996.
B. The parties desire to execute this Agreement to set forth the terms and
conditions of Kemendo's employment hereinafter.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, the parties agree as follows:
1. Employment of Kemendo and Duties. The Corporation shall employ Kemendo
--------------------------------
and Kemendo shall render services to and on behalf of the Corporation, subject
to the terms and conditions of this Agreement. Kemendo shall devote his full
time and attention to the affairs of the Corporation. Kemendo shall have the
title of Chief Financial Officer and Vice President-Finance. Kemendo's duties
shall be as specified in the by-laws of the Corporation and as directed from
time to time by the Corporation's President and Chief Executive Officer and its
Board of Directors.
2. Term of Employment. The term of this Agreement and Kemendo's
------------------
employment pursuant hereto shall commence on the date first above written and
shall expire on December 31, 2000; or, (b) such other date to which the term of
employment has been extended by the Corporation's Board of Directors.
3. Compensation.
-------------
(a) Base Compensation and Fringe Benefits. As compensation for his
-------------------------------------
services rendered hereunder, the Corporation shall pay Kemendo the following
annual base salary:
<TABLE>
<CAPTION>
Year Base Salary
---- -----------
<S> <C>
1996 $40,000
1997 $40,000
1998 $40,000
1999 $40,000
2000 $40,000
</TABLE>
In addition, the Corporation shall pay normal employee fringe benefits,
including but not limited to medical insurance for said em-
<PAGE>
ployee, from which amount shall be deducted normal employee withholding and
other applicable employment taxes, and such other benefits as may from time to
time be determined by the Board of Directors of the Corporation. Kemendo shall
receive annually vacation time as specified in the Corporation's Personnel
Manual, which may be carried over one year. Salary shall be payable in
installments twice monthly.
(b) Annual Incentive Compensation. As annual incentive compensation, the
-----------------------------
Corporation will establish a bonus pool equal to ten percent (10%) of the
Corporation's net income in excess of $100,000 as reflected by the Corporation's
annual audited financial statements. This sum shall be paid to those
individuals participating in said bonus pool as incentive compensation within
forty five (45) days from the date the annual audited financial statements are
delivered to the Corporation's Board of Directors. The amount to be paid to
each individual participant shall be determined by the Corporation's Board of
Directors based upon recommendations made to it by the Corporation's Chief
Executive Officer. Kemendo shall be eligible to participate in this bonus pool.
As further incentive compensation, Kemendo shall be eligible to participate in
the Corporation's existing Employee Stock Option Plan.
4. Covenant Not to Compete. Kemendo covenants and agrees that, during the
-----------------------
term of his employment and for a period of two (2) years thereafter, he will
not, directly or indirectly, engage in or become financially or otherwise
interested in any business in which the Corporation (or any affiliate) is now
engaged or in which it becomes engaged at any time during the term of Kemendo's
employment with the Corporation relating to the primary business of the
Corporation. The area covered by this covenant includes the Oklahoma and its
adjoining states. This covenant extends to Kemendo, whether as a principal,
agent, manager, employee, lessor, consultant, partner, shareholder, director,
officer or otherwise. This covenant does not extend to Kemendo's ownership of
less than two percent (2%) of the voting interests in a publicly held-
corporation. Kemendo expressly acknowledges that his execution of this covenant
not to compete is a material factor in the Corporation's execution of this
Agreement; that its specific terms were bargained for; that this covenant not to
compete is of material import to the Corporation as the business in which the
Corporation is engaged is highly competitive; and that the covenant not to
compete does not constitute an unreasonable restriction on Kemendo.
5. Disclosure of Information. It is agreed that any and all improvements,
-------------------------
discoveries or results of research, whether patentable or not, which are made,
discovered or invented by Kemendo, any other employee, contractor, or consultant
to the Corporation, which relate in any manner to any products, equipment, work
or other business activity of the Corporation or any affiliated corporation
during the term of Kemendo's employment, shall be and become the exclusive
property of the Corporation. Further, Kemendo expressly acknowledges that the
list of the Corporation's customers, its trade secrets and other information
pertaining to the patent
<PAGE>
rights, designs, methods, systems, improvements, proprietary information, sales
data, trademarks, products, and business affairs of the Corporation, as the same
may exist from time to time, are the sole property of the Corporation (or its
affiliated corporations as the case may be), are strictly confidential, and
shall be held in trust solely for the benefit and use of the Corporation (or its
affiliated corporations as the case may be). All knowledge and information which
Kemendo may acquire by, from or through the Corporation during the course of
rendering services under this Agreement, or from the employees or consultants to
the Corporation (or of any affiliated corporation as the case may be), with
respect to any such information as is specified above, and other confidential
matters shall for all purposes, be regarded as strictly confidential and held in
trust and solely for the benefit and use of the Corporation (or its affiliated
corporations as the case may be). Kemendo covenants and agrees that he shall
not, during the term of this Agreement, or at any time after the termination
hereof, disclose any such information to any person, firm, corporation,
association or other entity or group of persons, for any reason or purpose
whatsoever; provided, however, that the covenants contained in this Section 5
shall not prevent Kemendo from making such disclosures (i) as may be necessary
in the performance of the services hereunder, (ii) as may be necessary to comply
with legal process or governmental order, or (iii) to the extent such
information is al- ready in the public domain at the date of such disclosure.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. For just cause due to the fault of
--------------------------
Kemendo, the Corporation may terminate Kemendo's employment at any time upon ten
(10) days written notice to Kemendo and the Corporation shall be obligated to
pay Kemendo the compensation under Section 3 due him only up to the date of
termination, including any accrued employee benefits and/or vacation pay. As
used in this Agreement, the term "just cause" shall mean (i) Kemendo shall
engage in willful and material misconduct in the performance or nonperformance
of this Agreement; and (ii) Kemendo shall commit actual fraud or a felony
criminal act on or after the date of execution hereof. Such action shall only
be taken after reasonable notice to Kemendo and after having provided Kemendo an
opportunity to present his position. Kemendo's commission of fraud or a felony
criminal act shall be determined by a court of competent jurisdiction or
admitted by Kemendo. Termination under this subsection 6(a) shall result in the
termination for future periods of all compensation otherwise payable to Kemendo
under Section 3(a), and shall render null and void ab initio the Corporation's
-- ------
obligation to pay the incentive compensation specified in Section 3(b).
Kemendo's termination under this Section 6(a) shall not affect Kemendo's
obligations under Sections 4 or 5 hereof.
(b) Termination Without Just Cause. The Corporation may terminate
------------------------------
Kemendo's employment without just cause, but in such event the Corporation shall
be obligated to pay to kemendo the compensation otherwise payable under Section
3(a) for the remainder of the
<PAGE>
term of his employment as determined in Section 2, including any accrued
employee benefits and/or vacation pay. Any amount of such Section 3(a)
compensation in a gross amount before withholding taxes up to the greater of One
Hundred Thousand Dollars ($100,000) or the amount of Kemendo's combined federal
and state income taxes, if any, resulting from the Corporation's obligation to
pay such remaining Section 3 (a) compensation which are due in the year of
termination (or not later than the due date for the filing of Kemendo's
individual income tax returns for such year), shall be paid in cash thirty (30)
days following the date of Kemendo's termination. The amount, if any, of
Kemendo's Section 3(a) compensation exceeding such amount shall be paid in cash
in two equal annual installments, on the first and second anniversaries of
Kemendo's termination. No interest shall accrue on such payments, and the
Corporation shall deduct therefrom all normal employee withholding taxes. If the
Corporation terminates Kemendo's employment under this Section 6(b), the
incentive compensation otherwise due to Kemendo, if any, under Section 3(b)
shall be payable at the time(s) and in the form and manner set forth in Section
3(b). Termination of Kemendo's employment under this subsection 6(b) shall not
affect Kemendo's obligations under Sections 4 or 5 hereof. The foregoing
notwithstanding, Kemendo may, within ninety (90) days following the termination
of his employment under this Section 3 (b), notify the Corporation in accordance
with Section 8(b) that he has determined to take actions which would otherwise
violate Section 4 hereof. In such case, and subject to the following conditions,
Kemendo shall be relieved of his obligations under Section 4 hereof. In order to
be relieved of such Section 4 obligations, Kemendo agrees that his compensation
under Sections 3(a) and 3(b) shall terminate as of the date of his termination,
and Kemendo shall forfeit and return to the Corporation any Section 3(a)
compensation and evidences of indebtedness of the Corporation there for
applicable to periods after his termination; Kemendo's Section 3(b) compensation
shall accrue only to the date of his termination and it shall be paid as and
when it would otherwise be paid under Section 3 (b). Kemendo may be terminated
under this Section 6(b) only by a seventy five percent (75%) vote of the Board
of Directors of the Corporation, including Kemendo's if he is a director of the
Corporation at the time the vote is taken. The Corporation shall have the right
to prepay all or any part of any payments provided for in this Section 6(b) at
any time without penalty.
(c) Termination by Kemendo. Kemendo may terminate his employment at any
----------------------
time on thirty (30) days prior written notice to the Corporation, and in such
event, the Corporation shall be obligated to pay Kemendo his Section 3(a)
compensation only up to the date of termination, including any accrued employee
benefits and/or vacation pay. If Kemendo dies during the term of this Agreement,
his compensation shall continue only to the date of his death. If he becomes
disabled such that he cannot perform his principal duties hereunder for a period
of longer than three (3) months, the Corporation may terminate his employment
after the end of such three (3) month period and in such event Kemendo's
compensation shall terminate at such date. Termination under this subsection
6(c) shall
<PAGE>
not affect Kemendo's obligations under Sections 4 or 5. If Kemendo's employment
terminates under this Section 6(c), the incentive compensation otherwise due to
Kemendo under Section 3(b) shall accrue to the date of termination of his
employment under this Section 6(c). The Corporation shall have the right to
prepay all or any part of any payments provided for in this Section 6(c) at any
time without penalty.
7. Remedy for Breach.
-----------------
(a) Breach by Kemendo. If Kemendo breaches any agreement, provision,
-----------------
covenant, duty or requirement made herein or required herein on his part, and
such breach is not cured or corrected within five (5) days following written
notice of the same from the Corporation, then the Corporation, in its sole
discretion, shall be entitled to (i) actual damages from Kemendo for such
breach, (ii) specific performance of this Agreement by Kemendo and an injunction
restraining Kemendo from violating the terms of this Agreement, (iii) terminate
payment of the compensation described in Section 3 as of the date of such breach
(but only under the circumstances specified and to the extent provided in
Sections 6(a) or 6(b), as the case may be), and/or (iv) terminate Kemendo's
employment for cause under Section 6(a) (but only under the circumstances set
forth therein), and (v) to the fullest extent permitted by applicable law,
recovery of its attorneys fees, court costs, and all related expenses of
litigation, together with pre- and post-judgment interest thereon. Nothing
herein shall be construed as prohibiting the Corporation from pursuing any other
remedies available to it for such breach or threatened breach including the
recovery of damages from any third party involved or associated with such
breach.
(b) Breach by Corporation. If the Corporation breaches any agreement,
---------------------
provision, covenant, duty or requirement made herein or required herein on its
part, then Kemendo, in his sole discretion, shall be entitled to (i) actual
damages from the Corporation for such breach, (ii) specific performance of this
Agreement by the Corporation and an injunction restraining the Corporation from
violating the terms of this Agreement, and (iii) to the fullest extent permitted
by applicable law, recovery of his attorneys fees, court costs, and all related
expenses of litigation, together with pre- and post-judgement interest thereon.
Nothing herein shall be construed as prohibiting Kemendo from pursuing any other
remedies allowed by law which may be available to him including the recovery of
damages from any third party involved or associated with such breach.
8. Miscellaneous.
-------------
(a) Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
(b) Notices. All notices given under this Agreement shall be
-------
<PAGE>
deemed to be effectively given when personally delivered to the party entitled
to receive the notice, or when placed in the United States Mails, registered or
certified, postage prepaid, at the addresses stated below:
Kemendo: Vincent R. Kemendo
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
The Corporation: Pan Western Energy Corporation
1850 South Boulder Avenue
Suite 300
Tulsa, Oklahoma 74119
Either party may change his or its address for the purpose of notice by giving
notice of the change of address to the other party in accordance with the
provisions of this Section.
(c) Waiver and Modification. No waiver of any term of condition of this
-----------------------
Agreement shall be effective unless in writing signed by the waiving party. The
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other or subsequent breach of the same or
any other term or condition. This Agreement may only be modified in a writing
signed by both parties.
(d) Severability. The invalidity or unenforceability of any provision
-------------
hereof shall in no way affect the validity or enforceability of any other
provision. In the event any court shall finally hold that the time or territory
or any other provisions contained herein constitutes an unreasonable restriction
against Kemendo then Kemendo and the Corporation expressly agree that the
provisions of this Agreement shall not be rendered void but shall apply only as
to such time, territory or other extent as such court may judicially determine
or indicate constitutes a reasonable restriction under the circumstances
involved.
(e) Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Oklahoma.
(f) Entire Agreement. The parties agree that this Agreement, shall be the
----------------
sole agreement between the parties respecting the employment of Kemendo non-
competition obligations to the Corporation. All prior written and oral
agreements respecting such subject matter are terminated.
(g) Time of Essence. Time is of the essence of this Agreement.
---------------
(h) Corporate Authority. The Corporation represents and warrants to
-------------------
Kemendo (i) all necessary corporate and shareholder action has been taken on
behalf of the Corporation to authorize the execution and delivery of this
Agreement by the undersigned officer of
<PAGE>
the Corporation and the satisfaction by the Corporation of its obligations
hereunder, (ii) the Corporation has the full power and authority to enter into
this Agreement and to perform hereunder, and (iii) the Corporation's execution
and delivery of this Agreement does not violate or contravene any other
agreement by which the Corporation is bound. These representations and
warranties hall survive the execution hereof.
(i) Kemendo's Representations and Warranties. Kemendo represents
----------------------------------------
and warrants to the Corporation that (i) Kemendo has the full power and
authority to enter into this Agreement and to perform hereunder, and (ii)
Kemendo's execution and delivery of this Agreement does not violate or
contravene any other agreement by which Kemendo is bound. These representations
and warranties shall survive the execution hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ATTEST: PAN WESTERN ENERGY CORPORATION
/s/ Crystal R. Leggett /s/ Sid L. Anderson
- -------------------------- --------------------------
Secretary By: Sid L. Anderson
President
VINCENT R. KEMENDO
/s/ Vincent R. Kemendo
--------------------------
An Individual
<PAGE>
EXHIBIT 6.6
TECHNICAL INFORMATION
AND
PATENT LICENSE AGREEMENT
BETWEEN
AMOCO CORPORATION
AND
PAN WESTERN ENERGY CORPORATION
FOR
SHORT RADIUS DRILLING TECHNOLOGY
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Recitals .......................................................... 1
Article I. Definitions............................................... 1
Article II. Grant to LICENSEE......................................... 3
Article III. Consideration............................................. 4
Article IV. Grant-Back to AMOCO....................................... 6
Article V. Accounting................................................ 6
Article VI. Confidentiality........................................... 8
Article VII. Representations and Warranties............................ 9
Article VIII. Indemnification and Insurance............................. 10
Article IX. Marking................................................... 12
Article X. Term and Termination...................................... 12
Article XI. Assignment................................................ 14
Article XII. Waiver and Integration.................................... 14
Article XIII. Controlling Law........................................... 15
Article XIV. Export Regulations........................................ 15
Article XV. Notices................................................... 16
Article XVI. Miscellaneous............................................. 17
Signature .......................................................... 17
Appendix A
Appendix B
</TABLE>
<PAGE>
TECHNICAL INFORMATION AND PATENT LICENSE AGREEMENT
THIS AGREEMENT, is made by and between Amoco Corporation (hereinafter
referred to as "AMOCO"), a corporation organized and existing under the laws of
the State of Indiana, and Pan Western Energy Corporation. (hereinafter referred
to as "LICENSEE"), a corporation organized and existing under the laws of the
State of Oklahoma;
WITNESSETH THAT:
WHEREAS, AMOCO has the right to grant a license to LICENSEE under certain
hereinafter defined Patent Rights and Technical Information relating to short
radius drilling technology;
WHEREAS, LICENSEE is experienced in the drilling of oil and gas wells and
desires to obtain a license from AMOCO under the above-mentioned Patent Rights
and Technical Information upon the terms and conditions herein set forth and
WHEREAS, AMOCO desires to grant LICENSEE such a license;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the Parties hereto agree as
follows:
ARTICLE I. DEFINITIONS
----------------------
As used in this Agreement, the following terms shall have the following
meanings:
1.01 The terms "AMOCO" and "LICENSEE" shall have the meanings set forth
above. AMOCO and LICENSEE may be referred to herein either individually as a
"Party" or collectively as "Parties" to this Agreement.
1.02 "Field of the Agreement" means systems, equipment, apparatus,
processes, and methods that: use a non-rotating eccentric sleeve to direct or
control the direction of a drill bit; use drill string rotation to provide power
to such drill bit; and that form a curved borehole having a radius of one
hundred and fifty (150) feet or less, with or without straight boreholes
extending laterally therefrom for the purpose of producing oil or gas from
underground reservoirs. Specifically excluded is any drilling system, equipment,
apparatus, process, or method or part thereof that may be used for any purpose
other than drilling curved boreholes; such exclusion comprises, but is not
limited to, dual use devices such
1
<PAGE>
as, drill bits, drill pipe, and measurement while drilling (MWD) equipment and
methods.
1.03 "Technical Information" shall mean all technical information and know-
how, written or unwritten (including, without limitation thereto, designs,
drawings, plans, specifications and software): that relates to any subject
mailer within the Field of the Agreement; and that is fully developed or
completely acquired prior to January 1, 1997 by AMOCO's Exploration and
Production Technology Group (EPTG); and that AMOCO or EPTG has the right to make
the grants and disclosures provided for herein without accounting therefor to
others, but in each case subject to the conditions under which said right to
make such grants and disclosures has been acquired, and that AMOCO believes in
its sole discretion is pertinent to the rights granted to the LICENSEE under
this Agreement.
1.04 "Patent Rights" shall mean:
(a) The issued patents listed in APPENDIX A, which is attached hereto
and is hereby incorporated by reference; and
(b) Any extensions, reissues or reexaminations of the patents listed
in APPENDIX A hereto.
1.05 "Licensed Patents" shall mean all issued and unexpired patents
included within Patent Rights.
1.06 "Licensed Service" shall mean any drilling operation or any service
carried out by or for the LICENSEE within the Field Of the Agreement, and that
uses any system, equipment, apparatus, process or method that is:
(a) Within the scope of and subject to any claim or claims of a
Licensed Patent; or
(b) Developed, derived or dependent in whole or in part through
LICENSEE's use of Technical Information.
1.07 "Effective Date" shall mean, for all purposes under this Agreement,
July 15,1996, provided that this Agreement has been fully executed by both
Parties and AMOCO has received the payment set forth in Paragraph 3.01.
1.08 "Copyrighted Material" shall have the meaning that is set forth below
in Paragraph 2.03.
1.09 "Term" shall mean the period of time beginning with the Effective Date
and ending with the expiration or termination of this Agreement in accordance
with the provisions of Paragraphs 10.01 and 10.02 hereof.
2
<PAGE>
1.10 "PPI" shall mean the Producer Price Index for Oil and Gas Field
Services (Industry Code 138 having a Base Index of December 1985) as published
by the U. S. Department of Labor, Bureau of Labor Statistics.
1.11 "Inflation Factor" for any specific Licensed Service performed
hereunder after December 31, 1997 shall be determined by reference to the ratio
of the PPI for December of the calendar year immediately prior to the
performance of the Licensed Service to 112.5, the PPI for December 1995. The
Inflation Factor shall be equal to said ratio if the ratio is equal to or
greater than one (1)) However, if said ratio is less than one (1), then the
Inflation Factor shall be equal to one (1). For the purposes of this definition,
the Inflation Factor for Licensed Services provided during 1996 and 1997 shall
be one (1).
1.12 A "Curved Borehole" is a lateral drilled in performing Licensed
Service, whether or not such lateral has or shares a single common vertical
wellbore or has multiple vertical wellbores. For example, if a single vertical
wellbore is used to drill three laterals, the number of "Curved Boreholes" is
three. Similarly, if a one vertical wellbore is used to drill two laterals and
if another vertical wellbore is used to drill only one lateral, the number of
"Curved Boreholes" is three.
For the purpose of this definition, a Curved Borehole is "Drilled" in performing
Licensed Service, if any part of a lateral is formed and drilling is not
---
terminated before drilling a distance of:
at least: forty-five (45) feet, for a curve whose radius is less than or
equal to thirty (30) feet; or
at least sixty (60) feet, for a curve whose radius is more than thirty (30)
feet and less than or equal to forty-five (45) feet; or
at least ninety (90) feet for a curve whose radius is more than forty-five
(45) feet and less than or equal to sixty (60) feet.
For purposes of this definition, distance is measured from the kick-off point
(i.e., the location where an attempt is made to drill a curve borehole).
1.13 "Anniversary Year" is the one year period beginning on the Effective
Date or the anniversary thereof.
ARTICLE II. GRANT TO LICENSEE
-----------------------------
2.01 Subject to the terms and conditions set forth in this Agreement, AMOCO
hereby grants to LICENSEE a personal, non-exclusive, non-assignable and non-
transferable royalty-bearing license and right under Patent Rights and Technical
Information to perform Licensed Services (including the right to make,
3
<PAGE>
have made and use equipment to perform Licensed Service) in the United States
without the right to sublicense, transfer, assign or extend to any entity,
including any affiliate or subsidiary of LICENSEE.
2.02 AMOCO agrees to make Technical Information available to LICENSEE in
the following manner:
(a) Within thirty (30) days after receipt of the payment under
-----
Paragraph 3.01, AMOCO shall provide or make available to LICENSEE the
documentation and tangible material identified in Appendix B which is
attached hereto and is hereby incorporated by reference.
2.03 All Technical Information of a written, graphic or pictorial character
(including, without limitation thereto, software, training materials,
instruction manuals, know-how manuals, data sheets, flow charts, schematics,
engineering drawings, blueprints, layouts and video 3) provided to LICENSEE
hereunder has been copyrighted at the time of its creation by AMOCO in
accordance with the provisions of 17 U.S.C. (S)102 as an unpublished work and is
hereinafter referred to as "Copyrighted Material." Subject to the various other
provisions of this Agreement relating to Technical Information, AMOCO hereby
grants to LICENSEE a nonexclusive license and right to use Copyrighted Material
in connection with its operations hereunder and to make a reasonable number of
copies of any tangible materials provided by AMOCO.
2.04 Express or implied licenses and immunities outside the scope of
Paragraphs 2.01 and 2.03 are expressly excluded. Specifically excluded from the
grants under Paragraphs 2.01 and 2.03 are the right to sell, lease or transfer
to others any equipment or information encompassed by Patent Rights or any
equipment or information which is included in or derived from Technical
Information.
ARTICLE Ill. CONSIDERATION
--------------------------
3.01 As partial consideration for AMOCO's grant of the licenses and rights
hereunder, LICENSEE shall pay to AMOCO the sum of Forty Thousand U.S. dollars
($40,000.00) before August 15,1996.
------
4
<PAGE>
3.02 As further consideration for AMOCO's grant of the licenses and rights
hereunder, LICENSEE hereby agrees to pay to AMOCO an annual royalty as set forth
below and within thirty (30) days of the date so indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ROYALTY AMOUNT DUE DATE
- --------------------------------------------------------------------------------
<S> <C>
Royalty Amount Due Date
- --------------------------------------------------------------------------------
Twenty Thousand Dollars ($20,000.00) July 15,1997
multiplied by the Inflation Factor
- --------------------------------------------------------------------------------
Twenty Thousand Dollars ($20,000.00) July 15,1998
multiplied by the Inflation Factor
- --------------------------------------------------------------------------------
Thirty Thousand Dollars ($30,000.00) July 15,1999
multiplied by the Inflation Factor
- --------------------------------------------------------------------------------
Thirty Thousand Dollars ($30,000.00) July 15, 2000
multiplied by the Inflation Factor
- --------------------------------------------------------------------------------
Fifty Thousand Dollars ($50,000.00) July 15, 2001 and every Anniversary
multiplied by the Inflation Factor Year thereafter.
- --------------------------------------------------------------------------------
</TABLE>
In the event that this Agreement expires or terminates before the end of an
Anniversary Year, LICENSEE agrees to pay to AMOCO the annual royalty set forth
above multiplied by the ratio (expressed as a decimal rounded to the nearest
one-tenth) of the number of calendar days that the Agreement was in effect to
the number three hundred and sixty-five (365). Such amount will be paid within
thirty (30) days of the effective date of termination or expiration date.
FOR EXAMPLE, if during the eight Anniversary Year, the Agreement is
terminated and the effective date of termination is on the 183rd day of
that year, the annual royalty due to Amoco is $50,000.00 (multiplied by the
Inflation Factor) multiplied by 0.5, where 0.5 = 183/365.
3.03 Beginning on July 15, 2001 and during every Anniversary Year
thereafter, if the Curved Boreholes Drilled in any Anniversary Year (or pad
thereof, if this Agreement expires or is terminated before the end of that
Anniversary Year) are in excess of fifty (50), LICENSEE agrees to pay an
additional royalty of One Thousand Dollars ($1,000.00), multiplied by the
Inflation Factor, for each Curved Borehole Drilled after the first fifty Curved
Boreholes. Such amount will be paid within thirty (30) days of the end of that
Anniversary Year.
FOR EXAMPLE, if during the eight Anniversary Year, LICENSEE drills 60
curved boreholes, the annual royalty during the fifth Anniversary
5
<PAGE>
Year is $50,000.00 (multiplied by the Inflation Factor) for the first
fifty Curved Boreholes Drilled and $10,000.00 (multiplied by the
Inflation Factor) for the remaining ten Curved Boreholes Drilled, for
a total of annual royalty of $60,000.00 (multiplied by the Inflation
Factor). And if LICENSEE drills only 40 curved boreholes during the
ninth Anniversary Year, the annual royalty is $50,000.00 (multiplied
by the Inflation Factor).
ARTICLE IV. GRANT-BACK TO AMOCO
-------------------------------
4.01 LICENSEE hereby makes the following grants and agrees to make the
following disclosures, but only to the extent that it has the right to do so
without accounting therefore to others, and in each case, subject to the
conditions under which said right to make such grants and disclosures has been
acquired:
(a) LICENSEE agrees to advise AMOCO promptly and in writing of all
inventions with respect to any subject matter relating to the Licensed
Service (including all equipment and devises used to perform the Licensed
Service) which LICENSEE may have, acquire, make or develop during the Term
of this Agreement; and LICENSEE agrees to grant and hereby grants to AMOCO
and its affiliates under all such inventions and any letters patent
thereon, an irrevocable, royalty-free, nonexclusive world-wide license and
right to practice said inventions for all purposes and all applications.
(b) LICENSEE agrees to promptly advise AMOCO of its know-how and
information of a technical nature relating to the Licensed Service
(including all equipment and devices used to perform the Licensed Service)
which LICENSEE may have, acquire or develop during the Term of this
Agreement; and LICENSEE agrees to make such know-how and information
available to AMOCO and hereby grants to AMOCO and its affiliates an
irrevocable, royalty-free, nonexclusive world-wide license and right to use
all such know-how and information for all purposes and all applications.
ARTICLE V. ACCOUNTING
---------------------
5.01 LICENSEE agrees to keep or cause to be kept such detailed and accurate
records and books of account as will enable a determination of the
6
<PAGE>
amounts payable hereunder to AMOCO. LICENSEE further agrees to permit said
records and books of account to be examined during reasonable business hours for
three (3) years following the end of the calendar year to which they pertain for
the purpose of verifying the reports provided for in Paragraph 5.02 of this
Article V, such examination to be made by an auditor or accountant authorized by
AMOCO.
5.02 LICENSEE shall make the following written reports to AMOCO:
(a) Within thirty (30) days after the end of each Anniversary Year
during the Term of this Agreement, LICENSEE shall submit to AMOCO a written
report stating the total number of Curved Boreholes Drilled by LICENSEE in
performing Licensed Service during such Anniversary Year and the Inflation
Factor used.
(b) Within thirty (30) days after the date of expiration or
termination of this Agreement, LICENSEE shall submit to AMOCO a final
written report stating the total number of Curved Boreholes Drilled by
LICENSEE in performing Licensed Service since the last report submitted to
AMOCO pursuant to Paragraph 5.02 (a) and the Inflation Factor used.
Each such report shall be accompanied by payment of any royalty or other amount
due under the provisions of this Agreement. If no royalty or other amount is
believed to be due, LICENSEE shall so report. All reports and any accompanying
payment shall be sent to the address indicated in Paragraph 15.01.
5.03 For the purpose of computing royalties under Paragraph 3.03, a royalty
is still due under this Agreement if a Curved Borehole is Drilled and is
subsequently abandoned or is not used. Moreover, a royalty is Due to AMOCO
whether or not LICENSEE receives any payment or consideration in return for
performing Licensed Service.
5.04 All payments made by LICENSEE to AMOCO under this Agreement shall be
made:
(a) In lawful money of the United States of America; and
(b) Without deduction for and free from any present and future taxes,
assessments, fees or levies of any kind that are incurred or owed by
LICENSEE.
5.05 Without excusing prompt payment, any overdue payment shall bear and
LICENSEE shall pay interest at an annual rate equal to the United States Prime
Rate published in The Wall Street Journal (United States of America Midwest
-----------------------
Edition) as in effect on the first business day of the month in
7
<PAGE>
which the payment is due and compounded daily from the day when payment is due
until payment thereof is made to AMOCO.
ARTICLE VI. CONFIDENTIALITY
---------------------------
6.01 Subject to the provisions of Paragraph 6.03 of this Article VI
LICENSEE will treat Technical Information as confidential, will got use the same
or any part thereof except in accordance with the terms and provisions of this
Agreement, and will not disclose the same or any part thereof to any third party
without the prior, specific written approval of AMOCO; provided, however, that
to the extent, but only to the extent reasonably necessary in connection with
its operations hereunder, LICENSEE may disclose the same to such third parties,
including wholly owned subsidiaries, engineers, contractors and suppliers, who
are subject to a written obligation of confidentiality and restricted use with
respect to the same that is at least as restrictive as herein required of
LICENSEE.
6.02 Subject to the provisions of Paragraph 6.03 Of this Article VI AMOCO
will treat any proprietary information received from LICENSEE pursuant to the
provisions of Article IV as confidential, will not use the same or any part
thereof except in accordance with the terms and provisions of this Agreement,
and will not disclose the same or any part thereof to any third party without
the prior, specific written approval of LICENSEE; provided, however, that to the
extent, but only to the extent reasonably necessary in connection with any
operations contemplated under the grants of Article IV, AMOCO may disclose the
same to such third parties, including AMOCO's affiliates, engineers, contractors
and suppliers, who are subject to a written obligation of confidentiality and
restricted use with respect to the same that is at least as restrictive as
herein required of AMOCO.
6.03 Nothing contained in Paragraphs 6.01 or 6.02 above shall in any way
restrict or impair the right of the receiving Party to use, disclose or
otherwise deal with any information received from the disclosing Party which:
(a) At the time of disclosure is generally available to the public or
thereafter becomes generally available to the public by publication or
otherwise through no act of the receiving Party;
(b) The receiving Party can show was in its or its affiliate's
possession prior to the time of the disclosure hereunder and was not
acquired directly or indirectly from the disclosing Party; or
(c) Is independently made available to the receiving Party or its
affiliates as a matter of right by a third party.
8
<PAGE>
6.04 The obligations of LICENSEE and of AMOCO under this ARTICLE VI
shall survive the expiration or termination of this Agreement.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
-------------------------------------------
7.01 Each Party represents and warrants that it has legal power to make the
grant of licenses and rights that are set forth in this Agreement.
7.02 NEITHER PARTY MAKES ANY WARRANTY OTHER THAN THAT PROVIDED IN PARAGRAPH
7.01 OF THIS ARTICLE VII AND MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, AND ALL WARRANTIES, EXPRESS OR IMPLIED, EXCEPT THE
WARRANTY EXPRESSLY STATED ABOVE, ARE EXCLUDED. ALL TECHNICAL INFORMATION IS
PROVIDED TO LICENSEE BY AMOCO ON AN "AS-IS" BASIS.
7.03 Nothing contained in this Agreement shall be construed as:
(a) A warranty or representation by AMOCO as to the validity or scope
of Patent Rights or of any Licensed Patent; or
(b) A warranty or representation that anything made, used, sold or
any service or process performed under any license or right granted in this
Agreement is or will be free from infringement of patents of third parties;
or
(c) An obligation to bring or prosecute actions Or suits against
third parties for infringement of any patent; or
(d) Granting by implication, estoppel or otherwise any licenses or
rights other than those which are expressly stated herein; or
(e) A requirement that either Party file or prosecute any patent
application, secure any patent, or maintain any patent application or
patent; or
(f) A representation or warranty, express or implied, as to the
accuracy or utility of any Technical Information or that the use of any
Technical Information will not infringe any United States or foreign
patent.
7.04 LICENSEE agrees that, notwithstanding the transfer of Technical
Information pursuant to Article II, it is solely responsible for designing,
modifying or using equipment and methods to perform Licensed Services. LICENSEE
agrees that any assistance by AMOCO or any employee or agent of AMOCO shall not
be considered to be an endorsement, approval or inducement to
9
<PAGE>
perform Licensed Services. LICENSEE agrees that formal training in the use of
the items identified in Appendix B is not needed.
ARTICLE VIII. INDEMNIFICATION AND INSURANCE
-------------------------------------------
8.01 LICENSEE AGREES THAT AMOCO, ITS AFFILIATES AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES (such entities and persons
individually and collectively referred to as "AMOCO GROUP") SHALL NOT BE LIABLE
FOR ANY LOSS, DAMAGE, INJURY OR OTHER CASUALTY OF WHATSOEVER KIND (INCLUDING
PATENT INFRINGEMENT), OR BY WHOMSOEVER CAUSED, TO THE PERSON OR PROPERTY OF
ANYONE, INCLUDING LICENSEE OR ANY OF ITS CUSTOMERS, AND ARISING OUT OF OR
RESULTING FROM THE LICENSES AND RIGHTS GRANTED TO LICENSEE HEREUNDER (INCLUDING,
WITHOUT LIMITATION, ANY LOSS, DAMAGE, INJURY OR OTHER CASUALTY ARISING OUT OF
THE PERFORMANCE OF THE LICENSED SERVICE BY LICENSE)D-). LICENSEE AGREES FOR
ITSELF, ITS SUCCESSORS AND ASSIGNS, TO INDEMNIFY AND HOLD AMOCO GROUP HARMLESS
FROM AND AGAINST ALL CLAIMS, DEMANDS, LIABILITIES SUITS, ACTIONS, LOSSES, COSTS
AND EXPENSES (INCLUDING ALL REASONABLE EXPENSES AND ATTORNEY'S FEES INCURRED BY
OR IMPOSED ON AMOCO GROUP IN CONNECTION THEREWITH) FOR SUCH LOSS, DAMAGE, INJURY
OR OTHER CASUALTY, PROVIDED SUCH LOSS, DAMAGE, INJURY OR OTHER CASUALTY THAT
ARISES OUT OF OR RESULTS FROM THE LICENSES AND RIGHTS GRANTED TO LICENSEE
HEREUNDER.
8.02 As a separate and independent obligation, LICENSEE shall secure and
maintain during the term Of this Agreement Comprehensive General Liability or
Commercial General Liability (or equivalent coverage) Insurance, on an
occurrence not claims made basis, with minimum limits of Five Million U.S.
Dollars ($5,000,000.00) for death, injury and property damage per injury/per
occurrence.
All such policies shall:
(1) be issued from insurance companies that are solvent and that have
an A. M. Best rating of B or higher, or be issued by underwriters at Lloyds
of London or the member companies of Institute of London Underwriters;
(2) name Amoco Group is to be named as an "Additional Assured"
against loss by reason of any liability imposed upon LICENSEE by law or
assumed under this Agreement for the following:
10
<PAGE>
(a) Damages because of personal injuries, including death at any
time resulting therefrom, sustained by any person or persons
(including those employed by LICENSEE) insofar as such personal
injuries or death shall arise directly or indirectly from in
connection with e:+her the use of any information provided by Amoco
Group under this Agreement or the performance of any Licensed Service;
and
(b) Damages on count of injury to or destruction of property of
every description, including resultant loss of use thereof, insofar as
such injuries or destruction shall arise directly or indirectly from
or in connection with either the use of any information provided by
Amoco Group under this Agreement, or the performance of any Licensed
Service;
(3) be primary to any policies providing coverage to Amoco Group and
any coverage afforded Amoco Group under such policies without any
contributions or reimbursement, in whole or in part, by any insurance, or
self-insured retention or account maintained by or providing coverage to
Amoco Group;
(4) delete any excess clause or co-insurance clause that requires
sharing or renders any insurance providing coverage to Amoco Group as
primary;
(5) provide that AMOCO will receive written notice at least thirty
(30) days prior to cancellation of or a material change to any such policy;
(6) be endorsed as follows:
"To eliminate controversies, the expense and inconvenience
thereto, as between Amoco Group and LICENSEE, it is agreed
that the underwriters, insurers, insurance carriers, of
LICENSEE shall not have any right of subrogation (equitable
or by assignment, express or implied, loan receipt or
otherwise) against Amoco Group or their insurers, and the
right of subrogation is expressly waived."; and
(7) be endorsed to waive rights of statutory lien against Amoco
Group, or to include an assignment of statutory lien, if applicable.
Except as otherwise mandated by applicable law or expressly stated to the
contrary in this Agreement, LICENSEE's obligation to defend, indemnify and hold
Amoco Group harmless as set out in this Agreement shall not in any manner by
limited, offered or modified by these insurance requirements.
11
<PAGE>
8.03 Upon request, LICENSEE shall furnish AMOCO with insurance
certificates, certified copies of the original policies, or other documentation
to evidence the insurance required under Paragraph 8.02 of this Article VIII,
which certificates, documents, or policies shall indicate that all required
waivers and endorsements have been obtained. All such insurance shall be
maintained in force by LICENSEE for so long as LICENSEE is engaged in any use of
any Patent Rights or Technical Information, or the performance of Licensed
Services. Maintaining the prescribed insurance shall not relieve LICENSEE of any
other obligations under this Agreement. LICENSEE agrees that drilling any
lateral using Technical Information, making any payment to AMOCO, or any
performance to AMOCO under this Agreement without having such insurance shall
not be deemed an acceptance of any improperly completed insurance certificate
certified copy Of an original policies, or other documentation or a waiver of
AMOCO's rights under this Agreement.
ARTICLE IX. MARKING
-------------------
9.01 With respect to any equipment which is used to perform the Licensed
Service, which is within the scope of and subject to any claim or claims of a
Licensed Patent and which is either manufactured by or for LICENSEE or used by
LICENSEE within a country identified in Appendix A, LICENSEE agrees to mark such
equipment with proper patent notice as specified under the patent laws of the
such country.
ARTICLE X. TERM AND TERMINATION
-------------------------------
10.01 Unless previously terminated in accordance with the provisions of
Paragraph 10.02 of this Article X, this Agreement shall continue in full force
until the expiration date of the last to expire of Licensed Patents, whereupon
this Agreement shall become paid-up with no further royalties accruing in
respect of the grants under ARTICLE II hereof.
10.02 Subject to the provisions of Paragraphs 10.04 and 10.05 of this
Article X, this Agreement can be terminated as follows:
(a) LICENSEE shall have the right to terminate this Agreement upon
sixty (60) days prior written notice to AMOCO; and
(b) In the event that LICENSEE fails to fully and promptly discharge
any of its obligations hereunder and fails to rectify any such default
within thirty (30) days after receipt of written notice thereof from
12
<PAGE>
AMOCO specifying the nature of such failure, AMOCO may terminate this
Agreement by delivering written notice of termination to LICENSEE; and
(c) LICENSEE agrees that two important and material facts leading to
this grant of rights by AMOCO to LICENSEE were the representation made by
LICENSEE regarding its potential for offering the Licensed Service and the
representation that it is acting on its own behalf and not acting as an
agent for on behalf of any third party. LICENSEE agrees that AMOCO has the
right to terminate this Agreement in the event that there is a material
change in the organization or ownership of LICENSEE. It is understood that
a material change in ownership of LICENSEE includes, but is not limited to:
the direct or indirect acquisition of control of LICENSEE by purchase of
LICENSEE's business, and the purchase of stock carrying the right to vote
for managing directors, including any equivalent control thereof, in
LICENSEE's business by any entity whose business is primarily that of
providing services to the oil and gas industry and having a net worth in
excess of ten (10) times the product of the Inflation Factor and the net
worth of LICENSEE on the Effective Date, wherein the net worth and primary
business of such entity are determined by a public accrediting agency, such
as Dun and Bradstreet, selected by AMOCO. Specifically identified entities
that would give rise to AMOCO's right to terminate this Agreement include,
but are not limited to: oil and gas companies listed in the OGJ 100 Company
---------------
Listing; and Halliburton, Schlumberger, Dresser, and Baker Hughes and their
-------
affiliated companies. Entities that would not give rise to AMOCO's right to
---
terminate this Agreement include, but are not limited to, universities,
pension funds, commercial banks, insurance companies and other entities or
persons whose primary business is to provide financial and investment
services.
10.03 The licenses and rights granted under Article Il hereof with respect
to Technical Information shall survive the expiration of this Agreement under
the provisions of Paragraph 10.01 of this Article X.
10.04 In the event that this Agreement is terminated in accordance with any
of the provisions of Paragraph 10.02 of this Article X, it is understood and
agreed that:
(a) From and after the date of any such termination, LICENSEE shall
have no further licenses or rights with respect to Patent Rights, Licensed
Patents or Technical Information; and
(b) LICENSEE shall immediately destroy or return to AMOCO all
Copyrighted Material provided hereunder.
13
<PAGE>
10.05 Expiration Or termination of this Agreement shall not relieve
LICENSEE of its royalty obligations or otherwise relieve LICENSEE of any other
obligation or liability arising from any acts or omissions committed prior to
the date of such expiration or termination. In addition, expiration or
termination of this Agreement shall not relieve LICENSEE of the following
obligations:
(a) Its obligations under Article IV;
(b) Its obligations under Paragraph 5.01 of Article V to maintain
records and permit their examination;
(c) Its-obligation under Paragraph 5.02(b) of Article V to submit a
final written report;
(d) Its obligation of confidentiality and restricted use under
Paragraph 6.01 of Article VI; and
(e) Its obligations under Article VIII to indemnify and carry
insurance.
ARTICLE XI. ASSIGNMENT
----------------------
11.01 The licenses and rights granted hereunder by AMOCO to LICENSEE are
personal to LICENSEE and may not be assigned, sold, transferred, or extended to
any person or entity (including successors or related third parties) without the
prior written consent of AMOCO. Any attempted assignment, sale or transfer of
any such license or right, by any means, without AMOCO's prior written consent,
shall be void and shall automatically terminate all licenses and rights of
LICENSEE under this Agreement.
11.02 After completion of its obligation under Paragraph 2.02, AMOCO may
assign or otherwise transfer this Agreement or any of its licenses, rights,
duties and obligations hereunder to any nominee of AMOCO.
ARTICLE XII. WAIVER AND INTEGRATION
-----------------------------------
12.01 The waiver of a breach of this Agreement by either Party hereto shall
in no event constitute a waiver as to any other breach, whether similar or
dissimilar in nature.
12.02 The making, execution and delivery of this Agreement have not been
induced by any representations, statements, warranties or agreements other than
those expressed herein. This Agreement constitutes the entire
14
<PAGE>
understanding of the Parties hereto and merges any previous agreements or
understandings, written or oral, between the Parties and relating to the subject
matter hereof. Neither the course of conduct between the Parties nor trade
practice shall act to modify the provisions of this Agreement.
12.03 This Agreement may be amended or modified only by an instrument of
equal formality signed by duly authorized representatives of the respective
Parties.
ARTICLE XIII. CONTROLLING LAW
-----------------------------
13.01 This Agreement shall be construed and the legal relations between the
Parties shall be determined in accordance with the laws of the State of Oklahoma
of the United States of America, excluding any choice of law rules which may
direct the application of the laws of any other jurisdiction.
13.02 The Parties agree that if any part, term or provision of this
Agreement shall be found illegal or in conflict with any valid controlling law,
the validity of the remaining provisions shall not be affected by such finding.
13.03 To the extent that this Agreement may be subject to the laws of the
State of Texas, each Party hereto certifies that they are no "Consumers" within
the meaning of the Texas Deceptive Trade Practices-Consumer Protection Act,
Subchapter B of Chapter 17, Sections 17.42 et seq., of the Texas Business and
Commerce Code (the "DTPA"), as amended. The Parties covenant for themselves and
for and on behalf of their respective successors or assignees that if the DTPA
shall be applicable: (i) the Parties are "business consumers" under the DTPA,
(ii) each Party hereby waives and releases all its rights and remedies under the
DTPA (other than Section 17.555, Texas Business and Commerce Code) as applicable
to the other Party and its successors, and (iii) each Party hereby agrees to
defend and indemnify the other Party from and against any and all claims,
demands, or causes of action of or by that Party or any successor based in whole
or in part on the DTPA and arising out of or in connection with this Agreement.
ARTICLE XIV. EXPORT REGULATIONS
-------------------------------
14.01 Anything herein to the contrary notwithstanding, each Party hereto
agrees and gives its assurance to the other Party that it will not, directly or
indirectly, export, reexport or transship any technical information or data made
available hereunder by said other Party or the direct product thereof to any
destination requiring the approval of the Government of the United States of
15
<PAGE>
America for such export, reexport or transshipment until a request to do so has
been submitted to and approved by the appropriate United States Government
Agency.
ARTICLE XV. NOTICES
-------------------
15.01 Until otherwise specified in writing, the mailing addresses of both
Parties to this Agreement shall be as follows:
AMOCO: AMOCO CORPORATION
Mail Code 1906B
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Manager, Licensing
Law Department
Facsimile: (312) 8564972
Telex: 25-3731
LICENSEE: Pan Western Energy Corporation
Boulder on the Park
1850 South Boulder Avenue, Suite 300
Tulsa, Oklahoma 74119
Attention: S.L. Anderson, President
Facsimile: (918) 583-0601
15.02 Any notice expressly provided for under this Agreement shall be in
writing, and shall be given manually, by facsimile, by telex or by mail. Such
notice shall be deemed sufficiently given if and when received by the Party to
be notified, or on the date when sent by facsimile and followed by a specific
written receipt or confirmation; or when sent postpaid by Registered Mail or
Certified Mail and confirmed by a return receipt post card. Such notice shall be
sent to the address set forth above in Paragraph 15.01 or at such address as may
from time to time be designated in writing by said Party.
16
<PAGE>
ARTICLE XVI. MISCELLANEOUS
--------------------------
16.01 LICENSEE shall not, without the express written consent of AMOCO:
(a) Make any oral or written statements or perform any act indicating
that AMOCO endorses or approves, or has endorsed or approved, the Licensed
Service; or
(b) Associate or in any way connect any name or trademark of AMOCO or
its Affiliates with the Licensed Service.
LICENSEE is not prohibited from making statements of fact, including that it has
a license from Amoco Corporation, and that it is licensed to use certain
technology developed by EPTG. LICENSEE is warned not to make any statement,
express or implied, to the effect that it will receive any business from AMOCO,
or any part of AMOCO, to perform Licensed Service or that AMOCO or any part of
AMOCO, approves, guarantees or certifies Licensed Service.
16.02 The descriptive headings of the various articles of this Agreement
are for convenience only and shall not be used in the construction of the
contents hereof.
16.03 Any act, obligation, or right of AMOCO provided for in this License
Agreement may be performed or exercised, on AMOCO's election, by any of AMOCO's
affiliates, including EPTG.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized representatives as of the dates written
below.
PAN WESTERN
ENERGY CORPORATION AMOCO CORPORATION
By /s/ Sid L. Anderson, By /s/ Robert E. Sloat
--------------------- -------------------
Sid L. Anderson, Robert E. Sloat,
President Manager Licensing
Date: 7 - 1- 96 Date: 7/11/96
ATTACHMENTS: Appendix A
Appendix B
17
<PAGE>
APPENDIX A
of Technical Information and
Patent License Agreement
Page 1 of 1
APPENDIX A
================================================================================
PATENTS ISSUED IN UNITED STATES
Patent Number Title
------------- -----
4,699,224 Method and Apparatus for Lateral Drilling in Oil and Gas
Wells
4,739,843 Apparatus for Lateral Drilling in Oil and Gas Wells
4,899,833 Downhole Drilling Assembly Orienting Device
4,948,925 Apparatus and Method for Rotationally Orientating a Fluid
Conducting Conduit
5,103,919 Method of Determining the Rotational Orientation of a Curve
Drilling Assembly
5,194,859 Apparatus and Method for Positioning a Tool in a Deviated
Section of a Borehole
5,210,533 Apparatus and Method for Positioning a Tool in a Deviated
Section of a Borehole
5,213,168 Apparatus for Drilling a Curved Subterranean Bore hole
5,259,468 Method of Dynamically Monitoring the Orientation of a Curve
Drilling Assembly
5,423,389 Curve Drilling Apparatus
<PAGE>
APPENDIX B
of Technical Information and
Patent License Agreement
Page 1 of 1
APPENDIX B
================================================================================
DOCUMENTATION AND TANGIBLE MATERIALS TO BE MADE
AVAILABLE BY AMOCO TO LICENSEE
- --------------------------------------------------------------------------------
1. Curve Drilling Assembly drawings (for 3-7/8," 4-1/2," and 6-1/8" curve
drilling assemblies) and supporting detail adequate for having the assembly
manufactured to perform Licensed Services.
2. "Short Radius Lateral Drilling Operations Manual"
<PAGE>
EXHIBIT 6.7
PAN WESTERN ENERGY CORPORATION
1992 DIRECTORS' STOCK OPTION PLAN
SECTION 1. Establishment. There is hereby established the Pan Western
-------------
Energy Corporation 1992 Directors Stock Option Plan (the "Directors' Plan"),
pursuant to which certain directors Of PAN WESTERN ENERGY CORPORATION (the
"Company") may be granted options to purchase shares of common stock of the
Company, par value of $.01 per share ("Common Stock"), and thereby share in the
future growth of the business.
SECTION 2. Status of Options. The options to be issued pursuant to this
-----------------
Directors' Plan ("Options") shall not constitute incentive stock options within
the meaning of Section 422A of the Internal Revenue Code of 1986, as amended
("the Code")
SECTION 3. Eligibility. All directors of the Company who are not
-----------
employees of the Company or any of its subsidiaries (collectively, the
"Participants") shall be eligible to be granted Options under this Directors'
Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights. The
---------------------------------------------------------
total number of shares which may be issued and sold pursuant to Options granted
under this Plan shall be 30,000 shares of Common Stock (or the number and kind
of shares of stock or other securities which, in accordance with Section 8 of
this Directors' Plan, shall be substituted for such shares of Common Stock or to
which said shares shall be adjusted; hereinafter, all references to shares of
Common Stock are deemed to be references to said shares or shares so adjusted.)
The issuance of shares upon exercise of an Option shall be free from any
preemptive or preferential right of subscription or purchase on the part of any
stockholder. If any outstanding Option granted under this Directors' Plan is
terminated, for any reason, the shares of Common Stock subject to the
unexercised portion of the Option will again be available for Options issued
under this Directors' Plan.
SECTION 5. Administration.
---------------
(a) This Plan shall be administered by the committee (the "Committee")
consisting of from three (3) to five (5) individuals who may, but need not, be
members of the Board. The Committee shall be appointed by the Board, which may
at any time, and from time to time, remove any member of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum and all determinations of the Committee shall be made
by a majority of such quorum. Any decision or determination of the Committee
reduced to writing and signed by all of the members of the
<PAGE>
Committee shall be fully as effective as if it had been made at a meeting duly
called and held. A Participant may receive Options under this Directors' Plan
whether or not such Participant also serves as a member of the Committee.
(b) Options shall be automatically granted to Participants in accordance
with Section 6 hereof and shall be issued upon terms and conditions set forth in
section 7 hereof. Accordingly, the persons to whom Options shall be granted, the
number of shares subject thereto and the material terms and conditions governing
the Options, will not be subject to the discretion of the Committee. However, if
any questions of interpretation of the Directors' Plan or of any Options issued
hereunder shall arise, they shall be determined by the Committee and such
determination shall be final and binding upon all persons having an interest in
the Directors' Plan.
SECTION 6. Terms and Conditions of Options; Stock Option Agreements. Each
--------------------------------------------------------
Option granted pursuant to this Directors' Plan shall be evidenced by a written
agreement between the Participant and the Company which shall contain the
following terms and conditions:
(a) Option Price. The exercise price of each Directors' Option shall
------------
bc one hundred percent (100%) of the fair market value of the shares
subject to such Option on the date of grant. For purposes of this Section,
the fair market value of a share of Common Stock shall mean (i) in the
event the Common Stock is not publicly traded, the fair market value on
such day as determined in good faith by the Committee or (ii) in the event
the Common Stock is publicly traded, the average of the last sale price of
a share of Common Stock as reported by the principal quotation service on
which the Common Stock is listed, for the ten business days preceding the
date of grant; (iii) if last sale prices are not reported with respect to
the Common Stock, the average of the high bid and low asked prices of a
share of Common Stock as reported by such quotation service for the ten
business days preceding the date of grant; or (iv) if bid and asked
quotations are not reported, the average between the closing bid and asked
prices of a share of Common Stock for the ten business days preceding the
date of grant as furnished by a broker-dealer which regularly furnishes
price quotations for the Common Stock.
(b) Medium and Time of Payment. The exercise price of the shares to
--------------------------
be purchased pursuant to a Directors' Option shall be paid (i) in full in
cash or by check, (ii) by delivery (i.e. surrender) of shares of Common
Stock of the Company then owned by the Participant with a Fair Market Value
at the time of exercise of the Option equal to the exercise price, or (iii)
by a combination of (i) and (ii).
<PAGE>
(c) Term and Exercise of Options. The term of each Option shall
----------------------------
commence on the date it is granted and, unless sooner terminated as set
forth herein, shall expire ten years and thirty days after its date of
grant unless extended as set forth herein. If the Participant shall die or
become disabled within the meaning of Section 22(3) (e) of the Internal
Revenue Code of 1986, as amended, while still serving as a director or
prior to the termination of the Option in accordance with the preceding
sentence, the Option shall terminate on the anniversary of the
Participant's death or disability, as the case may be. In the event of the
Participants death, the Option may be exercised by the person or persons
entitled to do so under the Participant's will or,if the Participant shall
fail to make testamentary disposition of the Option, or shall die
intestate, by the Participant's legal representative.
(d) Transferability. Each Option shall be nontransferable by the
---------------
Participant except by will or by the laws of descent and distribution, and
shall be exercisable during the Participant's lifetime only by him.
(e) Investment Purpose. Each Participant shall represent and warrant
------------------
that he is acquiring the Option and in the event the Option is exercised,
the shares of Common Stock issuable thereunder, for investment, for his own
account and not with a view to the distribution thereof, and that he will
not offer or sell the shares unless a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") and any
applicable state securities law is in effect, or unless counsel
satisfactory to the Company renders a reasoned opinion that the proposed
sale is exempt from the registration requirements of the Securities Act and
such state security act.
SECTION 8. Adjustment of Number of Shares. In the event that a dividend
------------------------------
shall be declared upon the shares of Common Stock payable in shares of Common
Stock, the number of shares of Common Stock then subject to any option granted
hereunder, and the number of shares reserved for issuance pursuant to this
Directors' Plan but not yet covered by an Option, shall be adjusted by adding to
each of such shares the number of shares which would be distributable thereon if
such share had been outstanding on the date fixed for determining the
stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination or shares, merger or consolidation, then there shall
be substituted for each share of Common Stock subject to any such Option and for
each share of Common Stock reserved for issuance pursuant to this Directors'
<PAGE>
Plan but not yet covered by an Option, the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed or for which each such share shall be exchanged. In the case of any such
substitution or adjustment as provided for in this Section, the option price in
each stock option agreement for each share covered thereby prior to such
substitution or adjustment will be the total option price for all shares of
stock or other securities which shall have been substituted for each such share
or to which such share shall have been adjusted pursuant to this Section 8. No
adjustment or substitution provided for in this Section shall require the
Company, in any stock option agreement, to sell a fractional share, and the
total substitution or adjustment with respect to each stock option agreement
shall be limited accordingly.
SECTION 9. Effective Date and Term of Plan. Subject to approval by the
-------------------------------
stockholders of the Company, this Plan shall become effective as of the date of
its adoption by the Board of Directors of the Company. Except to the extent
necessary to govern outstanding Options issued, this Plan shall terminate on,
and no additional Options shall be granted after, the third anniversary of its
effective date unless earlier terminated by the Board of Directors in accordance
with Section 10 Thereof.
SECTION 10. Amendment of the Plan. This Plan may be terminated or
---------------------
amended from time to time by vote of the Board of Directors; provided, however,
that no such termination or amendment shall materially adversely affect or
impair any then outstanding Directors' Option without the consent of the
Participant and no amendment which shall (i) increase the maximum number of
shares subject to this Directors' Plan; (ii) increase the maximum number of
shares issuable to any Participant under this Directors' Plan; or (iii) change
the designation of Participants eligible to receive Options under this
Directors' Plan, shall be effective without the approval of the stockholders.
<PAGE>
PAN WESTERN ENERGY CORPORATION
Agreement Relating to Directors' Stock Options
Which Are Not "Incentive Options"
Pursuant to the 1992 Directors' Stock Option Plan
---------------------------
Option granted in Tulsa, Oklahoma, as of ________________, (hereinafter
referred to as the "Date of Grant") by PAN WESTERN ENERGY CORPORATION (the
"Corporation") to (the "Grantee"):________________________________________.
1. The Option. The Corporation hereby grants to the Grantee, effective
----------
on the Date of Grant, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to____________of the Corporation's fully
paid, non-assessable shares of Common Stock, par value $0.01 per share (the
"Shares"), at the option price set forth in Section 2 below.
The Option is granted pursuant to the Corporation's 1992 Directors' Stock
Option Plan (the "Plan"), a copy of which is delivered herewith by the
corporation and receipt thereof is acknowledged by the Grantee. The Option is
subject in its entirety to all the applicable provisions of the Plan which are
incorporated herein by reference. The Option is a "Non-incentive Stock Option"
within the meaning of Section 2 of the Plan.
2. The Purchase Price. The purchase price of the Shares shall be $______
------------------
per share (the "Option Price").
3. Exercise of Option.
------------------
(a) Except as otherwise provided in the Plan and this Option
Agreement, the Option is exercisable over a period of ten years and thirty days
from the Date of Grant. The option may be exercised from time to time during the
such period as to the total number of Shares allowable under this Section 3(a),
or any lesser amount thereof, but only during the continuation of the Grantee's
service as a director of the Corporation. If the Grantee shall die or become
disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, while still serving as a director or prior to the termination
of this Option in accordance with the preceding sentence, the Option shall
terminate on the first anniversary of the Grantee's death or disability, as the
case may be. In the event of the death of the Grantee, this Option may be
exercised by the person or persons entitled to do so under the Grantee's will (a
"legatee"), or, if the Grantee shall fail to make testamentary disposition of
this
<PAGE>
Option or shall die intestate, by the Grantee's legal representative (a "legal
representative"). If this Option shall extend to 100 or more Shares, then this
Option may not be exercised for less than 100 Shares at any one time, and if
this Option shall extend to less than 100 Shares, then this Option must be
exercised for all such Shares at one time.
(b) Not less than five days nor more than thirty days prior to
the date upon which all or any portion of the Option is to be exercised, She
person entitled to exercise the Option shall deliver to the Corporation written
notice (the "Notice") of his election to exercise all or a part of the Option,
which Notice shall specify the date for the exercise of the Option and the
number of Shares in respect of which the Option is to be exercised. The date
specified in the Notice shall be a business day of the Corporation.
(c) On the date specified in the Notice, the person entitled to
exercise the option shall pay to the Corporation the Option Price of the Shares
in respect of which the option is exercised and the minimum amount of any
Federal and state withholding tax and any employment tax. The Option Price shall
be paid in full at the time of purchase, in cash or by check or with Common
Stock of the Corporation which has been owned by the Grantee for at least six
months prior to the exercise of tee Option, the value of which shall be
determined in the same manner as provided for determining the fair market value
of a share of Common Stock as set forth in Section 7(a) of the Plan. If the
Option is exercised in accordance with the provisions of the Plan and this
Option Agreement, the Corporation shall deliver to such person certificates
representing the number of Shares or other securities in respect of which the
Option is being exercised which Shares or other securities shall be registered
in his name.
4. Representations, Warranties and Covenants.
-----------------------------------------
(a) The Grantee represents and warrants that he is acquiring
this Option and, in the even this Option is exercised the Shares, for
investment, for his own account and not with a view to the distribution thereof,
and that he has no present intention of disposing of this Option or the Shares
or any interest therein or sharing ownership thereof with any other person or
entity.
(b) The Grantee agrees that he will not offer, sell,
hypothecate, transfer or otherwise dispose of any of the Shares unless either:
(i) A registration statement covering the Shares which are to be
so offered has been filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 (the "Securities Act") and such
<PAGE>
sale, transfer or other disposition is accompanied by a prospectus
relating to a registration statement which is in effect under the
Securities Act covering the Shares which are to be sold, transferred
or otherwise disposed of and meeting the requirements of Section 10 of
the Securities Act; or
(ii) Counsel satisfactory to the Corporation renders a reasoned
opinion in writing and addressed to the Corporation and its counsel,
that in the opinion of such counsel such proposed sale, offer,
transfer or other disposition of the Shares is exempt from the
provisions of Section 5 of the Securities Act in view of circumstances
of such proposed offer, sale, transfer or other disposition.
(c) The Grantee acknowledges that (i) the Shares and this Option
constitute "securities" under the Securities Act and/or the Securities Exchange
Act of 1934 and/or the Rules and Regulations promulgated under said acts; (ii)
the Shares must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available; and (iii)
except as set forth in Section 8 below, the Corporation is not under any
obligation with respect to the registration of the Shares.
(d) The certificate or certificates representing the Shares
shall have an appropriate legend referring to the terms of this Option.
(e) The Grantee is advised that he or his legatee or legal
representative, as the case may be and as defined above, may be required to make
an appropriate representation at the time of any exercise of this Option in form
and substance similar to the representations contained herein, relating to the
Shares then being purchased.
(f) The Grantee acknowledged that, in the event of termination
of his or her employment with the Corporation, his or her rights to exercise
this opt ion are restricted as set forth in Section 3(a) above.
5. Successors and Assigns. This Option Agreement shall be binding
----------------------
upon and shall inure to the benefit of any successor or assign of the
Corporation and, to the extent herein provided, shall be binding upon and inure
to the benefit of the Grantee's legatee or legal representative, as defined
above.
6. Adjustment of Options.
---------------------
(a) The number of Shares issuable upon exercise of this Option,
or the amount and kind of other securities issuable
<PAGE>
in addition thereto or in lieu thereof upon the occurrence of the events
specified in Section 8 of the Plan, shall be determined and subject to
adjustment, as the case may be, in accordance with the procedures therein
specified.
(b) Fractional shares resulting from any adjustment in options
pursuant to this Section may be settled In cash or otherwise as the Committee
shall determine. Notice of any adjustment in this Option and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
7. Exercise and Transferability of Option. During the lifetime of
--------------------------------------
the Grantee, this Option is exercisable only by him and shall not be assignable
or transferable by him and no other person shall acquire any rights therein. If
the Grantee, while still serving as a Director of the Corporation, shall die
within the Option Period, his or her legatee or legal representative shall have
the rights provided in Section 3(a) above.
If the foregoing is in accordance with the Grantee's understanding and
approved by him, he may so confirm by signing and returning the duplicate of
this Option Agreement delivered for that purpose.
PAN WESTERN ENERGY CORPORATION
______________________________.
______________________________.
Grantee
<PAGE>
EXHIBIT 6.8
PAN WESTERN ENERGY CORPORATION
1992 EMPLOYEE STOCK OPTION PLAN
SECTION 1. Establishment. There is hereby established the Pan Western
-------------
Energy Corporation 1992 Stock Option Plan ("Plan"), pursuant to which employees
and any other persons who perform substantial services for or on behalf of PAN
WESTERN ENERGY CORPORATION (the "Company"), its subsidiaries and certain other
entities may be granted options to purchase shares of common stock of the
Company, par value of $.01 per share ("Common Stock"), and thereby share in the
future growth of the business. Notwithstanding the foregoing, any director who
is not an employee of the Company or any subsidiary of the Company shall be
ineligible to receive options under this Plan. The subsidiaries of the Company
included in this Plan (the "Subsidiaries") shall be any subsidiary of the
Company as defined in Section 425 of the Internal Revenue Code of 1986, as
amended ("the Code").
SECTION 2. Status of Options. The options which may be granted pursuant
-----------------
to this Plan will constitute either incentive stock options within the meaning
of Section 422A of the Code ("Incentive Stock Options") or options which are not
incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock
Options and Non-incentive Stock Options shall be collectively referred to herein
as "Options".
SECTION 3. Eligibility. All employees of the Company or any of its
-----------
Subsidiaries (including officers, whether or not they are members of the Board
of Directors) who are employed at the time of the adoption of this Plan or
thereafter, and any other persons who perform substantial services for or on
behalf of the Company or any of its Subsidiaries, affiliates or any entity in
which the Company has an interest (collectively the "Grantees") shall be
eligible to be granted Non-incentive Stock Options to purchase shares of Common
Stock under this Plan. All employees of the Company or any of its Subsidiaries
who are employed at the time of adoption of this Plan or thereafter shall be
eligible to be granted Incentive Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights. The
---------------------------------------------------------
total number of shares which may be issued and sold pursuant to Options granted
under this Plan shall be 20,000 shares of Common Stock (or the number and kind
of shares of stock or other securities which, in accordance with Section 9 of
this Plan, shall be substituted for such shares of Common Stock or to which said
shares shall be adjusted; hereinafter, all references to shares of Common Stock
are deemed to be references to said shares or shares so adjusted.) The issuance
of shares upon exercise of an Option shall be free from any preemptive or
preferential right of subscription or purchase on the part of any stockholder.
If any outstanding option granted under this Plan
<PAGE>
expires or is terminated, for any reason, the shares of Common Stock subject to
the unexercised portion of the Option will again be available for Options issued
under this Plan.
SECTION 5. Administration.
--------------
(a) This Plan shall be administered by the committee (the "Committee")
referred to in paragraph (b) of this Section. Subject to the express provisions
of this plan, the Committee shall have regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), to determine the Grantees to whom, and the times and the prices at
which, Options shall be granted, the option periods, the number of shares of the
Common Stock to be subject to each Option and whether each Option shall be an
Incentive Stock Option or a Non-incentive Stock Option, and to make all other
determinations necessary or advisable for the administration of the Plan. Each
Option shall be clearly identified at the time of grant as to its status. In
making such determinations, the Committee may take into account the nature of
the services rendered by the respective Grantees, their present and potential
contributions to the success of the Company and such other factors as the
Committee, in its discretion, shall deem relevant. Nothing contained in this
Plan shall be deemed to give any Grantee any right to be granted an Opt ion to
purchase shares of Common Stock except to the extent and upon such terms and
conditions as may be determined by the Committee. The Committee's determination
on all of the matters referred to in this Section 5 shall be conclusive.
(b) The Committee shall consist of from three (3) to five (5) individuals
who may, but need not, be members of the Board. Each member of the Committee
shall be a person who, at the time of his appointment to, and at all times
during his service as a member of, the Committee is a "disinterested person" as
that term is then defined under Regulation 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, or any successor statute or
regulation regarding the same subject matter. The Committee shall be appointed
by the Board, which may at any time, and from time to time, remove any member of
the Committee, with or without cause, appoint additional members to the
Committee and fill vacancies, however caused, in the Committee. A majority of
the members of the Committee shall constitute a quorum and all determinations of
the Committee shall be made by a majority of such quorum. Any decision or
determination of the Committee reduced to writing and signed by all of the
members of the Committee shall be fully as effective as if it had been made at a
meeting duly called and held.
(c) The Committee may at its election provide in any option agreement
covering the grant of Options under this Plan that, upon the exercise of such
Options, the Company will loan to the holder thereof such amount as shall equal
the purchase price of the
<PAGE>
shares of Common Stock issuable upon such exercise, such loan to be on terms and
conditions deemed appropriate by the Committee.
(d) Notwithstanding any provision hereof to the contrary, the Committee
shall have sole and exclusive authority with respect to the grant of Options to
Directors.
SECTION 6. Terms of Incentive Stock Options. Each Incentive Stock Option
--------------------------------
granted under this Plan shall be evidenced by an Incentive Stock Option
Agreement which shall be executed by the Company and by the person to whom such
Incentive Stock Option is granted, and shall be subject to the following terms
and conditions:
(a) The price at which shares of Common Stock covered by each
Incentive Stock Option may be purchased pursuant thereto shall be
determined in each case on the date of grant by the Committee, but shall be
an amount not less than the par value of such shares and not less than the
fair market value of such shares on the date of grant. For purposes of
this Section, the fair market value of shares of Common Stock on any day
shall be (i) in the event the Common Stock is not publicly traded, the fair
market value on such day as determined in good faith by the Committee or
(ii) in the event the Common Stock is publicly traded, the last sale price
of a share of Common Stock as reported by the principal quotation service
on which the Common Stock is listed, if available, or, if last sale prices
are not reported with respect to the Common Stock, the mean of the high bid
and low asked prices of a share of Common Stock as reported by such
quotation service for such day, such fair market value shall be the average
of (i) the last sale price (or, if last sale prices are not reported with
respect to the Common Stock, the mean of the high bid and low asked prices)
on the day next preceding such day for which there was a report and (ii)
the last sale price (or, if last sale prices are not reported with respect
to the Common Stock, the mean of the high bid and low asked prices) on the
day next succeeding such day for which there was a report, or as otherwise
determined by the Committee in its discretion pursuant to any reasonable
method contemplated by Section 422A of the Code and any regulations issued
pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to each
Incentive Stock Option shall be paid in full in cash, or by delivery (i.e.
surrender) of shares of Common Stock of the Company then owned by the
Grantee, at the time of the exercise of the Incentive Stock Option. Shares
of Common Stock so delivered will be valued on the day of delivery for the
purpose of determining the extent to which the option price has been paid
thereby, in the same manner as provided for the purchase price of Incentive
Stock Options as
<PAGE>
set forth in paragraph (a) of this Section, or as otherwise determined by
the Committee, in its discretion, pursuant to any reasonable method
contemplated by Section 422A of the Code and any regulations issued
pursuant to that Section.
(c) Each Incentive Stock Option Agreement shall provide that such
Incentive Stock Option may be exercised by the Grantee, in such parts and
at such times as nay be specified in such Agreement, within a period not
exceeding ten years after the date on which the Incentive Stock Option is
granted (hereinafter called the "Incentive Stock Option Period") and, in
any event, only during the continuance of the employee's employment by the
Company or any of its Subsidiaries or during the period of three months
after the termination of such employment to the extent that the right to
exercise such Incentive Stock Option had accrued at the date of such
termination; provided, however, that if Incentive Stock Options as to 100
or more shares are held by a Grantee, then such Incentive Stock Options may
not be exercised for less than 100 shares at any one time, and if Incentive
Stock Options for less than 100 shares are held by a Grantee, then
Incentive Stock Options for all such shares must be exercised at one time;
and provided, further, that if the Grantee, while still employed by the
Company or any of its Subsidiaries, shall die within the Incentive Stock
Option Period, the Incentive Stock Option may be exercised, to the extent
specified in the Incentive Stock Option Agreement, and has herein provided,
but only prior to the first to occur of:
(i) the expiration of the period of one year after the date of
the Grantee's death, or
(ii) the expiration of the Incentive Stock Option Period, by the
person or persons entitled to do so under the Grantee's will, or, if
the Grantee shall fail to make testamentary disposition of said
Incentive Stock Option, or shall die intestate, by the Grantee's legal
representative or representatives.
(d) Each Incentive Stock Option granted under this Plan shall by its
terms be nontransferable by the Grantee except by will or by the laws of
descent and distribution, and each Incentive stock Option shall by its
terms be exercisable during the Grantee's lifetime only by him.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the meaning
of Section 425(d) of the Code, more that 10% of the total combined voting
power of all classes of stock of the employer corporation (or a parent or
subsidiary of such corporation within the meaning of Section 425 of the
Code) the price at which each share of Common Stock Covered
<PAGE>
by such Incentive Stock Option may be purchased pursuant to such Incentive
stock Option shall not be less than 110% of the fair market value
(determined as in paragraph (a) of this Section) of the shares of Common
stock at the time the Incentive stock Option is granted, and such Incentive
Stock Option must be exercised within a period specified in the Incentive
Stock Option Agreement which does not exceed five years after the date on
which such Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Committee including, without
limitation, provisions (i) requiring the giving of satisfactory assurances
by the Grantee that the shares are purchased for investment and not with a
view to resale in connection with a distribution of such shares, and will
not be transferred in violation of applicable securities laws, (ii)
restricting the transferability of such shares during a specified period
and (iii) requiring the resale of such shares to the Company at the option
price if the employment of the employee terminates prior to a specified
time. In addition, the Committee, in its discretion, may afford to holders
of Incentive Stock Options granted under this Plan the right to require the
Company to cause to be registered under the Securities Act of 1933, as
amended, for public sale by the holders thereof, shares of Common Stock
subject to such Incentive Stock Options upon such terms and subject to such
conditions as the Committee may determine to be appropriate.
(g) In the discretion of the Committee, a single Stock Option
Agreement may include both Incentive Stock Options and Non-incentive Stock
Options, or those options may be included in separate stock option
agreements.
SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive Stock
------------------------------------
Option granted under this Plan shall be evidenced by a Non-incentive Stock
Option Agreement which shall be executed by the Company and by the person to
whom such Non-incentive Stock Option is granted, and shall be subject to the
following terms and conditions.
(a) The price at which shares of Common Stock covered by each Non-
incentive Stock Option may be purchased pursuant thereto shall be an amount
not less than the par value of such shares.
(b) Each Non-incentive Stock Option Agreement shall provide that such
Non-incentive Stock Option may be exercised by the Grantee, in such parts
and at such times as may be specified in such Agreement, within a period up
to and
<PAGE>
including ten years and thirty days after the date on which the Non-
incentive Stock Option is granted.
(c) Each Non-incentive Stock Option granted under this Plan shall by its
terms be non-transferable by the optionee except by will or by the laws of
descent and distribution, and each Non-incentive Stock Option shall by its
terms be exercisable during the Grantee's lifetime only by him.
(d) The Non-incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Committee, in its sole discretion,
including without limitation the terms, provisions and conditions set forth
in Section 6(f) with respect to Incentive Stock Option Agreements.
SECTION 8. Limit on Option Amount. Notwithstanding any provision
----------------------
contained herein, the aggregate fair market value (determined under Section 6(a)
as of the time such Incentive Stock Options are granted) of the shares of Common
Stock with respect to which Incentive Stock Options are first exercisable by any
employee during any calendar-year (under all stock option plans of the
employee's employer corporation and its parent and subsidiary corporation within
the meaning of Section 425 of the Code) shall not exceed $100,000. An option may
be granted which exceeds this $100,000 limitation, as long as under then
applicable law only the portion of such an option which is exercisable for
shares of Common Stock in excess of the $100,000 limitation shall be treated as
a Non-incentive Stock Option. The limit in this paragraph shall not apply to
options which are designated as Non-incentive Stock Options, and, except as
otherwise provided herein, there shall be no limit on the amount of such options
which may be first exercisable in any year.
SECTION 9. Adjustment of Number of Shares. ln the event that a dividend
------------------------------
shall be declared upon the shares of Common stock payable in shares of Common
Stock, the number of shares of Common Stock then subject to any option granted
hereunder, and the number of shares reserved for issuance pursuant to this Plan
but not yet covered by an option, shall be adjusted by adding to each of such
shares the number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the stockholders entitled
to receive such stock dividend. In the event that the outstanding shares of
Common Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination or
shares, merger or consolidation, then there shall be substituted for each share
of Common Stock subject to any such Option and for each share of Common Stock
reserved for issuance pursuant to the Plan but not
<PAGE>
yet covered by an Option, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed
or for which each such share shall be exchanged; provided, however, that in the
event that such change or exchange results from a merger or consolidation, and
in the judgment of the Board of Directors such substitution cannot be effected
or would be inappropriate, or if the Company shall sell all or substantially all
of its assets, the Company shall use reasonable efforts to effect some other
adjustment of each then outstanding Option which the Board of Directors, in its
sole discretion, shall deem equitable. In the event that there shall be any
change, other than as specified above in this Section 9, in the number or kind
of outstanding shares of Common Stock or of any stock or other securities into
which such shares of Common Stock shall have been changed or for which they
shall have been exchanged, then, if the Board of Directors shall determine that
such change equitable requires an adjustment in the number or kind of shares
theretofore reserved for issuance pursuant to the Plan but not yet covered by an
Option and of the shares then subject to an Option or Options, such adjustment
shall be made by the Board of Directors and shall be effective and binding for
all purposes of this Plan and of each stock option agreement. Notwithstanding
the foregoing, if any adjustment in the number of shares which may be issued and
sold pursuant to Options is required by the Code or regulations issued pursuant
thereto to be approved by the stockholders in order to enable the Company to
issue Incentive Stock Options pursuant to this Plan, then no such adjustment
shall be made without the approval of the stockholders. In the case of any such
substitution or adjustment as provided for in this Section, the option price in
each stock option agreement for each share covered thereby prior to such
substitution or adjustment will be the total option price for all shares of
stock or other securities which shall have been substituted for each such share
or to which such share shall have been adjusted pursuant to this Section 9. No
adjustment or substitution provided for in this Section 9 shall require the
Company, in any stock option agreement, to sell a fractional share, and the
total substitution or adjustment with respect to each stock option agreement
shall be limited accordingly. Notwithstanding the foregoing, in the case of
Incentive Stock Options, if the effect of the adjustments or substitution is to
cause the Incentive Stock Option to fail to continue to qualify as an Incentive
Stock Option or to cause a modification, extension or renewal of such Incentive
Stock Option within the meaning of Section 425 of the Code, the Board of
Directors shall use reasonable efforts to effect such other adjustment of each
then outstanding option as the Board of Directors, in its sole discretion, shall
deem equitable.
SECTION 10. Amendments. This Plan may be terminated or amended from time
----------
to time by vote of the Board of Directors; provided, however, that no such
termination or amendment shall materially adversely affect or impair any then
outstanding Option
<PAGE>
without he consent of the Grantee thereof and no amendment which shall (i)
change the total number of shares which may be issued and sold pursuant to
Options granted under this Plan, or (ii) change the designation of employees
eligible to receive Incentive Stock Options or the class of employees or other
persons eligible to receive Options, shall be effective without the approval of
the stockholders. Notwithstanding the foregoing, the Plan may be amended by the
Committee to incorporate any amendments made to the Code which the Committee
deems to be necessary or desirable to preserve incentive stock option status for
outstanding Incentive Stock Options and to preserve the ability to issue
Incentive Stock Options pursuant to this Plan.
SECTION 11. Termination. Except to the extent necessary to govern
-----------
outstanding Options, this Plan shall terminate on, and no additional Options
shall be granted after, ten years from the date the Plan is adopted, or ten
years from the date the Plan is approved by the stockholders, whichever is
earlier.
<PAGE>
EXHIBIT 6.9
[LETTERHEAD OF PAN WESTERN APPEARS HERE]
[LOGO OF PAN WESTERN]
February 6, 1996
Mr. Bud E. Livingston
Kato Operating Company
P.O. Box 960
Bristow, OK 74010
RE: Northwest Antelope Mississippi Chat Unit
Garfield County, and Noble County, Oklahoma
Dear Bud:
Pursuant to our conversation yesterday, the following represents my
understanding of the agreement reached between Pan Western Energy Corporation
("PWEC") and Bud E. Livingston ("BEL"):
1. Pan Western will pay to BEL monthly, commencing with February 1, 1996
production revenues, an amount equal to 3.93694% of net revenues less 4.77328%
of the lease operating expenses attributable to the above referenced unit.
2. Notwithstanding Paragraph 1. above, PWEC will receive the first Six
Thousand Dollars ($6,000.00) of net revenues less lease operating expenses
attributable to the BEL interest prior to BEL receiving any distributions
attributable to said interest.
3. PWEC will pay all workover costs associated with the implementation of the
water flood unit hereinabove described and no such costs will be attributed to
the BEL interest.
4. In consideration of the remuneration described in Paragraphs 1., 2., and
3., above, BEL will provide to PWEC evaluation and reservoir engineering
services relating to the following fields and wells:
A. Centrahoma Field, Coal County, Oklahoma
B. Borden County, Texas Wells
C. West Flowers Unit, Stonewall County, Texas
5. The evaluation and reservoir engineering services to be provided by BEL to
PWEC shall be designed to result in recommendations by BEL to PWEC as to how
PWEC can maximize the recovery of all its oil
<PAGE>
and gas reserves located in and under the hereinabove described fields and/or
wells set forth in Paragraph 4. BEL's recommendations will be accompanied by
supporting data as deemed necessary and appropriate to assist PWEC with its
annual independent reserve report and sale of any prospect(s), re-works or
developmental opportunities identified by BEL in the areas hereinabove set forth
in Paragraph 4.
6. For purposes of this agreement, the order of priority of the projects to be
undertaken by BEL will be as set forth in Paragraph 4. above. Since it is
understood by both parties that time is of the essence, the overall services to
be performed by BEL will be completed by June 30, 1996. BEL's services relating
to the Centrahoma Field, Coal County, Oklahoma will be completed by February 21,
1996.
7. The effective date of this agreement is February 1, 1996.
If the above summation clearly reflects your understanding of the agreement
reached between Pan Western Energy Corporation and yourself, please execute the
enclosed copy of this letter where indicated and return same to the undersigned
as soon as possible.
My best regards,
PAN WESTERN ENERGY CORPORATION
/s/ Sid L. Anderson
Sid L. Anderson, President
Accepted:
/s/ Bud E. Livingston
- ------------------------------
Bud E. Livingston
Dated: 02-27-96
------------------------
<PAGE>
EXHIBIT 8.1
PAN WESTERN ENERGY CORP
REPORT OF AUDITED RESERVES
AS OF
JANUARY 1, 1997
SYCAMORE RESOURCES, LLC
TULSA, OKLAHOMA
<PAGE>
[LETTERHEAD OF SYCAMORE RESOURCES, LLC APPEARS HERE]
Pan Western Energy Corporation
Boulder on the Park
1850 S. Boulder Ave. Suite 300
Tulsa, Oklahoma 74119
February 12, 1997
REPORT OF AUDITED RESERVES 1997
-------------------------------
Pan Western Energy Corporation
Effective January 1, 1997
Gentlemen:
Pan Western has requested that a review of audited reserves be performed on the
attached properties. We reviewed company records and verified these against
public production records. Based on our observations, the following value is
presented:
<TABLE>
<CAPTION>
NET NET PRESENT LIFE
PROVED MBBL MMCF CASH WORTH YRS
M$ @10%
<S> <C> <C> <C> <C> <C>
PRODUCING PDP 669 2,904 16,034 8,974 30
NONPRODUCING PNP 586 1,009 12,667 7,973 17
UNDEVELOPED PUD 1,024 3,397 28,360 19,359 30
-----------------------------------------
2,279 7,310 57,061 36,306
</TABLE>
METHOD OF APPRAISAL
The properties were evaluated on the basis of future net cash flow, which is
defined as the amount of income estimated to accrue to the appraised interest by
operation of the property to its economic limit. Future net cash flow values
were determined for various discount rates. Discounting was performed by
compounding continuously.
<PAGE>
GENERAL ASSUMPTIONS
PRICES - The oil and gas price was initiated at the December 1996 price for
each property. No escalation was applied.
OPERATING EXPENSES - The operating expenses were supplied by Pan Western based
on the past twelve months and recent changes to gathering systems. These have
been reviewed and appear to be reasonable. No overhead charges were applied.
SALVAGE VALUE - Salvage value or plug and abandonment expenses were not
included in the cashflow models. Normally the two will equalize, and any surplus
or expense is insignificant due to time delay.
SEVERANCE TAX - A severance tax of 7.095% on all products was applied to
Oklahoma wells. Texas severance tax was applied at 4.6% for oil, and 7.5% for
gas. Kansas severance tax was applied at 8%. No ad valorem tax has been applied.
RESERVE CATEGORIES
PROVED PRODUCING - Proved producing as defined by the Society of Petroleum
Engineers, February 27, 1989 are "Estimates of volumes of crude oil, condensate,
natural gas, natural gas liquids, and associated substances anticipated to be
commercially recoverable from a known accumulation from a given date forward,
under existing conditions, by established operating practices and current
government regulations. Proved reserves must have facilities to process and
transport to market that are operational at the time of the estimate, or
reasonable expectation to install such facilities in the future."
PROVED NONPRODUCING - Proved producing reserves are defined as reserves from
zones in existing wells that have not been previously perforated or stimulated.
The reserves have been weighted to account for factors such as production type,
subnormal pressure, log abnormalities, and partial recovery of oil and gas in
place by offset production. Because expenditures occur during recompletion, each
well is assigned adequate investment funds. These reserves have a higher risk
associated with them as compared to PROVED PRODUCING.
PROVED UNDEVELOPED - Proved undeveloped reserves are defined as reserves from
established produced zones that will require expenses in excess of a simple
recompletion attempt. This can include offset drilling and side track drilling
of existing wells. These reserves have a higher risk associated with them as
compared to PROVED NONPRODUCING.
<PAGE>
RESERVE DETERMINATION
PROVED PRODUCING - These reserves were determined by production decline curve
analysis, supported when available by P/Z plots. No volumetric analysis was
applied.
PROVED NONPRODUCING AND UNDEVELOPED - These reserves were prepared based on
previous work and reservoir studies by Conoco, Sun Oil, and KATO Operating
Company. More recent work on horizontal sidetracking from existing wellbores was
prepared as a joint effort of KATO and SYCAMORE. We find that the reserves
portrayed are reasonable, and that the assumptions used are conservative in
nature.
COALGATE FIELD - PDP
An increase in production is noted in this field due to the drop in gathering
line pressure. This increases the net worth of the properties by lowering cost
and increasing rates.
NORTHWEST ANTELOPE - PDP
Production for 1996 indicates that an increase in production rate from remedial
work has been accomplished. In addition, the beginning of stimulation is
evidenced in some areas. Consequently, reserves equivalent to 100 MBBLS have
been moved from the Proved Nonproducing to the Proved Producing category. Pan
Western plans to continue remedial workovers and increase injection capacity.
WEST FLOWERS UNIT - PNP
This field is presently on a 4% decline. A reservoir study should be performed
in order to recover the full potential of the field. Expenditures and reserves
presented involve mostly recompletion and enhancement of existing wellbores.
HORIZONTAL DRILLING - PUD
The horizontal work presented in the PROVED UNDEVELOPED category require the use
of a relatively new but highly successful tool. The technique is short radius
sidetracking. A window is cut in the existing casing over the perforations. A
new hole is bored at a 900 angle into the existing zone for a distance of 400'
to 700'. The results to date in the industry have been good. We have tempered
the reserves not to exceed the ultimate recovery of the well being sidetracked.
This should be considered low on the risk scale of PUD.
REPRESENTATION AND QUALIFICATIONS
The gas balancing situation (if any) has not been addressed in this report. No
on site inspection was made of any of the properties by the evaluator. No effort
was made to check for equipment liens on the above properties.
No environmental audit was made of the properties, to ascertain what
requirements will be needed to bring the wells into
<PAGE>
compliance with state and federal regulations.
The reserve estimates were determined in a manner consistent with accepted
engineering practice. However, because of the nature of oil and gas production,
the data quality, and the many variables involved, it should in no way be
construed that the properties are warranted to behave in the forecasted manner.
Additional activities on the leases, or information obtained subsequent to this
report will require revision of the stated value.
The use or release of this report constitutes an agreement of license with the
author, and releases the author from any liability thereof. Sycamore Resources
LLC, its employees and associates neither own nor expect to own any interest in
the wells, properties, or portions of companies which are partners of Pan
Western Energy, it's employees or associates.
We would be pleased to discuss the report in detail at your convenience.
Respectfully submitted,
/s/ Mike S. Mabry
Mike S. Mabry P.E.
State of Texas 50893
<PAGE>
SUMMARY
<PAGE>
PEP 3.22 2/12/97 9:09 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES OVERALL TOTAL PROVED 1996
<TABLE>
<CAPTION>
EFFECTIVE: 1997.01 ---ADV--- --SEV.-- -- XRF --
THRU: 2026.12 OIL: 0.000 0.000
LIFE: 30.00 YRS GAS: 0.000 0.000
ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
TOTAL PROVED PAYOUT (YRS) 0.30 0.30 INITIAL 0.0000 0.0000 0.0000
NET INC./INV: 15.42 10.39 AT 0.00 0.0000 0.0000 0.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT ADV TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 423.709 1667.686 347.217 1087.986 8168.665 2877.545 11046.209 768.486 0.000 768.486
1998.12 364.332 1304.798 297.177 848.456 6999.060 2236.336 9235.396 768.486 0.000 768.486
1999.12 329.424 1082.380 267.162 702.134 6299.964 1850.238 8150.202 768.486 0.000 768.486
2000.12 287.196 921.267 231.942 596.667 5473.606 1573.564 7047.170 800.557 0.000 800.557
2001.12 242.313 794.864 195.324 514.619 4611.902 1358.519 5970.420 788.972 0.000 788.972
2002.12 205.640 694.794 165.403 450.189 3907.538 1189.778 5097.316 777.677 0.000 777.677
2003.12 170.675 603.055 136.546 390.059 3226.278 1028.963 4255.241 712.583 0.000 712.583
2004.12 137.391 516.623 109.531 333.755 2590.903 884.322 3475.224 647.960 0.000 647.960
2005.12 117.988 457.975 93.673 296.301 2217.071 785.692 3002.763 636.394 0.000 636.394
2006.12 102.469 411.397 81.009 267.284 1918.213 709.265 2627.478 632.827 0.000 632.827
2007.12 89.448 360.516 70.416 238.761 1668.061 635.454 2303.515 619.706 0.000 619.706
2008.12 78.338 327.639 61.411 217.355 1455.268 578.487 2033.755 611.557 0.000 611.557
2009.12 66.945 295.438 52.190 196.565 1237.320 523.198 1760.518 581.077 0.000 581.077
2010.12 43.242 247.528 33.343 161.870 790.438 432.521 1222.960 450.874 0.000 450.874
2011.12 37.919 229.021 29.025 149.993 688.274 400.836 1089.110 442.829 0.000 442.829
SUB-TOT 2697.029 9914.980 2171.369 6451.994 51252.563 17064.721 68317.273 10008.472 0.000 10008.472
AFTER 155.196 1373.897 107.315 858.086 2545.133 2188.762 4733.898 2023.290 0.000 2023.290
TOTAL 2852.225 11288.878 2278.684 7310.081 53797.695 19253.482 73051.172 12031.762 0.000 12031.762
ULT. 8191.815 29132.080
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ DH&LSEHLD ACP COSTS VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 10277.723 3329.935 162.787 0.000 6785.002 6785.001 6314.700 143.0 24.73 2.850
1998.12 8466.911 0.000 0.000 0.000 8466.911 15251.913 13614.150 143.0 24.79 2.841
1999.12 7381.717 391.902 73.482 0.000 6916.333 22168.246 18991.139 143.0 24.87 2.840
2000.12 6246.613 0.000 0.000 0.000 6246.613 28414.857 23401.797 142.3 24.92 2.843
2001.12 5181.449 0.000 0.000 0.000 5181.449 33596.309 26712.035 138.5 24.94 2.845
2002.12 4319.640 0.000 0.000 0.000 4319.640 37915.945 29208.986 135.5 24.97 2.848
2003.12 3542.658 0.000 0.000 0.000 3542.658 41458.605 31061.857 126.9 24.98 2.843
2004.12 2827.264 0.000 0.000 0.000 2827.264 44285.867 32400.156 121.8 25.03 2.855
2005.12 2366.369 0.000 0.000 0.000 2366.369 46652.238 33413.438 119.0 25.06 2.858
2006.12 1994.651 0.000 0.000 0.000 1994.651 48646.891 34186.258 117.5 25.08 2.860
2007.12 1683.810 0.000 0.000 0.000 1683.810 50330.699 34776.551 113.4 25.10 2.868
2008.12 1422.198 0.000 0.000 0.000 1422.198 51752.898 35227.688 111.2 25.12 2.868
2009.12 1179.442 0.000 0.000 0.000 1179.442 52932.340 35566.504 107.6 25.13 2.868
2010.12 772.086 0.000 0.000 0.000 772.086 53704.426 35767.035 107.0 25.00 2.880
2011.12 646.281 0.000 0.000 0.000 646.281 54350.707 35918.926 105.9 25.02 2.880
SUB-TOT 58308.813 3721.837 236.269 0.000 54350.707 54350.707 35918.926 125.0 24.91 2.851
AFTER 2710.637 0.000 -0.001 0.000 2710.633 57061.320 36305.648 55.6 25.16 2.750
TOTAL 61019.449 3721.837 236.268 0.000 57061.340 57061.320 36305.648 90.3 24.92 2.839
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 36305.6 30386.404 25969.199 22554.955 19842.068 17637.789 15813.347 14279.614 12973.016 11847.127
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:09 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES SUMMARY PROVED PRODUCING 1996
<TABLE>
<CAPTION>
EFFECTIVE: 1997.01 ---ADV--- --SEV.-- -- XRF --
THRU: 2026.12 OIL: 0.000 0.000
LIFE: 30.00 YRS GAS: 0.000 0.000
ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYOUT (YRS) 0.09 0.08 INITIAL 0.0000 0.0000 0.0000
PRODUCING NET INC./INV: 82.83 48.75 AT 0.00 0.0000 0.0000 0.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT ADV TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 85.554 498.846 63.801 287.664 1521.678 763.126 2284.804 420.547 0.000 420.547
1998.12 80.463 443.469 60.136 257.148 1435.124 680.668 2115.792 420.547 0.000 420.547
1999.12 74.607 395.923 55.810 230.836 1332.140 609.329 1941.469 420.547 0.000 420.547
2000.12 68.038 354.815 50.906 207.997 1214.910 547.312 1762.222 417.347 0.000 417.347
2001.12 61.590 316.589 46.337 186.726 1105.819 489.462 1595.280 405.762 0.000 405.762
2002.12 55.755 284.282 42.103 168.970 1004.920 441.318 1446.238 394.467 0.000 394.467
2003.12 49.524 257.442 37.319 153.849 890.981 400.362 1291.343 360.147 0.000 360.147
2004.12 44.897 223.484 33.805 134.552 806.897 346.858 1153.755 326.886 0.000 326.886
2005.12 41.503 198.638 31.185 120.164 744.120 307.968 1052.088 316.319 0.000 316.319
2006.12 38.390 179.897 28.784 109.814 686.601 280.505 967.105 313.489 0.000 313.489
2007.12 35.518 158.142 26.572 99.186 633.633 254.185 887.819 308.476 0.000 308.476
2008.12 32.748 145.741 24.442 91.718 582.636 234.261 816.897 304.852 0.000 304.852
2009.12 29.772 134.374 22.094 84.985 526.761 216.369 743.130 292.227 0.000 292.227
2010.12 27.594 123.832 20.426 78.762 486.814 199.880 686.694 291.352 0.000 291.352
2011.12 25.593 114.614 18.895 73.300 450.173 185.428 635.601 291.108 0.000 291.108
SUB-TOT 751.546 3830.088 562.615 2285.671 13423.206 5957.031 19380.236 5284.073 0.000 5284.073
AFTER 153.568 942.235 105.947 619.168 2512.836 1512.728 4025.568 1891.749 0.000 1891.749
TOTAL 905.114 4772.323 668.562 2904.839 15936.042 7469.759 23405.805 7175.822 0.000 7175.822
ULT. 6244.630 22615.467
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ DH&LSEHLD ACP COSTS VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1864.258 195.951 0.000 0.000 1668.307 1668.307 1587.568 111.0 25.25 2.860
1998.12 1695.245 0.000 0.000 0.000 1695.245 3363.552 3048.386 111.0 25.26 2.854
1999.12 1520.922 0.000 0.000 0.000 1520.922 4884.474 4234.575 111.0 25.26 2.846
2000.12 1344.875 0.000 0.000 0.000 1344.875 6229.349 5183.650 110.3 25.26 2.837
2001.12 1189.518 0.000 0.000 0.000 1189.518 7418.867 5943.205 106.5 25.25 2.826
2002.12 1051.771 0.000 0.000 0.000 1051.771 8470.638 6550.893 103.5 25.25 2.816
2003.12 931.196 0.000 0.000 0.000 931.196 9401.833 7037.707 97.8 25.25 2.806
2004.12 826.869 0.000 0.000 0.000 826.869 10228.703 7428.832 94.8 25.24 2.780
2005.12 735.768 0.000 0.000 0.000 735.768 10964.471 7743.746 92.0 25.23 2.764
2006.12 653.616 0.000 0.000 0.000 653.616 11618.087 7996.880 90.6 25.23 2.755
2007.12 579.343 0.000 0.000 0.000 579.343 12197.430 8199.902 87.4 25.22 2.764
2008.12 512.044 0.000 0.000 0.000 512.044 12709.475 8362.270 86.0 25.22 2.755
2009.12 450.903 0.000 0.000 0.000 450.903 13160.377 8491.647 83.6 25.21 2.746
2010.12 395.341 0.000 0.000 0.000 395.341 13555.719 8594.293 83.0 25.21 2.738
2011.12 344.493 0.000 0.000 0.000 344.493 13900.211 8675.230 82.8 25.20 2.729
SUB-TOT 14096.162 195.951 0.000 0.000 13900.212 13900.211 8675.230 96.7 25.24 2.810
AFTER 2133.795 0.000 0.000 0.000 2133.796 16034.012 8973.904 52.4 25.16 2.636
TOTAL 16229.957 195.951 0.000 0.000 16034.008 16034.012 8973.904 74.6 25.23 2.773
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 8973.9 7294.901 6130.603 5278.329 4628.498 4117.173 3704.671 3365.084 3080.816 2839.494
</TABLE>
<PAGE>
PEP 3.22 2/12/97 8:56 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES ONE LINE SUMMARY PROVED PRODUCING 1996
<TABLE>
<CAPTION>
ST FIELD LEASE NAME WI % NET OIL NET GAS SALES REV EXP+TAX INVES'MT NET CF PW @10.0 RANK CUM %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TX FLOWERS WE WEST FLOWERS UNIT 100.000 180.920 42.699 4481.458 1704.000 0.000 2777.454 1804.662 1 20.1
OK ANTELOPE N NORTHWEST ANTELOP 97.975 107.185 273.381 3315.591 258.654 195.951 2860.987 1412.059 2 35.8
TX PEGS HILL PEGS HILL 1234,&6 100.000 66.071 75.136 1843.140 633.000 0.000 1210.139 793.232 3 44.7
OK BOWLEGS BAKER TJ #9 & 10 100.000 65.661 0.000 1564.714 760.949 0.000 803.763 464.698 4 49.9
TX HIGGINS WE CLEVELAND, WAYNE 100.000 22.629 369.895 1311.368 486.002 0.000 825.368 415.304 5 54.5
TX KELLN BABITZKE, BERT A 100.000 20.761 240.256 975.404 216.001 0.000 759.404 370.031 6 58.6
OK CENTRAHOMA HOFFMAN SE/4 100.000 0.000 295.429 872.782 90.000 0.000 782.782 344.236 7 62.5
OK LAKE BLACK JAMES #1 SW 80.000 35.277 0.000 837.379 302.399 0.000 534.979 261.841 8 65.4
TX HIGGINS WE LILLIAN, ADDIE, 1 100.000 18.448 179.245 798.381 180.000 0.000 618.381 231.905 9 68.0
OK POLLYANNA CRANE #1 50.000 0.000 171.863 443.882 93.775 0.000 350.107 226.481 10 70.5
OK LAKE BLACK HARRINGTON 1&2 CO 80.000 25.324 0.000 601.114 258.000 0.000 343.114 219.932 11 72.9
OK CENTRAHOMA MAYER R #3-20 100.000 0.000 114.734 320.848 46.200 0.000 274.648 185.896 12 75.0
OK ENID NE (M AIRPORT 100.000 3.842 126.822 444.883 138.180 0.000 306.703 178.040 13 77.0
TX HIGGINS WE HAYNES, HAROLD 100.000 11.379 85.563 441.116 36.000 0.000 405.116 159.500 14 78.8
OK FITTS (HNT COX #1 NWSE 53.125 13.932 0.000 331.991 113.793 0.000 218.198 133.731 15 80.2
OK CENTRAHOMA MAYER R #4-20 100.000 0.000 93.220 260.683 58.200 0.000 202.483 121.166 16 81.6
OK COALGATE S VITOSCH 89.219 0.000 93.368 257.628 65.576 0.000 192.052 113.167 17 82.9
OK CENTRAHOMA ADMIRE ESTATE 70.205 0.000 96.591 284.585 150.941 0.000 133.645 109.300 18 84.1
TX GLEN COVE MCCORD-HENNIG 2 & 100.000 1.032 64.313 234.674 81.200 0.000 153.474 101.989 19 85.2
OK HARDSCRABB ROZELL 1-32, 2-32 17.664 0.000 88.184 227.759 19.078 0.000 208.681 101.372 20 86.3
KS HYACINTH N SCHUMACHER BDA1 44.375 17.200 0.000 399.563 151.763 0.000 247.800 95.229 21 87.4
OK LAKE BLACK HAM #1 SSWNE 80.000 6.746 0.000 160.133 51.840 0.000 108.293 90.895 22 88.4
OK CENTRAHOMA MAYER 6-17 100.000 0.000 97.168 271.723 72.000 0.000 199.723 88.398 23 89.4
OK FITTS (ATO PARKS MCCARTY #3 100.000 8.436 0.000 201.041 66.000 0.000 135.041 87.585 24 90.4
OK LAKE BLACK ARNOLD #1-14 SENE 80.000 12.579 0.000 298.595 115.200 0.000 183.395 84.296 25 91.3
OK FITTS (BRM STATLER-MCCARTY # 37.500 8.513 0.000 202.876 72.394 0.000 130.482 74.071 26 92.1
OK CENTRAHOMA MCKINNEY NE/4 44.531 0.000 59.919 182.590 32.062 0.000 150.528 73.057 27 93.0
OK CENTRAHOMA MAYER R NW/4 2-1 82.254 0.000 64.439 176.608 54.781 0.000 121.827 66.485 28 93.7
OK CENTRAHOMA KNIGHT-WTRHS-COMB 72.787 0.000 32.713 88.137 18.342 0.000 69.795 54.733 29 94.3
OK CONCHO NOR SCHWARZ A #1 SE 50.000 4.984 5.365 122.396 0.000 0.000 122.396 54.555 30 94.9
KS KRAUS VONFELDT 3,6,9 100.000 6.693 0.000 155.484 95.700 0.000 59.785 50.834 31 95.5
OK CENTRAHOMA VANZANT # 1-9 100.000 0.000 26.946 79.607 23.750 0.000 55.856 45.721 32 96.0
TX P J T (PAL MCCORD-HENNIG 1 100.000 3.457 19.491 126.485 57.750 0.000 68.735 44.115 33 96.5
TX HIGGINS WE FARNSWORTH, FRED 100.000 3.240 37.795 153.185 84.400 0.000 68.785 43.574 34 97.0
KS KRAUS (ARB KINDERKNECHT B 100.000 8.562 0.000 198.901 144.000 0.000 54.901 38.976 35 97.4
OK FITTS (MCA STATLER #1,2,3 100.000 5.656 0.000 132.688 88.200 0.000 44.488 37.249 36 97.8
OK HARDSCRABB MULLEN -PAW # 2-5 32.633 0.000 23.233 60.006 14.440 0.000 45.566 32.465 37 98.2
OK CENTRAHOMA LANOY LEON 49.138 0.000 14.983 41.621 11.498 0.000 30.122 23.730 38 98.4
OK CENTRAHOMA BATTLES W J 1 98.438 0.000 17.385 48.777 21.459 0.000 27.318 21.434 39 98.7
OK PARKLAND W STINER #1 96.875 0.000 18.552 47.916 23.250 0.000 24.666 19.777 40 98.9
OK HARDSCRABB MCFARLIN #1 11.914 0.000 12.663 32.706 12.372 0.000 20.335 15.767 41 99.1
OK STROUD (TU YOUNG # 1 50.000 0.000 15.300 39.517 18.875 0.000 20.642 14.785 42 99.2
OK FITTS (GIL MCCARTY NENW 1 & 100.000 5.620 0.000 133.923 117.000 0.000 16.923 13.851 43 99.4
OK PARKLAND W HODSON #1 50.000 0.000 12.355 31.911 16.100 0.000 15.813 12.782 44 99.5
OK LAKE BLACK OLTMANNS #1&2 NHN 80.000 2.015 0.000 47.841 35.200 0.000 12.641 11.308 45 99.7
OK FITTS (VIO MATTHEWS #2 NWNW 100.000 1.843 0.000 43.923 32.750 0.000 11.173 8.141 46 99.8
OK CENTRAHOMA CODY BOB 78.920 0.000 6.038 17.837 9.470 0.000 8.367 7.450 47 99.8
OK SCOTT GAS CREEK NATION 80.000 0.000 21.280 26.294 19.040 0.000 7.255 5.435 48 99.9
OK HARDSCRABB MULLEN-P A W #1 60.910 0.000 4.578 11.823 7.309 0.000 4.514 4.007 49 99.9
KS IVANHOE EA BOLAND #1 15.000 0.555 0.000 11.740 8.910 0.000 2.830 2.464 50 100.0
OK COALGATE S JONES # 1(coming 66.875 0.000 3.937 10.572 8.025 0.000 2.546 2.186 51 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 668.560 2904.839 23405.799 7175.828 195.951 16034.019 8973.897
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:09 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES SUMMARY PROVED NONPRODUCING 1996
<TABLE>
<CAPTION> EFFECTIVE: 1997.01 ---ADV--- --SEV.-- -- XRF --
THRU: 2013.07 OIL: 0.000 0.000
LIFE: 16.58 YRS GAS: 0.000 0.000
ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYOUT (YRS) 0.36 0.36 INITIAL 0.0000 0.0000 0.0000
NONPRODUCING NET INC./INV: 12.97 9.19 AT 0.00 0.0000 0.0000 0.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT ADV TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 67.666 229.056 57.620 153.833 1380.232 443.045 1823.277 230.386 0.000 230.386
1998.12 71.488 197.437 59.802 133.044 1429.790 382.018 1811.808 230.386 0.000 230.386
1999.12 87.323 171.004 71.635 115.701 1708.860 331.180 2040.040 230.386 0.000 230.386
2000.12 86.488 148.823 70.432 101.166 1678.833 288.637 1967.470 265.657 0.000 265.657
2001.12 75.151 130.136 61.041 88.928 1454.705 252.871 1707.576 265.657 0.000 265.657
2002.12 65.452 114.330 53.029 78.574 1263.508 222.663 1486.171 265.657 0.000 265.657
2003.12 53.246 89.980 42.774 61.862 1018.505 173.162 1191.667 234.883 0.000 234.883
2004.12 45.908 79.981 36.736 55.412 874.550 154.570 1029.120 214.522 0.000 214.522
2005.12 40.424 71.891 32.280 50.164 768.348 139.434 907.782 214.522 0.000 214.522
2006.12 35.653 64.863 28.413 45.587 676.185 126.273 802.458 214.522 0.000 214.522
2007.12 31.492 58.731 25.048 41.575 596.021 114.773 710.794 214.522 0.000 214.522
2008.12 27.855 50.664 22.114 36.494 526.141 100.351 626.492 209.997 0.000 209.997
2009.12 23.139 40.315 18.341 29.876 436.360 82.091 518.451 192.142 0.000 192.142
2010.12 4.527 11.892 3.603 7.709 86.360 24.247 110.607 62.814 0.000 62.814
2011.12 3.650 10.366 2.863 6.745 68.611 21.216 89.827 58.014 0.000 58.014
SUB-TOT 719.462 1469.469 585.731 1006.670 13967.008 2856.531 16823.539 3104.067 0.000 3104.067
AFTER 0.730 3.504 0.613 2.887 14.699 9.429 24.133 18.841 0.000 18.841
TOTAL 720.192 1472.973 586.344 1009.557 13981.707 2865.960 16847.672 3122.908 0.000 3122.908
ULT. 720.264 1473.035
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ DH&LSEHLD ACP COSTS VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1592.891 592.690 0.000 0.000 1000.200 1000.200 924.672 13.0 25.24 3.104
1998.12 1581.421 0.000 0.000 0.000 1581.421 2581.622 2284.717 13.0 25.31 3.094
1999.12 1809.654 391.902 73.482 0.000 1344.271 3925.893 3312.898 13.0 25.38 3.085
2000.12 1701.812 0.000 0.000 0.000 1701.812 5627.705 4514.283 13.0 25.41 3.074
2001.12 1441.919 0.000 0.000 0.000 1441.919 7069.624 5435.335 13.0 25.42 3.064
2002.12 1220.514 0.000 0.000 0.000 1220.514 8290.137 6140.777 13.0 25.42 3.053
2003.12 956.784 0.000 0.000 0.000 956.784 9246.921 6641.159 10.2 25.44 3.015
2004.12 814.598 0.000 0.000 0.000 814.598 10061.519 7026.616 9.0 25.45 3.005
2005.12 693.260 0.000 0.000 0.000 693.260 10754.778 7323.448 9.0 25.45 2.994
2006.12 587.936 0.000 0.000 0.000 587.936 11342.714 7551.236 9.0 25.46 2.984
2007.12 496.272 0.000 0.000 0.000 496.272 11838.985 7725.220 9.0 25.47 2.974
2008.12 416.495 0.000 0.000 0.000 416.495 12255.480 7857.345 8.2 25.47 2.962
2009.12 326.309 0.000 0.000 0.000 326.309 12581.790 7951.307 7.0 25.47 2.960
2010.12 47.793 0.000 0.000 0.000 47.793 12629.583 7963.740 7.0 25.22 3.393
2011.12 31.812 0.000 0.000 0.000 31.812 12661.396 7971.232 6.5 25.23 3.394
SUB-TOT 13719.469 984.592 73.482 0.000 12661.395 12661.396 7971.232 10.2 25.40 3.058
AFTER 5.292 0.000 0.000 0.000 5.293 12666.693 7972.366 1.3 25.18 3.531
TOTAL 13724.761 984.592 73.482 0.000 12666.688 12666.693 7972.366 9.3 25.40 3.059
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 7972.4 6533.875 5451.887 4619.840 3966.958 3445.245 3021.493 2672.253 2380.660 2134.343
</TABLE>
<PAGE>
PEP 3.22 2/12/97 8:56 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES ONE LINE SUMMARY PROVED NONPRODUCING 1996
<TABLE>
<CAPTION>
ST FIELD LEASE NAME WI % NET OIL NET GAS SALES REV EXP+TAX INVES'MT NET CF PW @10.0 RANK CUM %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OK ANTELOPE N NORTHWEST ANTELOP 97.975 315.638 411.791 8555.920 1716.530 465.383 6374.004 3547.922 1 44.5
TX WEST FLOWE WEST FLOWERS 47 100.000 56.238 22.452 1423.269 139.200 75.000 1209.069 890.798 2 55.7
TX WEST FLOWE WEST FLOWERS 48 100.000 42.628 47.662 1179.718 144.800 50.000 984.918 654.634 3 63.9
TX WEST FLOWE WEST FLOWERS 3 100.000 42.096 23.622 1087.804 144.800 50.000 893.004 600.278 4 71.4
TX WEST FLOWE WEST FLOWERS INCR 100.000 31.187 44.052 893.343 72.000 100.000 721.343 550.086 5 78.3
TX WEST FLOWE WEST FLOWERS 43 100.000 30.565 53.016 907.931 159.200 50.000 698.731 476.069 6 84.3
TX WEST FLOWE WEST FLOWERS UNIT 100.000 32.869 20.664 856.686 144.800 50.000 661.886 466.397 7 90.1
OK BOWLEGS BAKER TJ #9 & 10 100.000 23.088 0.000 550.200 225.150 75.000 250.049 197.291 8 92.6
OK CENTRAHOMA CODY BOB 78.920 7.358 95.894 458.641 142.845 27.622 288.173 175.984 9 94.8
OK CENTRAHOMA MCKINNEY NE/4 44.531 4.676 56.271 282.894 80.602 13.359 188.933 128.671 10 96.4
OK CENTRAHOMA BATTLES WJ 1 98.438 0.000 113.632 318.822 67.922 73.828 177.072 118.488 11 97.9
OK CENTRAHOMA MAYER REGINA 2-18 82.254 0.000 61.599 168.825 30.023 8.225 130.577 104.269 12 99.2
OK CENTRAHOMA LANOY LEON 49.138 0.000 58.901 163.619 55.035 19.655 88.929 61.477 13 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 586.343 1009.556 16847.672 3122.907 1058.072 12666.688 7972.364
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:09 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES SUMMARY PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
EFFECTIVE: 1997.01 ---ADV--- --SEV.-- -- XRF --
THRU: 2026.12 OIL: 0.000 0.000
LIFE: 30.00 YRS GAS: 0.000 0.000
ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYOUT (YRS) 0.36 0.37 INITIAL 0.0000 0.0000 0.0000
UNDEVELOPED NET INC./INV: 11.49 8.16 AT 0.00 0.0000 0.0000 0.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT ADV TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 270.489 939.783 225.796 646.489 5266.754 1671.375 6938.128 117.552 0.000 117.552
1998.12 212.381 663.893 177.239 458.264 4134.147 1173.651 5307.797 117.552 0.000 117.552
1999.12 167.494 515.453 139.718 355.597 3258.964 909.729 4168.692 117.552 0.000 117.552
2000.12 132.670 417.629 110.604 287.504 2579.863 737.615 3317.477 117.552 0.000 117.552
2001.12 105.572 348.139 87.946 238.966 2051.378 616.186 2667.564 117.552 0.000 117.552
2002.12 84.433 296.182 70.272 202.645 1639.111 525.797 2164.908 117.552 0.000 117.552
2003.12 67.905 255.633 56.453 174.348 1316.792 455.439 1772.231 117.552 0.000 117.552
2004.12 46.585 213.159 38.990 143.790 909.455 382.894 1292.349 106.552 0.000 106.552
2005.12 36.060 187.445 30.208 125.972 704.603 338.290 1042.893 105.552 0.000 105.552
2006.12 28.426 166.637 23.812 111.883 555.427 302.488 857.915 104.815 0.000 104.815
2007.12 22.438 143.643 18.795 98.000 438.407 266.496 704.903 96.707 0.000 96.707
2008.12 17.734 131.234 14.855 89.143 346.491 243.875 590.366 96.707 0.000 96.707
2009.12 14.035 120.749 11.755 81.704 274.198 224.739 498.937 96.707 0.000 96.707
2010.12 11.122 111.804 9.315 75.398 217.265 208.394 425.659 96.707 0.000 96.707
2011.12 8.676 104.041 7.266 69.949 169.491 194.192 363.683 93.707 0.000 93.707
SUB-TOT 1226.020 4615.424 1023.024 3159.652 23862.344 8251.160 32113.500 1620.318 0.000 1620.318
AFTER 0.901 428.166 0.756 236.030 17.637 666.611 684.211 112.731 0.000 112.731
TOTAL 1226.921 5043.590 1023.780 3395.682 23879.980 8917.771 32797.711 1733.049 0.000 1733.049
ULT. 1226.921 5043.586
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ DH&LSEHLD ACP COSTS VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 6820.576 2541.295 162.787 0.000 4116.494 4116.495 3802.459 19.0 24.45 2.786
1998.12 5190.246 0.000 0.000 0.000 5190.246 9306.739 8281.046 19.0 24.45 2.760
1999.12 4051.141 0.000 0.000 0.000 4051.141 13357.880 11443.666 19.0 24.45 2.757
2000.12 3199.925 0.000 0.000 0.000 3199.925 16557.805 13703.861 19.0 24.45 2.765
2001.12 2550.012 0.000 0.000 0.000 2550.012 19107.816 15333.492 19.0 24.45 2.779
2002.12 2047.355 0.000 0.000 0.000 2047.355 21155.172 16517.314 19.0 24.45 2.796
2003.12 1654.679 0.000 0.000 0.000 1654.679 22809.852 17382.988 19.0 24.45 2.815
2004.12 1185.797 0.000 0.000 0.000 1185.797 23995.648 17944.703 18.1 24.45 2.868
2005.12 937.341 0.000 0.000 0.000 937.341 24932.988 18346.232 18.0 24.45 2.892
2006.12 753.100 0.000 0.000 0.000 753.100 25686.088 18638.131 17.9 24.45 2.912
2007.12 608.195 0.000 0.000 0.000 608.195 26294.283 18851.422 17.0 24.45 2.928
2008.12 493.658 0.000 0.000 0.000 493.658 26787.941 19008.064 17.0 24.45 2.946
2009.12 402.229 0.000 0.000 0.000 402.229 27190.172 19123.547 17.0 24.45 2.962
2010.12 328.952 0.000 0.000 0.000 328.952 27519.123 19209.002 17.0 24.45 2.976
2011.12 269.975 0.000 0.000 0.000 269.975 27789.100 19272.459 16.7 24.45 2.989
SUB-TOT 30493.182 2541.295 162.787 0.000 27789.100 27789.100 19272.459 18.1 24.45 2.814
AFTER 571.525 0.000 0.000 0.000 571.525 28360.615 19359.359 3.0 24.46 3.040
TOTAL 31064.707 2541.295 162.787 0.000 28360.625 28360.615 19359.359 10.6 24.45 2.829
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 19359.4 16557.631 14386.722 12656.772 11246.606 10075.368 9087.190 8242.271 7511.549 6873.291
</TABLE>
<PAGE>
PEP 3.22 2/12/97 8:57 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES ONE LINE SUMMARY PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
ST FIELD LEASE NAME WI % NET OIL NET GAS SALES REV EXP+TAX INVES'MT NET CF PW @10.0 RANK CUM %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TX HIGGINS W CLEVELAND W HORIZ 100.000 375.524 275.788 9343.397 537.000 630.000 8176.392 6111.052 1 31.6
TX HIGGINS W ADDIE LILIAN HORI 100.000 257.054 215.917 6439.245 182.000 330.000 5927.246 4144.606 2 53.0
TX CANADIAN N BABITIZKE HORIZ D 100.000 250.127 218.350 6280.641 218.400 330.000 5732.242 4013.352 3 73.7
TX HIGGINS W FARNSWORTH HORIZ 100.000 69.407 107.834 1840.368 85.000 150.000 1605.368 1160.956 4 79.7
TX HIGGINS W HAYNES H HORIZ D 100.000 71.669 100.985 1879.065 181.000 150.000 1548.065 1030.370 5 85.0
OK CENTRAHOMA MAYER R 6-17 HORI 100.000 0.000 310.119 985.356 49.000 75.000 861.356 524.265 6 87.7
OK CENTRAHOMA MAYER R 3-20 HORI 100.000 0.000 325.124 909.191 49.000 150.000 710.191 401.078 7 89.8
OK CENTRAHOMA BATTLES WJ 1-19 H 98.438 0.000 305.293 856.569 48.234 147.656 660.679 370.507 8 91.7
OK CENTRAHOMA MAYER R 4-20 HORI 100.000 0.000 301.873 827.344 49.000 150.000 628.344 349.295 9 93.5
OK CENTRAHOMA MCKINNEY HORIZ DR 44.531 0.000 236.361 720.259 40.078 66.797 613.384 291.458 10 95.0
OK CENTRAHOMA KWC HORIZ DRILL 72.787 0.000 302.255 814.349 65.508 109.180 639.662 288.881 11 96.5
OK CENTRAHOMA MAYER R 2-18 HORI 82.254 0.000 246.858 676.562 40.305 123.382 512.876 284.803 12 98.0
OK CENTRAHOMA KWC DRILL NW/4 72.787 0.000 333.073 903.569 100.809 218.360 584.400 278.683 13 99.4
OK CENTRAHOMA LANOY LEON HORIZ 49.138 0.000 115.854 321.825 87.711 73.707 160.407 110.055 14 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 1023.781 3395.684 32797.740 1733.045 2704.082 28360.612 19359.361
</TABLE>
<PAGE>
PROVED PRODUCING
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 1
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
7 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
ADMIRE ESTATE THRU: 2004.02 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 7.17 YRS GAS: 0.000 7.095
CENTRAHOMA (CRML-WPCK)
5 1N 10E CRML-WPCK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 70.2049 58.5041 58.5041
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 70.2049 58.5041 58.5041
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 35.996 0.000 21.059 0.000 62.047 62.047 21.061 0.000 21.061
1998.12 0.000 30.597 0.000 17.900 0.000 52.740 52.740 21.061 0.000 21.061
1999.12 0.000 26.007 0.000 15.215 0.000 44.829 44.829 21.061 0.000 21.061
2000.12 0.000 22.106 0.000 12.933 0.000 38.105 38.105 21.061 0.000 21.061
2001.12 0.000 18.790 0.000 10.993 0.000 32.389 32.389 21.061 0.000 21.061
2002.12 0.000 15.972 0.000 9.344 0.000 27.531 27.531 21.061 0.000 21.061
2003.12 0.000 13.576 0.000 7.943 0.000 23.401 23.401 21.061 0.000 21.061
2004.02 0.000 2.056 0.000 1.203 0.000 3.544 3.544 3.510 0.000 3.510
TOTAL 0.000 165.100 0.000 96.590 0.000 284.586 284.586 150.937 0.000 150.937
ULT. 0.000 292.487
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 40.986 0.000 0.000 0.000 40.986 40.986 39.082 1.0 0.00 3.171
1998.12 31.679 0.000 0.000 0.000 31.679 72.664 66.421 1.0 0.00 3.171
1999.12 23.768 0.000 0.000 0.000 23.768 96.432 84.985 1.0 0.00 3.171
2000.12 17.043 0.000 0.000 0.000 17.043 113.475 97.037 1.0 0.00 3.171
2001.12 11.327 0.000 0.000 0.000 11.327 124.802 104.290 1.0 0.00 3.171
2002.12 6.469 0.000 0.000 0.000 6.469 131.271 108.045 1.0 0.00 3.171
2003.12 2.340 0.000 0.000 0.000 2.340 133.611 109.284 1.0 0.00 3.171
2004.02 0.033 0.000 0.000 0.000 0.033 133.644 109.300 1.0 0.00 3.171
TOTAL 133.645 0.000 0.000 0.000 133.645 133.644 109.300 1.0 0.00 3.171
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 109.300 99.710 91.445 84.279 78.031 72.551 67.721 63.440 59.628 56.218
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:33 PAN WESTERN ENERGY CORP 1996 PAN96 Page:2
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
29 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
AIRPORT THRU: 2024.05 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 27.42 YRS GAS: 0.000 7.095
ENID NE (MISSISSIPPIAN)
13 22N 6W MISSISSIPPIAN ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
GARFIELD OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 83.3300 83.3300
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 83.3300 83.3300
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.180 16.116 0.150 13.430 3.197 38.416 41.613 5.040 0.000 5.040
1998.12 0.179 14.505 0.149 12.087 3.181 34.574 37.756 5.040 0.000 5.040
1999.12 0.178 13.054 0.148 10.878 3.165 31.117 34.282 5.040 0.000 5.040
2000.12 0.177 11.749 0.147 9.790 3.149 28.005 31.155 5.040 0.000 5.040
2001.12 0.176 10.574 0.147 8.811 3.134 25.205 28.338 5.040 0.000 5.040
2002.12 0.175 9.516 0.146 7.930 3.118 22.684 25.802 5.040 0.000 5.040
2003.12 0.174 8.565 0.145 7.137 3.102 20.416 23.518 5.040 0.000 5.040
2004.12 0.173 7.708 0.144 6.423 3.087 18.374 21.461 5.040 0.000 5.040
2005.12 0.172 6.937 0.144 5.781 3.071 16.537 19.608 5.040 0.000 5.040
2006.12 0.172 6.244 0.143 5.203 3.056 14.883 17.939 5.040 0.000 5.040
2007.12 0.171 5.619 0.142 4.683 3.041 13.395 16.436 5.040 0.000 5.040
SUB-TOT 1.927 110.587 1.605 92.153 34.301 263.606 297.908 55.440 0.000 55.440
AFTER 2.684 41.606 2.237 34.669 47.801 99.175 146.975 82.740 0.000 82.740
TOTAL 4.611 152.193 3.842 126.822 82.102 362.781 444.883 138.180 0.000 138.180
ULT. 7.024 534.074
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 36.573 0.000 0.000 0.000 36.573 36.573 34.836 1.0 23.00 3.079
1998.12 32.716 0.000 0.000 0.000 32.716 69.289 63.032 1.0 23.00 3.079
1999.12 29.242 0.000 0.000 0.000 29.242 98.531 85.837 1.0 23.00 3.079
2000.12 26.115 0.000 0.000 0.000 26.115 124.646 104.264 1.0 23.00 3.079
2001.12 23.298 0.000 0.000 0.000 23.298 147.944 119.140 1.0 23.00 3.079
2002.12 20.762 0.000 0.000 0.000 20.762 168.706 131.135 1.0 23.00 3.079
2003.12 18.478 0.000 0.000 0.000 18.478 187.184 140.795 1.0 23.00 3.079
2004.12 16.421 0.000 0.000 0.000 16.421 203.605 148.563 1.0 23.00 3.079
2005.12 14.568 0.000 0.000 0.000 14.568 218.174 154.798 1.0 23.00 3.079
2006.12 12.899 0.000 0.000 0.000 12.899 231.073 159.794 1.0 23.00 3.079
2007.12 11.396 0.000 0.000 0.000 11.396 242.469 163.788 1.0 23.00 3.079
SUB-TOT 242.468 0.000 0.000 0.000 242.468 242.469 163.788 1.0 23.00 3.079
AFTER 64.235 0.000 0.000 0.000 64.235 306.703 178.040 1.0 23.00 3.079
TOTAL 306.703 0.000 0.000 0.000 306.703 306.703 178.040 1.0 23.00 3.079
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 178.040 145.687 122.997 106.307 93.555 83.510 75.400 68.719 63.121 58.364
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:33 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 3
SYCAMORE RESOURCES PROVED PRODUCING
1996
<TABLE>
<CAPTION>
55 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
ARNOLD #1-14 SENENW THRU: 2026.12 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 0.000 *
LAKE BLACKWELL EAST (LAYTON)
14 19N 1E LAYTON ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYNE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 60.0000 60.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 60.0000 60.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.188 0.000 0.713 0.000 16.914 0.000 16.914 3.840 0.000 3.840
1998.12 1.140 0.000 0.684 0.000 16.238 0.000 16.238 3.840 0.000 3.840
1999.12 1.094 0.000 0.657 0.000 15.588 0.000 15.588 3.840 0.000 3.840
2000.12 1.051 0.000 0.630 0.000 14.965 0.000 14.965 3.840 0.000 3.840
2001.12 1.009 0.000 0.605 0.000 14.366 0.000 14.366 3.840 0.000 3.840
2002.12 0.968 0.000 0.581 0.000 13.791 0.000 13.791 3.840 0.000 3.840
2003.12 0.930 0.000 0.558 0.000 13.240 0.000 13.240 3.840 0.000 3.840
2004.12 0.892 0.000 0.535 0.000 12.710 0.000 12.710 3.840 0.000 3.840
2005.12 0.857 0.000 0.514 0.000 12.202 0.000 12.202 3.840 0.000 3.840
2006.12 0.822 0.000 0.493 0.000 11.714 0.000 11.714 3.840 0.000 3.840
2007.12 0.790 0.000 0.474 0.000 11.245 0.000 11.245 3.840 0.000 3.840
SUB-TOT 10.741 0.000 6.444 0.000 152.973 0.000 152.973 42.240 0.000 42.240
AFTER 10.224 0.000 6.135 0.000 145.622 0.000 145.622 72.960 0.000 72.960
TOTAL 20.965 0.000 12.579 0.000 298.595 0.000 298.595 115.200 0.000 115.200
ULT. 49.353 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 13.074 0.000 0.000 0.000 13.074 13.074 12.447 1.0 25.55 0.000
1998.12 12.398 0.000 0.000 0.000 12.398 25.472 23.127 1.0 25.55 0.000
1999.12 11.748 0.000 0.000 0.000 11.748 37.220 32.284 1.0 25.55 0.000
2000.12 11.125 0.000 0.000 0.000 11.125 48.344 40.130 1.0 25.55 0.000
2001.12 10.526 0.000 0.000 0.000 10.526 58.870 46.848 1.0 25.55 0.000
2002.12 9.951 0.000 0.000 0.000 9.951 68.822 52.594 1.0 25.55 0.000
2003.12 9.400 0.000 0.000 0.000 9.400 78.221 57.506 1.0 25.55 0.000
2004.12 8.870 0.000 0.000 0.000 8.870 87.091 61.700 1.0 25.55 0.000
2005.12 8.362 0.000 0.000 0.000 8.362 95.453 65.277 1.0 25.55 0.000
2006.12 7.874 0.000 0.000 0.000 7.874 103.327 68.325 1.0 25.55 0.000
2007.12 7.405 0.000 0.000 0.000 7.405 110.732 70.918 1.0 25.55 0.000
SUB-TOT 110.733 0.000 0.000 0.000 110.733 110.732 70.918 1.0 25.55 0.000
AFTER 72.662 0.000 0.000 0.000 72.662 183.395 84.296 1.0 25.55 0.000
TOTAL 183.395 0.000 0.000 0.000 183.395 183.395 84.296 1.0 25.55 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 84.296 64.848 52.473 43.993 37.846 33.195 29.556 26.634 24.235 22.232
</TABLE>
<PAGE>
Pep 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 4
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
51 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BABITZKE, BERT A & B THRU: 2026.12 OIL: 0.000 4.600
PAN WESTERN LIFE: 30.00 YRS GAS: 0.000 7.500
KELLN
109 43 H/TC TONKAWA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 87.5000 87.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.687 19.526 1.476 17.085 34.436 34.926 69.363 7.200 0.000 7.200
1998.12 1.586 18.354 1.388 16.060 32.370 32.830 65.201 7.200 0.000 7.200
1999.12 1.491 17.253 1.305 15.096 30.428 30.861 61.289 7.200 0.000 7.200
2000.12 1.401 16.218 1.226 14.191 28.602 29.009 57.611 7.200 0.000 7.200
2001.12 1.317 15.245 1.153 13.339 26.886 27.268 54.155 7.200 0.000 7.200
2002.12 1.238 14.330 1.084 12.539 25.273 25.632 50.905 7.200 0.000 7.200
2003.12 1.164 13.470 1.018 11.786 23.757 24.094 47.851 7.200 0.000 7.200
2004.12 1.094 12.662 0.957 11.079 22.331 22.649 44.980 7.200 0.000 7.200
2005.12 1.029 11.902 0.900 10.414 20.991 21.290 42.281 7.200 0.000 7.200
2006.12 0.967 11.188 0.846 9.790 19.732 20.012 39.744 7.200 0.000 7.200
2007.12 0.909 10.517 0.795 9.202 18.548 18.812 37.360 7.200 0.000 7.200
2008.12 0.854 9.886 0.747 8.650 17.435 17.683 35.118 7.200 0.000 7.200
2009.12 0.803 9.293 0.703 8.131 16.389 16.622 33.011 7.200 0.000 7.200
2010.12 0.755 8.735 0.660 7.643 15.406 15.625 31.030 7.200 0.000 7.200
2011.12 0.710 8.211 0.621 7.185 14.481 14.687 29.169 7.200 0.000 7.200
SUB-TOT 17.005 196.790 14.879 172.190 347.065 352.000 699.068 108.000 0.000 108.000
AFTER 6.722 77.789 5.882 68.066 137.195 139.144 276.336 108.001 0.000 108.001
TOTAL 23.727 274.579 20.761 240.256 484.260 491.144 975.404 216.001 0.000 216.001
ULT. 195.194 1643.329
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 62.163 0.000 0.000 0.000 62.163 62.163 59.189 2.0 24.45 2.210
1998.12 58.001 0.000 0.000 0.000 58.001 120.163 109.160 2.0 24.45 2.210
1999.12 54.089 0.000 0.000 0.000 54.089 174.252 151.326 2.0 24.45 2.210
2000.12 50.411 0.000 0.000 0.000 50.411 224.663 186.886 2.0 24.45 2.210
2001.12 46.955 0.000 0.000 0.000 46.955 271.618 216.856 2.0 24.45 2.210
2002.12 43.705 0.000 0.000 0.000 43.705 315.324 242.097 2.0 24.45 2.210
2003.12 40.651 0.000 0.000 0.000 40.651 355.975 263.341 2.0 24.45 2.210
2004.12 37.780 0.000 0.000 0.000 37.780 393.755 281.205 2.0 24.45 2.210
2005.12 35.081 0.000 0.000 0.000 35.081 428.836 296.215 2.0 24.45 2.210
2006.12 32.544 0.000 0.000 0.000 32.544 461.380 308.814 2.0 24.45 2.210
2007.12 30.160 0.000 0.000 0.000 30.160 491.540 319.379 2.0 24.45 2.210
2008.12 27.918 0.000 0.000 0.000 27.918 519.458 328.228 2.0 24.45 2.210
2009.12 25.811 0.000 0.000 0.000 25.811 545.269 335.631 2.0 24.45 2.210
2010.12 23.830 0.000 0.000 0.000 23.830 569.100 341.816 2.0 24.45 2.210
2011.12 21.969 0.000 0.000 0.000 21.969 591.068 346.974 2.0 24.45 2.210
SUB-TOT 591.068 0.000 0.000 0.000 591.068 591.068 346.974 2.0 24.45 2.210
AFTER 168.336 0.000 0.000 0.000 168.336 759.404 370.031 2.0 24.45 2.210
TOTAL 759.404 0.000 0.000 0.000 759.404 759.404 370.031 2.0 24.45 2.210
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 370.031 289.550 237.126 200.547 173.659 153.091 136.861 123.733 112.896 103.801
</TABLE>
<PAGE>
Pep 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 5
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
5 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BAKER TJ #9 & 10 THRU: 2019.03 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 22.25 YRS GAS: 0.000 0.000 *
BOWLEGS
10 8N 6E WILCOX ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
SEMINOLE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 87.5000 87.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 5.852 0.000 5.120 0.000 122.013 0.000 122.013 34.200 0.000 34.200
1998.12 5.520 0.000 4.830 0.000 115.095 0.000 115.095 34.200 0.000 34.200
1999.12 5.207 0.000 4.556 0.000 108.569 0.000 108.569 34.200 0.000 34.200
2000.12 4.912 0.000 4.298 0.000 102.413 0.000 102.413 34.200 0.000 34.200
2001.12 4.633 0.000 4.054 0.000 96.606 0.000 96.606 34.200 0.000 34.200
2002.12 4.370 0.000 3.824 0.000 91.129 0.000 91.129 34.200 0.000 34.200
2003.12 4.123 0.000 3.607 0.000 85.962 0.000 85.962 34.200 0.000 34.200
2004.12 3.889 0.000 3.403 0.000 81.088 0.000 81.088 34.200 0.000 34.200
2005.12 3.668 0.000 3.210 0.000 76.490 0.000 76.490 34.200 0.000 34.200
2006.12 3.460 0.000 3.028 0.000 72.153 0.000 72.153 34.200 0.000 34.200
2007.12 3.264 0.000 2.856 0.000 68.062 0.000 68.062 34.200 0.000 34.200
2008.12 3.079 0.000 2.694 0.000 64.203 0.000 64.203 34.200 0.000 34.200
2009.12 2.904 0.000 2.541 0.000 60.563 0.000 60.563 34.200 0.000 34.200
2010.12 2.740 0.000 2.397 0.000 57.129 0.000 57.129 34.200 0.000 34.200
2011.12 2.584 0.000 2.261 0.000 53.890 0.000 53.890 34.200 0.000 34.200
SUB-TOT 60.205 0.000 52.679 0.000 1255.365 0.000 1255.365 513.000 0.000 513.000
AFTER 14.836 0.000 12.982 0.000 309.349 0.000 309.349 247.949 0.000 247.949
TOTAL 75.041 0.000 65.661 0.000 1564.714 0.000 1564.714 760.949 0.000 760.949
ULT. 1126.592 1.104
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 87.813 0.000 0.000 0.000 87.813 87.813 83.621 2.0 25.65 0.000
1998.12 80.895 0.000 0.000 0.000 80.895 168.708 153.325 2.0 25.65 0.000
1999.12 74.369 0.000 0.000 0.000 74.369 243.077 211.308 2.0 25.65 0.000
2000.12 68.213 0.000 0.000 0.000 68.213 311.291 259.432 2.0 25.65 0.000
2001.12 62.406 0.000 0.000 0.000 62.406 373.697 299.271 2.0 25.65 0.000
2002.12 56.929 0.000 0.000 0.000 56.929 430.626 332.155 2.0 25.65 0.000
2003.12 51.762 0.000 0.000 0.000 51.762 482.388 359.210 2.0 25.65 0.000
2004.12 46.888 0.000 0.000 0.000 46.888 529.276 381.386 2.0 25.65 0.000
2005.12 42.290 0.000 0.000 0.000 42.290 571.566 399.484 2.0 25.65 0.000
2006.12 37.953 0.000 0.000 0.000 37.953 609.519 414.182 2.0 25.65 0.000
2007.12 33.862 0.000 0.000 0.000 33.862 643.381 426.048 2.0 25.65 0.000
2008.12 30.003 0.000 0.000 0.000 30.003 673.384 435.562 2.0 25.65 0.000
2009.12 26.363 0.000 0.000 0.000 26.363 699.747 443.126 2.0 25.65 0.000
2010.12 22.929 0.000 0.000 0.000 22.929 722.676 449.080 2.0 25.65 0.000
2011.12 19.690 0.000 0.000 0.000 19.690 742.365 453.707 2.0 25.65 0.000
SUB-TOT 742.365 0.000 0.000 0.000 742.365 742.365 453.707 2.0 25.65 0.000
AFTER 61.398 0.000 0.000 0.000 61.398 803.763 464.698 2.0 25.65 0.000
TOTAL 803.763 0.000 0.000 0.000 803.763 803.763 464.698 2.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 464.698 377.065 315.598 270.621 236.513 209.866 188.522 171.068 156.541 144.269
</TABLE>
<PAGE>
Pep 3.22 2/02/97 9:31 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 6
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
21 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BATTLES W J 1 THRU: 2006.01 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 9.08 YRS GAS: 0.000 7.095
CENTRAHOMA (WAPANUCKA)
19 1N 10E WAPANUCKA ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 98.4375 76.2940 76.2940
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 98.4375 76.2940 76.2940
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 4.430 0.000 3.380 0.000 9.484 9.484 2.362 0.000 2.362
1998.12 0.000 3.766 0.000 2.873 0.000 8.061 8.061 2.362 0.000 2.362
1999.12 0.000 3.201 0.000 2.442 0.000 6.852 6.852 2.362 0.000 2.362
2000.12 0.000 2.721 0.000 2.076 0.000 5.824 5.824 2.362 0.000 2.362
2001.12 0.000 2.313 0.000 1.764 0.000 4.950 4.950 2.362 0.000 2.362
2002.12 0.000 1.966 0.000 1.500 0.000 4.208 4.208 2.362 0.000 2.362
2003.12 0.000 1.671 0.000 1.275 0.000 3.577 3.577 2.362 0.000 2.362
2004.12 0.000 1.420 0.000 1.084 0.000 3.040 3.040 2.362 0.000 2.362
2005.12 0.000 1.207 0.000 0.921 0.000 2.584 2.584 2.362 0.000 2.362
2006.01 0.000 0.092 0.000 0.070 0.000 0.197 0.197 0.197 0.000 0.197
TOTAL 0.000 22.787 0.000 17.385 0.000 48.777 48.777 21.455 0.000 21.455
ULT. 0.352 316.198
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 7.121 0.000 0.000 0.000 7.121 7.121 6.789 1.0 0.00 3.020
1998.12 5.699 0.000 0.000 0.000 5.699 12.820 11.705 1.0 0.00 3.020
1999.12 4.489 0.000 0.000 0.000 4.489 17.309 15.210 1.0 0.00 3.020
2000.12 3.462 0.000 0.000 0.000 3.462 20.771 17.656 1.0 0.00 3.020
2001.12 2.588 0.000 0.000 0.000 2.588 23.359 19.311 1.0 0.00 3.020
2002.12 1.845 0.000 0.000 0.000 1.845 25.204 20.379 1.0 0.00 3.020
2003.12 1.214 0.000 0.000 0.000 1.214 26.418 21.016 1.0 0.00 3.020
2004.12 0.678 0.000 0.000 0.000 0.678 27.096 21.338 1.0 0.00 3.020
2005.12 0.222 0.000 0.000 0.000 0.222 27.318 21.434 1.0 0.00 3.020
2006.01 0.000 0.000 0.000 0.000 0.000 27.318 21.434 1.0 0.00 3.020
TOTAL 27.318 0.000 0.000 0.000 27.318 27.318 21.434 1.0 0.00 3.020
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 21.434 19.237 17.398 15.845 14.523 13.387 12.404 11.547
</TABLE>
<PAGE>
Pep 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 7
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
49 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BOLAND #1 THRU: 2001.06 OIL: 0.000 8.000
PAN WESTERN ENERGY CORP LIFE: 4.50 YRS GAS: 0.000 0.000 *
IVANHOE EAST (MISSISSIPPIAN)
16 26S 33W MISSISSIPPIAN ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
FINNEY KS PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 15.0000 12.0000 12.0000
PRODUCING ACTIVE NET INC./INV: 0.00 0.00 AT 1997.01 15.0000 12.0000 12.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.246 0.000 0.150 0.000 3.164 0.000 3.164 1.980 0.000 1.980
1998.12 1.109 0.000 0.133 0.000 2.816 0.000 2.816 1.980 0.000 1.980
1999.12 0.987 0.000 0.118 0.000 2.507 0.000 2.507 1.980 0.000 1.980
2000.12 0.879 0.000 0.105 0.000 2.231 0.000 2.231 1.980 0.000 1.980
2001.06 0.402 0.000 0.048 0.000 1.022 0.000 1.022 0.990 0.000 0.990
TOTAL 4.623 0.000 0.554 0.000 11.740 0.000 11.740 8.910 0.000 8.910
ULT. 8.972 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1.184 0.000 0.000 0.000 1.184 1.184 1.130 1.0 23.00 0.000
1998.12 0.836 0.000 0.000 0.000 0.836 2.020 1.852 1.0 23.00 0.000
1999.12 0.527 0.000 0.000 0.000 0.527 2.547 2.264 1.0 23.00 0.000
2000.12 0.251 0.000 0.000 0.000 0.251 2.798 2.443 1.0 23.00 0.000
2001.06 0.032 0.000 0.000 0.000 0.032 2.830 2.464 1.0 23.00 0.000
TOTAL 2.830 0.000 0.000 0.000 2.830 2.830 2.464 1.0 23.00 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 2.464 2.308 2.167 2.040 1.924 1.819 1.723 1.635 1.555 1.482
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 8
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
45 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CLEVELAND, WAYNE COMINGLED THRU: 2026.12 OIL: 0.000 4.600
PAN WESTERN LIFE: 30.00 YRS GAS: 0.000 7.500
HIGGINS WEST
105 43 H/TC TONK & CLEVE ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 83.3984 83.3984
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 83.3984 83.3984
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 2.306 24.259 1.923 20.231 44.856 42.855 87.711 16.200 0.000 16.200
1998.12 2.127 23.359 1.774 19.481 41.384 41.265 82.649 16.200 0.000 16.200
1999.12 1.963 22.492 1.637 18.758 38.181 39.734 77.915 16.200 0.000 16.200
2000.12 1.811 21.658 1.510 18.062 35.226 38.260 73.486 16.200 0.000 16.200
2001.12 1.671 20.854 1.393 17.392 32.499 36.840 69.340 16.200 0.000 16.200
2002.12 1.541 20.080 1.285 16.747 29.984 35.474 65.458 16.200 0.000 16.200
2003.12 1.422 19.335 1.186 16.125 27.663 34.158 61.821 16.200 0.000 16.200
2004.12 1.312 18.618 1.094 15.527 25.522 32.890 58.412 16.200 0.000 16.200
2005.12 1.210 17.927 1.009 14.951 23.547 31.670 55.217 16.200 0.000 16.200
2006.12 1.117 17.262 0.931 14.396 21.724 30.495 52.219 16.200 0.000 16.200
2007.12 1.030 16.622 0.859 13.862 20.043 29.364 49.407 16.200 0.000 16.200
2008.12 0.951 16.005 0.793 13.348 18.491 28.274 46.766 16.200 0.000 16.200
2009.12 0.877 15.411 0.731 12.853 17.060 27.225 44.286 16.200 0.000 16.200
2010.12 0.809 14.840 0.675 12.376 15.740 26.215 41.955 16.200 0.000 16.200
2011.12 0.746 14.289 0.623 11.917 14.521 25.243 39.764 16.200 0.000 16.200
SUB-TOT 20.893 283.011 17.423 236.026 406.441 499.962 906.406 243.000 0.000 243.000
AFTER 6.241 160.516 5.206 133.869 121.397 283.568 404.962 243.002 0.000 243.002
TOTAL 27.134 443.527 22.629 369.895 527.838 783.530 1311.368 486.002 0.000 486.002
ULT. 280.920 1806.922
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 71.511 0.000 0.000 0.000 71.511 71.511 68.093 1.0 24.45 2.290
1998.12 66.449 0.000 0.000 0.000 66.449 137.960 125.345 1.0 24.45 2.290
1999.12 61.715 0.000 0.000 0.000 61.715 199.676 173.458 1.0 24.45 2.290
2000.12 57.286 0.000 0.000 0.000 57.286 256.961 213.868 1.0 24.45 2.290
2001.12 53.140 0.000 0.000 0.000 53.140 310.101 247.787 1.0 24.45 2.290
2002.12 49.258 0.000 0.000 0.000 49.258 359.359 276.236 1.0 24.45 2.290
2003.12 45.621 0.000 0.000 0.000 45.621 404.980 300.077 1.0 24.45 2.290
2004.12 42.212 0.000 0.000 0.000 42.212 447.192 320.038 1.0 24.45 2.290
2005.12 39.017 0.000 0.000 0.000 39.017 486.209 336.732 1.0 24.45 2.290
2006.12 36.019 0.000 0.000 0.000 36.019 522.228 350.678 1.0 24.45 2.290
2007.12 33.207 0.000 0.000 0.000 33.207 555.435 362.311 1.0 24.45 2.290
2008.12 30.566 0.000 0.000 0.000 30.566 586.001 371.999 1.0 24.45 2.290
2009.12 28.086 0.000 0.000 0.000 28.086 614.086 380.055 1.0 24.45 2.290
2010.12 25.755 0.000 0.000 0.000 25.755 639.841 386.740 1.0 24.45 2.290
2011.12 23.564 0.000 0.000 0.000 23.564 663.406 392.273 1.0 24.45 2.290
SUB-TOT 663.406 0.000 0.000 0.000 663.406 663.406 392.273 1.0 24.45 2.290
AFTER 161.962 0.000 0.000 0.000 161.962 825.368 415.304 1.0 24.45 2.290
TOTAL 825.368 0.000 0.000 0.000 825.368 825.368 415.304 1.0 24.45 2.290
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 415.304 327.187 269.057 228.167 197.949 174.747 156.389 141.509 129.206 118.867
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 9
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
15 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CODY BOB THRU: 2000.12 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 4.00 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
35 2N 9E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 78.9200 60.4933 60.4933
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 78.9200 60.4933 60.4933
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 3.650 0.000 2.208 0.000 6.523 6.523 2.368 0.000 2.368
1998.12 0.000 2.738 0.000 1.656 0.000 4.892 4.892 2.368 0.000 2.368
1999.12 0.000 2.053 0.000 1.242 0.000 3.669 3.669 2.368 0.000 2.368
2000.12 0.000 1.540 0.000 0.932 0.000 2.752 2.752 2.368 0.000 2.368
TOTAL 0.000 9.981 0.000 6.038 0.000 17.836 17.836 9.472 0.000 9.472
ULT. 3.080 402.922
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 4.156 0.000 0.000 0.000 4.156 4.156 3.969 1.0 0.00 3.180
1998.12 2.525 0.000 0.000 0.000 2.525 6.680 6.153 1.0 0.00 3.180
1999.12 1.302 0.000 0.000 0.000 1.302 7.982 7.174 1.0 0.00 3.180
2000.12 0.384 0.000 0.000 0.000 0.384 8.366 7.450 1.0 0.00 3.180
TOTAL 8.367 0.000 0.000 0.000 8.367 8.366 7.450 1.0 0.00 3.180
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 7.450 7.050 6.684 6.349 6.040 5.756 5.493 5.251 5.026 4.818
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:10
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
33 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
COX #1 NWSE THRU: 2017.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 21.00 YRS GAS: 0.000 0.000 *
FITTS (HNTN-VIOL)
1 1N 7E HNTN-VIOL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 53.1250 40.6738 40.6738
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 53.1250 40.6738 40.6738
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 3.445 0.000 1.401 0.000 33.389 0.000 33.389 5.419 0.000 5.419
1998.12 3.152 0.000 1.282 0.000 30.551 0.000 30.551 5.419 0.000 5.419
1999.12 2.884 0.000 1.173 0.000 27.954 0.000 27.954 5.419 0.000 5.419
2000.12 2.639 0.000 1.073 0.000 25.578 0.000 25.578 5.419 0.000 5.419
2001.12 2.415 0.000 0.982 0.000 23.404 0.000 23.404 5.419 0.000 5.419
2002.12 2.209 0.000 0.899 0.000 21.414 0.000 21.414 5.419 0.000 5.419
2003.12 2.022 0.000 0.822 0.000 19.594 0.000 19.594 5.419 0.000 5.419
2004.12 1.850 0.000 0.752 0.000 17.929 0.000 17.929 5.419 0.000 5.419
2005.12 1.692 0.000 0.688 0.000 16.405 0.000 16.405 5.419 0.000 5.419
2006.12 1.549 0.000 0.630 0.000 15.010 0.000 15.010 5.419 0.000 5.419
2007.12 1.417 0.000 0.576 0.000 13.734 0.000 13.734 5.419 0.000 5.419
2008.12 1.297 0.000 0.527 0.000 12.567 0.000 12.567 5.419 0.000 5.419
2009.12 1.186 0.000 0.483 0.000 11.499 0.000 11.499 5.419 0.000 5.419
2010.12 1.086 0.000 0.442 0.000 10.521 0.000 10.521 5.419 0.000 5.419
2011.12 0.993 0.000 0.404 0.000 9.627 0.000 9.627 5.419 0.000 5.419
SUB-TOT 29.836 0.000 12.134 0.000 289.176 0.000 289.176 81.285 0.000 81.285
AFTER 4.416 0.000 1.798 0.000 42.815 0.000 42.815 32.509 0.000 32.509
TOTAL 34.252 0.000 13.932 0.000 331.991 0.000 331.991 113.793 0.000 113.793
ULT. 102.934 103.784
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 27.970 0.000 0.000 0.000 27.970 27.970 26.640 1.0 25.65 0.000
1998.12 25.132 0.000 0.000 0.000 25.132 53.102 48.300 1.0 25.65 0.000
1999.12 22.535 0.000 0.000 0.000 22.535 75.637 65.873 1.0 25.65 0.000
2000.12 20.159 0.000 0.000 0.000 20.159 95.796 80.098 1.0 25.65 0.000
2001.12 17.985 0.000 0.000 0.000 17.985 113.781 91.582 1.0 25.65 0.000
2002.12 15.996 0.000 0.000 0.000 15.996 129.776 100.823 1.0 25.65 0.000
2003.12 14.175 0.000 0.000 0.000 14.175 143.952 108.234 1.0 25.65 0.000
2004.12 12.510 0.000 0.000 0.000 12.510 156.462 114.152 1.0 25.65 0.000
2005.12 10.986 0.000 0.000 0.000 10.986 167.448 118.855 1.0 25.65 0.000
2006.12 9.592 0.000 0.000 0.000 9.592 177.039 122.570 1.0 25.65 0.000
2007.12 8.316 0.000 0.000 0.000 8.316 185.355 125.484 1.0 25.65 0.000
2008.12 7.148 0.000 0.000 0.000 7.148 192.503 127.752 1.0 25.65 0.000
2009.12 6.080 0.000 0.000 0.000 6.080 198.583 129.497 1.0 25.65 0.000
2010.12 5.103 0.000 0.000 0.000 5.103 203.686 130.822 1.0 25.65 0.000
2011.12 4.208 0.000 0.000 0.000 4.208 207.894 131.811 1.0 25.65 0.000
SUB-TOT 207.895 0.000 0.000 0.000 207.895 207.894 131.811 1.0 25.65 0.000
AFTER 10.303 0.000 0.000 0.000 10.303 218.197 133.731 1.0 25.65 0.000
TOTAL 218.198 0.000 0.000 0.000 218.198 218.197 133.731 1.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 133.731 110.553 93.839 81.335 71.682 64.031 57.831 52.712 48.417 44.763
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:11
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
72 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CRANE #1 THRU: 2017.02 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 20.17 YRS GAS: 0.000 7.095
POLLYANNA
8 15N RED FORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 50.0000 41.2500 41.2500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 50.0000 41.2500 41.2500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 54.105 0.000 22.318 0.000 57.642 57.642 4.650 0.000 4.650
1998.12 0.000 47.612 0.000 19.640 0.000 50.725 50.725 4.650 0.000 4.650
1999.12 0.000 41.899 0.000 17.283 0.000 44.638 44.638 4.650 0.000 4.650
2000.12 0.000 36.871 0.000 15.209 0.000 39.282 39.282 4.650 0.000 4.650
2001.12 0.000 32.446 0.000 13.384 0.000 34.568 34.568 4.650 0.000 4.650
2002.12 0.000 28.553 0.000 11.778 0.000 30.420 30.420 4.650 0.000 4.650
2003.12 0.000 25.126 0.000 10.365 0.000 26.769 26.769 4.650 0.000 4.650
2004.12 0.000 22.111 0.000 9.121 0.000 23.557 23.557 4.650 0.000 4.650
2005.12 0.000 19.458 0.000 8.026 0.000 20.730 20.730 4.650 0.000 4.650
2006.12 0.000 17.123 0.000 7.063 0.000 18.243 18.243 4.650 0.000 4.650
2007.12 0.000 15.068 0.000 6.216 0.000 16.053 16.053 4.650 0.000 4.650
2008.12 0.000 13.260 0.000 5.470 0.000 14.127 14.127 4.650 0.000 4.650
2009.12 0.000 11.669 0.000 4.813 0.000 12.432 12.432 4.650 0.000 4.650
2010.12 0.000 10.269 0.000 4.236 0.000 10.940 10.940 4.650 0.000 4.650
2011.12 0.000 9.036 0.000 3.727 0.000 9.627 9.627 4.650 0.000 4.650
SUB-TOT 0.000 384.606 0.000 158.649 0.000 409.753 409.753 69.750 0.000 69.750
AFTER 0.000 32.033 0.000 13.214 0.000 34.129 34.129 24.025 0.000 24.025
TOTAL 0.000 416.639 0.000 171.863 0.000 443.882 443.882 93.775 0.000 93.775
ULT. 1.057 1002.585
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 52.992 0.000 0.000 0.000 52.992 52.992 50.487 1.0 0.00 2.780
1998.12 46.075 0.000 0.000 0.000 46.075 99.068 90.207 1.0 0.00 2.780
1999.12 39.988 0.000 0.000 0.000 39.988 139.056 121.400 1.0 0.00 2.780
2000.12 34.632 0.000 0.000 0.000 34.632 173.688 145.844 1.0 0.00 2.780
2001.12 29.918 0.000 0.000 0.000 29.918 203.606 164.951 1.0 0.00 2.780
2002.12 25.770 0.000 0.000 0.000 25.770 229.376 179.844 1.0 0.00 2.780
2003.12 22.119 0.000 0.000 0.000 22.119 251.495 191.411 1.0 0.00 2.780
2004.12 18.907 0.000 0.000 0.000 18.907 270.402 200.357 1.0 0.00 2.780
2005.12 16.080 0.000 0.000 0.000 16.080 286.482 207.242 1.0 0.00 2.780
2006.12 13.593 0.000 0.000 0.000 13.593 300.075 212.509 1.0 0.00 2.780
2007.12 11.403 0.000 0.000 0.000 11.403 311.479 216.507 1.0 0.00 2.780
2008.12 9.477 0.000 0.000 0.000 9.477 320.956 219.514 1.0 0.00 2.780
2009.12 7.782 0.000 0.000 0.000 7.782 328.737 221.748 1.0 0.00 2.780
2010.12 6.290 0.000 0.000 0.000 6.290 335.027 223.382 1.0 0.00 2.780
2011.12 4.977 0.000 0.000 0.000 4.977 340.005 224.553 1.0 0.00 2.780
SUB-TOT 340.003 0.000 0.000 0.000 340.003 340.005 224.553 1.0 0.00 2.780
AFTER 10.104 0.000 0.000 0.000 10.104 350.107 226.481 1.0 0.00 2.780
TOTAL 350.107 0.000 0.000 0.000 350.107 350.107 226.481 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 226.481 190.702 164.212 143.954 128.031 115.218 104.702 95.926 88.495 82.125
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:12
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
73 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CREEK NATION THRU: 2006.11 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 9.92 YRS GAS: 0.000 7.095
SCOTT GAS AREA (HUNTON)
10 10N 10E HUNTON ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
OKFUSKEE OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 62.9333 62.9333
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 62.9333 62.9333
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 4.422 0.000 2.783 0.000 3.439 3.439 1.920 0.000 1.920
1998.12 0.000 4.157 0.000 2.616 0.000 3.233 3.233 1.920 0.000 1.920
1999.12 0.000 3.908 0.000 2.460 0.000 3.039 3.039 1.920 0.000 1.920
2000.12 0.000 3.674 0.000 2.312 0.000 2.857 2.857 1.920 0.000 1.920
2001.12 0.000 3.454 0.000 2.174 0.000 2.686 2.686 1.920 0.000 1.920
2002.12 0.000 3.247 0.000 2.043 0.000 2.525 2.525 1.920 0.000 1.920
2003.12 0.000 3.053 0.000 1.921 0.000 2.374 2.374 1.920 0.000 1.920
2004.12 0.000 2.870 0.000 1.806 0.000 2.232 2.232 1.920 0.000 1.920
2005.12 0.000 2.698 0.000 1.698 0.000 2.098 2.098 1.920 0.000 1.920
2006.11 0.000 2.331 0.000 1.467 0.000 1.813 1.813 1.760 0.000 1.760
TOTAL 0.000 33.814 0.000 21.280 0.000 26.296 26.296 19.040 0.000 19.040
ULT. 0.000 281.052
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1.519 0.000 0.000 0.000 1.519 1.519 1.447 1.0 0.00 1.330
1998.12 1.313 0.000 0.000 0.000 1.313 2.831 2.579 1.0 0.00 1.330
1999.12 1.119 0.000 0.000 0.000 1.119 3.950 3.452 1.0 0.00 1.330
2000.12 0.937 0.000 0.000 0.000 0.937 4.888 4.113 1.0 0.00 1.330
2001.12 0.766 0.000 0.000 0.000 0.766 5.653 4.603 1.0 0.00 1.330
2002.12 0.605 0.000 0.000 0.000 0.605 6.258 4.953 1.0 0.00 1.330
2003.12 0.454 0.000 0.000 0.000 0.454 6.712 5.190 1.0 0.00 1.330
2004.12 0.312 0.000 0.000 0.000 0.312 7.024 5.338 1.0 0.00 1.330
2005.12 0.178 0.000 0.000 0.000 0.178 7.202 5.415 1.0 0.00 1.330
2006.11 0.052 0.000 0.000 0.000 0.052 7.254 5.435 1.0 0.00 1.330
TOTAL 7.255 0.000 0.000 0.000 7.255 7.254 5.435 1.0 0.00 1.330
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 5.435 4.786 4.257 3.821 3.457 3.151 2.891 2.668 2.475 2.307
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:13
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
41 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
FARNSWORTH, FRED THRU: 2014.07 OIL: 0.000 4.600
PAN WESTERN ENERGY CORP LIFE: 17.58 YRS GAS: 0.000 7.500
HIGGINS WEST (TONKAWA)
72 43 H/TC TONKAWA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 79.2969 79.2969
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 79.2969 79.2969
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.340 4.716 0.269 3.739 6.280 7.679 13.959 4.800 0.000 4.800
1998.12 0.323 4.373 0.256 3.468 5.977 7.121 13.097 4.800 0.000 4.800
1999.12 0.308 4.055 0.244 3.216 5.688 6.603 12.291 4.800 0.000 4.800
2000.12 0.293 3.760 0.232 2.982 5.413 6.123 11.536 4.800 0.000 4.800
2001.12 0.279 3.487 0.221 2.765 5.152 5.678 10.830 4.800 0.000 4.800
2002.12 0.265 3.233 0.210 2.564 4.903 5.265 10.168 4.800 0.000 4.800
2003.12 0.252 2.998 0.200 2.378 4.666 4.882 9.548 4.800 0.000 4.800
2004.12 0.240 2.780 0.190 2.205 4.441 4.527 8.968 4.800 0.000 4.800
2005.12 0.228 2.578 0.181 2.044 4.226 4.198 8.425 4.800 0.000 4.800
2006.12 0.217 2.391 0.172 1.896 4.022 3.893 7.915 4.800 0.000 4.800
2007.12 0.207 2.217 0.164 1.758 3.828 3.610 7.438 4.800 0.000 4.800
2008.12 0.197 2.056 0.156 1.630 3.643 3.348 6.991 4.800 0.000 4.800
2009.12 0.187 1.906 0.149 1.512 3.467 3.104 6.571 4.800 0.000 4.800
2010.12 0.178 1.768 0.141 1.402 3.300 2.879 6.178 4.800 0.000 4.800
2011.12 0.170 1.639 0.135 1.300 3.140 2.669 5.809 4.800 0.000 4.800
SUB-TOT 3.684 43.957 2.920 34.859 68.146 71.579 139.724 72.000 0.000 72.000
AFTER 0.402 3.705 0.320 2.936 7.428 6.032 13.461 12.400 0.000 12.400
TOTAL 4.086 47.662 3.240 37.795 75.574 77.611 153.185 84.400 0.000 84.400
ULT. 42.076 362.866
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 9.159 0.000 0.000 0.000 9.159 9.159 8.723 1.0 24.45 2.220
1998.12 8.297 0.000 0.000 0.000 8.297 17.456 15.873 1.0 24.45 2.220
1999.12 7.491 0.000 0.000 0.000 7.491 24.947 21.715 1.0 24.45 2.220
2000.12 6.736 0.000 0.000 0.000 6.736 31.684 26.468 1.0 24.45 2.220
2001.12 6.030 0.000 0.000 0.000 6.030 37.713 30.318 1.0 24.45 2.220
2002.12 5.368 0.000 0.000 0.000 5.368 43.082 33.420 1.0 24.45 2.220
2003.12 4.748 0.000 0.000 0.000 4.748 47.830 35.902 1.0 24.45 2.220
2004.12 4.168 0.000 0.000 0.000 4.168 51.998 37.874 1.0 24.45 2.220
2005.12 3.625 0.000 0.000 0.000 3.625 55.623 39.426 1.0 24.45 2.220
2006.12 3.115 0.000 0.000 0.000 3.115 58.738 40.633 1.0 24.45 2.220
2007.12 2.638 0.000 0.000 0.000 2.638 61.376 41.557 1.0 24.45 2.220
2008.12 2.191 0.000 0.000 0.000 2.191 63.566 42.252 1.0 24.45 2.220
2009.12 1.771 0.000 0.000 0.000 1.771 65.338 42.761 1.0 24.45 2.220
2010.12 1.378 0.000 0.000 0.000 1.378 66.716 43.119 1.0 24.45 2.220
2011.12 1.009 0.000 0.000 0.000 1.009 67.725 43.357 1.0 24.45 2.220
SUB-TOT 67.724 0.000 0.000 0.000 67.724 67.725 43.357 1.0 24.45 2.220
AFTER 1.061 0.000 0.000 0.000 1.061 68.785 43.574 1.0 24.45 2.220
TOTAL 68.785 0.000 0.000 0.000 68.785 68.785 43.574 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 43.574 36.273 30.902 26.831 23.662 21.138 19.087 17.390 15.966 14.754
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:14
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
56 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HAM #1 SSWNE THRU: 2003.09 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 6.75 YRS GAS: 0.000 0.000 *
LAKE BLACKWELL EAST (LAYTON)
14 19N 1E LAYTON ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYNE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 59.0000 59.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 59.0000 59.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 3.337 0.000 1.969 0.000 46.737 0.000 46.737 7.680 0.000 7.680
1998.12 2.503 0.000 1.477 0.000 35.053 0.000 35.053 7.680 0.000 7.680
1999.12 1.877 0.000 1.108 0.000 26.290 0.000 26.290 7.680 0.000 7.680
2000.12 1.408 0.000 0.831 0.000 19.717 0.000 19.717 7.680 0.000 7.680
2001.12 1.056 0.000 0.623 0.000 14.788 0.000 14.788 7.680 0.000 7.680
2002.12 0.792 0.000 0.467 0.000 11.091 0.000 11.091 7.680 0.000 7.680
2003.09 0.461 0.000 0.272 0.000 6.457 0.000 6.457 5.760 0.000 5.760
TOTAL 11.434 0.000 6.747 0.000 160.133 0.000 160.133 51.840 0.000 51.840
ULT. 91.829 2.540
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 39.057 0.000 0.000 0.000 39.057 39.057 37.273 1.0 25.55 0.000
1998.12 27.373 0.000 0.000 0.000 27.373 66.430 60.915 1.0 25.55 0.000
1999.12 18.610 0.000 0.000 0.000 18.610 85.039 75.463 1.0 25.55 0.000
2000.12 12.037 0.000 0.000 0.000 12.037 97.077 83.982 1.0 25.55 0.000
2001.12 7.108 0.000 0.000 0.000 7.108 104.184 88.538 1.0 25.55 0.000
2002.12 3.411 0.000 0.000 0.000 3.411 107.595 90.522 1.0 25.55 0.000
2003.09 0.697 0.000 0.000 0.000 0.697 108.293 90.895 1.0 25.55 0.000
TOTAL 108.293 0.000 0.000 0.000 108.293 108.293 90.895 1.0 25.55 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 90.895 83.873 77.730 72.328 67.555 63.317 59.536 56.148 53.099 50.345
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:15
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
60 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HARRINGTON 1&2 COMINGLED THRU: 2014.11 OIL: 0.000 7.095
PAN WESTERN ENERGY LIFE: 17.92 YRS GAS: 0.000 0.000 *
LAKE BLACKWELL EASE
14 19N 1E LAYTON ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYNE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 62.7500 62.7500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 62.7500 62.7500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 4.189 0.000 2.629 0.000 62.393 0.000 62.393 14.400 0.000 14.400
1998.12 3.850 0.000 2.416 0.000 57.346 0.000 57.346 14.400 0.000 14.400
1999.12 3.539 0.000 2.220 0.000 52.706 0.000 52.706 14.400 0.000 14.400
2000.12 3.252 0.000 2.041 0.000 48.443 0.000 48.443 14.400 0.000 14.400
2001.12 2.989 0.000 1.876 0.000 44.524 0.000 44.524 14.400 0.000 14.400
2002.12 2.747 0.000 1.724 0.000 40.922 0.000 40.922 14.400 0.000 14.400
2003.12 2.525 0.000 1.584 0.000 37.611 0.000 37.611 14.400 0.000 14.400
2004.12 2.321 0.000 1.456 0.000 34.568 0.000 34.568 14.400 0.000 14.400
2005.12 2.133 0.000 1.338 0.000 31.772 0.000 31.772 14.400 0.000 14.400
2006.12 1.960 0.000 1.230 0.000 29.201 0.000 29.201 14.400 0.000 14.400
2007.12 1.802 0.000 1.131 0.000 26.839 0.000 26.839 14.400 0.000 14.400
2008.12 1.656 0.000 1.039 0.000 24.668 0.000 24.668 14.400 0.000 14.400
2009.12 1.522 0.000 0.955 0.000 22.672 0.000 22.672 14.400 0.000 14.400
2010.12 1.399 0.000 0.878 0.000 20.838 0.000 20.838 14.400 0.000 14.400
2011.12 1.286 0.000 0.807 0.000 19.152 0.000 19.152 14.400 0.000 14.400
SUB-TOT 37.170 0.000 23.324 0.000 553.655 0.000 553.655 216.000 0.000 216.000
AFTER 3.186 0.000 2.000 0.000 47.459 0.000 47.459 42.000 0.000 42.000
TOTAL 40.356 0.000 25.324 0.000 601.114 0.000 601.114 258.000 0.000 258.000
ULT. 165.698 141.730
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 47.993 0.000 0.000 0.000 47.993 47.993 45.713 2.0 25.55 0.000
1998.12 42.946 0.000 0.000 0.000 42.946 90.939 82.727 2.0 25.55 0.000
1999.12 38.306 0.000 0.000 0.000 38.306 129.246 112.601 2.0 25.55 0.000
2000.12 34.043 0.000 0.000 0.000 34.043 163.288 136.624 2.0 25.55 0.000
2001.12 30.124 0.000 0.000 0.000 30.124 193.412 155.859 2.0 25.55 0.000
2002.12 26.522 0.000 0.000 0.000 26.522 219.933 171.184 2.0 25.55 0.000
2003.12 23.211 0.000 0.000 0.000 23.211 243.144 183.319 2.0 25.55 0.000
2004.12 20.168 0.000 0.000 0.000 20.168 263.312 192.862 2.0 25.55 0.000
2005.12 17.372 0.000 0.000 0.000 17.372 280.684 200.299 2.0 25.55 0.000
2006.12 14.801 0.000 0.000 0.000 14.801 295.485 206.034 2.0 25.55 0.000
2007.12 12.439 0.000 0.000 0.000 12.439 307.924 210.395 2.0 25.55 0.000
2008.12 10.268 0.000 0.000 0.000 10.268 318.192 213.653 2.0 25.55 0.000
2009.12 8.272 0.000 0.000 0.000 8.272 326.464 216.028 2.0 25.55 0.000
2010.12 6.438 0.000 0.000 0.000 6.438 332.902 217.702 2.0 25.55 0.000
2011.12 4.752 0.000 0.000 0.000 4.752 337.654 218.820 2.0 25.55 0.000
SUB-TOT 337.655 0.000 0.000 0.000 337.655 337.654 218.820 2.0 25.55 0.000
AFTER 5.459 0.000 0.000 0.000 5.459 343.114 219.932 2.0 25.55 0.000
TOTAL 343.114 0.000 0.000 0.000 343.114 343.114 219.932 2.0 25.55 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 219.932 183.978 157.396 137.148 121.317 108.654 98.324 89.751 82.531 76.372
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:33 PAN WESTERN ENERGY CORP 1996 PAN96 Page:16
SYCAMORE RESOURCES PROVED PRODUCING
1996
<TABLE>
<CAPTION>
42 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HAYNES, HAROLD THRU: 2026.12 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.500
HIGGINS WEST (TONKAWA)
73 43 H/TC TONKAWA ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 82.0312 82.0312
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 82.0312 82.0312
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.708 5.312 0.588 4.411 13.717 9.058 22.774 1.200 0.000 1.200
1998.12 0.685 5.141 0.569 4.268 13.271 8.765 22.036 1.200 0.000 1.200
1999.12 0.663 4.975 0.550 4.131 12.840 8.482 21.322 1.200 0.000 1.200
2000.12 0.641 4.814 0.533 3.997 12.422 8.208 20.630 1.200 0.000 1.200
2001.12 0.621 4.659 0.515 3.868 12.019 7.943 19.961 1.200 0.000 1.200
2002.12 0.600 4.508 0.499 3.743 11.628 7.686 19.314 1.200 0.000 1.200
2003.12 0.581 4.362 0.482 3.622 11.250 7.438 18.688 1.200 0.000 1.200
2004.12 0.562 4.222 0.467 3.505 10.884 7.198 18.082 1.200 0.000 1.200
2005.12 0.544 4.085 0.451 3.392 10.531 6.965 17.496 1.200 0.000 1.200
2006.12 0.526 3.953 0.437 3.282 10.188 6.740 16.929 1.200 0.000 1.200
2007.12 0.509 3.826 0.423 3.176 9.857 6.523 16.380 1.200 0.000 1.200
SUB-TOT 6.640 49.857 5.514 41.395 128.607 85.006 213.612 13.200 0.000 13.200
AFTER 7.064 53.192 5.865 44.168 136.806 90.697 227.504 22.800 0.000 22.800
TOTAL 13.704 103.049 11.379 85.563 265.413 175.703 441.116 36.000 0.000 36.000
ULT. 71.479 323.402
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 21.574 0.000 0.000 0.000 21.574 21.574 20.537 1.0 24.45 2.220
1998.12 20.836 0.000 0.000 0.000 20.836 42.410 38.483 1.0 24.45 2.220
1999.12 20.122 0.000 0.000 0.000 20.122 62.532 54.165 1.0 24.45 2.220
2000.12 19.430 0.000 0.000 0.000 19.430 81.962 67.867 1.0 24.45 2.220
2001.12 18.761 0.000 0.000 0.000 18.761 100.724 79.838 1.0 24.45 2.220
2002.12 18.114 0.000 0.000 0.000 18.114 118.838 90.296 1.0 24.45 2.220
2003.12 17.488 0.000 0.000 0.000 17.488 136.326 99.432 1.0 24.45 2.220
2004.12 16.882 0.000 0.000 0.000 16.882 153.209 107.413 1.0 24.45 2.220
2005.12 16.296 0.000 0.000 0.000 16.296 169.505 114.383 1.0 24.45 2.220
2006.12 15.729 0.000 0.000 0.000 15.729 185.233 120.470 1.0 24.45 2.220
2007.12 15.180 0.000 0.000 0.000 15.180 200.413 125.786 1.0 24.45 2.220
SUB-TOT 200.412 0.000 0.000 0.000 200.412 200.413 125.786 1.0 24.45 2.220
AFTER 204.704 0.000 0.000 0.000 204.704 405.116 159.500 1.0 24.45 2.220
TOTAL 405.116 0.000 0.000 0.000 405.116 405.116 159.500 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 159.500 118.106 93.303 77.004 65.529 57.024 50.471 45.268 41.037 37.529
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:17
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
66 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HODSON #1 THRU: 2004.08 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 7.67 YRS GAS: 0.000 7.095
PARKLAND WEST (RED FORK)
33 16N 4E RED FORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 50.0000 39.1500 39.1500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 50.0000 39.1500 39.1500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 6.645 0.000 2.602 0.000 6.720 6.720 2.100 0.000 2.100
1998.12 0.000 5.649 0.000 2.211 0.000 5.712 5.712 2.100 0.000 2.100
1999.12 0.000 4.801 0.000 1.880 0.000 4.855 4.855 2.100 0.000 2.100
2000.12 0.000 4.081 0.000 1.598 0.000 4.127 4.127 2.100 0.000 2.100
2001.12 0.000 3.469 0.000 1.358 0.000 3.508 3.508 2.100 0.000 2.100
2002.12 0.000 2.949 0.000 1.154 0.000 2.982 2.982 2.100 0.000 2.100
2003.12 0.000 2.506 0.000 0.981 0.000 2.534 2.534 2.100 0.000 2.100
2004.08 0.000 1.458 0.000 0.571 0.000 1.475 1.475 1.400 0.000 1.400
TOTAL 0.000 31.558 0.000 12.355 0.000 31.913 31.913 16.100 0.000 16.100
ULT. 0.035 409.788
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 4.620 0.000 0.000 0.000 4.620 4.620 4.405 1.0 0.00 2.780
1998.12 3.612 0.000 0.000 0.000 3.612 8.231 7.521 1.0 0.00 2.780
1999.12 2.755 0.000 0.000 0.000 2.755 10.986 9.673 1.0 0.00 2.780
2000.12 2.027 0.000 0.000 0.000 2.027 13.013 11.105 1.0 0.00 2.780
2001.12 1.408 0.000 0.000 0.000 1.408 14.420 12.006 1.0 0.00 2.780
2002.12 0.882 0.000 0.000 0.000 0.882 15.302 12.517 1.0 0.00 2.780
2003.12 0.434 0.000 0.000 0.000 0.434 15.736 12.746 1.0 0.00 2.780
2004.08 0.075 0.000 0.000 0.000 0.075 15.811 12.782 1.0 0.00 2.780
TOTAL 15.813 0.000 0.000 0.000 15.813 15.811 12.782 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 12.782 11.607 10.602 9.737 8.988 8.335 7.763 7.258 6.810 6.412
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:18
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
12 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HOFFMAN SE/4 THRU: 2026.12 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
6 1N 10E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 76.5672 76.5672
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 76.5672 76.5672
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 24.565 0.000 18.808 0.000 55.566 55.566 3.000 0.000 3.000
1998.12 0.000 23.336 0.000 17.868 0.000 52.787 52.787 3.000 0.000 3.000
1999.12 0.000 22.170 0.000 16.975 0.000 50.148 50.148 3.000 0.000 3.000
2000.12 0.000 21.061 0.000 16.126 0.000 47.641 47.641 3.000 0.000 3.000
2001.12 0.000 20.008 0.000 15.320 0.000 45.259 45.259 3.000 0.000 3.000
2002.12 0.000 19.008 0.000 14.554 0.000 42.996 42.996 3.000 0.000 3.000
2003.12 0.000 18.057 0.000 13.826 0.000 40.846 40.846 3.000 0.000 3.000
2004.12 0.000 17.154 0.000 13.135 0.000 38.804 38.804 3.000 0.000 3.000
2005.12 0.000 16.297 0.000 12.478 0.000 36.863 36.863 3.000 0.000 3.000
2006.12 0.000 15.482 0.000 11.854 0.000 35.020 35.020 3.000 0.000 3.000
2007.12 0.000 14.708 0.000 11.261 0.000 33.269 33.269 3.000 0.000 3.000
2008.12 0.000 13.972 0.000 10.698 0.000 31.606 31.606 3.000 0.000 3.000
2009.12 0.000 13.274 0.000 10.163 0.000 30.025 30.025 3.000 0.000 3.000
2010.12 0.000 12.610 0.000 9.655 0.000 28.524 28.524 3.000 0.000 3.000
2011.12 0.000 11.980 0.000 9.172 0.000 27.098 27.098 3.000 0.000 3.000
SUB-TOT 0.000 263.682 0.000 201.893 0.000 596.452 596.452 45.000 0.000 45.000
AFTER 0.000 122.161 0.000 93.536 0.000 276.330 276.330 45.000 0.000 45.000
TOTAL 0.000 385.843 0.000 295.429 0.000 872.782 872.782 90.000 0.000 90.000
ULT. 0.000 651.908
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 52.566 0.000 0.000 0.000 52.566 52.566 50.045 1.0 0.00 3.180
1998.12 49.787 0.000 0.000 0.000 49.787 102.353 92.934 1.0 0.00 3.180
1999.12 47.148 0.000 0.000 0.000 47.148 149.501 129.685 1.0 0.00 3.180
2000.12 44.641 0.000 0.000 0.000 44.641 194.141 161.170 1.0 0.00 3.180
2001.12 42.259 0.000 0.000 0.000 42.259 236.400 188.139 1.0 0.00 3.180
2002.12 39.996 0.000 0.000 0.000 39.996 276.396 211.234 1.0 0.00 3.180
2003.12 37.846 0.000 0.000 0.000 37.846 314.241 231.009 1.0 0.00 3.180
2004.12 35.804 0.000 0.000 0.000 35.804 350.045 247.936 1.0 0.00 3.180
2005.12 33.863 0.000 0.000 0.000 33.863 383.908 262.422 1.0 0.00 3.180
2006.12 32.020 0.000 0.000 0.000 32.020 415.929 274.817 1.0 0.00 3.180
2007.12 30.269 0.000 0.000 0.000 30.269 446.198 285.418 1.0 0.00 3.180
2008.12 28.606 0.000 0.000 0.000 28.606 474.803 294.484 1.0 0.00 3.180
2009.12 27.025 0.000 0.000 0.000 27.025 501.829 302.234 1.0 0.00 3.180
2010.12 25.524 0.000 0.000 0.000 25.524 527.353 308.857 1.0 0.00 3.180
2011.12 24.098 0.000 0.000 0.000 24.098 551.451 314.514 1.0 0.00 3.180
SUB-TOT 551.452 0.000 0.000 0.000 551.452 551.451 314.514 1.0 0.00 3.180
AFTER 231.330 0.000 0.000 0.000 231.330 782.782 344.236 1.0 0.00 3.180
TOTAL 782.782 0.000 0.000 0.000 782.782 782.782 344.236 1.0 0.00 3.180
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 344.236 262.727 211.751 177.174 152.257 133.470 118.803 107.037 97.390 89.336
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:19
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
59 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
JAMES #1 SW THRU: 2026.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 0.000 *
LAKE BLACKWELL EAST (LAYTON)
14 19N 1E LAYTON ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYNE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 64.0000 64.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 64.0000 64.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 3.509 0.000 2.246 0.000 53.312 0.000 53.312 10.080 0.000 10.080
1998.12 3.334 0.000 2.134 0.000 50.646 0.000 50.646 10.080 0.000 10.080
1999.12 3.167 0.000 2.027 0.000 48.114 0.000 48.114 10.080 0.000 10.080
2000.12 3.009 0.000 1.926 0.000 45.708 0.000 45.708 10.080 0.000 10.080
2001.12 2.858 0.000 1.829 0.000 43.423 0.000 43.423 10.080 0.000 10.080
2002.12 2.715 0.000 1.738 0.000 41.252 0.000 41.252 10.080 0.000 10.080
2003.12 2.580 0.000 1.651 0.000 39.189 0.000 39.189 10.080 0.000 10.080
2004.12 2.451 0.000 1.568 0.000 37.230 0.000 37.230 10.080 0.000 10.080
2005.12 2.328 0.000 1.490 0.000 35.368 0.000 35.368 10.080 0.000 10.080
2006.12 2.212 0.000 1.415 0.000 33.600 0.000 33.600 10.080 0.000 10.080
2007.12 2.101 0.000 1.345 0.000 31.920 0.000 31.920 10.080 0.000 10.080
2008.12 1.996 0.000 1.277 0.000 30.324 0.000 30.324 10.080 0.000 10.080
2009.12 1.896 0.000 1.214 0.000 28.808 0.000 28.808 10.080 0.000 10.080
2010.12 1.801 0.000 1.153 0.000 27.367 0.000 27.367 10.080 0.000 10.080
2011.12 1.711 0.000 1.095 0.000 25.999 0.000 25.999 10.080 0.000 10.080
SUB-TOT 37.668 0.000 24.108 0.000 572.260 0.000 572.260 151.200 0.000 151.200
AFTER 17.452 0.000 11.169 0.000 265.118 0.000 265.118 151.199 0.000 151.199
TOTAL 55.120 0.000 35.277 0.000 837.379 0.000 837.379 302.399 0.000 302.399
ULT. 84.643 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 43.232 0.000 0.000 0.000 43.232 43.232 41.162 2.0 25.55 0.000
1998.12 40.566 0.000 0.000 0.000 40.566 83.798 76.110 2.0 25.55 0.000
1999.12 38.034 0.000 0.000 0.000 38.034 121.832 105.759 2.0 25.55 0.000
2000.12 35.628 0.000 0.000 0.000 35.628 157.460 130.890 2.0 25.55 0.000
2001.12 33.343 0.000 0.000 0.000 33.343 190.802 152.171 2.0 25.55 0.000
2002.12 31.172 0.000 0.000 0.000 31.172 221.974 170.173 2.0 25.55 0.000
2003.12 29.109 0.000 0.000 0.000 29.109 251.083 185.384 2.0 25.55 0.000
2004.12 27.150 0.000 0.000 0.000 27.150 278.233 198.221 2.0 25.55 0.000
2005.12 25.288 0.000 0.000 0.000 25.288 303.521 209.041 2.0 25.55 0.000
2006.12 23.520 0.000 0.000 0.000 23.520 327.040 218.146 2.0 25.55 0.000
2007.12 21.840 0.000 0.000 0.000 21.840 348.880 225.796 2.0 25.55 0.000
2008.12 20.244 0.000 0.000 0.000 20.244 369.124 232.213 2.0 25.55 0.000
2009.12 18.728 0.000 0.000 0.000 18.728 387.851 237.584 2.0 25.55 0.000
2010.12 17.287 0.000 0.000 0.000 17.287 405.138 242.071 2.0 25.55 0.000
2011.12 15.919 0.000 0.000 0.000 15.919 421.057 245.809 2.0 25.55 0.000
SUB-TOT 421.060 0.000 0.000 0.000 421.060 421.057 245.809 2.0 25.55 0.000
AFTER 113.919 0.000 0.000 0.000 113.919 534.979 261.841 2.0 25.55 0.000
TOTAL 534.979 0.000 0.000 0.000 534.979 534.979 261.841 2.0 25.55 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 261.841 204.592 167.243 141.196 122.079 107.481 95.981 86.692 79.037 72.620
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:20
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
26 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
JONES # 1(comingled) THRU: 2001.12 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 5.00 YRS GAS: 0.000 7.095
COALGATE SW (WAPANUCKA)
29 1N 10E WAPANUCKA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 66.8755 35.1737 35.1737
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 66.8755 35.1737 35.1737
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 2.733 0.000 0.961 0.000 2.582 2.582 1.605 0.000 1.605
1998.12 0.000 2.460 0.000 0.865 0.000 2.323 2.323 1.605 0.000 1.605
1999.12 0.000 2.214 0.000 0.779 0.000 2.091 2.091 1.605 0.000 1.605
2000.12 0.000 1.993 0.000 0.701 0.000 1.882 1.882 1.605 0.000 1.605
2001.12 0.000 1.793 0.000 0.631 0.000 1.694 1.694 1.605 0.000 1.605
TOTAL 0.000 11.193 0.000 3.937 0.000 10.572 10.572 8.025 0.000 8.025
ULT. 0.000 79.906
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 0.976 0.000 0.000 0.000 0.976 0.976 0.931 1.0 0.00 2.890
1998.12 0.718 0.000 0.000 0.000 0.718 1.695 1.552 1.0 0.00 2.890
1999.12 0.486 0.000 0.000 0.000 0.486 2.181 1.932 1.0 0.00 2.890
2000.12 0.277 0.000 0.000 0.000 0.277 2.458 2.128 1.0 0.00 2.890
2001.12 0.089 0.000 0.000 0.000 0.089 2.546 2.186 1.0 0.00 2.890
TOTAL 2.546 0.000 0.000 0.000 2.546 2.546 2.186 1.0 0.00 2.890
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 2.186 2.034 1.899 1.778 1.669 1.571 1.482 1.402 1.328 1.262
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:33 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 21
SYCAMORE RESOURCES PROVED PRODUCING
1996
<TABLE>
<CAPTION>
53 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
KINDERKNECHT B THRU: 2008.12 OIL: 0.000 8.000 Tier 2
PAN WESTERN ENERGY CORP LIFE: 12.00 YRS GAS: 0.000 0.000 *
KRAUS (ARBUCKLE)
16 14S 19W ARBUCKLE ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
ELLIS KS PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 87.5000 87.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.064 0.000 0.931 0.000 21.637 0.000 21.637 12.000 0.000 12.000
1998.12 1.011 0.000 0.885 0.000 20.555 0.000 20.555 12.000 0.000 12.000
1999.12 0.961 0.000 0.841 0.000 19.527 0.000 19.527 12.000 0.000 12.000
2000.12 0.913 0.000 0.799 0.000 18.551 0.000 18.551 12.000 0.000 12.000
2001.12 0.867 0.000 0.759 0.000 17.623 0.000 17.623 12.000 0.000 12.000
2002.12 0.824 0.000 0.721 0.000 16.742 0.000 16.742 12.000 0.000 12.000
2003.12 0.782 0.000 0.685 0.000 15.905 0.000 15.905 12.000 0.000 12.000
2004.12 0.743 0.000 0.650 0.000 15.110 0.000 15.110 12.000 0.000 12.000
2005.12 0.706 0.000 0.618 0.000 14.354 0.000 14.354 12.000 0.000 12.000
2006.12 0.671 0.000 0.587 0.000 13.636 0.000 13.636 12.000 0.000 12.000
2007.12 0.637 0.000 0.558 0.000 12.955 0.000 12.955 12.000 0.000 12.000
SUB-TOT 9.179 0.000 8.034 0.000 186.595 0.000 186.595 132.000 0.000 132.000
AFTER 0.606 0.000 0.528 0.000 12.306 0.000 12.306 12.000 0.000 12.000
TOTAL 9.785 0.000 8.562 0.000 198.901 0.000 198.901 144.000 0.000 144.000
ULT. 104.669 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 9.637 0.000 0.000 0.000 9.637 9.637 9.179 2.0 25.25 0.000
1998.12 8.555 0.000 0.000 0.000 8.555 18.191 16.553 2.0 25.25 0.000
1999.12 7.527 0.000 0.000 0.000 7.527 25.719 22.424 2.0 25.25 0.000
2000.12 6.551 0.000 0.000 0.000 6.551 32.269 27.048 2.0 25.25 0.000
2001.12 5.623 0.000 0.000 0.000 5.623 37.892 30.639 2.0 25.25 0.000
2002.12 4.742 0.000 0.000 0.000 4.742 42.634 33.381 2.0 25.25 0.000
2003.12 3.905 0.000 0.000 0.000 3.905 46.539 35.423 2.0 25.25 0.000
2004.12 3.110 0.000 0.000 0.000 3.110 49.649 36.896 2.0 25.25 0.000
2005.12 2.354 0.000 0.000 0.000 2.354 52.003 37.905 2.0 25.25 0.000
2006.12 1.636 0.000 0.000 0.000 1.636 53.640 38.541 2.0 25.25 0.000
2007.12 0.955 0.000 0.000 0.000 0.955 54.594 38.877 2.0 25.25 0.000
SUB-TOT 54.595 0.000 0.000 0.000 54.595 54.594 38.877 2.0 25.25 0.000
AFTER 0.306 0.000 0.000 0.000 0.306 54.901 38.976 2.0 25.25 0.000
TOTAL 54.901 0.000 0.000 0.000 54.901 54.901 38.976 2.0 25.25 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 38.976 33.642 29.441 26.077 23.343 21.091 19.210 17.622 16.266 15.097
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:22
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
10 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
KNIGHT-WTRHS-COMBS SW/4 THRU: 2007.06 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 10.50 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
5 1N 10E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 72.7866 63.5762 63.5762
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 72.7866 63.5762 63.5762
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 12.220 0.000 7.769 0.000 20.931 20.931 1.747 0.000 1.747
1998.12 0.000 9.531 0.000 6.060 0.000 16.326 16.326 1.747 0.000 1.747
1999.12 0.000 7.434 0.000 4.727 0.000 12.734 12.734 1.747 0.000 1.747
2000.12 0.000 5.799 0.000 3.687 0.000 9.933 9.933 1.747 0.000 1.747
2001.12 0.000 4.523 0.000 2.876 0.000 7.748 7.748 1.747 0.000 1.747
2002.12 0.000 3.528 0.000 2.243 0.000 6.043 6.043 1.747 0.000 1.747
2003.12 0.000 2.752 0.000 1.750 0.000 4.714 4.714 1.747 0.000 1.747
2004.12 0.000 2.146 0.000 1.365 0.000 3.677 3.677 1.747 0.000 1.747
2005.12 0.000 1.674 0.000 1.064 0.000 2.868 2.868 1.747 0.000 1.747
2006.12 0.000 1.306 0.000 0.830 0.000 2.237 2.237 1.747 0.000 1.747
2007.06 0.000 0.541 0.000 0.344 0.000 0.926 0.926 0.873 0.000 0.873
TOTAL 0.000 51.454 0.000 32.715 0.000 88.137 88.137 18.343 0.000 18.343
ULT. 0.000 484.121
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 19.184 0.000 0.000 0.000 19.184 19.184 18.297 1.0 0.00 2.900
1998.12 14.579 0.000 0.000 0.000 14.579 33.763 30.880 1.0 0.00 2.900
1999.12 10.988 0.000 0.000 0.000 10.988 44.751 39.461 1.0 0.00 2.900
2000.12 8.186 0.000 0.000 0.000 8.186 52.937 45.246 1.0 0.00 2.900
2001.12 6.001 0.000 0.000 0.000 6.001 58.938 49.084 1.0 0.00 2.900
2002.12 4.296 0.000 0.000 0.000 4.296 63.234 51.571 1.0 0.00 2.900
2003.12 2.967 0.000 0.000 0.000 2.967 66.201 53.125 1.0 0.00 2.900
2004.12 1.930 0.000 0.000 0.000 1.930 68.131 54.041 1.0 0.00 2.900
2005.12 1.121 0.000 0.000 0.000 1.121 69.251 54.523 1.0 0.00 2.900
2006.12 0.490 0.000 0.000 0.000 0.490 69.741 54.714 1.0 0.00 2.900
2007.06 0.053 0.000 0.000 0.000 0.053 69.794 54.733 1.0 0.00 2.900
TOTAL 69.795 0.000 0.000 0.000 69.795 69.794 54.733 1.0 0.00 2.900
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 54.733 49.185 44.569 40.687 37.388 34.558 32.108 29.971 28.091 26.428
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:23
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
9 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
LANOY LEON THRU: 2006.09 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 9.75 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
13 1N 9E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 49.1379 39.5887 39.5887
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 49.1379 39.5887 39.5887
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 8.595 0.000 3.403 0.000 9.452 9.452 1.179 0.000 1.179
1998.12 0.000 6.859 0.000 2.716 0.000 7.543 7.543 1.179 0.000 1.179
1999.12 0.000 5.475 0.000 2.167 0.000 6.020 6.020 1.179 0.000 1.179
2000.12 0.000 4.369 0.000 1.730 0.000 4.805 4.805 1.179 0.000 1.179
2001.12 0.000 3.487 0.000 1.380 0.000 3.835 3.835 1.179 0.000 1.179
2002.12 0.000 2.783 0.000 1.102 0.000 3.061 3.061 1.179 0.000 1.179
2003.12 0.000 2.221 0.000 0.879 0.000 2.443 2.443 1.179 0.000 1.179
2004.12 0.000 1.773 0.000 0.702 0.000 1.949 1.949 1.179 0.000 1.179
2005.12 0.000 1.415 0.000 0.560 0.000 1.556 1.556 1.179 0.000 1.179
2006.09 0.000 0.870 0.000 0.345 0.000 0.957 0.957 0.884 0.000 0.884
TOTAL 0.000 37.847 0.000 14.984 0.000 41.621 41.621 11.495 0.000 11.495
ULT. 0.000 235.630
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 8.272 0.000 0.000 0.000 8.272 8.272 7.889 1.0 0.00 2.990
1998.12 6.364 0.000 0.000 0.000 6.364 14.637 13.381 1.0 0.00 2.990
1999.12 4.841 0.000 0.000 0.000 4.841 19.478 17.162 1.0 0.00 2.990
2000.12 3.626 0.000 0.000 0.000 3.626 23.103 19.724 1.0 0.00 2.990
2001.12 2.655 0.000 0.000 0.000 2.655 25.759 21.422 1.0 0.00 2.990
2002.12 1.881 0.000 0.000 0.000 1.881 27.640 22.512 1.0 0.00 2.990
2003.12 1.263 0.000 0.000 0.000 1.263 28.903 23.174 1.0 0.00 2.990
2004.12 0.770 0.000 0.000 0.000 0.770 29.674 23.539 1.0 0.00 2.990
2005.12 0.377 0.000 0.000 0.000 0.377 30.050 23.702 1.0 0.00 2.990
2006.09 0.073 0.000 0.000 0.000 0.073 30.123 23.730 1.0 0.00 2.990
TOTAL 30.122 0.000 0.000 0.000 30.122 30.123 23.730 1.0 0.00 2.990
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 23.730 21.351 19.361 17.681 16.249 15.018 13.950 13.017 12.197 11.470
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:24
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
43 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
LILLIAN, ADDIE, 104 THRU: 2026.12 OIL: 0.000 4.600
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.500
HIGGINS WEST (TONKAWA)
104 43 H/TC TONKAWA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 81.3477 81.3477
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 81.3477 81.3477
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.998 9.968 0.812 8.109 18.934 16.652 35.586 6.000 0.000 6.000
1998.12 0.978 9.748 0.796 7.930 18.556 16.284 34.839 6.000 0.000 6.000
1999.12 0.958 9.532 0.780 7.754 18.185 15.924 34.108 6.000 0.000 6.000
2000.12 0.939 9.322 0.764 7.583 17.821 15.572 33.393 6.000 0.000 6.000
2001.12 0.920 9.116 0.749 7.415 17.465 15.228 32.692 6.000 0.000 6.000
2002.12 0.902 8.914 0.734 7.252 17.115 14.891 32.006 6.000 0.000 6.000
2003.12 0.884 8.717 0.719 7.091 16.773 14.562 31.335 6.000 0.000 6.000
2004.12 0.866 8.525 0.705 6.935 16.438 14.240 30.678 6.000 0.000 6.000
2005.12 0.849 8.336 0.691 6.781 16.109 13.926 30.034 6.000 0.000 6.000
2006.12 0.832 8.152 0.677 6.632 15.787 13.618 29.404 6.000 0.000 6.000
2007.12 0.815 7.972 0.663 6.485 15.471 13.317 28.788 6.000 0.000 6.000
2008.12 0.799 7.796 0.650 6.342 15.161 13.023 28.184 6.000 0.000 6.000
2009.12 0.783 7.623 0.637 6.201 14.858 12.735 27.593 6.000 0.000 6.000
2010.12 0.767 7.455 0.624 6.064 14.561 12.453 27.014 6.000 0.000 6.000
2011.12 0.752 7.290 0.612 5.930 14.270 12.178 26.448 6.000 0.000 6.000
SUB-TOT 13.042 128.466 10.613 104.504 247.504 214.603 462.102 90.000 0.000 90.000
AFTER 9.636 91.878 7.835 74.741 182.797 153.477 336.279 90.000 0.000 90.000
TOTAL 22.678 220.344 18.448 179.245 430.301 368.080 798.381 180.000 0.000 180.000
ULT. 125.172 959.868
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 29.586 0.000 0.000 0.000 29.586 29.586 28.161 1.0 24.45 2.220
1998.12 28.839 0.000 0.000 0.000 28.839 58.426 52.999 1.0 24.45 2.220
1999.12 28.108 0.000 0.000 0.000 28.108 86.534 74.903 1.0 24.45 2.220
2000.12 27.393 0.000 0.000 0.000 27.393 113.927 94.219 1.0 24.45 2.220
2001.12 26.692 0.000 0.000 0.000 26.692 140.619 111.249 1.0 24.45 2.220
2002.12 26.006 0.000 0.000 0.000 26.006 166.625 126.263 1.0 24.45 2.220
2003.12 25.335 0.000 0.000 0.000 25.335 191.961 139.497 1.0 24.45 2.220
2004.12 24.678 0.000 0.000 0.000 24.678 216.638 151.162 1.0 24.45 2.220
2005.12 24.034 0.000 0.000 0.000 24.034 240.673 161.441 1.0 24.45 2.220
2006.12 23.404 0.000 0.000 0.000 23.404 264.077 170.498 1.0 24.45 2.220
2007.12 22.788 0.000 0.000 0.000 22.788 286.865 178.477 1.0 24.45 2.220
2008.12 22.184 0.000 0.000 0.000 22.184 309.049 185.506 1.0 24.45 2.220
2009.12 21.593 0.000 0.000 0.000 21.593 330.642 191.697 1.0 24.45 2.220
2010.12 21.014 0.000 0.000 0.000 21.014 351.656 197.148 1.0 24.45 2.220
2011.12 20.448 0.000 0.000 0.000 20.448 372.104 201.947 1.0 24.45 2.220
SUB-TOT 372.102 0.000 0.000 0.000 372.102 372.104 201.947 1.0 24.45 2.220
AFTER 246.279 0.000 0.000 0.000 246.279 618.380 231.905 1.0 24.45 2.220
TOTAL 618.381 0.000 0.000 0.000 618.381 618.380 231.905 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 231.905 169.281 132.447 108.584 91.961 79.740 70.382 62.988 56.999 52.049
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:25
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
83 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MATTHEWS #2 NWNW THRU: 2007.11 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 10.92 YRS GAS: 0.000 0.000 *
FITTS (VIOLA)
12 1N 7E VIOLA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 76.5626 76.5626
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 76.5626 76.5626
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.281 0.000 0.215 0.000 5.122 0.000 5.122 3.000 0.000 3.000
1998.12 0.267 0.000 0.204 0.000 4.866 0.000 4.866 3.000 0.000 3.000
1999.12 0.253 0.000 0.194 0.000 4.623 0.000 4.623 3.000 0.000 3.000
2000.12 0.241 0.000 0.184 0.000 4.392 0.000 4.392 3.000 0.000 3.000
2001.12 0.229 0.000 0.175 0.000 4.172 0.000 4.172 3.000 0.000 3.000
2002.12 0.217 0.000 0.166 0.000 3.963 0.000 3.963 3.000 0.000 3.000
2003.12 0.206 0.000 0.158 0.000 3.765 0.000 3.765 3.000 0.000 3.000
2004.12 0.196 0.000 0.150 0.000 3.577 0.000 3.577 3.000 0.000 3.000
2005.12 0.186 0.000 0.143 0.000 3.398 0.000 3.398 3.000 0.000 3.000
2006.12 0.177 0.000 0.135 0.000 3.228 0.000 3.228 3.000 0.000 3.000
2007.11 0.154 0.000 0.118 0.000 2.817 0.000 2.817 2.750 0.000 2.750
TOTAL 2.407 0.000 1.842 0.000 43.923 0.000 43.923 32.750 0.000 32.750
ULT. 17.542 220.844
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 2.122 0.000 0.000 0.000 2.122 2.122 2.021 1.0 25.65 0.000
1998.12 1.866 0.000 0.000 0.000 1.866 3.988 3.630 1.0 25.65 0.000
1999.12 1.623 0.000 0.000 0.000 1.623 5.611 4.896 1.0 25.65 0.000
2000.12 1.392 0.000 0.000 0.000 1.392 7.002 5.878 1.0 25.65 0.000
2001.12 1.172 0.000 0.000 0.000 1.172 8.174 6.627 1.0 25.65 0.000
2002.12 0.963 0.000 0.000 0.000 0.963 9.138 7.184 1.0 25.65 0.000
2003.12 0.765 0.000 0.000 0.000 0.765 9.903 7.584 1.0 25.65 0.000
2004.12 0.577 0.000 0.000 0.000 0.577 10.480 7.858 1.0 25.65 0.000
2005.12 0.398 0.000 0.000 0.000 0.398 10.878 8.028 1.0 25.65 0.000
2006.12 0.228 0.000 0.000 0.000 0.228 11.106 8.117 1.0 25.65 0.000
2007.11 0.067 0.000 0.000 0.000 0.067 11.173 8.141 1.0 25.65 0.000
TOTAL 11.173 0.000 0.000 0.000 11.173 11.173 8.141 1.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 8.141 7.093 6.254 5.573 5.013 4.546 4.154 3.820 3.533 3.285
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:29
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
86 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER 6-17 THRU: 2026.12 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
17 1N 10E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 77.5000 77.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 77.5000 77.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 7.282 0.000 5.644 0.000 15.782 15.782 2.400 0.000 2.400
1998.12 0.000 6.976 0.000 5.406 0.000 15.118 15.118 2.400 0.000 2.400
1999.12 0.000 6.682 0.000 5.179 0.000 14.482 14.482 2.400 0.000 2.400
2000.12 0.000 6.401 0.000 4.961 0.000 13.872 13.872 2.400 0.000 2.400
2001.12 0.000 6.131 0.000 4.752 0.000 13.288 13.288 2.400 0.000 2.400
2002.12 0.000 5.873 0.000 4.552 0.000 12.728 12.728 2.400 0.000 2.400
2003.12 0.000 5.626 0.000 4.360 0.000 12.193 12.193 2.400 0.000 2.400
2004.12 0.000 5.389 0.000 4.176 0.000 11.679 11.679 2.400 0.000 2.400
2005.12 0.000 5.162 0.000 4.001 0.000 11.188 11.188 2.400 0.000 2.400
2006.12 0.000 4.945 0.000 3.832 0.000 10.717 10.717 2.400 0.000 2.400
2007.12 0.000 4.737 0.000 3.671 0.000 10.265 10.265 2.400 0.000 2.400
2008.12 0.000 4.537 0.000 3.516 0.000 9.833 9.833 2.400 0.000 2.400
2009.12 0.000 4.346 0.000 3.368 0.000 9.419 9.419 2.400 0.000 2.400
2010.12 0.000 4.163 0.000 3.226 0.000 9.023 9.023 2.400 0.000 2.400
2011.12 0.000 3.988 0.000 3.091 0.000 8.643 8.643 2.400 0.000 2.400
SUB-TOT 0.000 82.238 0.000 63.735 0.000 178.230 178.230 36.000 0.000 36.000
AFTER 0.000 43.139 0.000 33.433 0.000 93.493 93.493 36.000 0.000 36.000
TOTAL 0.000 125.377 0.000 97.168 0.000 271.723 271.723 72.000 0.000 72.000
ULT. 0.000 185.441
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 13.382 0.000 0.000 0.000 13.382 13.382 12.740 1.0 0.00 3.010
1998.12 12.718 0.000 0.000 0.000 12.718 26.100 23.696 1.0 0.00 3.010
1999.12 12.082 0.000 0.000 0.000 12.082 38.182 33.113 1.0 0.00 3.010
2000.12 11.472 0.000 0.000 0.000 11.472 49.654 41.204 1.0 0.00 3.010
2001.12 10.888 0.000 0.000 0.000 10.888 60.542 48.152 1.0 0.00 3.010
2002.12 10.328 0.000 0.000 0.000 10.328 70.870 54.116 1.0 0.00 3.010
2003.12 9.793 0.000 0.000 0.000 9.793 80.663 59.233 1.0 0.00 3.010
2004.12 9.279 0.000 0.000 0.000 9.279 89.942 63.620 1.0 0.00 3.010
2005.12 8.788 0.000 0.000 0.000 8.788 98.730 67.379 1.0 0.00 3.010
2006.12 8.317 0.000 0.000 0.000 8.317 107.046 70.598 1.0 0.00 3.010
2007.12 7.865 0.000 0.000 0.000 7.865 114.912 73.353 1.0 0.00 3.010
2008.12 7.433 0.000 0.000 0.000 7.433 122.345 75.709 1.0 0.00 3.010
2009.12 7.019 0.000 0.000 0.000 7.019 129.364 77.722 1.0 0.00 3.010
2010.12 6.623 0.000 0.000 0.000 6.623 135.987 79.440 1.0 0.00 3.010
2011.12 6.243 0.000 0.000 0.000 6.243 142.230 80.906 1.0 0.00 3.010
SUB-TOT 142.230 0.000 0.000 0.000 142.230 142.230 80.906 1.0 0.00 3.010
AFTER 57.493 0.000 0.000 0.000 57.493 199.723 88.398 1.0 0.00 3.010
TOTAL 199.723 0.000 0.000 0.000 199.723 199.723 88.398 1.0 0.00 3.010
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 88.398 67.462 54.335 45.425 39.006 34.169 30.395 27.370 24.892 22.824
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:27
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
22 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R #3-20 THRU: 2016.03 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 19.25 YRS GAS: 0.000 7.095
CENTRAHOMA (WAPANUCKA)
20 1N 10E WAPANUCKA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 81.2500 81.2500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 81.2500 81.2500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 22.152 0.000 17.998 0.000 50.331 50.331 2.400 0.000 2.400
1998.12 0.000 18.829 0.000 15.298 0.000 42.781 42.781 2.400 0.000 2.400
1999.12 0.000 16.005 0.000 13.004 0.000 36.364 36.364 2.400 0.000 2.400
2000.12 0.000 13.604 0.000 11.053 0.000 30.909 30.909 2.400 0.000 2.400
2001.12 0.000 11.563 0.000 9.395 0.000 26.273 26.273 2.400 0.000 2.400
2002.12 0.000 9.829 0.000 7.986 0.000 22.332 22.332 2.400 0.000 2.400
2003.12 0.000 8.354 0.000 6.788 0.000 18.982 18.982 2.400 0.000 2.400
2004.12 0.000 7.101 0.000 5.770 0.000 16.135 16.135 2.400 0.000 2.400
2005.12 0.000 6.036 0.000 4.904 0.000 13.715 13.715 2.400 0.000 2.400
2006.12 0.000 5.131 0.000 4.169 0.000 11.657 11.657 2.400 0.000 2.400
2007.12 0.000 4.361 0.000 3.543 0.000 9.909 9.909 2.400 0.000 2.400
2008.12 0.000 3.707 0.000 3.012 0.000 8.423 8.423 2.400 0.000 2.400
2009.12 0.000 3.151 0.000 2.560 0.000 7.159 7.159 2.400 0.000 2.400
2010.12 0.000 2.678 0.000 2.176 0.000 6.085 6.085 2.400 0.000 2.400
2011.12 0.000 2.277 0.000 1.850 0.000 5.172 5.172 2.400 0.000 2.400
SUB-TOT 0.000 134.778 0.000 109.506 0.000 306.227 306.227 36.000 0.000 36.000
AFTER 0.000 6.433 0.000 5.228 0.000 14.621 14.621 10.200 0.000 10.200
TOTAL 0.000 141.211 0.000 114.734 0.000 320.848 320.848 46.200 0.000 46.200
ULT. 0.190 1173.797
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 47.931 0.000 0.000 0.000 47.931 47.931 45.676 1.0 0.00 3.010
1998.12 40.381 0.000 0.000 0.000 40.381 88.312 80.497 1.0 0.00 3.010
1999.12 33.964 0.000 0.000 0.000 33.964 122.276 106.997 1.0 0.00 3.010
2000.12 28.509 0.000 0.000 0.000 28.509 150.785 127.125 1.0 0.00 3.010
2001.12 23.873 0.000 0.000 0.000 23.873 174.659 142.376 1.0 0.00 3.010
2002.12 19.932 0.000 0.000 0.000 19.932 194.591 153.898 1.0 0.00 3.010
2003.12 16.582 0.000 0.000 0.000 16.582 211.173 162.571 1.0 0.00 3.010
2004.12 13.735 0.000 0.000 0.000 13.735 224.908 169.072 1.0 0.00 3.010
2005.12 11.315 0.000 0.000 0.000 11.315 236.222 173.918 1.0 0.00 3.010
2006.12 9.257 0.000 0.000 0.000 9.257 245.480 177.506 1.0 0.00 3.010
2007.12 7.509 0.000 0.000 0.000 7.509 252.989 180.139 1.0 0.00 3.010
2008.12 6.023 0.000 0.000 0.000 6.023 259.011 182.051 1.0 0.00 3.010
2009.12 4.759 0.000 0.000 0.000 4.759 263.770 183.417 1.0 0.00 3.010
2010.12 3.685 0.000 0.000 0.000 3.685 267.456 184.375 1.0 0.00 3.010
2011.12 2.772 0.000 0.000 0.000 2.772 270.228 185.028 1.0 0.00 3.010
SUB-TOT 270.227 0.000 0.000 0.000 270.227 270.228 185.028 1.0 0.00 3.010
AFTER 4.421 0.000 0.000 0.000 4.421 274.648 185.896 1.0 0.00 3.010
TOTAL 274.648 0.000 0.000 0.000 274.648 274.648 185.896 1.0 0.00 3.010
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 185.896 158.952 138.534 122.617 109.904 99.537 90.934 83.686 77.500 72.159
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:34 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 28
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
16 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R #4-20 THRU: 2021.03 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 24.25 YRS GAS: 0.000 7.095
CENTRAHOMA (SPIRO)
20 1N 10E SPIRO ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 75.4395 75.4395
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 75.4395 75.4395
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 13.171 0.000 9.936 0.000 27.785 27.785 2.400 0.000 2.400
1998.12 0.000 11.883 0.000 8.964 0.000 25.068 25.068 2.400 0.000 2.400
1999.12 0.000 10.720 0.000 8.087 0.000 22.616 22.616 2.400 0.000 2.400
2000.12 0.000 9.672 0.000 7.297 0.000 20.404 20.404 2.400 0.000 2.400
2001.12 0.000 8.726 0.000 6.583 0.000 18.409 18.409 2.400 0.000 2.400
2002.12 0.000 7.873 0.000 5.939 0.000 16.608 16.608 2.400 0.000 2.400
2003.12 0.000 7.103 0.000 5.358 0.000 14.984 14.984 2.400 0.000 2.400
2004.12 0.000 6.408 0.000 4.834 0.000 13.519 13.519 2.400 0.000 2.400
2005.12 0.000 5.781 0.000 4.361 0.000 12.197 12.197 2.400 0.000 2.400
2006.12 0.000 5.216 0.000 3.935 0.000 11.004 11.004 2.400 0.000 2.400
2007.12 0.000 4.706 0.000 3.550 0.000 9.928 9.928 2.400 0.000 2.400
SUB-TOT 0.000 91.259 0.000 68.844 0.000 192.522 192.522 26.400 0.000 26.400
AFTER 0.000 32.310 0.000 24.376 0.000 68.161 68.161 31.800 0.000 31.800
TOTAL 0.000 123.569 0.000 93.220 0.000 260.683 260.683 58.200 0.000 58.200
ULT. 0.000 392.187
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 25.385 0.000 0.000 0.000 25.385 25.385 24.180 1.0 0.00 3.010
1998.12 22.668 0.000 0.000 0.000 22.668 48.053 43.716 1.0 0.00 3.010
1999.12 20.216 0.000 0.000 0.000 20.216 68.269 59.482 1.0 0.00 3.010
2000.12 18.004 0.000 0.000 0.000 18.004 86.273 72.187 1.0 0.00 3.010
2001.12 16.009 0.000 0.000 0.000 16.009 102.282 82.409 1.0 0.00 3.010
2002.12 14.208 0.000 0.000 0.000 14.208 116.491 90.618 1.0 0.00 3.010
2003.12 12.584 0.000 0.000 0.000 12.584 129.075 97.197 1.0 0.00 3.010
2004.12 11.119 0.000 0.000 0.000 11.119 140.193 102.457 1.0 0.00 3.010
2005.12 9.797 0.000 0.000 0.000 9.797 149.990 106.650 1.0 0.00 3.010
2006.12 8.604 0.000 0.000 0.000 8.604 158.593 109.982 1.0 0.00 3.010
2007.12 7.528 0.000 0.000 0.000 7.528 166.121 112.621 1.0 0.00 3.010
SUB-TOT 166.122 0.000 0.000 0.000 166.122 166.121 112.621 1.0 0.00 3.010
AFTER 36.361 0.000 0.000 0.000 36.361 202.483 121.166 1.0 0.00 3.010
TOTAL 202.483 0.000 0.000 0.000 202.483 202.483 121.166 1.0 0.00 3.010
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 121.166 99.777 84.555 73.254 64.568 57.698 52.136 47.545 43.692 40.414
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:26
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
87 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R NW/4 2-18 THRU: 2024.09 OIL: 0.000 0.000 *
PAN WESTERN ENERGY LIFE: 27.75 YRS GAS: 0.000 7.095
CENTRAHOMA (WAPANUCKA)
18 1N 10E WAPANUCKA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 82.2544 61.6908 61.6908
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 82.2544 61.6908 61.6908
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 8.438 0.000 5.206 0.000 14.267 14.267 1.974 0.000 1.974
1998.12 0.000 7.847 0.000 4.841 0.000 13.268 13.268 1.974 0.000 1.974
1999.12 0.000 7.298 0.000 4.502 0.000 12.339 12.339 1.974 0.000 1.974
2000.12 0.000 6.787 0.000 4.187 0.000 11.476 11.476 1.974 0.000 1.974
2001.12 0.000 6.312 0.000 3.894 0.000 10.672 10.672 1.974 0.000 1.974
2002.12 0.000 5.870 0.000 3.621 0.000 9.925 9.925 1.974 0.000 1.974
2003.12 0.000 5.459 0.000 3.368 0.000 9.231 9.231 1.974 0.000 1.974
2004.12 0.000 5.077 0.000 3.132 0.000 8.584 8.584 1.974 0.000 1.974
2005.12 0.000 4.722 0.000 2.913 0.000 7.983 7.983 1.974 0.000 1.974
2006.12 0.000 4.391 0.000 2.709 0.000 7.425 7.425 1.974 0.000 1.974
2007.12 0.000 4.084 0.000 2.519 0.000 6.905 6.905 1.974 0.000 1.974
2008.12 0.000 3.798 0.000 2.343 0.000 6.422 6.422 1.974 0.000 1.974
2009.12 0.000 3.532 0.000 2.179 0.000 5.972 5.972 1.974 0.000 1.974
2010.12 0.000 3.285 0.000 2.026 0.000 5.554 5.554 1.974 0.000 1.974
2011.12 0.000 3.055 0.000 1.885 0.000 5.165 5.165 1.974 0.000 1.974
SUB-TOT 0.000 79.955 0.000 49.325 0.000 135.188 135.188 29.610 0.000 29.610
AFTER 0.000 24.500 0.000 15.114 0.000 41.420 41.420 25.171 0.000 25.171
TOTAL 0.000 104.455 0.000 64.439 0.000 176.608 176.608 54.781 0.000 54.781
ULT. 0.000 275.836
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 12.293 0.000 0.000 0.000 12.293 12.293 11.706 1.0 0.00 2.950
1998.12 11.294 0.000 0.000 0.000 11.294 23.587 21.438 1.0 0.00 2.950
1999.12 10.365 0.000 0.000 0.000 10.365 33.952 29.520 1.0 0.00 2.950
2000.12 9.502 0.000 0.000 0.000 9.502 43.454 36.223 1.0 0.00 2.950
2001.12 8.698 0.000 0.000 0.000 8.698 52.152 41.776 1.0 0.00 2.950
2002.12 7.951 0.000 0.000 0.000 7.951 60.103 46.368 1.0 0.00 2.950
2003.12 7.256 0.000 0.000 0.000 7.256 67.360 50.161 1.0 0.00 2.950
2004.12 6.610 0.000 0.000 0.000 6.610 73.970 53.287 1.0 0.00 2.950
2005.12 6.009 0.000 0.000 0.000 6.009 79.979 55.859 1.0 0.00 2.950
2006.12 5.451 0.000 0.000 0.000 5.451 85.430 57.969 1.0 0.00 2.950
2007.12 4.931 0.000 0.000 0.000 4.931 90.361 59.697 1.0 0.00 2.950
2008.12 4.447 0.000 0.000 0.000 4.447 94.808 61.107 1.0 0.00 2.950
2009.12 3.998 0.000 0.000 0.000 3.998 98.806 62.254 1.0 0.00 2.950
2010.12 3.580 0.000 0.000 0.000 3.580 102.386 63.183 1.0 0.00 2.950
2011.12 3.191 0.000 0.000 0.000 3.191 105.577 63.933 1.0 0.00 2.950
SUB-TOT 105.576 0.000 0.000 0.000 105.576 105.577 63.933 1.0 0.00 2.950
AFTER 16.251 0.000 0.000 0.000 16.251 121.827 66.485 1.0 0.00 2.950
TOTAL 121.827 0.000 0.000 0.000 121.827 121.827 66.485 1.0 0.00 2.950
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 66.485 53.360 44.403 37.957 33.118 29.360 26.362 23.915 21.882 20.166
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:30
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
85 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCCARTY NENW 1 & 2 THRU: 2003.06 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 6.50 YRS GAS: 0.000 0.000 *
FITTS (GILCREASE)
12 1N 7E GILCREASE ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 82.0313 82.0313
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 82.0313 82.0313
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.176 0.000 0.965 0.000 22.985 0.000 22.985 18.000 0.000 18.000
1998.12 1.129 0.000 0.926 0.000 22.066 0.000 22.066 18.000 0.000 18.000
1999.12 1.084 0.000 0.889 0.000 21.183 0.000 21.183 18.000 0.000 18.000
2000.12 1.040 0.000 0.853 0.000 20.336 0.000 20.336 18.000 0.000 18.000
2001.12 0.999 0.000 0.819 0.000 19.523 0.000 19.523 18.000 0.000 18.000
2002.12 0.959 0.000 0.786 0.000 18.742 0.000 18.742 18.000 0.000 18.000
2003.06 0.465 0.000 0.381 0.000 9.088 0.000 9.088 9.000 0.000 9.000
TOTAL 6.852 0.000 5.619 0.000 133.923 0.000 133.923 117.000 0.000 117.000
ULT. 63.843 1.484
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 4.985 0.000 0.000 0.000 4.985 4.985 4.752 2.0 25.65 0.000
1998.12 4.066 0.000 0.000 0.000 4.066 9.052 8.259 2.0 25.65 0.000
1999.12 3.183 0.000 0.000 0.000 3.183 12.235 10.745 2.0 25.65 0.000
2000.12 2.336 0.000 0.000 0.000 2.336 14.571 12.397 2.0 25.65 0.000
2001.12 1.523 0.000 0.000 0.000 1.523 16.094 13.372 2.0 25.65 0.000
2002.12 0.742 0.000 0.000 0.000 0.742 16.835 13.804 2.0 25.65 0.000
2003.06 0.088 0.000 0.000 0.000 0.088 16.923 13.851 2.0 25.65 0.000
TOTAL 16.923 0.000 0.000 0.000 16.923 16.923 13.851 2.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 13.851 12.631 11.575 10.656 9.853 9.147 8.524 7.971 7.479 7.039
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:31 PAN WESTERN ENERGY CORP 1996 PAN96 Page:31
SYCAMORE RESOURCES PROVED PRODUCING 96
<TABLE>
<CAPTION>
63 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCCORD-HENNIG 1 THRU: 2016.03 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY CORP LIFE: 19.25 YRS GAS: 0.000 7.500
P J T (PALO PINTO)
PALO PINTO ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COLEMAN TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 72.7500 72.7500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 72.7500 72.7500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.330 3.649 0.240 2.655 4.357 8.692 13.049 3.000 0.000 3.000
1998.12 0.319 3.189 0.232 2.320 4.211 7.597 11.808 3.000 0.000 3.000
1999.12 0.309 2.787 0.225 2.028 4.071 6.640 10.711 3.000 0.000 3.000
2000.12 0.298 2.436 0.217 1.772 3.936 5.803 9.739 3.000 0.000 3.000
2001.12 0.289 2.129 0.210 1.549 3.805 5.072 8.877 3.000 0.000 3.000
2002.12 0.279 1.861 0.203 1.354 3.678 4.433 8.111 3.000 0.000 3.000
2003.12 0.270 1.626 0.196 1.183 3.555 3.874 7.430 3.000 0.000 3.000
2004.12 0.261 1.421 0.190 1.034 3.437 3.386 6.823 3.000 0.000 3.000
2005.12 0.252 1.242 0.183 0.904 3.323 2.960 6.282 3.000 0.000 3.000
2006.12 0.244 1.086 0.177 0.790 3.212 2.587 5.799 3.000 0.000 3.000
2007.12 0.235 0.949 0.171 0.690 3.105 2.261 5.366 3.000 0.000 3.000
SUB-TOT 3.086 22.375 2.244 16.279 40.690 53.305 93.995 33.000 0.000 33.000
AFTER 1.666 4.417 1.213 3.212 21.972 10.518 32.490 24.750 0.000 24.750
TOTAL 4.752 26.792 3.457 19.491 62.662 63.823 126.485 57.750 0.000 57.750
ULT. 13.692 99.362
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 10.049 0.000 0.000 0.000 10.049 10.049 9.573 2.0 19.00 3.540
1998.12 8.808 0.000 0.000 0.000 8.808 18.857 17.166 2.0 19.00 3.540
1999.12 7.711 0.000 0.000 0.000 7.711 26.568 23.180 2.0 19.00 3.540
2000.12 6.739 0.000 0.000 0.000 6.739 33.307 27.937 2.0 19.00 3.540
2001.12 5.877 0.000 0.000 0.000 5.877 39.184 31.689 2.0 19.00 3.540
2002.12 5.111 0.000 0.000 0.000 5.111 44.294 34.643 2.0 19.00 3.540
2003.12 4.430 0.000 0.000 0.000 4.430 48.724 36.959 2.0 19.00 3.540
2004.12 3.823 0.000 0.000 0.000 3.823 52.547 38.768 2.0 19.00 3.540
2005.12 3.282 0.000 0.000 0.000 3.282 55.830 40.173 2.0 19.00 3.540
2006.12 2.799 0.000 0.000 0.000 2.799 58.628 41.257 2.0 19.00 3.540
2007.12 2.366 0.000 0.000 0.000 2.366 60.994 42.087 2.0 19.00 3.540
SUB-TOT 60.995 0.000 0.000 0.000 60.995 60.994 42.087 2.0 19.00 3.540
AFTER 7.740 0.000 0.000 0.000 7.740 68.735 44.115 2.0 19.00 3.540
TOTAL 68.735 0.000 0.000 0.000 68.735 68.735 44.115 2.0 19.00 3.540
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 44.115 37.012 31.770 27.776 24.648 22.140 20.087 18.379
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:34 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 32
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
35 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCCORD-HENNIG 2 & 4 THRU: 2013.11 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 16.92 YRS GAS: 0.000 7.500
GLEN COVE (FRY)
FRY ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COLEMAN TX PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 72.7500 72.7500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 72.7500 72.7500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.171 10.867 0.124 7.906 2.899 25.887 28.786 4.800 0.000 4.800
1998.12 0.154 9.741 0.112 7.087 2.608 23.205 25.814 4.800 0.000 4.800
1999.12 0.138 8.732 0.101 6.353 2.347 20.801 23.148 4.800 0.000 4.800
2000.12 0.124 7.827 0.091 5.694 2.112 18.646 20.758 4.800 0.000 4.800
2001.12 0.112 7.016 0.081 5.104 1.900 16.715 18.615 4.800 0.000 4.800
2002.12 0.101 6.290 0.073 4.576 1.710 14.983 16.693 4.800 0.000 4.800
2003.12 0.091 5.638 0.066 4.102 1.538 13.431 14.969 4.800 0.000 4.800
2004.12 0.082 5.054 0.059 3.677 1.384 12.039 13.424 4.800 0.000 4.800
2005.12 0.073 4.530 0.053 3.296 1.246 10.792 12.038 4.800 0.000 4.800
2006.12 0.066 4.061 0.048 2.954 1.121 9.674 10.795 4.800 0.000 4.800
2007.12 0.059 3.640 0.043 2.648 1.008 8.672 9.680 4.800 0.000 4.800
SUB-TOT 1.171 73.396 0.851 53.397 19.873 174.845 194.720 52.800 0.000 52.800
AFTER 0.248 15.007 0.181 10.916 4.208 35.749 39.954 28.400 0.000 28.400
TOTAL 1.419 88.403 1.032 64.313 24.081 210.594 234.674 81.200 0.000 81.200
ULT. 4.233 170.475
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 23.986 0.000 0.000 0.000 23.986 23.986 22.850 1.0 24.45 3.540
1998.12 21.014 0.000 0.000 0.000 21.014 45.000 40.965 1.0 24.45 3.540
1999.12 18.348 0.000 0.000 0.000 18.348 63.348 55.276 1.0 24.45 3.540
2000.12 15.958 0.000 0.000 0.000 15.958 79.306 66.540 1.0 24.45 3.540
2001.12 13.815 0.000 0.000 0.000 13.815 93.121 75.363 1.0 24.45 3.540
2002.12 11.893 0.000 0.000 0.000 11.893 105.014 82.236 1.0 24.45 3.540
2003.12 10.169 0.000 0.000 0.000 10.169 115.183 87.554 1.0 24.45 3.540
2004.12 8.624 0.000 0.000 0.000 8.624 123.806 91.635 1.0 24.45 3.540
2005.12 7.238 0.000 0.000 0.000 7.238 131.044 94.734 1.0 24.45 3.540
2006.12 5.995 0.000 0.000 0.000 5.995 137.039 97.057 1.0 24.45 3.540
2007.12 4.880 0.000 0.000 0.000 4.880 141.919 98.769 1.0 24.45 3.540
SUB-TOT 141.920 0.000 0.000 0.000 141.920 141.919 98.769 1.0 24.45 3.540
AFTER 11.554 0.000 0.000 0.000 11.554 153.474 101.989 1.0 24.45 3.540
TOTAL 153.474 0.000 0.000 0.000 153.474 153.474 101.989 1.0 24.45 3.540
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 101.989 86.378 74.617 65.519 58.313 52.488 47.693 43.684 40.287 37.374
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:33
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
37 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCFARLIN #1 THRU: 2006.10 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 9.83 YRS GAS: 0.000 7.095
HARDSCRABBLE (REDFORK)
32 16N REDFORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 11.9141 9.3496 9.3496
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 11.9141 9.3496 9.3496
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 26.430 0.000 2.471 0.000 6.382 6.382 1.258 0.000 1.258
1998.12 0.000 22.201 0.000 2.076 0.000 5.361 5.361 1.258 0.000 1.258
1999.12 0.000 18.649 0.000 1.744 0.000 4.503 4.503 1.258 0.000 1.258
2000.12 0.000 15.665 0.000 1.465 0.000 3.783 3.783 1.258 0.000 1.258
2001.12 0.000 13.159 0.000 1.230 0.000 3.177 3.177 1.258 0.000 1.258
2002.12 0.000 11.053 0.000 1.033 0.000 2.669 2.669 1.258 0.000 1.258
2003.12 0.000 9.285 0.000 0.868 0.000 2.242 2.242 1.258 0.000 1.258
2004.12 0.000 7.799 0.000 0.729 0.000 1.883 1.883 1.258 0.000 1.258
2005.12 0.000 6.551 0.000 0.613 0.000 1.582 1.582 1.258 0.000 1.258
2006.10 0.000 4.651 0.000 0.435 0.000 1.123 1.123 1.048 0.000 1.048
TOTAL 0.000 135.443 0.000 12.664 0.000 32.705 32.705 12.370 0.000 12.370
ULT. 1.070 1411.587
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 5.124 0.000 0.000 0.000 5.124 5.124 4.885 1.0 0.00 2.780
1998.12 4.103 0.000 0.000 0.000 4.103 9.227 8.424 1.0 0.00 2.780
1999.12 3.245 0.000 0.000 0.000 3.245 12.472 10.958 1.0 0.00 2.780
2000.12 2.525 0.000 0.000 0.000 2.525 14.997 12.741 1.0 0.00 2.780
2001.12 1.919 0.000 0.000 0.000 1.919 16.916 13.969 1.0 0.00 2.780
2002.12 1.411 0.000 0.000 0.000 1.411 18.327 14.785 1.0 0.00 2.780
2003.12 0.984 0.000 0.000 0.000 0.984 19.311 15.301 1.0 0.00 2.780
2004.12 0.625 0.000 0.000 0.000 0.625 19.936 15.598 1.0 0.00 2.780
2005.12 0.324 0.000 0.000 0.000 0.324 20.260 15.737 1.0 0.00 2.780
2006.10 0.075 0.000 0.000 0.000 0.075 20.335 15.767 1.0 0.00 2.780
TOTAL 20.335 0.000 0.000 0.000 20.335 20.335 15.767 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 15.767 14.089 12.699 11.534 10.548 9.707 8.981 8.352 7.801 7.315
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:34
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
8 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCKINNEY NE/4 THRU: 2026.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
12 1N 9E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 44.5313 36.5770 36.5770
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 44.5313 36.5770 36.5770
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 12.003 0.000 4.390 0.000 13.378 13.378 1.069 0.000 1.069
1998.12 0.000 11.249 0.000 4.114 0.000 12.538 12.538 1.069 0.000 1.069
1999.12 0.000 10.542 0.000 3.856 0.000 11.751 11.751 1.069 0.000 1.069
2000.12 0.000 9.880 0.000 3.614 0.000 11.013 11.013 1.069 0.000 1.069
2001.12 0.000 9.260 0.000 3.387 0.000 10.321 10.321 1.069 0.000 1.069
2002.12 0.000 8.678 0.000 3.174 0.000 9.673 9.673 1.069 0.000 1.069
2003.12 0.000 8.133 0.000 2.975 0.000 9.065 9.065 1.069 0.000 1.069
2004.12 0.000 7.623 0.000 2.788 0.000 8.496 8.496 1.069 0.000 1.069
2005.12 0.000 7.144 0.000 2.613 0.000 7.963 7.963 1.069 0.000 1.069
2006.12 0.000 6.695 0.000 2.449 0.000 7.463 7.463 1.069 0.000 1.069
2007.12 0.000 6.275 0.000 2.295 0.000 6.994 6.994 1.069 0.000 1.069
2008.12 0.000 5.881 0.000 2.151 0.000 6.555 6.555 1.069 0.000 1.069
2009.12 0.000 5.511 0.000 2.016 0.000 6.143 6.143 1.069 0.000 1.069
2010.12 0.000 5.165 0.000 1.889 0.000 5.757 5.757 1.069 0.000 1.069
2011.12 0.000 4.841 0.000 1.771 0.000 5.396 5.396 1.069 0.000 1.069
SUB-TOT 0.000 118.880 0.000 43.482 0.000 132.506 132.506 16.035 0.000 16.035
AFTER 0.000 44.937 0.000 16.437 0.000 50.084 50.084 16.027 0.000 16.027
TOTAL 0.000 163.817 0.000 59.919 0.000 182.590 182.590 32.062 0.000 32.062
ULT. 62.414 1202.631
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 12.309 0.000 0.000 0.000 12.309 12.309 11.721 1.0 0.00 3.280
1998.12 11.469 0.000 0.000 0.000 11.469 23.779 21.602 1.0 0.00 3.280
1999.12 10.682 0.000 0.000 0.000 10.682 34.460 29.930 1.0 0.00 3.280
2000.12 9.944 0.000 0.000 0.000 9.944 44.404 36.944 1.0 0.00 3.280
2001.12 9.252 0.000 0.000 0.000 9.252 53.657 42.850 1.0 0.00 3.280
2002.12 8.604 0.000 0.000 0.000 8.604 62.261 47.819 1.0 0.00 3.280
2003.12 7.997 0.000 0.000 0.000 7.997 70.258 51.998 1.0 0.00 3.280
2004.12 7.427 0.000 0.000 0.000 7.427 77.685 55.510 1.0 0.00 3.280
2005.12 6.894 0.000 0.000 0.000 6.894 84.579 58.459 1.0 0.00 3.280
2006.12 6.394 0.000 0.000 0.000 6.394 90.973 60.935 1.0 0.00 3.280
2007.12 5.925 0.000 0.000 0.000 5.925 96.898 63.010 1.0 0.00 3.280
2008.12 5.486 0.000 0.000 0.000 5.486 102.384 64.749 1.0 0.00 3.280
2009.12 5.074 0.000 0.000 0.000 5.074 107.458 66.205 1.0 0.00 3.280
2010.12 4.689 0.000 0.000 0.000 4.689 112.146 67.421 1.0 0.00 3.280
2011.12 4.327 0.000 0.000 0.000 4.327 116.473 68.437 1.0 0.00 3.280
SUB-TOT 116.473 0.000 0.000 0.000 116.473 116.473 68.437 1.0 0.00 3.280
AFTER 34.055 0.000 0.000 0.000 34.055 150.528 73.057 1.0 0.00 3.280
TOTAL 150.528 0.000 0.000 0.000 150.528 150.528 73.057 1.0 0.00 3.280
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 73.057 57.157 46.816 39.605 34.305 30.249 27.049 24.459 22.321 20.526
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:35
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
39 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MULLEN -PAW # 2-5 THRU: 2011.09 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 14.75 YRS GAS: 0.000 7.095
HARDSCRABBLE WEST
5 RED FORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 32.6330 25.6402 25.6402
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 32.6330 25.6402 25.6402
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 14.952 0.000 3.834 0.000 9.902 9.902 0.979 0.000 0.979
1998.12 0.000 12.709 0.000 3.259 0.000 8.417 8.417 0.979 0.000 0.979
1999.12 0.000 10.803 0.000 2.770 0.000 7.154 7.154 0.979 0.000 0.979
2000.12 0.000 9.183 0.000 2.354 0.000 6.081 6.081 0.979 0.000 0.979
2001.12 0.000 7.805 0.000 2.001 0.000 5.169 5.169 0.979 0.000 0.979
2002.12 0.000 6.634 0.000 1.701 0.000 4.393 4.393 0.979 0.000 0.979
2003.12 0.000 5.639 0.000 1.446 0.000 3.734 3.734 0.979 0.000 0.979
2004.12 0.000 4.793 0.000 1.229 0.000 3.174 3.174 0.979 0.000 0.979
2005.12 0.000 4.074 0.000 1.045 0.000 2.698 2.698 0.979 0.000 0.979
2006.12 0.000 3.463 0.000 0.888 0.000 2.293 2.293 0.979 0.000 0.979
2007.12 0.000 2.944 0.000 0.755 0.000 1.949 1.949 0.979 0.000 0.979
2008.12 0.000 2.502 0.000 0.642 0.000 1.657 1.657 0.979 0.000 0.979
2009.12 0.000 2.127 0.000 0.545 0.000 1.408 1.408 0.979 0.000 0.979
2010.12 0.000 1.808 0.000 0.464 0.000 1.197 1.197 0.979 0.000 0.979
2011.09 0.000 1.176 0.000 0.301 0.000 0.778 0.778 0.734 0.000 0.734
TOTAL 0.000 90.612 0.000 23.234 0.000 60.004 60.004 14.440 0.000 14.440
ULT. 4.152 1139.229
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 8.923 0.000 0.000 0.000 8.923 8.923 8.504 1.0 0.00 2.780
1998.12 7.438 0.000 0.000 0.000 7.438 16.360 14.918 1.0 0.00 2.780
1999.12 6.175 0.000 0.000 0.000 6.175 22.535 19.736 1.0 0.00 2.780
2000.12 5.102 0.000 0.000 0.000 5.102 27.637 23.339 1.0 0.00 2.780
2001.12 4.190 0.000 0.000 0.000 4.190 31.827 26.016 1.0 0.00 2.780
2002.12 3.414 0.000 0.000 0.000 3.414 35.242 27.990 1.0 0.00 2.780
2003.12 2.755 0.000 0.000 0.000 2.755 37.997 29.432 1.0 0.00 2.780
2004.12 2.195 0.000 0.000 0.000 2.195 40.192 30.471 1.0 0.00 2.780
2005.12 1.719 0.000 0.000 0.000 1.719 41.912 31.208 1.0 0.00 2.780
2006.12 1.314 0.000 0.000 0.000 1.314 43.226 31.718 1.0 0.00 2.780
2007.12 0.970 0.000 0.000 0.000 0.970 44.196 32.058 1.0 0.00 2.780
2008.12 0.678 0.000 0.000 0.000 0.678 44.874 32.274 1.0 0.00 2.780
2009.12 0.429 0.000 0.000 0.000 0.429 45.304 32.397 1.0 0.00 2.780
2010.12 0.218 0.000 0.000 0.000 0.218 45.522 32.454 1.0 0.00 2.780
2011.09 0.044 0.000 0.000 0.000 0.044 45.566 32.465 1.0 0.00 2.780
TOTAL 45.564 0.000 0.000 0.000 45.564 45.566 32.465 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 32.465 28.173 24.813 22.128 19.944 18.139 16.625 15.338 14.234 13.275
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:36
SYCAMORE RESOURCES PROVED PRODUCING 1996
88 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MULLEN-P A W #1 THRU: 2000.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 4.00 YRS GAS: 0.000 7.095
HARDSCRABBLE WEST (RED FORK)
5 15N 4E RED FORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 60.9102 48.0572 48.0572
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 60.9102 48.0572 48.0572
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 3.227 0.000 1.551 0.000 4.005 4.005 1.827 0.000 1.827
1998.12 0.000 2.581 0.000 1.241 0.000 3.204 3.204 1.827 0.000 1.827
1999.12 0.000 2.065 0.000 0.992 0.000 2.563 2.563 1.827 0.000 1.827
2000.12 0.000 1.652 0.000 0.794 0.000 2.051 2.051 1.827 0.000 1.827
TOTAL 0.000 9.525 0.000 4.578 0.000 11.823 11.823 7.308 0.000 7.308
ULT. 0.813 368.449
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 2.178 0.000 0.000 0.000 2.178 2.178 2.079 1.0 0.00 2.780
1998.12 1.377 0.000 0.000 0.000 1.377 3.554 3.270 1.0 0.00 2.780
1999.12 0.736 0.000 0.000 0.000 0.736 4.290 3.847 1.0 0.00 2.780
2000.12 0.223 0.000 0.000 0.000 0.223 4.514 4.007 1.0 0.00 2.780
TOTAL 4.514 0.000 0.000 0.000 4.514 4.514 4.007 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 4.007 3.787 3.585 3.400 3.231 3.075 2.931 2.799 2.676 2.562
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:37
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
84 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
NORTHWEST ANTELOPE MISS SU THRU: 2024.06 OIL: 0.000 4.600
PAN WESTERN ENERGY CORP LIFE: 27.50 YRS GAS: 0.000 7.500
ANTELOPE NW
6 22N 2W MISSP CHAT ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
NOBLE OK PRI: OIL PAYOUT (YRS) 0.81 0.81 INITIAL 97.9754 78.9843 78.9843
PRODUCING ACT NET INC./INV: 15.60 8.51 AT 1997.01 97.9754 78.9843 78.9843
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 9.616 33.668 7.595 26.592 185.122 68.382 253.504 9.406 0.000 9.406
1998.12 11.241 30.638 8.879 24.199 216.411 62.227 278.639 9.406 0.000 9.406
1999.12 11.362 27.880 8.974 22.021 218.742 56.627 275.369 9.406 0.000 9.406
2000.12 10.339 25.371 8.166 20.039 199.055 51.530 250.585 9.406 0.000 9.406
2001.12 9.409 23.088 7.431 18.236 181.140 46.893 228.033 9.406 0.000 9.406
2002.12 8.562 21.010 6.763 16.594 164.837 42.672 207.510 9.406 0.000 9.406
2003.12 7.791 19.119 6.154 15.101 150.002 38.832 188.834 9.406 0.000 9.406
2004.12 7.090 17.398 5.600 13.742 136.502 35.337 171.839 9.406 0.000 9.406
2005.12 6.452 15.832 5.096 12.505 124.217 32.157 156.373 9.406 0.000 9.406
2006.12 5.871 14.407 4.637 11.380 113.037 29.263 142.300 9.406 0.000 9.406
2007.12 5.343 13.111 4.220 10.355 102.864 26.629 129.493 9.406 0.000 9.406
2008.12 4.862 11.931 3.840 9.423 93.606 24.232 117.838 9.406 0.000 9.406
2009.12 4.425 10.857 3.495 8.575 85.182 22.051 107.233 9.406 0.000 9.406
2010.12 4.026 9.880 3.180 7.804 77.515 20.067 97.582 9.406 0.000 9.406
2011.12 3.664 8.991 2.894 7.101 70.539 18.261 88.800 9.406 0.000 9.406
SUB-TOT 110.053 283.181 86.924 223.667 2118.771 575.160 2693.932 141.090 0.000 141.090
AFTER 25.651 62.939 20.261 49.714 493.823 127.838 621.659 117.564 0.000 117.564
TOTAL 135.704 346.120 107.185 273.381 2612.594 702.998 3315.591 258.654 0.000 258.654
ULT. 288.533 1275.235
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 244.098 195.951 0.000 0.000 48.148 48.148 44.158 32.0 25.55 2.780
1998.12 269.233 0.000 0.000 0.000 269.233 317.381 275.792 32.0 25.55 2.780
1999.12 265.963 0.000 0.000 0.000 265.963 583.344 483.177 32.0 25.55 2.780
2000.12 241.180 0.000 0.000 0.000 241.180 824.523 653.342 32.0 25.55 2.780
2001.12 218.627 0.000 0.000 0.000 218.627 1043.151 792.916 32.0 25.55 2.780
2002.12 198.104 0.000 0.000 0.000 198.104 1241.255 907.353 32.0 25.55 2.780
2003.12 179.428 0.000 0.000 0.000 179.428 1420.683 1001.139 32.0 25.55 2.780
2004.12 162.433 0.000 0.000 0.000 162.433 1583.116 1077.962 32.0 25.55 2.780
2005.12 146.968 0.000 0.000 0.000 146.968 1730.084 1140.856 32.0 25.55 2.780
2006.12 132.894 0.000 0.000 0.000 132.894 1862.978 1192.315 32.0 25.55 2.780
2007.12 120.087 0.000 0.000 0.000 120.087 1983.065 1234.391 32.0 25.55 2.780
2008.12 108.433 0.000 0.000 0.000 108.433 2091.498 1268.768 32.0 25.55 2.780
2009.12 97.827 0.000 0.000 0.000 97.827 2189.325 1296.832 32.0 25.55 2.780
2010.12 88.176 0.000 0.000 0.000 88.176 2277.501 1319.720 32.0 25.55 2.780
2011.12 79.394 0.000 0.000 0.000 79.394 2356.896 1338.368 32.0 25.55 2.780
SUB-TOT 2552.845 195.951 0.000 0.000 2356.895 2356.896 1338.368 32.0 25.55 2.780
AFTER 504.092 0.000 0.000 0.000 504.092 2860.986 1412.059 32.0 25.55 2.780
TOTAL 3056.937 195.951 0.000 0.000 2860.987 2860.986 1412.059 32.0 25.55 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 1412.059 1085.065 865.574 709.572 593.742 504.792 434.654 378.169 331.889 293.428
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:38
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
57 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
OLTMANNS #1&2 NHNE THRU: 2000.08 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 3.67 YRS GAS: 0.000 0.000 *
LAKE BLACKWELL EAST (LAYTON)
14 19N 1E LAYTON ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PAYNE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 80.0000 64.0000 64.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 80.0000 64.0000 64.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.052 0.000 0.673 0.000 15.985 0.000 15.985 9.600 0.000 9.600
1998.12 0.894 0.000 0.572 0.000 13.587 0.000 13.587 9.600 0.000 9.600
1999.12 0.760 0.000 0.487 0.000 11.549 0.000 11.549 9.600 0.000 9.600
2000.08 0.442 0.000 0.283 0.000 6.720 0.000 6.720 6.400 0.000 6.400
TOTAL 3.148 0.000 2.015 0.000 47.841 0.000 47.841 35.200 0.000 35.200
ULT. 76.076 20.048
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 6.385 0.000 0.000 0.000 6.385 6.385 6.096 2.0 25.55 0.000
1998.12 3.987 0.000 0.000 0.000 3.987 10.372 9.545 2.0 25.55 0.000
1999.12 1.949 0.000 0.000 0.000 1.949 12.321 11.076 2.0 25.55 0.000
2000.08 0.320 0.000 0.000 0.000 0.320 12.641 11.308 2.0 25.55 0.000
TOTAL 12.641 0.000 0.000 0.000 12.641 12.641 11.308 2.0 25.55 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 11.308 10.722 10.183 9.686 9.227 8.803 8.409 8.045 7.706 7.391
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:39
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
30 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
PARKS MCCARTY #3 SENW THRU: 2015.04 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 18.33 YRS GAS: 0.000 0.000 *
FITTS (ATOK-GLCR)
12 1N 7E ATOK-GLCR ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 87.5000 87.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.128 0.000 0.987 0.000 23.511 0.000 23.511 3.600 0.000 3.600
1998.12 1.015 0.000 0.888 0.000 21.160 0.000 21.160 3.600 0.000 3.600
1999.12 0.913 0.000 0.799 0.000 19.044 0.000 19.044 3.600 0.000 3.600
2000.12 0.822 0.000 0.719 0.000 17.140 0.000 17.140 3.600 0.000 3.600
2001.12 0.740 0.000 0.647 0.000 15.426 0.000 15.426 3.600 0.000 3.600
2002.12 0.666 0.000 0.583 0.000 13.883 0.000 13.883 3.600 0.000 3.600
2003.12 0.599 0.000 0.524 0.000 12.495 0.000 12.495 3.600 0.000 3.600
2004.12 0.539 0.000 0.472 0.000 11.245 0.000 11.245 3.600 0.000 3.600
2005.12 0.485 0.000 0.425 0.000 10.121 0.000 10.121 3.600 0.000 3.600
2006.12 0.437 0.000 0.382 0.000 9.109 0.000 9.109 3.600 0.000 3.600
2007.12 0.393 0.000 0.344 0.000 8.198 0.000 8.198 3.600 0.000 3.600
2008.12 0.354 0.000 0.310 0.000 7.378 0.000 7.378 3.600 0.000 3.600
2009.12 0.318 0.000 0.279 0.000 6.640 0.000 6.640 3.600 0.000 3.600
2010.12 0.287 0.000 0.251 0.000 5.976 0.000 5.976 3.600 0.000 3.600
2011.12 0.258 0.000 0.226 0.000 5.379 0.000 5.379 3.600 0.000 3.600
SUB-TOT 8.954 0.000 7.836 0.000 186.705 0.000 186.705 54.000 0.000 54.000
AFTER 0.688 0.000 0.600 0.000 14.336 0.000 14.336 12.000 0.000 12.000
TOTAL 9.642 0.000 8.436 0.000 201.041 0.000 201.041 66.000 0.000 66.000
ULT. 33.313 60.726
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 19.911 0.000 0.000 0.000 19.911 19.911 18.968 1.0 25.65 0.000
1998.12 17.560 0.000 0.000 0.000 17.560 37.471 34.104 1.0 25.65 0.000
1999.12 15.444 0.000 0.000 0.000 15.444 52.916 46.150 1.0 25.65 0.000
2000.12 13.540 0.000 0.000 0.000 13.540 66.455 55.705 1.0 25.65 0.000
2001.12 11.826 0.000 0.000 0.000 11.826 78.281 63.257 1.0 25.65 0.000
2002.12 10.283 0.000 0.000 0.000 10.283 88.564 69.200 1.0 25.65 0.000
2003.12 8.895 0.000 0.000 0.000 8.895 97.459 73.851 1.0 25.65 0.000
2004.12 7.645 0.000 0.000 0.000 7.645 105.104 77.468 1.0 25.65 0.000
2005.12 6.521 0.000 0.000 0.000 6.521 111.625 80.260 1.0 25.65 0.000
2006.12 5.509 0.000 0.000 0.000 5.509 117.134 82.395 1.0 25.65 0.000
2007.12 4.598 0.000 0.000 0.000 4.598 121.732 84.007 1.0 25.65 0.000
2008.12 3.778 0.000 0.000 0.000 3.778 125.510 85.206 1.0 25.65 0.000
2009.12 3.040 0.000 0.000 0.000 3.040 128.550 86.079 1.0 25.65 0.000
2010.12 2.376 0.000 0.000 0.000 2.376 130.926 86.697 1.0 25.65 0.000
2011.12 1.779 0.000 0.000 0.000 1.779 132.705 87.115 1.0 25.65 0.000
SUB-TOT 132.705 0.000 0.000 0.000 132.705 132.705 87.115 1.0 25.65 0.000
AFTER 2.336 0.000 0.000 0.000 2.336 135.041 87.585 1.0 25.65 0.000
TOTAL 135.041 0.000 0.000 0.000 135.041 135.041 87.585 1.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 87.585 73.641 63.280 55.350 49.120 44.115 40.016 36.602 33.717 31.249
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:40
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
PEGS EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
PEGS HILL 1234,&6 COMG THRU: 2014.07 OIL: 0.000 4.600
PAN WESTERN ENERGY LIFE: 17.58 YRS GAS: 0.000 7.500
PEGS HILL
61 10 CANY MISS SPRA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
BORDON TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 80.0000 80.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 80.0000 80.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 9.795 11.139 7.836 8.911 188.758 29.839 218.597 36.000 0.000 36.000
1998.12 8.816 10.025 7.052 8.020 169.882 26.855 196.737 36.000 0.000 36.000
1999.12 7.934 9.023 6.347 7.218 152.894 24.170 177.063 36.000 0.000 36.000
2000.12 7.141 8.120 5.712 6.496 137.604 21.753 159.357 36.000 0.000 36.000
2001.12 6.427 7.308 5.141 5.847 123.844 19.577 143.421 36.000 0.000 36.000
2002.12 5.784 6.577 4.627 5.262 111.459 17.620 129.079 36.000 0.000 36.000
2003.12 5.205 5.920 4.164 4.736 100.314 15.858 116.171 36.000 0.000 36.000
2004.12 4.685 5.328 3.748 4.262 90.282 14.272 104.554 36.000 0.000 36.000
2005.12 4.216 4.795 3.373 3.836 81.254 12.845 94.099 36.000 0.000 36.000
2006.12 3.795 4.315 3.036 3.452 73.129 11.560 84.689 36.000 0.000 36.000
2007.12 3.415 3.884 2.732 3.107 65.816 10.404 76.220 36.000 0.000 36.000
2008.12 3.074 3.496 2.459 2.796 59.234 9.364 68.598 36.000 0.000 36.000
2009.12 2.766 3.146 2.213 2.517 53.311 8.427 61.738 36.000 0.000 36.000
2010.12 2.490 2.831 1.992 2.265 47.980 7.585 55.564 36.000 0.000 36.000
2011.12 2.241 2.548 1.793 2.039 43.182 6.826 50.008 36.000 0.000 36.000
SUB-TOT 77.784 88.455 62.225 70.764 1498.943 236.955 1735.895 540.000 0.000 540.000
AFTER 4.805 5.465 3.846 4.372 92.603 14.639 107.245 93.000 0.000 93.000
TOTAL 82.589 93.920 66.071 75.136 1591.546 251.594 1843.140 633.000 0.000 633.000
ULT. 376.275 264.229
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 182.597 0.000 0.000 0.000 182.597 182.597 173.945 5.0 25.25 3.620
1998.12 160.737 0.000 0.000 0.000 160.737 343.334 312.497 5.0 25.25 3.620
1999.12 141.063 0.000 0.000 0.000 141.063 484.397 422.523 5.0 25.25 3.620
2000.12 123.357 0.000 0.000 0.000 123.357 607.754 509.585 5.0 25.25 3.620
2001.12 107.421 0.000 0.000 0.000 107.421 715.175 578.188 5.0 25.25 3.620
2002.12 93.079 0.000 0.000 0.000 93.079 808.254 631.977 5.0 25.25 3.620
2003.12 80.171 0.000 0.000 0.000 80.171 888.425 673.900 5.0 25.25 3.620
2004.12 68.554 0.000 0.000 0.000 68.554 956.979 706.339 5.0 25.25 3.620
2005.12 58.099 0.000 0.000 0.000 58.099 1015.078 731.217 5.0 25.25 3.620
2006.12 48.689 0.000 0.000 0.000 48.689 1063.767 750.083 5.0 25.25 3.620
2007.12 40.220 0.000 0.000 0.000 40.220 1103.987 764.187 5.0 25.25 3.620
2008.12 32.598 0.000 0.000 0.000 32.598 1136.585 774.532 5.0 25.25 3.620
2009.12 25.738 0.000 0.000 0.000 25.738 1162.323 781.924 5.0 25.25 3.620
2010.12 19.564 0.000 0.000 0.000 19.564 1181.887 787.011 5.0 25.25 3.620
2011.12 14.008 0.000 0.000 0.000 14.008 1195.895 790.308 5.0 25.25 3.620
SUB-TOT 1195.895 0.000 0.000 0.000 1195.895 1195.895 790.308 5.0 25.25 3.620
AFTER 14.244 0.000 0.000 0.000 14.244 1210.140 793.232 5.0 25.25 3.620
TOTAL 1210.139 0.000 0.000 0.000 1210.139 1210.140 793.232 5.0 25.25 3.620
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 793.232 668.957 576.055 504.618 448.308 402.953 365.731 334.686 308.427 285.941
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:34 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 41
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
36 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
ROZELL 1-32, 2-32 THRU: 2026.12 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
HARDSCRABBLE
32 16N 4E BARTLESVILLE RD ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLD OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 17.6645 14.1526 14.1526
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 17.6645 14.1526 14.1526
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 49.194 0.000 6.962 0.000 17.982 17.982 0.636 0.000 0.636
1998.12 0.000 45.750 0.000 6.475 0.000 16.723 16.723 0.636 0.000 0.636
1999.12 0.000 42.548 0.000 6.022 0.000 15.552 15.552 0.636 0.000 0.636
2000.12 0.000 39.569 0.000 5.600 0.000 14.464 14.464 0.636 0.000 0.636
2001.12 0.000 36.799 0.000 5.208 0.000 13.451 13.451 0.636 0.000 0.636
2002.12 0.000 34.223 0.000 4.844 0.000 12.510 12.510 0.636 0.000 0.636
2003.12 0.000 31.828 0.000 4.504 0.000 11.634 11.634 0.636 0.000 0.636
2004.12 0.000 29.600 0.000 4.189 0.000 10.820 10.820 0.636 0.000 0.636
2005.12 0.000 27.528 0.000 3.896 0.000 10.062 10.062 0.636 0.000 0.636
2006.12 0.000 25.601 0.000 3.623 0.000 9.358 9.358 0.636 0.000 0.636
2007.12 0.000 23.809 0.000 3.370 0.000 8.703 8.703 0.636 0.000 0.636
SUB-TOT 0.000 386.449 0.000 54.693 0.000 141.259 141.259 6.996 0.000 6.996
AFTER 0.000 236.645 0.000 33.491 0.000 86.500 86.500 12.082 0.000 12.082
TOTAL 0.000 623.094 0.000 88.184 0.000 227.759 227.759 19.078 0.000 19.078
ULT. 0.000 1867.526
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 17.346 0.000 0.000 0.000 17.346 17.346 16.517 2.0 0.00 2.780
1998.12 16.087 0.000 0.000 0.000 16.087 33.433 30.377 2.0 0.00 2.780
1999.12 14.916 0.000 0.000 0.000 14.916 48.349 42.006 2.0 0.00 2.780
2000.12 13.828 0.000 0.000 0.000 13.828 62.177 51.761 2.0 0.00 2.780
2001.12 12.815 0.000 0.000 0.000 12.815 74.992 59.941 2.0 0.00 2.780
2002.12 11.874 0.000 0.000 0.000 11.874 86.866 66.798 2.0 0.00 2.780
2003.12 10.998 0.000 0.000 0.000 10.998 97.864 72.546 2.0 0.00 2.780
2004.12 10.184 0.000 0.000 0.000 10.184 108.048 77.361 2.0 0.00 2.780
2005.12 9.426 0.000 0.000 0.000 9.426 117.474 81.395 2.0 0.00 2.780
2006.12 8.722 0.000 0.000 0.000 8.722 126.196 84.771 2.0 0.00 2.780
2007.12 8.067 0.000 0.000 0.000 8.067 134.263 87.597 2.0 0.00 2.780
SUB-TOT 134.263 0.000 0.000 0.000 134.263 134.263 87.597 2.0 0.00 2.780
AFTER 74.418 0.000 0.000 0.000 74.418 208.681 101.372 2.0 0.00 2.780
TOTAL 208.681 0.000 0.000 0.000 208.681 208.681 101.372 2.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 101.372 79.459 65.201 55.244 47.914 42.297 37.856 34.258 31.284 28.784
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:42
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
46 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
SCHUMACHER BDA1 THRU: 2026.12 OIL: 0.000 8.000
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 0.000 *
HYACINTH NORTHEAST (LANSING)
16 12S 18W LANSING ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
ELLIS KS PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 44.3750 36.1563 36.1563
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 44.3750 36.1563 36.1563
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 2.079 0.000 0.752 0.000 17.466 0.000 17.466 5.059 0.000 5.059
1998.12 2.039 0.000 0.737 0.000 17.125 0.000 17.125 5.059 0.000 5.059
1999.12 1.999 0.000 0.723 0.000 16.791 0.000 16.791 5.059 0.000 5.059
2000.12 1.960 0.000 0.709 0.000 16.464 0.000 16.464 5.059 0.000 5.059
2001.12 1.922 0.000 0.695 0.000 16.143 0.000 16.143 5.059 0.000 5.059
2002.12 1.884 0.000 0.681 0.000 15.828 0.000 15.828 5.059 0.000 5.059
2003.12 1.848 0.000 0.668 0.000 15.519 0.000 15.519 5.059 0.000 5.059
2004.12 1.812 0.000 0.655 0.000 15.217 0.000 15.217 5.059 0.000 5.059
2005.12 1.776 0.000 0.642 0.000 14.920 0.000 14.920 5.059 0.000 5.059
2006.12 1.742 0.000 0.630 0.000 14.629 0.000 14.629 5.059 0.000 5.059
2007.12 1.708 0.000 0.617 0.000 14.344 0.000 14.344 5.059 0.000 5.059
2008.12 1.674 0.000 0.605 0.000 14.064 0.000 14.064 5.059 0.000 5.059
2009.12 1.642 0.000 0.594 0.000 13.790 0.000 13.790 5.059 0.000 5.059
2010.12 1.610 0.000 0.582 0.000 13.521 0.000 13.521 5.059 0.000 5.059
2011.12 1.578 0.000 0.571 0.000 13.257 0.000 13.257 5.059 0.000 5.059
SUB-TOT 27.273 0.000 9.861 0.000 229.078 0.000 229.078 75.885 0.000 75.885
AFTER 20.299 0.000 7.339 0.000 170.485 0.000 170.485 75.878 0.000 75.878
TOTAL 47.572 0.000 17.200 0.000 399.563 0.000 399.563 151.763 0.000 151.763
ULT. 97.354 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 12.407 0.000 0.000 0.000 12.407 12.407 11.809 1.0 25.25 0.000
1998.12 12.066 0.000 0.000 0.000 12.066 24.473 22.202 1.0 25.25 0.000
1999.12 11.732 0.000 0.000 0.000 11.732 36.205 31.345 1.0 25.25 0.000
2000.12 11.405 0.000 0.000 0.000 11.405 47.610 39.387 1.0 25.25 0.000
2001.12 11.084 0.000 0.000 0.000 11.084 58.694 46.459 1.0 25.25 0.000
2002.12 10.769 0.000 0.000 0.000 10.769 69.463 52.676 1.0 25.25 0.000
2003.12 10.460 0.000 0.000 0.000 10.460 79.924 58.140 1.0 25.25 0.000
2004.12 10.158 0.000 0.000 0.000 10.158 90.082 62.942 1.0 25.25 0.000
2005.12 9.861 0.000 0.000 0.000 9.861 99.943 67.159 1.0 25.25 0.000
2006.12 9.570 0.000 0.000 0.000 9.570 109.513 70.863 1.0 25.25 0.000
2007.12 9.285 0.000 0.000 0.000 9.285 118.798 74.114 1.0 25.25 0.000
2008.12 9.005 0.000 0.000 0.000 9.005 127.803 76.968 1.0 25.25 0.000
2009.12 8.731 0.000 0.000 0.000 8.731 136.534 79.471 1.0 25.25 0.000
2010.12 8.462 0.000 0.000 0.000 8.462 144.996 81.666 1.0 25.25 0.000
2011.12 8.198 0.000 0.000 0.000 8.198 153.194 83.590 1.0 25.25 0.000
SUB-TOT 153.193 0.000 0.000 0.000 153.193 153.194 83.590 1.0 25.25 0.000
AFTER 94.607 0.000 0.000 0.000 94.607 247.800 95.229 1.0 25.25 0.000
TOTAL 247.800 0.000 0.000 0.000 247.800 247.800 95.229 1.0 25.25 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 95.229 69.951 54.943 45.156 38.307 33.255 29.378 26.309 23.820 21.761
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:43
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
27 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
SCHWARZ A #1 SE THRU: 2026.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CONCHO NORTH (HNTN-MSSP)
18 14N 7W HNTN-MSSP ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
CANADIAN OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 50.0000 43.7500 43.7500
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 50.0000 43.7500 43.7500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.725 5.024 0.317 2.198 7.443 2.246 9.689 0.000 0.000 0.000
1998.12 0.689 2.985 0.301 1.306 7.071 1.334 8.406 0.000 0.000 0.000
1999.12 0.655 1.773 0.286 0.776 6.718 0.793 7.510 0.000 0.000 0.000
2000.12 0.622 1.053 0.272 0.461 6.382 0.471 6.853 0.000 0.000 0.000
2001.12 0.591 0.626 0.258 0.274 6.063 0.280 6.342 0.000 0.000 0.000
2002.12 0.561 0.372 0.246 0.163 5.759 0.166 5.926 0.000 0.000 0.000
2003.12 0.533 0.221 0.233 0.097 5.471 0.099 5.570 0.000 0.000 0.000
2004.12 0.506 0.131 0.222 0.057 5.198 0.059 5.257 0.000 0.000 0.000
2005.12 0.481 0.078 0.210 0.034 4.938 0.035 4.973 0.000 0.000 0.000
2006.12 0.457 0.000 0.200 0.000 4.691 0.000 4.691 0.000 0.000 0.000
2007.12 0.434 0.000 0.190 0.000 4.457 0.000 4.457 0.000 0.000 0.000
2008.12 0.413 0.000 0.180 0.000 4.234 0.000 4.234 0.000 0.000 0.000
2009.12 0.392 0.000 0.171 0.000 4.022 0.000 4.022 0.000 0.000 0.000
2010.12 0.372 0.000 0.163 0.000 3.821 0.000 3.821 0.000 0.000 0.000
2011.12 0.354 0.000 0.155 0.000 3.630 0.000 3.630 0.000 0.000 0.000
SUB-TOT 7.785 12.263 3.404 5.366 79.898 5.483 85.381 0.000 0.000 0.000
AFTER 3.607 0.000 1.580 -0.001 37.015 0.000 37.015 0.000 0.000 0.000
TOTAL 11.392 12.263 4.984 5.365 116.913 5.483 122.396 0.000 0.000 0.000
ULT. 37.806 254.887
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 9.689 0.000 0.000 0.000 9.689 9.689 9.233 1.0 25.25 1.100
1998.12 8.406 0.000 0.000 0.000 8.406 18.095 16.478 1.0 25.25 1.100
1999.12 7.510 0.000 0.000 0.000 7.510 25.605 22.335 1.0 25.25 1.100
2000.12 6.853 0.000 0.000 0.000 6.853 32.458 27.169 1.0 25.25 1.100
2001.12 6.342 0.000 0.000 0.000 6.342 38.800 31.217 1.0 25.25 1.100
2002.12 5.926 0.000 0.000 0.000 5.926 44.726 34.639 1.0 25.25 1.100
2003.12 5.570 0.000 0.000 0.000 5.570 50.296 37.550 1.0 25.25 1.100
2004.12 5.257 0.000 0.000 0.000 5.257 55.553 40.035 1.0 25.25 1.100
2005.12 4.973 0.000 0.000 0.000 4.973 60.526 42.162 1.0 25.25 1.100
2006.12 4.691 0.000 0.000 0.000 4.691 65.217 43.978 1.0 25.25 0.000
2007.12 4.457 0.000 0.000 0.000 4.457 69.673 45.539 1.0 25.25 0.000
2008.12 4.234 0.000 0.000 0.000 4.234 73.907 46.880 1.0 25.25 0.000
2009.12 4.022 0.000 0.000 0.000 4.022 77.929 48.034 1.0 25.25 0.000
2010.12 3.821 0.000 0.000 0.000 3.821 81.750 49.025 1.0 25.25 0.000
2011.12 3.630 0.000 0.000 0.000 3.630 85.380 49.877 1.0 25.25 0.000
SUB-TOT 85.381 0.000 0.000 0.000 85.381 85.380 49.877 1.0 25.25 1.100
AFTER 37.015 0.000 0.000 0.000 37.015 122.395 54.555 1.0 25.25 0.000
TOTAL 122.396 0.000 0.000 0.000 122.396 122.395 54.555 1.0 25.25 1.100
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 54.555 42.128 34.361 29.075 25.243 22.335 20.047 18.199 16.672 15.388
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:44
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
32 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
STATLER #1,2,3 THRU: 2002.12 OIL: 0.000 7.095
PAN WESTERN ENERGY CORP LIFE: 6.00 YRS GAS: 0.000 0.000 *
FITTS (MCALESTER)
12 1N 7E MCALESTER ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 75.0000 75.0000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 75.0000 75.0000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.690 0.000 1.267 0.000 29.729 0.000 29.729 14.700 0.000 14.700
1998.12 1.487 0.000 1.115 0.000 26.161 0.000 26.161 14.700 0.000 14.700
1999.12 1.309 0.000 0.981 0.000 23.022 0.000 23.022 14.700 0.000 14.700
2000.12 1.151 0.000 0.864 0.000 20.259 0.000 20.259 14.700 0.000 14.700
2001.12 1.013 0.000 0.760 0.000 17.828 0.000 17.828 14.700 0.000 14.700
2002.12 0.892 0.000 0.669 0.000 15.689 0.000 15.689 14.700 0.000 14.700
TOTAL 7.542 0.000 5.656 0.000 132.688 0.000 132.688 88.200 0.000 88.200
ULT. 62.732 0.992
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 15.029 0.000 0.000 0.000 15.029 15.029 14.332 3.0 25.25 0.000
1998.12 11.461 0.000 0.000 0.000 11.461 26.490 24.224 3.0 25.25 0.000
1999.12 8.322 0.000 0.000 0.000 8.322 34.812 30.727 3.0 25.25 0.000
2000.12 5.559 0.000 0.000 0.000 5.559 40.371 34.661 3.0 25.25 0.000
2001.12 3.128 0.000 0.000 0.000 3.128 43.499 36.669 3.0 25.25 0.000
2002.12 0.989 0.000 0.000 0.000 0.989 44.488 37.249 3.0 25.25 0.000
TOTAL 44.488 0.000 0.000 0.000 44.488 44.488 37.249 3.0 25.25 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 37.249 34.307 31.726 29.451 27.438 25.648 24.052 22.622 21.336 20.176
</TABLE>
<PAGE>
PEP 3.22 2/07/97 17:34 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 45
SYCAMORE RESOURCES PROVED PRODUCING
1996
<TABLE>
<CAPTION>
31 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
STATLER-MCCARTY # 1 & 2 NHNE THRU: 2021.09 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 24.75 YRS GAS: 0.000 0.000 *
FITTS (BRMD-VIOL)
12 1N 7E BRMD-VIOL ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
PONTOTOC OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 37.5000 28.7109 28.7109
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 37.5000 28.7109 28.7109
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 2.489 0.000 0.715 0.000 17.027 0.000 17.027 2.925 0.000 2.925
1998.12 2.314 0.000 0.664 0.000 15.835 0.000 15.835 2.925 0.000 2.925
1999.12 2.152 0.000 0.618 0.000 14.726 0.000 14.726 2.925 0.000 2.925
2000.12 2.002 0.000 0.575 0.000 13.696 0.000 13.696 2.925 0.000 2.925
2001.12 1.862 0.000 0.534 0.000 12.737 0.000 12.737 2.925 0.000 2.925
2002.12 1.731 0.000 0.497 0.000 11.845 0.000 11.845 2.925 0.000 2.925
2003.12 1.610 0.000 0.462 0.000 11.016 0.000 11.016 2.925 0.000 2.925
2004.12 1.497 0.000 0.430 0.000 10.245 0.000 10.245 2.925 0.000 2.925
2005.12 1.393 0.000 0.400 0.000 9.528 0.000 9.528 2.925 0.000 2.925
2006.12 1.295 0.000 0.372 0.000 8.861 0.000 8.861 2.925 0.000 2.925
2007.12 1.204 0.000 0.346 0.000 8.241 0.000 8.241 2.925 0.000 2.925
SUB-TOT 19.549 0.000 5.613 0.000 133.757 0.000 133.757 32.175 0.000 32.175
AFTER 10.103 0.000 2.900 0.000 69.119 0.000 69.119 40.219 0.000 40.219
TOTAL 29.652 0.000 8.513 0.000 202.876 0.000 202.876 72.394 0.000 72.394
ULT. 212.868 365.255
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 14.102 0.000 0.000 0.000 14.102 14.102 13.429 2.0 25.65 0.000
1998.12 12.910 0.000 0.000 0.000 12.910 27.012 24.554 2.0 25.65 0.000
1999.12 11.801 0.000 0.000 0.000 11.801 38.813 33.755 2.0 25.65 0.000
2000.12 10.771 0.000 0.000 0.000 10.771 49.584 41.354 2.0 25.65 0.000
2001.12 9.812 0.000 0.000 0.000 9.812 59.396 47.618 2.0 25.65 0.000
2002.12 8.920 0.000 0.000 0.000 8.920 68.316 52.771 2.0 25.65 0.000
2003.12 8.091 0.000 0.000 0.000 8.091 76.407 57.000 2.0 25.65 0.000
2004.12 7.320 0.000 0.000 0.000 7.320 83.727 60.462 2.0 25.65 0.000
2005.12 6.603 0.000 0.000 0.000 6.603 90.330 63.288 2.0 25.65 0.000
2006.12 5.936 0.000 0.000 0.000 5.936 96.266 65.586 2.0 25.65 0.000
2007.12 5.316 0.000 0.000 0.000 5.316 101.581 67.449 2.0 25.65 0.000
SUB-TOT 101.582 0.000 0.000 0.000 101.582 101.581 67.449 2.0 25.65 0.000
AFTER 28.900 0.000 0.000 0.000 28.900 130.482 74.071 2.0 25.65 0.000
TOTAL 130.482 0.000 0.000 0.000 130.482 130.482 74.071 2.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 74.071 59.964 50.163 43.027 37.629 33.414 30.039 27.277 24.977 23.033
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:46
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
65 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
STINER #1 THRU: 2004.12 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 8.00 YRS GAS: 0.000 7.095
PARKLAND WEST
29 16N RED FORK ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 96.8750 75.0781 75.0781
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 96.8750 75.0781 75.0781
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 5.095 0.000 3.825 0.000 9.879 9.879 2.906 0.000 2.906
1998.12 0.000 4.331 0.000 3.251 0.000 8.397 8.397 2.906 0.000 2.906
1999.12 0.000 3.681 0.000 2.764 0.000 7.138 7.138 2.906 0.000 2.906
2000.12 0.000 3.129 0.000 2.349 0.000 6.067 6.067 2.906 0.000 2.906
2001.12 0.000 2.660 0.000 1.997 0.000 5.157 5.157 2.906 0.000 2.906
2002.12 0.000 2.261 0.000 1.697 0.000 4.384 4.384 2.906 0.000 2.906
2003.12 0.000 1.922 0.000 1.443 0.000 3.726 3.726 2.906 0.000 2.906
2004.12 0.000 1.633 0.000 1.226 0.000 3.167 3.167 2.906 0.000 2.906
TOTAL 0.000 24.712 0.000 18.552 0.000 47.915 47.915 23.248 0.000 23.248
ULT. 0.115 471.791
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 6.973 0.000 0.000 0.000 6.973 6.973 6.648 1.0 0.00 2.780
1998.12 5.491 0.000 0.000 0.000 5.491 12.464 11.386 1.0 0.00 2.780
1999.12 4.232 0.000 0.000 0.000 4.232 16.696 14.691 1.0 0.00 2.780
2000.12 3.161 0.000 0.000 0.000 3.161 19.857 16.925 1.0 0.00 2.780
2001.12 2.251 0.000 0.000 0.000 2.251 22.108 18.365 1.0 0.00 2.780
2002.12 1.477 0.000 0.000 0.000 1.477 23.585 19.221 1.0 0.00 2.780
2003.12 0.820 0.000 0.000 0.000 0.820 24.405 19.652 1.0 0.00 2.780
2004.12 0.261 0.000 0.000 0.000 0.261 24.666 19.777 1.0 0.00 2.780
TOTAL 24.666 0.000 0.000 0.000 24.666 24.666 19.777 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 19.777 17.900 16.304 14.938 13.761 12.739 11.846 11.062 10.368 9.752
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:47
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
13 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
VANZANT # 1-9 THRU: 2004.11 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 7.92 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
9 1N 10E CROMWELL ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 79.0244 79.0244
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 79.0244 79.0244
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 8.976 0.000 7.093 0.000 20.956 20.956 3.000 0.000 3.000
1998.12 0.000 6.912 0.000 5.462 0.000 16.136 16.136 3.000 0.000 3.000
1999.12 0.000 5.322 0.000 4.206 0.000 12.425 12.425 3.000 0.000 3.000
2000.12 0.000 4.098 0.000 3.238 0.000 9.567 9.567 3.000 0.000 3.000
2001.12 0.000 3.155 0.000 2.494 0.000 7.367 7.367 3.000 0.000 3.000
2002.12 0.000 2.430 0.000 1.920 0.000 5.672 5.672 3.000 0.000 3.000
2003.12 0.000 1.871 0.000 1.478 0.000 4.368 4.368 3.000 0.000 3.000
2004.11 0.000 1.334 0.000 1.054 0.000 3.115 3.115 2.750 0.000 2.750
TOTAL 0.000 34.098 0.000 26.945 0.000 79.606 79.606 23.750 0.000 23.750
ULT. 0.000 101.387
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 17.956 0.000 0.000 0.000 17.956 17.956 17.131 1.0 0.00 3.180
1998.12 13.136 0.000 0.000 0.000 13.136 31.092 28.472 1.0 0.00 3.180
1999.12 9.425 0.000 0.000 0.000 9.425 40.517 35.836 1.0 0.00 3.180
2000.12 6.567 0.000 0.000 0.000 6.567 47.084 40.480 1.0 0.00 3.180
2001.12 4.367 0.000 0.000 0.000 4.367 51.451 43.276 1.0 0.00 3.180
2002.12 2.672 0.000 0.000 0.000 2.672 54.124 44.825 1.0 0.00 3.180
2003.12 1.368 0.000 0.000 0.000 1.368 55.491 45.545 1.0 0.00 3.180
2004.11 0.365 0.000 0.000 0.000 0.365 55.857 45.721 1.0 0.00 3.180
TOTAL 55.856 0.000 0.000 0.000 55.856 55.857 45.721 1.0 0.00 3.180
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 45.721 41.758 38.355 35.412 32.851 30.606 28.628 26.875 25.313 23.914
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:48
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
25 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
VITOSCH THRU: 2021.06 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 24.50 YRS GAS: 0.000 7.095
COALGATE SW (WAPANUCKA)
28 1N 10E WAPANUCKA ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 89.2188 68.7429 68.7429
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 89.2188 68.7429 68.7429
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 13.570 0.000 9.328 0.000 25.740 25.740 2.677 0.000 2.677
1998.12 0.000 12.349 0.000 8.489 0.000 23.423 23.423 2.677 0.000 2.677
1999.12 0.000 11.237 0.000 7.725 0.000 21.315 21.315 2.677 0.000 2.677
2000.12 0.000 10.226 0.000 7.030 0.000 19.397 19.397 2.677 0.000 2.677
2001.12 0.000 9.306 0.000 6.397 0.000 17.651 17.651 2.677 0.000 2.677
2002.12 0.000 8.468 0.000 5.821 0.000 16.063 16.063 2.677 0.000 2.677
2003.12 0.000 7.706 0.000 5.297 0.000 14.617 14.617 2.677 0.000 2.677
2004.12 0.000 7.013 0.000 4.821 0.000 13.301 13.301 2.677 0.000 2.677
2005.12 0.000 6.381 0.000 4.387 0.000 12.104 12.104 2.677 0.000 2.677
2006.12 0.000 5.807 0.000 3.992 0.000 11.015 11.015 2.677 0.000 2.677
2007.12 0.000 5.284 0.000 3.633 0.000 10.024 10.024 2.677 0.000 2.677
2008.12 0.000 4.809 0.000 3.306 0.000 9.121 9.121 2.677 0.000 2.677
2009.12 0.000 4.376 0.000 3.008 0.000 8.300 8.300 2.677 0.000 2.677
2010.12 0.000 3.982 0.000 2.737 0.000 7.553 7.553 2.677 0.000 2.677
2011.12 0.000 3.624 0.000 2.491 0.000 6.874 6.874 2.677 0.000 2.677
SUB-TOT 0.000 114.138 0.000 78.462 0.000 216.498 216.498 40.155 0.000 40.155
AFTER 0.000 21.684 0.000 14.906 0.000 41.130 41.130 25.421 0.000 25.421
TOTAL 0.000 135.822 0.000 93.368 0.000 257.628 257.628 65.576 0.000 65.576
ULT. 0.000 375.912
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 23.063 0.000 0.000 0.000 23.063 23.063 21.967 1.0 0.00 2.970
1998.12 20.747 0.000 0.000 0.000 20.747 43.810 39.847 1.0 0.00 2.970
1999.12 18.639 0.000 0.000 0.000 18.639 62.449 54.381 1.0 0.00 2.970
2000.12 16.720 0.000 0.000 0.000 16.720 79.169 66.180 1.0 0.00 2.970
2001.12 14.975 0.000 0.000 0.000 14.975 94.144 75.741 1.0 0.00 2.970
2002.12 13.386 0.000 0.000 0.000 13.386 107.530 83.474 1.0 0.00 2.970
2003.12 11.940 0.000 0.000 0.000 11.940 119.470 89.716 1.0 0.00 2.970
2004.12 10.625 0.000 0.000 0.000 10.625 130.095 94.742 1.0 0.00 2.970
2005.12 9.428 0.000 0.000 0.000 9.428 139.522 98.777 1.0 0.00 2.970
2006.12 8.338 0.000 0.000 0.000 8.338 147.861 102.006 1.0 0.00 2.970
2007.12 7.347 0.000 0.000 0.000 7.347 155.208 104.581 1.0 0.00 2.970
2008.12 6.445 0.000 0.000 0.000 6.445 161.652 106.625 1.0 0.00 2.970
2009.12 5.624 0.000 0.000 0.000 5.624 167.276 108.239 1.0 0.00 2.970
2010.12 4.877 0.000 0.000 0.000 4.877 172.153 109.505 1.0 0.00 2.970
2011.12 4.197 0.000 0.000 0.000 4.197 176.350 110.491 1.0 0.00 2.970
SUB-TOT 176.351 0.000 0.000 0.000 176.351 176.350 110.491 1.0 0.00 2.970
AFTER 15.701 0.000 0.000 0.000 15.701 192.052 113.167 1.0 0.00 2.970
TOTAL 192.052 0.000 0.000 0.000 192.052 192.052 113.167 1.0 0.00 2.970
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 113.167 92.733 78.294 67.636 59.482 53.057 47.872 43.602 40.028 36.992
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:49
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
52 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
VONFELDT 3,6,9 THRU: 2002.06 OIL: 0.000 8.000
PAN WESTERN ENERGY CORP LIFE: 5.50 YRS GAS: 0.000 0.000 *
KRAUS
9 14S 19W ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
ELLIS KS PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 82.0313 82.0313
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 82.0313 82.0313
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 2.071 0.000 1.699 0.000 39.468 0.000 39.468 17.400 0.000 17.400
1998.12 1.760 0.000 1.444 0.000 33.548 0.000 33.548 17.400 0.000 17.400
1999.12 1.496 0.000 1.228 0.000 28.516 0.000 28.516 17.400 0.000 17.400
2000.12 1.272 0.000 1.043 0.000 24.238 0.000 24.238 17.400 0.000 17.400
2001.12 1.081 0.000 0.887 0.000 20.603 0.000 20.603 17.400 0.000 17.400
2002.06 0.478 0.000 0.392 0.000 9.112 0.000 9.112 8.700 0.000 8.700
TOTAL 8.158 0.000 6.693 0.000 155.485 0.000 155.485 95.700 0.000 95.700
ULT. 315.089 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 22.068 0.000 0.000 0.000 22.068 22.068 21.051 3.0 25.25 0.000
1998.12 16.148 0.000 0.000 0.000 16.148 38.216 34.994 3.0 25.25 0.000
1999.12 11.116 0.000 0.000 0.000 11.116 49.332 43.684 3.0 25.25 0.000
2000.12 6.838 0.000 0.000 0.000 6.838 56.170 48.528 3.0 25.25 0.000
2001.12 3.203 0.000 0.000 0.000 3.203 59.372 50.589 3.0 25.25 0.000
2002.06 0.412 0.000 0.000 0.000 0.412 59.784 50.834 3.0 25.25 0.000
TOTAL 59.785 0.000 0.000 0.000 59.785 59.784 50.834 3.0 25.25 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 50.834 47.134 43.853 40.934 38.327 35.990 33.889 31.993 30.276 28.717
</TABLE>
<PAGE>
PEP 3.23 2/02/97 17:34 PAN WESTERN ENERGY CORP 1996 PAN96 Page:50
SYCAMORE RESOURCES PROVED PRODUCING 1996
1996
<TABLE>
<CAPTION>
34 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS UNIT THRU: 2014.09 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 17.75 YRS GAS: 0.000 7.500
FLOWERS WEST(CANYON)
111787 7B CANYON ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 100.0000 87.5000 87.5000
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 22.903 7.753 20.040 6.784 480.828 22.339 503.167 96.000 0.000 96.000
1998.12 20.842 6.590 18.237 5.766 437.553 18.989 456.542 96.000 0.000 96.000
1999.12 18.966 5.602 16.595 4.901 398.173 16.140 414.314 96.000 0.000 96.000
2000.12 17.259 4.761 15.102 4.166 362.338 13.719 376.057 96.000 0.000 96.000
2001.12 15.706 4.047 13.743 3.541 329.727 11.661 341.389 96.000 0.000 96.000
2002.12 14.292 3.440 12.506 3.010 300.052 9.912 309.964 96.000 0.000 96.000
2003.12 13.006 2.924 11.380 2.559 273.047 8.425 281.473 96.000 0.000 96.000
2004.12 11.835 2.485 10.356 2.175 248.473 7.162 255.635 96.000 0.000 96.000
2005.12 10.770 2.113 9.424 1.849 226.110 6.087 232.198 96.000 0.000 96.000
2006.12 9.801 1.796 8.576 1.571 205.761 5.174 210.935 96.000 0.000 96.000
2007.12 8.919 1.526 7.804 1.336 187.242 4.398 191.640 96.000 0.000 96.000
SUB-TOT 164.299 43.037 143.763 37.658 3449.304 124.006 3573.314 1056.000 0.000 1056.000
AFTER 42.467 5.762 37.157 5.041 891.540 16.603 908.144 648.000 0.000 648.000
TOTAL 206.766 48.799 180.920 42.699 4340.844 140.609 4481.458 1704.000 0.000 1704.000
ULT. 2115.440 771.128
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 407.167 0.000 0.000 0.000 407.167 407.167 387.855 12.0 25.15 3.560
1998.12 360.542 0.000 0.000 0.000 360.542 767.709 698.621 12.0 25.15 3.560
1999.12 318.314 0.000 0.000 0.000 318.314 1086.023 946.885 12.0 25.15 3.560
2000.12 280.057 0.000 0.000 0.000 280.057 1366.080 1144.532 12.0 25.15 3.560
2001.12 245.389 0.000 0.000 0.000 245.389 1611.469 1301.238 12.0 25.15 3.560
2002.12 213.964 0.000 0.000 0.000 213.964 1825.433 1424.878 12.0 25.15 3.560
2003.12 185.473 0.000 0.000 0.000 185.473 2010.905 1521.861 12.0 25.15 3.560
2004.12 159.635 0.000 0.000 0.000 159.635 2170.540 1597.394 12.0 25.15 3.560
2005.12 136.198 0.000 0.000 0.000 136.198 2306.738 1655.710 12.0 25.15 3.560
2006.12 114.935 0.000 0.000 0.000 114.935 2421.672 1700.244 12.0 25.15 3.560
2007.12 95.640 0.000 0.000 0.000 95.640 2517.313 1733.778 12.0 25.15 3.560
SUB-TOT 2517.314 0.000 0.000 0.000 2517.314 2517.313 1733.778 12.0 25.15 3.560
AFTER 260.140 0.000 0.000 0.000 260.140 2777.453 1804.662 12.0 25.15 3.560
TOTAL 2777.454 0.000 0.000 0.000 2777.454 2777.453 1804.662 12.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 1804.662 1517.157 1303.184 1139.270 1010.478 907.024 822.318 751.807 692.265 641.355
</TABLE>
<PAGE>
PEP 3.23 2/02/97 14:12 PAN WESTERN ENERGY CORP 1996 PAN96 Page:51
SYCAMORE RESOURCES PROVED PRODUCING 1996
<TABLE>
<CAPTION>
79 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
YOUNG # 1 THRU: 2009.07 OIL: 0.000 0.000 *
PAN WESTERN ENERGY CORP LIFE: 12.58 YRS GAS: 0.000 7.095
STROUD (TUCKER)
23 15N 5E TUCKER ROR: 99.9 UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LINCOLN OK PRI: GAS PAYOUT (YRS) 0.08 0.08 INITIAL 50.0000 41.6667 41.6667
PRODUCING ACT NET INC./INV: 0.00 0.00 AT 1997.01 50.0000 41.6667 41.6667
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 5.000 0.000 2.083 0.000 5.381 5.381 1.500 0.000 1.500
1998.12 0.000 4.500 0.000 1.875 0.000 4.843 4.843 1.500 0.000 1.500
1999.12 0.000 4.050 0.000 1.688 0.000 4.358 4.358 1.500 0.000 1.500
2000.12 0.000 3.645 0.000 1.519 0.000 3.923 3.923 1.500 0.000 1.500
2001.12 0.000 3.281 0.000 1.367 0.000 3.530 3.530 1.500 0.000 1.500
2002.12 0.000 2.952 0.000 1.230 0.000 3.177 3.177 1.500 0.000 1.500
2003.12 0.000 2.657 0.000 1.107 0.000 2.860 2.860 1.500 0.000 1.500
2004.12 0.000 2.391 0.000 0.996 0.000 2.574 2.574 1.500 0.000 1.500
2005.12 0.000 2.152 0.000 0.897 0.000 2.316 2.316 1.500 0.000 1.500
2006.12 0.000 1.937 0.000 0.807 0.000 2.085 2.085 1.500 0.000 1.500
2007.12 0.000 1.743 0.000 0.726 0.000 1.876 1.876 1.500 0.000 1.500
2008.12 0.000 1.569 0.000 0.654 0.000 1.689 1.689 1.500 0.000 1.500
2009.07 0.000 0.842 0.000 0.351 0.000 0.906 0.906 0.875 0.000 0.875
TOTAL 0.000 36.719 0.000 15.300 0.000 39.518 39.518 18.875 0.000 18.875
ULT. 0.000 108.810
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 3.881 0.000 0.000 0.000 3.881 3.881 3.697 1.0 0.00 2.780
1998.12 3.343 0.000 0.000 0.000 3.343 7.223 6.579 1.0 0.00 2.780
1999.12 2.858 0.000 0.000 0.000 2.858 10.082 8.809 1.0 0.00 2.780
2000.12 2.423 0.000 0.000 0.000 2.423 12.504 10.520 1.0 0.00 2.780
2001.12 2.030 0.000 0.000 0.000 2.030 14.535 11.817 1.0 0.00 2.780
2002.12 1.677 0.000 0.000 0.000 1.677 16.212 12.786 1.0 0.00 2.780
2003.12 1.360 0.000 0.000 0.000 1.360 17.572 13.498 1.0 0.00 2.780
2004.12 1.074 0.000 0.000 0.000 1.074 18.645 14.006 1.0 0.00 2.780
2005.12 0.816 0.000 0.000 0.000 0.816 19.461 14.356 1.0 0.00 2.780
2006.12 0.585 0.000 0.000 0.000 0.585 20.046 14.583 1.0 0.00 2.780
2007.12 0.376 0.000 0.000 0.000 0.376 20.422 14.715 1.0 0.00 2.780
2008.12 0.189 0.000 0.000 0.000 0.189 20.611 14.775 1.0 0.00 2.780
2009.07 0.031 0.000 0.000 0.000 0.031 20.642 14.785 1.0 0.00 2.780
TOTAL 20.643 0.000 0.000 0.000 20.643 20.642 14.785 1.0 0.00 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 14.785 12.822 11.273 10.029 9.015 8.176 7.473 6.876 6.365 5.923
</TABLE>
<PAGE>
PROVED NONPRODUCING
<PAGE>
PEP 3.22 2/07/97 19:02 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 1
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN5 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BAKER TJ #9 & 10 THRU: 2003.07 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 6.58 YRS GAS: 0.000 0.000 *
BOWLEGS
INSTALL PMP UNITS VIOLA WILCOX ROR: 99.9 PAYOUT: 0.62
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
SEMINOLE OK PRI: OIL PAYOUT (YRS) 0.62 0.64 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 4.33 3.63 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 7.120 0.000 6.230 0.000 148.457 0.000 148.457 34.200 0.000 34.200
1998.12 5.589 0.000 4.890 0.000 116.539 0.000 116.539 34.200 0.000 34.200
1999.12 4.387 0.000 3.839 0.000 91.483 0.000 91.483 34.200 0.000 34.200
2000.12 3.444 0.000 3.014 0.000 71.814 0.000 71.814 34.200 0.000 34.200
2001.12 2.704 0.000 2.366 0.000 56.374 0.000 56.374 34.200 0.000 34.200
2002.12 2.122 0.000 1.857 0.000 44.254 0.000 44.254 34.200 0.000 34.200
2003.07 1.020 0.000 0.893 0.000 21.278 0.000 21.278 19.950 0.000 19.950
TOTAL 26.386 0.000 23.089 0.000 550.199 0.000 550.199 225.150 0.000 225.150
ULT. 26.445 0.000
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 114.257 75.000 0.000 0.000 39.257 39.257 34.013 2.0 25.65 0.000
1998.12 82.339 0.000 0.000 0.000 82.339 121.596 105.113 2.0 25.65 0.000
1999.12 57.283 0.000 0.000 0.000 57.283 178.879 149.886 2.0 25.65 0.000
2000.12 37.614 0.000 0.000 0.000 37.614 216.494 176.505 2.0 25.65 0.000
2001.12 22.174 0.000 0.000 0.000 22.174 238.668 190.721 2.0 25.65 0.000
2002.12 10.054 0.000 0.000 0.000 10.054 248.722 196.575 2.0 25.65 0.000
2003.07 1.328 0.000 0.000 0.000 1.328 250.050 197.291 2.0 25.65 0.000
TOTAL 325.049 75.000 0.000 0.000 250.049 250.050 197.291 2.0 25.65 0.000
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 197.291 175.980 157.335 140.943 126.462 113.609 102.149 91.889 82.663 74.335
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:02 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 2
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN21 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BATTLES WJ 1 THRU: 2008.06 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY LIFE: 11.50 YRS GAS: 0.000 7.095
CENTRAHOMA
19 1N 10E CROMWELL ROR: 74.7 PAYOUT: 1.20
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 1.20 1.28 INITIAL 98.4375 76.2940 76.2940
NONPRODUCING ACT NET INC./INV: 3.40 2.60 AT 1997.01 98.4375 76.2940 76.2940
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 32.267 0.000 24.618 0.000 69.071 69.071 5.906 0.000 5.906
1998.12 0.000 25.814 0.000 19.694 0.000 55.257 55.257 5.906 0.000 5.906
1999.12 0.000 20.651 0.000 15.755 0.000 44.206 44.206 5.906 0.000 5.906
2000.12 0.000 16.521 0.000 12.604 0.000 35.364 35.364 5.906 0.000 5.906
2001.12 0.000 13.217 0.000 10.083 0.000 28.292 28.292 5.906 0.000 5.906
2002.12 0.000 10.573 0.000 8.067 0.000 22.633 22.633 5.906 0.000 5.906
2003.12 0.000 8.459 0.000 6.453 0.000 18.107 18.107 5.906 0.000 5.906
2004.12 0.000 6.767 0.000 5.163 0.000 14.485 14.485 5.906 0.000 5.906
2005.12 0.000 5.414 0.000 4.130 0.000 11.588 11.588 5.906 0.000 5.906
2006.12 0.000 4.331 0.000 3.304 0.000 9.271 9.271 5.906 0.000 5.906
2007.12 0.000 3.465 0.000 2.643 0.000 7.416 7.416 5.906 0.000 5.906
SUB-TOT 0.000 147.479 0.000 112.514 0.000 315.690 315.690 64.966 0.000 64.966
AFTER 0.000 1.461 0.000 1.118 0.000 3.132 3.132 2.956 0.000 2.956
TOTAL 0.000 148.940 0.000 113.632 0.000 318.822 318.822 67.922 0.000 67.922
ULT. 0.000 148.940
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 63.165 73.828 0.000 0.000 -10.663 -10.663 -13.598 1.0 0.00 3.020
1998.12 49.351 0.000 0.000 0.000 49.351 38.688 28.984 1.0 0.00 3.020
1999.12 38.299 0.000 0.000 0.000 38.299 76.987 58.888 1.0 0.00 3.020
2000.12 29.458 0.000 0.000 0.000 29.458 106.445 79.701 1.0 0.00 3.020
2001.12 22.385 0.000 0.000 0.000 22.385 128.830 94.014 1.0 0.00 3.020
2002.12 16.727 0.000 0.000 0.000 16.727 145.557 103.693 1.0 0.00 3.020
2003.12 12.200 0.000 0.000 0.000 12.200 157.758 110.082 1.0 0.00 3.020
2004.12 8.579 0.000 0.000 0.000 8.579 166.337 114.149 1.0 0.00 3.020
2005.12 5.682 0.000 0.000 0.000 5.682 172.019 116.587 1.0 0.00 3.020
2006.12 3.364 0.000 0.000 0.000 3.364 175.383 117.896 1.0 0.00 3.020
2007.12 1.510 0.000 0.000 0.000 1.510 176.893 118.429 1.0 0.00 3.020
SUB-TOT 250.720 73.828 0.000 0.000 176.892 176.893 118.429 1.0 0.00 3.020
AFTER 0.180 0.000 0.000 0.000 0.180 177.072 118.488 1.0 0.00 3.020
TOTAL 250.900 73.828 0.000 0.000 177.072 177.072 118.488 1.0 0.00 3.020
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 118.488 97.506 80.315 66.042 54.050 43.862 35.117 27.542 20.925 15.100
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:02 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 3
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN15 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CODY BOB THRU: 2012.01 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 15.08 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
INSTALL PMP UNIT CROMWELL ROR: 99.9 PAYOUT: 0.59
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.59 0.61 INITIAL 78.9200 60.4933 60.4933
NONPRODUCING ACT NET INC./INV: 11.43 7.37 AT 1997.01 78.9200 60.4933 60.4933
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.058 22.259 0.640 13.465 15.255 39.780 55.036 9.470 0.000 9.470
1998.12 1.016 19.588 0.615 11.849 14.645 35.007 49.652 9.470 0.000 9.470
1999.12 0.975 17.238 0.590 10.428 14.059 30.806 44.865 9.470 0.000 9.470
2000.12 0.936 15.169 0.566 9.176 13.497 27.109 40.606 9.470 0.000 9.470
2001.12 0.899 13.349 0.544 8.075 12.957 23.856 36.813 9.470 0.000 9.470
2002.12 0.863 11.747 0.522 7.106 12.439 20.993 33.432 9.470 0.000 9.470
2003.12 0.828 10.337 0.501 6.253 11.941 18.474 30.415 9.470 0.000 9.470
2004.12 0.795 9.097 0.481 5.503 11.464 16.257 27.721 9.470 0.000 9.470
2005.12 0.763 8.005 0.462 4.843 11.005 14.306 25.311 9.470 0.000 9.470
2006.12 0.733 7.045 0.443 4.261 10.565 12.590 23.155 9.470 0.000 9.470
2007.12 0.704 6.199 0.426 3.750 10.142 11.079 21.221 9.470 0.000 9.470
SUB-TOT 9.570 140.033 5.790 84.709 137.969 250.257 388.227 104.170 0.000 104.170
AFTER 2.593 18.486 1.568 11.185 37.374 33.040 70.414 38.675 0.000 38.675
TOTAL 12.163 158.519 7.358 95.894 175.343 283.297 458.641 142.845 0.000 142.845
ULT. 12.164 158.544
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 45.565 27.622 0.000 0.000 17.943 17.943 15.784 1.0 25.65 3.180
1998.12 40.182 0.000 0.000 0.000 40.182 58.125 50.419 1.0 25.65 3.180
1999.12 35.395 0.000 0.000 0.000 35.395 93.520 78.025 1.0 25.65 3.180
2000.12 31.136 0.000 0.000 0.000 31.136 124.656 99.999 1.0 25.65 3.180
2001.12 27.343 0.000 0.000 0.000 27.343 151.998 117.459 1.0 25.65 3.180
2002.12 23.962 0.000 0.000 0.000 23.962 175.960 131.305 1.0 25.65 3.180
2003.12 20.945 0.000 0.000 0.000 20.945 196.905 142.256 1.0 25.65 3.180
2004.12 18.250 0.000 0.000 0.000 18.250 215.156 150.891 1.0 25.65 3.180
2005.12 15.841 0.000 0.000 0.000 15.841 230.997 157.672 1.0 25.65 3.180
2006.12 13.684 0.000 0.000 0.000 13.684 244.681 162.973 1.0 25.65 3.180
2007.12 11.751 0.000 0.000 0.000 11.751 256.432 167.092 1.0 25.65 3.180
SUB-TOT 284.054 27.622 0.000 0.000 256.432 256.432 167.092 1.0 25.65 3.180
AFTER 31.741 0.000 0.000 0.000 31.741 288.173 175.984 1.0 25.65 3.180
TOTAL 315.795 27.622 0.000 0.000 288.173 288.173 175.984 1.0 25.65 3.180
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 175.984 143.030 118.623 100.015 85.454 73.798 64.281 56.375 49.710 44.018
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:02 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 4
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN9 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
LANOY LEON THRU: 2008.08 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 11.67 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
INSTALL PMP UNIT WAPANUKA ROR: 99.9 PAYOUT: 0.80
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.80 0.83 INITIAL 49.1379 39.5887 39.5887
NONPRODUCING ACT NET INC./INV: 5.52 4.13 AT 1997.01 49.1379 39.5887 39.5887
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 26.261 0.000 10.396 0.000 28.879 28.879 4.717 0.000 4.717
1998.12 0.000 22.322 0.000 8.837 0.000 24.547 24.547 4.717 0.000 4.717
1999.12 0.000 18.973 0.000 7.511 0.000 20.865 20.865 4.717 0.000 4.717
2000.12 0.000 16.127 0.000 6.385 0.000 17.736 17.736 4.717 0.000 4.717
2001.12 0.000 13.708 0.000 5.427 0.000 15.075 15.075 4.717 0.000 4.717
2002.12 0.000 11.652 0.000 4.613 0.000 12.814 12.814 4.717 0.000 4.717
2003.12 0.000 9.904 0.000 3.921 0.000 10.892 10.892 4.717 0.000 4.717
2004.12 0.000 8.419 0.000 3.333 0.000 9.258 9.258 4.717 0.000 4.717
2005.12 0.000 7.156 0.000 2.833 0.000 7.869 7.869 4.717 0.000 4.717
2006.12 0.000 6.082 0.000 2.408 0.000 6.689 6.689 4.717 0.000 4.717
2007.12 0.000 5.170 0.000 2.047 0.000 5.686 5.686 4.717 0.000 4.717
SUB-TOT 0.000 145.774 0.000 57.711 0.000 160.310 160.310 51.887 0.000 51.887
AFTER 0.000 3.009 0.000 1.190 0.000 3.309 3.309 3.148 0.000 3.148
TOTAL 0.000 148.783 0.000 58.901 0.000 163.619 163.619 55.035 0.000 55.035
ULT. 0.000 148.788
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 24.162 19.655 0.000 0.000 4.507 4.507 3.375 1.0 0.00 2.990
1998.12 19.830 0.000 0.000 0.000 19.830 24.337 20.479 1.0 0.00 2.990
1999.12 16.148 0.000 0.000 0.000 16.148 40.485 33.082 1.0 0.00 2.990
2000.12 13.018 0.000 0.000 0.000 13.018 53.504 42.276 1.0 0.00 2.990
2001.12 10.358 0.000 0.000 0.000 10.358 63.862 48.896 1.0 0.00 2.990
2002.12 8.097 0.000 0.000 0.000 8.097 71.958 53.580 1.0 0.00 2.990
2003.12 6.175 0.000 0.000 0.000 6.175 78.133 56.812 1.0 0.00 2.990
2004.12 4.541 0.000 0.000 0.000 4.541 82.674 58.964 1.0 0.00 2.990
2005.12 3.152 0.000 0.000 0.000 3.152 85.826 60.316 1.0 0.00 2.990
2006.12 1.972 0.000 0.000 0.000 1.972 87.798 61.082 1.0 0.00 2.990
2007.12 0.968 0.000 0.000 0.000 0.968 88.766 61.424 1.0 0.00 2.990
SUB-TOT 108.421 19.655 0.000 0.000 88.766 88.766 61.424 1.0 0.00 2.990
AFTER 0.164 0.000 0.000 0.000 0.163 88.929 61.477 1.0 0.00 2.990
TOTAL 108.585 19.655 0.000 0.000 88.929 88.929 61.477 1.0 0.00 2.990
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 61.477 51.868 44.098 37.728 32.436 27.987 24.204 20.956 18.141 15.680
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:02 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 5
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN14 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER REGINA 2-18 THRU: 2003.01 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY LIFE: 6.08 YRS GAS: 0.000 7.095
CENTRAHOMA
17 1N 10E CROMWELL ROR: 99.9 PAYOUT: 0.18
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.18 0.19 INITIAL 82.2544 61.6910 61.6910
NONPRODUCING ACT NET INC./INV: 16.87 13.68 AT 1997.01 82.2544 61.6910 61.6910
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 26.889 0.000 16.588 0.000 45.463 45.463 4.935 0.000 4.935
1998.12 0.000 21.511 0.000 13.271 0.000 36.371 36.371 4.935 0.000 4.935
1999.12 0.000 17.209 0.000 10.616 0.000 29.097 29.097 4.935 0.000 4.935
2000.12 0.000 13.767 0.000 8.493 0.000 23.277 23.277 4.935 0.000 4.935
2001.12 0.000 11.014 0.000 6.795 0.000 18.622 18.622 4.935 0.000 4.935
2002.12 0.000 8.811 0.000 5.436 0.000 14.897 14.897 4.935 0.000 4.935
2003.01 0.000 0.649 0.000 0.401 0.000 1.098 1.098 0.411 0.000 0.411
TOTAL 0.000 99.850 0.000 61.600 0.000 168.825 168.825 30.021 0.000 30.021
ULT. 0.000 99.851
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 40.528 8.225 0.000 0.000 32.303 32.303 30.422 0.0 0.00 2.950
1998.12 31.435 0.000 0.000 0.000 31.435 63.738 57.548 0.0 0.00 2.950
1999.12 24.161 0.000 0.000 0.000 24.161 87.900 76.414 0.0 0.00 2.950
2000.12 18.342 0.000 0.000 0.000 18.342 106.242 89.375 0.0 0.00 2.950
2001.12 13.687 0.000 0.000 0.000 13.687 119.928 98.128 0.0 0.00 2.950
2002.12 9.962 0.000 0.000 0.000 9.962 129.890 103.894 0.0 0.00 2.950
2003.01 0.687 0.000 0.000 0.000 0.687 130.577 104.269 0.0 0.00 2.950
TOTAL 138.802 8.225 0.000 0.000 130.577 130.577 104.269 0.0 0.00 2.950
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 104.269 93.974 85.142 77.521 70.909 65.138 60.075 55.609 51.649 48.121
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 6
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN8 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCKINNEY NE/4 THRU: 2012.01 OIL: 0.000 7.095 Tier 2
PAN WESTERN ENERGY CORP LIFE: 15.08 YRS GAS: 0.000 7.095
CENTRAHOMA (CROMWELL)
WORKOVER CROMWELL ROR: 99.9 PAYOUT: 0.34
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.34 0.34 INITIAL 44.5313 36.5770 36.5770
NONPRODUCING ACT NET INC./INV: 15.14 10.63 AT 1997.01 44.5313 36.5770 36.5770
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 1.699 25.253 0.621 9.237 14.810 28.147 42.957 5.344 0.000 5.344
1998.12 1.512 21.465 0.553 7.851 13.181 23.925 37.106 5.344 0.000 5.344
1999.12 1.346 18.245 0.492 6.674 11.731 20.336 32.067 5.344 0.000 5.344
2000.12 1.198 15.508 0.438 5.673 10.440 17.286 27.726 5.344 0.000 5.344
2001.12 1.066 13.182 0.390 4.822 9.292 14.693 23.985 5.344 0.000 5.344
2002.12 0.949 11.205 0.347 4.098 8.270 12.489 20.759 5.344 0.000 5.344
2003.12 0.844 9.524 0.309 3.484 7.360 10.616 17.976 5.344 0.000 5.344
2004.12 0.752 8.095 0.275 2.961 6.551 9.023 15.574 5.344 0.000 5.344
2005.12 0.669 6.881 0.245 2.517 5.830 7.670 13.500 5.344 0.000 5.344
2006.12 0.595 5.849 0.218 2.139 5.189 6.519 11.708 5.344 0.000 5.344
2007.12 0.530 4.972 0.194 1.818 4.618 5.541 10.159 5.344 0.000 5.344
SUB-TOT 11.160 140.179 4.082 51.274 97.272 156.245 253.517 58.784 0.000 58.784
AFTER 1.623 13.665 0.594 4.997 14.147 15.230 29.377 21.818 0.000 21.818
TOTAL 12.783 153.844 4.676 56.271 111.419 171.475 282.894 80.602 0.000 80.602
ULT. 12.796 153.875
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 37.613 13.359 0.000 0.000 24.254 24.254 22.484 1.0 25.65 3.280
1998.12 31.762 0.000 0.000 0.000 31.762 56.016 49.871 1.0 25.65 3.280
1999.12 26.723 0.000 0.000 0.000 26.723 82.739 70.722 1.0 25.65 3.280
2000.12 22.382 0.000 0.000 0.000 22.382 105.121 86.525 1.0 25.65 3.280
2001.12 18.641 0.000 0.000 0.000 18.641 123.762 98.434 1.0 25.65 3.280
2002.12 15.415 0.000 0.000 0.000 15.415 139.178 107.346 1.0 25.65 3.280
2003.12 12.632 0.000 0.000 0.000 12.632 151.810 113.954 1.0 25.65 3.280
2004.12 10.230 0.000 0.000 0.000 10.230 162.040 118.797 1.0 25.65 3.280
2005.12 8.156 0.000 0.000 0.000 8.156 170.196 122.292 1.0 25.65 3.280
2006.12 6.364 0.000 0.000 0.000 6.364 176.560 124.759 1.0 25.65 3.280
2007.12 4.816 0.000 0.000 0.000 4.816 181.376 126.449 1.0 25.65 3.280
SUB-TOT 194.734 13.359 0.000 0.000 181.375 181.376 126.449 1.0 25.65 3.280
AFTER 7.558 0.000 0.000 0.000 7.558 188.933 128.671 1.0 25.65 3.280
TOTAL 202.292 13.359 0.000 0.000 188.933 188.933 128.671 1.0 25.65 3.280
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 128.671 109.236 94.143 82.169 72.486 64.522 57.871 52.244 47.425 43.257
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:31 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 7
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN84 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
NORTHWEST ANTELOPE MISS SU THRU: 2009.11 OIL: 0.000 7.095 Tier 2
PANWESTERN LIFE: 12.92 YRS GAS: 0.000 7.095
ANTELOPE NW
6 22N 2W MISS. CHAT ROR: 99.9 PAYOUT: 0.08
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
NOBLE OK PRI: OIL PAYOUT (YRS) 0.08 0.08 INITIAL 97.9754 78.9843 78.9843
NONPRODUCING ACT NET INC./INV: 14.70 10.31 AT 1997.01 97.9754 78.9843 78.9843
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 5.126 53.808 4.049 42.500 96.108 109.768 205.876 105.813 0.000 105.813
1998.12 20.035 51.118 15.824 40.375 375.622 104.279 479.902 105.813 0.000 105.813
1999.12 44.908 48.562 35.470 38.356 841.966 99.065 941.031 105.813 0.000 105.813
2000.12 51.453 46.134 40.640 36.439 964.681 94.112 1058.792 141.085 0.000 141.085
2001.12 46.154 43.827 36.454 34.617 865.319 89.406 954.725 141.085 0.000 141.085
2002.12 41.400 41.636 32.699 32.886 776.191 84.936 861.127 141.085 0.000 141.085
2003.12 37.136 39.554 29.331 31.241 696.243 80.689 776.932 141.085 0.000 141.085
2004.12 33.311 37.576 26.310 29.679 624.530 76.655 701.185 141.085 0.000 141.085
2005.12 29.880 35.698 23.600 28.195 560.203 72.822 633.025 141.085 0.000 141.085
2006.12 26.802 33.913 21.169 26.786 502.502 69.181 571.683 141.085 0.000 141.085
2007.12 24.041 32.217 18.989 25.446 450.745 65.722 516.467 141.085 0.000 141.085
SUB-TOT 360.246 464.043 284.535 366.520 6754.110 946.635 7700.745 1446.119 0.000 1446.119
AFTER 39.375 57.315 31.103 45.271 738.253 116.922 855.175 270.411 0.000 270.411
TOTAL 399.621 521.358 315.638 411.791 7492.364 1063.557 8555.920 1716.530 0.000 1716.530
ULT. 399.621 521.358
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 100.062 0.000 0.000 0.000 100.062 100.062 94.267 0.0 25.55 2.780
1998.12 374.088 0.000 0.000 0.000 374.088 474.151 412.888 0.0 25.55 2.780
1999.12 835.218 391.902 73.482 0.000 369.835 843.985 680.510 0.0 25.55 2.780
2000.12 917.708 0.000 0.000 0.000 917.708 1761.693 1328.115 0.0 25.55 2.780
2001.12 813.640 0.000 0.000 0.000 813.640 2575.333 1847.650 0.0 25.55 2.780
2002.12 720.042 0.000 0.000 0.000 720.042 3295.375 2263.674 0.0 25.55 2.780
2003.12 635.848 0.000 0.000 0.000 635.848 3931.223 2596.098 0.0 25.55 2.780
2004.12 560.100 0.000 0.000 0.000 560.100 4491.323 2861.061 0.0 25.55 2.780
2005.12 491.941 0.000 0.000 0.000 491.941 4983.264 3071.640 0.0 25.55 2.780
2006.12 430.599 0.000 0.000 0.000 430.599 5413.863 3238.425 0.0 25.55 2.780
2007.12 375.382 0.000 0.000 0.000 375.382 5789.245 3369.991 0.0 25.55 2.780
SUB-TOT 6254.628 391.902 73.482 0.000 5789.245 5789.245 3369.991 0.0 25.55 2.780
AFTER 584.759 0.000 0.000 0.000 584.759 6374.006 3547.922 0.0 25.55 2.780
TOTAL 6839.387 391.902 73.482 0.000 6374.004 6374.006 3547.922 0.0 25.55 2.780
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 3547.922 2729.042 2137.337 1701.383 1374.302 1124.786 931.535 779.800
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 8
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN343 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS 3 THRU: 2012.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.08 YRS GAS: 0.000 7.500
WEST FLOWERS
PERF ACIDIZE FRAC CANYON ROR: 99.9 PAYOUT: 0.28
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.28 0.28 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 18.86 13.01 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 7.897 5.116 6.910 4.476 165.790 14.740 180.531 9.600 0.000 9.600
1998.12 6.712 4.195 5.873 3.671 140.922 12.087 153.009 9.600 0.000 9.600
1999.12 5.706 3.440 4.992 3.010 119.783 9.911 129.695 9.600 0.000 9.600
2000.12 4.850 2.821 4.244 2.468 101.816 8.127 109.943 9.600 0.000 9.600
2001.12 4.122 2.313 3.607 2.024 86.544 6.664 93.208 9.600 0.000 9.600
2002.12 3.504 1.897 3.066 1.660 73.562 5.465 79.027 9.600 0.000 9.600
2003.12 2.978 1.555 2.606 1.361 62.528 4.481 67.009 9.600 0.000 9.600
2004.12 2.532 1.275 2.215 1.116 53.149 3.675 56.823 9.600 0.000 9.600
2005.12 2.152 1.046 1.883 0.915 45.176 3.013 48.189 9.600 0.000 9.600
2006.12 1.829 0.857 1.600 0.750 38.400 2.471 40.871 9.600 0.000 9.600
2007.12 1.555 0.703 1.360 0.615 32.640 2.026 34.666 9.600 0.000 9.600
SUB-TOT 43.837 25.218 38.356 22.066 920.310 72.660 992.971 105.600 0.000 105.600
AFTER 4.273 1.778 3.740 1.556 89.708 5.126 94.833 39.200 0.000 39.200
TOTAL 48.110 26.996 42.096 23.622 1010.018 77.786 1087.804 144.800 0.000 144.800
ULT. 48.110 26.996
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 170.931 50.000 0.000 0.000 120.931 120.931 112.897 1.0 25.15 3.560
1998.12 143.409 0.000 0.000 0.000 143.409 264.340 236.561 1.0 25.15 3.560
1999.12 120.095 0.000 0.000 0.000 120.095 384.434 330.268 1.0 25.15 3.560
2000.12 100.343 0.000 0.000 0.000 100.343 484.778 401.114 1.0 25.15 3.560
2001.12 83.608 0.000 0.000 0.000 83.608 568.386 454.528 1.0 25.15 3.560
2002.12 69.427 0.000 0.000 0.000 69.427 637.813 494.663 1.0 25.15 3.560
2003.12 57.409 0.000 0.000 0.000 57.409 695.222 524.693 1.0 25.15 3.560
2004.12 47.223 0.000 0.000 0.000 47.223 742.445 547.045 1.0 25.15 3.560
2005.12 38.589 0.000 0.000 0.000 38.589 781.034 563.574 1.0 25.15 3.560
2006.12 31.271 0.000 0.000 0.000 31.271 812.305 575.694 1.0 25.15 3.560
2007.12 25.066 0.000 0.000 0.000 25.066 837.371 584.486 1.0 25.15 3.560
SUB-TOT 887.371 50.000 0.000 0.000 837.371 837.371 584.486 1.0 25.15 3.560
AFTER 55.633 0.000 0.000 0.000 55.633 893.004 600.278 1.0 25.15 3.560
TOTAL 943.004 50.000 0.000 0.000 893.004 893.004 600.278 1.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 600.278 508.661 438.427 383.238 338.915 302.635 272.442 246.951 225.158 206.322
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 9
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN3443 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS 43 THRU: 2013.07 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 16.58 YRS GAS: 0.000 7.500
WEST FLOWERS
PERF ACIDIZE FRAC CANYON ROR: 99.9 PAYOUT: 0.32
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.32 0.33 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 14.97 10.52 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 6.531 6.471 5.714 5.662 137.106 18.644 155.750 9.600 0.000 9.600
1998.12 5.355 5.953 4.686 5.209 112.427 17.152 129.579 9.600 0.000 9.600
1999.12 4.391 5.477 3.842 4.792 92.190 15.780 107.970 9.600 0.000 9.600
2000.12 3.601 5.039 3.151 4.409 75.596 14.518 90.114 9.600 0.000 9.600
2001.12 2.953 4.635 2.584 4.056 61.989 13.356 75.345 9.600 0.000 9.600
2002.12 2.421 4.265 2.119 3.732 50.831 12.288 63.119 9.600 0.000 9.600
2003.12 1.985 3.923 1.737 3.433 41.681 11.305 52.986 9.600 0.000 9.600
2004.12 1.628 3.610 1.425 3.158 34.179 10.400 44.579 9.600 0.000 9.600
2005.12 1.335 3.321 1.168 2.906 28.026 9.568 37.595 9.600 0.000 9.600
2006.12 1.095 3.055 0.958 2.673 22.982 8.803 31.785 9.600 0.000 9.600
2007.12 0.898 2.811 0.785 2.459 18.845 8.099 26.944 9.600 0.000 9.600
SUB-TOT 32.193 48.560 28.169 42.489 675.852 139.913 815.766 105.600 0.000 105.600
AFTER 2.739 12.029 2.396 10.527 57.499 34.667 92.165 53.600 0.000 53.600
TOTAL 34.932 60.589 30.565 53.016 733.351 174.580 907.931 159.200 0.000 159.200
ULT. 34.932 60.589
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 146.150 50.000 0.000 0.000 96.150 96.150 89.306 1.0 25.15 3.560
1998.12 119.979 0.000 0.000 0.000 119.979 216.129 192.785 1.0 25.15 3.560
1999.12 98.370 0.000 0.000 0.000 98.370 314.499 269.554 1.0 25.15 3.560
2000.12 80.514 0.000 0.000 0.000 80.514 395.013 326.409 1.0 25.15 3.560
2001.12 65.745 0.000 0.000 0.000 65.745 460.758 368.418 1.0 25.15 3.560
2002.12 53.519 0.000 0.000 0.000 53.519 514.277 399.361 1.0 25.15 3.560
2003.12 43.386 0.000 0.000 0.000 43.386 557.663 422.060 1.0 25.15 3.560
2004.12 34.979 0.000 0.000 0.000 34.979 592.642 438.620 1.0 25.15 3.560
2005.12 27.995 0.000 0.000 0.000 27.995 620.636 450.612 1.0 25.15 3.560
2006.12 22.185 0.000 0.000 0.000 22.185 642.821 459.212 1.0 25.15 3.560
2007.12 17.344 0.000 0.000 0.000 17.344 660.165 465.297 1.0 25.15 3.560
SUB-TOT 710.166 50.000 0.000 0.000 660.166 660.165 465.297 1.0 25.15 3.560
AFTER 38.565 0.000 0.000 0.000 38.565 698.731 476.069 1.0 25.15 3.560
TOTAL 748.731 50.000 0.000 0.000 698.731 698.731 476.069 1.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 476.069 405.299 350.532 307.120 271.981 243.018 218.767 198.182 180.502 165.157
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page:10
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN3447 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS 47 THRU: 2011.06 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 14.50 YRS GAS: 0.000 7.500
WEST FLOWERS
PERF ACID FRAC EQUIP CANYON ROR: 99.9 PAYOUT: 0.22
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.22 0.22 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 17.12 12.88 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 14.536 7.001 12.719 6.126 305.169 20.173 325.342 9.600 0.000 9.600
1998.12 11.338 5.111 9.921 4.472 238.032 14.726 252.758 9.600 0.000 9.600
1999.12 8.844 3.731 7.738 3.265 185.665 10.750 196.415 9.600 0.000 9.600
2000.12 6.898 2.724 6.036 2.383 144.819 7.848 152.666 9.600 0.000 9.600
2001.12 5.381 1.988 4.708 1.740 112.959 5.729 118.687 9.600 0.000 9.600
2002.12 4.197 1.451 3.672 1.270 88.108 4.182 92.290 9.600 0.000 9.600
2003.12 3.274 1.060 2.864 0.927 68.724 3.053 71.777 9.600 0.000 9.600
2004.12 2.553 0.773 2.234 0.677 53.605 2.229 55.833 9.600 0.000 9.600
2005.12 1.992 0.565 1.743 0.494 41.812 1.627 43.439 9.600 0.000 9.600
2006.12 1.553 0.412 1.359 0.361 32.613 1.188 33.801 9.600 0.000 9.600
2007.12 1.212 0.301 1.060 0.263 25.438 0.867 26.305 9.600 0.000 9.600
SUB-TOT 61.778 25.117 54.054 21.978 1296.944 72.372 1369.313 105.600 0.000 105.600
AFTER 2.494 0.543 2.184 0.474 52.390 1.563 53.956 33.600 0.000 33.600
TOTAL 64.272 25.660 56.238 22.452 1349.334 73.935 1423.269 139.200 0.000 139.200
ULT. 64.272 25.660
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 315.742 75.000 0.000 0.000 240.742 240.742 226.114 1.0 25.15 3.560
1998.12 243.158 0.000 0.000 0.000 243.158 483.901 435.943 1.0 25.15 3.560
1999.12 186.815 0.000 0.000 0.000 186.815 670.716 581.814 1.0 25.15 3.560
2000.12 143.066 0.000 0.000 0.000 143.066 813.782 682.897 1.0 25.15 3.560
2001.12 109.087 0.000 0.000 0.000 109.087 922.870 752.641 1.0 25.15 3.560
2002.12 82.690 0.000 0.000 0.000 82.690 1005.559 800.479 1.0 25.15 3.560
2003.12 62.177 0.000 0.000 0.000 62.177 1067.736 833.030 1.0 25.15 3.560
2004.12 46.233 0.000 0.000 0.000 46.233 1113.970 854.932 1.0 25.15 3.560
2005.12 33.839 0.000 0.000 0.000 33.839 1147.808 869.440 1.0 25.15 3.560
2006.12 24.201 0.000 0.000 0.000 24.201 1172.009 878.831 1.0 25.15 3.560
2007.12 16.705 0.000 0.000 0.000 16.705 1188.714 884.698 1.0 25.15 3.560
SUB-TOT 1263.713 75.000 0.000 0.000 1188.713 1188.714 884.698 1.0 25.15 3.560
AFTER 20.356 0.000 0.000 0.000 20.356 1209.069 890.798 1.0 25.15 3.560
TOTAL 1284.069 75.000 0.000 0.000 1209.069 1209.069 890.798 1.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 890.798 781.056 692.628 620.135 559.785 508.856 465.357 427.803 395.073 366.306
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page:11
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN3448 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS 48 THRU: 2012.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.08 YRS GAS: 0.000 7.500
WEST FLOWERS
PERF ACIDIZE FRAC CANYON ROR: 99.9 PAYOUT: 0.26
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.26 0.26 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 20.70 14.09 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 7.997 7.649 6.997 6.693 167.883 22.039 189.922 9.600 0.000 9.600
1998.12 6.797 6.731 5.948 5.890 142.701 19.394 162.095 9.600 0.000 9.600
1999.12 5.778 5.923 5.055 5.183 121.295 17.067 138.362 9.600 0.000 9.600
2000.12 4.911 5.212 4.297 4.561 103.101 15.019 118.120 9.600 0.000 9.600
2001.12 4.174 4.587 3.653 4.014 87.636 13.217 100.853 9.600 0.000 9.600
2002.12 3.548 4.037 3.105 3.532 74.491 11.631 86.121 9.600 0.000 9.600
2003.12 3.016 3.552 2.639 3.108 63.317 10.235 73.552 9.600 0.000 9.600
2004.12 2.564 3.126 2.243 2.735 53.819 9.007 62.826 9.600 0.000 9.600
2005.12 2.179 2.751 1.907 2.407 45.747 7.926 53.673 9.600 0.000 9.600
2006.12 1.852 2.421 1.621 2.118 38.885 6.975 45.859 9.600 0.000 9.600
2007.12 1.574 2.130 1.378 1.864 33.052 6.138 39.190 9.600 0.000 9.600
SUB-TOT 44.390 48.119 38.843 42.105 931.927 138.648 1070.573 105.600 0.000 105.600
AFTER 4.327 6.352 3.785 5.557 90.840 18.303 109.145 39.200 0.000 39.200
TOTAL 48.717 54.471 42.628 47.662 1022.767 156.951 1179.718 144.800 0.000 144.800
ULT. 48.717 54.471
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 180.322 50.000 0.000 0.000 130.322 130.322 121.836 1.0 25.15 3.560
1998.12 152.495 0.000 0.000 0.000 152.495 282.817 253.326 1.0 25.15 3.560
1999.12 128.762 0.000 0.000 0.000 128.762 411.579 353.789 1.0 25.15 3.560
2000.12 108.520 0.000 0.000 0.000 108.520 520.100 430.403 1.0 25.15 3.560
2001.12 91.253 0.000 0.000 0.000 91.253 611.352 488.696 1.0 25.15 3.560
2002.12 76.521 0.000 0.000 0.000 76.521 687.873 532.928 1.0 25.15 3.560
2003.12 63.952 0.000 0.000 0.000 63.952 751.826 566.378 1.0 25.15 3.560
2004.12 53.226 0.000 0.000 0.000 53.226 805.052 591.569 1.0 25.15 3.560
2005.12 44.073 0.000 0.000 0.000 44.073 849.124 610.444 1.0 25.15 3.560
2006.12 36.259 0.000 0.000 0.000 36.259 885.384 624.496 1.0 25.15 3.560
2007.12 29.590 0.000 0.000 0.000 29.590 914.973 634.873 1.0 25.15 3.560
SUB-TOT 964.973 50.000 0.000 0.000 914.973 914.973 634.873 1.0 25.15 3.560
AFTER 69.945 0.000 0.000 0.000 69.945 984.918 654.634 1.0 25.15 3.560
TOTAL 1034.918 50.000 0.000 0.000 984.918 984.918 654.634 1.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 654.634 552.678 475.073 414.455 366.015 326.529 293.782 266.215 242.704 222.425
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page:12
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN34 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS INCREMENTAL THRU: 2002.12 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 6.00 YRS GAS: 0.000 7.500
WEST FLOWERS
88,55,56,89,57,90, CANYON ROR: 99.9 PAYOUT: 0.47
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.47 0.48 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 8.21 6.50 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 8.584 12.206 7.511 10.680 180.207 35.170 215.377 12.000 0.000 12.000
1998.12 7.296 10.334 6.384 9.043 153.176 29.777 182.953 12.000 0.000 12.000
1999.12 6.202 8.755 5.427 7.661 130.199 25.226 155.426 12.000 0.000 12.000
2000.12 5.271 7.420 4.613 6.493 110.670 21.381 132.051 12.000 0.000 12.000
2001.12 4.481 6.292 3.921 5.506 94.069 18.130 112.199 12.000 0.000 12.000
2002.12 3.809 5.337 3.333 4.670 79.959 15.378 95.337 12.000 0.000 12.000
TOTAL 35.643 50.344 31.189 44.053 748.280 145.062 893.343 72.000 0.000 72.000
ULT. 35.643 50.345
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 203.377 100.000 0.000 0.000 103.377 103.377 93.815 2.0 25.15 3.560
1998.12 170.953 0.000 0.000 0.000 170.953 274.330 241.229 2.0 25.15 3.560
1999.12 143.426 0.000 0.000 0.000 143.426 417.756 353.139 2.0 25.15 3.560
2000.12 120.051 0.000 0.000 0.000 120.051 537.807 437.898 2.0 25.15 3.560
2001.12 100.199 0.000 0.000 0.000 100.199 638.006 501.910 2.0 25.15 3.560
2002.12 83.337 0.000 0.000 0.000 83.337 721.343 550.086 2.0 25.15 3.560
TOTAL 821.343 100.000 0.000 0.000 721.343 721.343 550.086 2.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 550.086 484.138 428.159 380.364 339.322 303.875 273.086 246.196 222.582 201.737
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:03 PAN WESTERN ENERGY CORP 1996 PAN96 Page:13
SYCAMORE RESOURCES PROVED NONPRODUCING
1996
<TABLE>
<CAPTION>
PN342 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
WEST FLOWERS 2 THRU: 2012.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.08 YRS GAS: 0.000 7.500
WEST FLOWERS
PERF ACIDIZE FRAC CANYON ROR: 99.9 PAYOUT: 0.31
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
STONEWALL TX PRI: OIL PAYOUT (YRS) 0.31 0.31 INITIAL 100.0000 87.5000 87.5000
NONPRODUCING ACT NET INC./INV: 14.24 10.33 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 7.118 3.877 6.229 3.392 149.445 11.170 160.615 9.600 0.000 9.600
1998.12 5.837 3.295 5.108 2.883 122.545 9.494 132.040 9.600 0.000 9.600
1999.12 4.786 2.801 4.188 2.451 100.487 8.070 108.557 9.600 0.000 9.600
2000.12 3.925 2.381 3.434 2.083 82.399 6.860 89.259 9.600 0.000 9.600
2001.12 3.218 2.024 2.816 1.771 67.568 5.831 73.398 9.600 0.000 9.600
2002.12 2.639 1.720 2.309 1.505 55.405 4.956 60.361 9.600 0.000 9.600
2003.12 2.164 1.462 1.894 1.279 45.432 4.213 49.645 9.600 0.000 9.600
2004.12 1.775 1.243 1.553 1.087 37.255 3.581 40.835 9.600 0.000 9.600
2005.12 1.455 1.056 1.273 0.924 30.549 3.044 33.592 9.600 0.000 9.600
2006.12 1.193 0.898 1.044 0.786 25.050 2.587 27.637 9.600 0.000 9.600
2007.12 0.978 0.763 0.856 0.668 20.541 2.199 22.740 9.600 0.000 9.600
SUB-TOT 35.088 21.520 30.704 18.829 736.676 62.005 798.679 105.600 0.000 105.600
AFTER 2.477 2.096 2.165 1.835 51.963 6.043 58.007 39.200 0.000 39.200
TOTAL 37.565 23.616 32.869 20.664 788.639 68.048 856.686 144.800 0.000 144.800
ULT. 37.565 23.616
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 151.015 50.000 0.000 0.000 101.015 101.015 93.957 1.0 25.15 3.560
1998.12 122.440 0.000 0.000 0.000 122.440 223.455 199.570 1.0 25.15 3.560
1999.12 98.957 0.000 0.000 0.000 98.957 322.412 276.807 1.0 25.15 3.560
2000.12 79.659 0.000 0.000 0.000 79.659 402.071 333.066 1.0 25.15 3.560
2001.12 63.798 0.000 0.000 0.000 63.798 465.869 373.839 1.0 25.15 3.560
2002.12 50.761 0.000 0.000 0.000 50.761 516.631 403.194 1.0 25.15 3.560
2003.12 40.045 0.000 0.000 0.000 40.045 556.676 424.150 1.0 25.15 3.560
2004.12 31.235 0.000 0.000 0.000 31.235 587.911 438.942 1.0 25.15 3.560
2005.12 23.992 0.000 0.000 0.000 23.992 611.903 449.224 1.0 25.15 3.560
2006.12 18.037 0.000 0.000 0.000 18.037 629.940 456.219 1.0 25.15 3.560
2007.12 13.140 0.000 0.000 0.000 13.140 643.081 460.832 1.0 25.15 3.560
SUB-TOT 693.079 50.000 0.000 0.000 643.079 643.081 460.832 1.0 25.15 3.560
AFTER 18.807 0.000 0.000 0.000 18.807 661.886 466.397 1.0 25.15 3.560
TOTAL 711.886 50.000 0.000 0.000 661.886 661.886 466.397 1.0 25.15 3.560
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 466.397 401.408 350.075 308.729 274.840 246.631 222.826 202.492 184.938 169.638
</TABLE>
<PAGE>
PROVED UNDEVELOPED
<PAGE>
PEP 3.22 2/07/97 19:06 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 1
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU43 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
ADDIE LILIAN HORIZ DRILL THRU: 2012.02 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.17 YRS GAS: 0.000 7.500
HIGGINS W
105 BLK 43 H&T TONKAWA ROR: 99.9 PAYOUT: 0.23
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.23 0.23 INITIAL 100.0000 81.3747 81.3747
UNDEVELOPED ACT NET INC./INV: 18.96 13.56 AT 1997.01 100.0000 81.3747 81.3747
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 65.395 54.929 53.215 44.699 1241.250 91.789 1333.039 12.000 0.000 12.000
1998.12 52.316 43.944 42.572 35.759 993.000 73.431 1066.431 12.000 0.000 12.000
1999.12 41.853 35.155 34.057 28.607 794.400 58.745 853.145 12.000 0.000 12.000
2000.12 33.482 28.124 27.246 22.886 635.520 46.996 682.516 12.000 0.000 12.000
2001.12 26.786 22.499 21.797 18.309 508.416 37.597 546.013 12.000 0.000 12.000
2002.12 21.429 17.999 17.437 14.647 406.733 30.077 436.810 12.000 0.000 12.000
2003.12 17.143 14.399 13.950 11.717 325.386 24.062 349.448 12.000 0.000 12.000
2004.12 13.714 11.520 11.160 9.374 260.309 19.249 279.559 12.000 0.000 12.000
2005.12 10.971 9.216 8.928 7.499 208.247 15.400 223.647 12.000 0.000 12.000
2006.12 8.777 7.373 7.142 5.999 166.598 12.320 178.917 12.000 0.000 12.000
2007.12 7.022 5.898 5.714 4.799 133.278 9.856 143.134 12.000 0.000 12.000
SUB-TOT 298.888 251.056 243.218 204.295 5673.137 419.522 6092.659 132.000 0.000 132.000
AFTER 17.001 14.281 13.836 11.622 322.725 23.863 346.585 50.000 0.000 50.000
TOTAL 315.889 265.337 257.054 215.917 5995.862 443.385 6439.245 182.000 0.000 182.000
ULT. 315.889 265.337
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1321.039 300.000 30.000 0.000 991.039 991.039 929.472 2.0 24.45 2.220
1998.12 1054.431 0.000 0.000 0.000 1054.431 2045.470 1839.100 2.0 24.45 2.220
1999.12 841.145 0.000 0.000 0.000 841.145 2886.615 2495.682 2.0 24.45 2.220
2000.12 670.516 0.000 0.000 0.000 670.516 3557.132 2969.270 2.0 24.45 2.220
2001.12 534.013 0.000 0.000 0.000 534.013 4091.144 3310.556 2.0 24.45 2.220
2002.12 424.810 0.000 0.000 0.000 424.810 4515.955 3556.217 2.0 24.45 2.220
2003.12 337.448 0.000 0.000 0.000 337.448 4853.403 3732.791 2.0 24.45 2.220
2004.12 267.559 0.000 0.000 0.000 267.559 5120.961 3859.472 2.0 24.45 2.220
2005.12 211.647 0.000 0.000 0.000 211.647 5332.608 3950.147 2.0 24.45 2.220
2006.12 166.917 0.000 0.000 0.000 166.917 5499.526 4014.855 2.0 24.45 2.220
2007.12 131.134 0.000 0.000 0.000 131.134 5630.660 4060.855 2.0 24.45 2.220
SUB-TOT 5960.659 300.000 30.000 0.000 5630.658 5630.660 4060.855 2.0 24.45 2.220
AFTER 296.585 0.000 0.000 0.000 296.587 5927.247 4144.606 2.0 24.45 2.220
TOTAL 6257.245 300.000 30.000 0.000 5927.246 5927.247 4144.606 2.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 4144.606 3570.086 3121.894 2763.956 2472.220 2230.219 2026.412 1852.502 1702.405 1571.567
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:06 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 2
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU51 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BABITIZKE HORIZ DRILL THRU: 2012.02 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.17 YRS GAS: 0.000 7.500
CANADIAN N
109 BLK 43 TONKAWA ROR: 99.9 PAYOUT: 0.24
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.24 0.24 INITIAL 100.0000 87.5000 87.5000
UNDEVELOPED ACT NET INC./INV: 18.37 13.16 AT 1997.01 100.0000 87.5000 87.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 59.178 51.660 51.781 45.202 1207.801 92.405 1300.205 14.400 0.000 14.400
1998.12 47.342 41.328 41.425 36.162 966.241 73.924 1040.164 14.400 0.000 14.400
1999.12 37.874 33.062 33.140 28.929 772.992 59.139 832.132 14.400 0.000 14.400
2000.12 30.299 26.450 26.512 23.144 618.394 47.311 665.705 14.400 0.000 14.400
2001.12 24.239 21.160 21.209 18.515 494.715 37.849 532.564 14.400 0.000 14.400
2002.12 19.391 16.928 16.968 14.812 395.772 30.279 426.051 14.400 0.000 14.400
2003.12 15.513 13.542 13.574 11.849 316.618 24.223 340.841 14.400 0.000 14.400
2004.12 12.411 10.834 10.859 9.480 253.294 19.379 272.673 14.400 0.000 14.400
2005.12 9.928 8.667 8.687 7.584 202.635 15.503 218.138 14.400 0.000 14.400
2006.12 7.943 6.934 6.950 6.067 162.108 12.402 174.511 14.400 0.000 14.400
2007.12 6.354 5.547 5.560 4.854 129.687 9.922 139.609 14.400 0.000 14.400
SUB-TOT 270.472 236.112 236.665 206.598 5520.257 422.336 5942.593 158.400 0.000 158.400
AFTER 15.387 13.430 13.462 11.752 314.023 24.025 338.048 60.000 0.000 60.000
TOTAL 285.859 249.542 250.127 218.350 5834.280 446.361 6280.641 218.400 0.000 218.400
ULT. 285.859 249.542
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 1285.806 300.000 30.000 0.000 955.805 955.806 895.886 2.0 24.45 2.210
1998.12 1025.765 0.000 0.000 0.000 1025.765 1981.570 1780.787 2.0 24.45 2.210
1999.12 817.732 0.000 0.000 0.000 817.732 2799.302 2419.097 2.0 24.45 2.210
2000.12 651.305 0.000 0.000 0.000 651.305 3450.607 2879.120 2.0 24.45 2.210
2001.12 518.164 0.000 0.000 0.000 518.164 3968.771 3210.280 2.0 24.45 2.210
2002.12 411.651 0.000 0.000 0.000 411.651 4380.422 3448.333 2.0 24.45 2.210
2003.12 326.441 0.000 0.000 0.000 326.441 4706.863 3619.149 2.0 24.45 2.210
2004.12 258.273 0.000 0.000 0.000 258.273 4965.136 3741.437 2.0 24.45 2.210
2005.12 203.738 0.000 0.000 0.000 203.738 5168.875 3828.726 2.0 24.45 2.210
2006.12 160.111 0.000 0.000 0.000 160.111 5328.985 3890.797 2.0 24.45 2.210
2007.12 125.209 0.000 0.000 0.000 125.209 5454.193 3934.721 2.0 24.45 2.210
SUB-TOT 5784.194 300.000 30.000 0.000 5454.193 5454.193 3934.721 2.0 24.45 2.210
AFTER 278.047 0.000 0.000 0.000 278.049 5732.244 4013.352 2.0 24.45 2.210
TOTAL 6062.242 300.000 30.000 0.000 5732.242 5732.244 4013.352 2.0 24.45 2.210
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 4013.352 3457.899 3024.043 2677.211 2394.308 2159.496 1961.648 1792.763 1646.958 1519.831
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:06 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 3
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU21 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
BATTLES WJ 1-19 HORIZ DRILL THRU: 2013.04 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 16.33 YRS GAS: 0.000 7.095
CENTRAHOMA
19 1N 10E CROMWELL WAP ROR: 94.9 PAYOUT: 0.94
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.94 1.00 INITIAL 98.4375 76.2940 76.2940
UNDEVELOPED ACT NET INC./INV: 5.47 3.51 AT 1997.01 98.4375 76.2940 76.2940
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 73.668 0.000 56.204 0.000 157.693 157.693 2.953 0.000 2.953
1998.12 0.000 49.745 0.000 37.953 0.000 106.485 106.485 2.953 0.000 2.953
1999.12 0.000 38.357 0.000 29.264 0.000 82.108 82.108 2.953 0.000 2.953
2000.12 0.000 31.553 0.000 24.073 0.000 67.542 67.542 2.953 0.000 2.953
2001.12 0.000 26.978 0.000 20.583 0.000 57.750 57.750 2.953 0.000 2.953
2002.12 0.000 23.670 0.000 18.059 0.000 50.669 50.669 2.953 0.000 2.953
2003.12 0.000 21.155 0.000 16.140 0.000 45.285 45.285 2.953 0.000 2.953
2004.12 0.000 19.172 0.000 14.627 0.000 41.039 41.039 2.953 0.000 2.953
2005.12 0.000 17.563 0.000 13.399 0.000 37.595 37.595 2.953 0.000 2.953
2006.12 0.000 16.229 0.000 12.382 0.000 34.741 34.741 2.953 0.000 2.953
2007.12 0.000 15.104 0.000 11.523 0.000 32.332 32.332 2.953 0.000 2.953
SUB-TOT 0.000 333.194 0.000 254.207 0.000 713.239 713.239 32.483 0.000 32.483
AFTER 0.000 66.959 0.000 51.086 0.000 143.331 143.331 15.751 0.000 15.751
TOTAL 0.000 400.153 0.000 305.293 0.000 856.569 856.569 48.234 0.000 48.234
ULT. 0.000 400.153
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 154.740 147.656 0.000 0.000 7.084 7.084 0.215 1.0 0.00 3.020
1998.12 103.531 0.000 0.000 0.000 103.531 110.615 89.594 1.0 0.00 3.020
1999.12 79.155 0.000 0.000 0.000 79.155 189.770 151.381 1.0 0.00 3.020
2000.12 64.589 0.000 0.000 0.000 64.589 254.359 196.983 1.0 0.00 3.020
2001.12 54.797 0.000 0.000 0.000 54.797 309.156 231.981 1.0 0.00 3.020
2002.12 47.716 0.000 0.000 0.000 47.716 356.872 259.551 1.0 0.00 3.020
2003.12 42.332 0.000 0.000 0.000 42.332 399.203 281.680 1.0 0.00 3.020
2004.12 38.085 0.000 0.000 0.000 38.085 437.289 299.693 1.0 0.00 3.020
2005.12 34.642 0.000 0.000 0.000 34.642 471.931 314.516 1.0 0.00 3.020
2006.12 31.787 0.000 0.000 0.000 31.787 503.718 326.823 1.0 0.00 3.020
2007.12 29.379 0.000 0.000 0.000 29.379 533.097 337.115 1.0 0.00 3.020
SUB-TOT 680.753 147.656 0.000 0.000 533.097 533.097 337.115 1.0 0.00 3.020
AFTER 127.582 0.000 0.000 0.000 127.582 660.679 370.507 1.0 0.00 3.020
TOTAL 808.335 147.656 0.000 0.000 660.679 660.679 370.507 1.0 0.00 3.020
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 370.507 290.969 233.570 190.460 156.941 130.103 108.084 89.647 73.949 60.393
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:31 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 4
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU45 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
CLEVELAND W HORIZ DRILL THRU: 2011.11 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 14.92 YRS GAS: 0.000 7.500
HIGGINS W
105 BLK 43 H&T TONKAWA ROR: 99.9 PAYOUT: 0.24
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.24 0.24 INITIAL 100.0000 83.3984 83.3984
UNDEVELOPED ACT NET INC./INV: 13.98 10.70 AT 1997.01 100.0000 83.3984 83.3984
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 114.131 93.287 95.184 77.800 2220.191 164.799 2384.990 36.000 0.000 36.000
1998.12 85.599 67.167 71.388 56.016 1665.143 118.656 1783.799 36.000 0.000 36.000
1999.12 64.199 48.360 53.541 40.331 1248.857 85.432 1334.289 36.000 0.000 36.000
2000.12 48.149 34.819 40.156 29.039 936.643 61.511 998.154 36.000 0.000 36.000
2001.12 36.112 25.070 30.117 20.908 702.482 44.288 746.770 36.000 0.000 36.000
2002.12 27.084 18.050 22.588 15.054 526.862 31.887 558.749 36.000 0.000 36.000
2003.12 20.313 12.996 16.941 10.839 395.146 22.959 418.105 36.000 0.000 36.000
2004.12 15.235 9.357 12.706 7.804 296.360 16.530 312.890 36.000 0.000 36.000
2005.12 11.426 6.737 9.529 5.619 222.270 11.902 234.172 36.000 0.000 36.000
2006.12 8.570 4.851 7.147 4.045 166.702 8.569 175.272 36.000 0.000 36.000
2007.12 6.427 3.493 5.360 2.913 125.027 6.170 131.197 36.000 0.000 36.000
SUB-TOT 437.245 324.187 364.657 270.368 8505.683 572.703 9078.388 396.000 0.000 396.000
AFTER 13.032 6.500 10.867 5.420 253.526 11.484 265.010 141.000 0.000 141.000
TOTAL 450.277 330.687 375.524 275.788 8759.209 584.187 9343.397 537.000 0.000 537.000
ULT. 450.277 330.687
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 2348.990 600.000 30.000 0.000 1718.990 1718.990 1610.804 4.0 24.45 2.290
1998.12 1747.799 0.000 0.000 0.000 1747.799 3466.789 3119.458 4.0 24.45 2.290
1999.12 1298.289 0.000 0.000 0.000 1298.289 4765.079 4133.479 4.0 24.45 2.290
2000.12 962.154 0.000 0.000 0.000 962.154 5727.232 4813.466 4.0 24.45 2.290
2001.12 710.770 0.000 0.000 0.000 710.770 6438.003 5268.002 4.0 24.45 2.290
2002.12 522.749 0.000 0.000 0.000 522.749 6960.752 5570.499 4.0 24.45 2.290
2003.12 382.105 0.000 0.000 0.000 382.105 7342.857 5770.581 4.0 24.45 2.290
2004.12 276.890 0.000 0.000 0.000 276.890 7619.747 5901.783 4.0 24.45 2.290
2005.12 198.172 0.000 0.000 0.000 198.172 7817.918 5986.760 4.0 24.45 2.290
2006.12 139.272 0.000 0.000 0.000 139.272 7957.190 6040.807 4.0 24.45 2.290
2007.12 95.197 0.000 0.000 0.000 95.197 8052.387 6074.243 4.0 24.45 2.290
SUB-TOT 8682.388 600.000 30.000 0.000 8052.387 8052.387 6074.243 4.0 24.45 2.290
AFTER 124.010 0.000 0.000 0.000 124.005 8176.394 6111.052 4.0 24.45 2.290
TOTAL 8806.397 600.000 30.000 0.000 8176.392 8176.394 6111.052 4.0 24.45 2.290
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 6111.052 5387.834 4799.664 4313.329 3905.251 3558.393 3260.194 3001.231
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 5
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU41 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
FARNSWORTH HORIZ DRILL THRU: 2004.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 7.08 YRS GAS: 0.000 7.500
HIGGINS W
72 BLK 10 H&T TONKAWA ROR: 99.9 PAYOUT: 0.42
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.42 0.43 INITIAL 100.0000 79.2970 79.2970
UNDEVELOPED ACT NET INC./INV: 11.70 8.74 AT 1997.01 100.0000 79.2970 79.2970
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 16.720 27.396 13.259 21.724 309.260 44.611 353.871 12.000 0.000 12.000
1998.12 14.469 24.108 11.474 19.117 267.632 39.257 306.889 12.000 0.000 12.000
1999.12 12.939 21.215 10.260 16.823 239.323 34.546 273.870 12.000 0.000 12.000
2000.12 11.811 18.670 9.366 14.804 218.458 30.401 248.858 12.000 0.000 12.000
2001.12 10.935 16.429 8.671 13.028 202.252 26.753 229.005 12.000 0.000 12.000
2002.12 10.229 14.458 8.111 11.465 189.194 23.542 212.736 12.000 0.000 12.000
2003.12 9.644 12.723 7.647 10.089 178.380 20.717 199.097 12.000 0.000 12.000
2004.01 0.780 0.989 0.619 0.784 14.432 1.610 16.042 1.000 0.000 1.000
TOTAL 87.527 135.988 69.407 107.834 1618.931 221.437 1840.368 85.000 0.000 85.000
ULT. 87.527 135.988
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 341.871 150.000 0.000 0.000 191.871 191.871 175.784 1.0 24.45 2.220
1998.12 294.889 0.000 0.000 0.000 294.889 486.760 429.976 1.0 24.45 2.220
1999.12 261.870 0.000 0.000 0.000 261.870 748.629 634.187 1.0 24.45 2.220
2000.12 236.858 0.000 0.000 0.000 236.858 985.488 801.296 1.0 24.45 2.220
2001.12 217.005 0.000 0.000 0.000 217.005 1202.493 939.816 1.0 24.45 2.220
2002.12 200.736 0.000 0.000 0.000 200.736 1403.229 1055.750 1.0 24.45 2.220
2003.12 187.097 0.000 0.000 0.000 187.097 1590.326 1153.517 1.0 24.45 2.220
2004.01 15.042 0.000 0.000 0.000 15.042 1605.368 1160.956 1.0 24.45 2.220
TOTAL 1755.368 150.000 0.000 0.000 1605.368 1605.368 1160.956 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 1160.956 999.761 867.695 758.598 667.728 591.414 526.804 471.668 424.254 383.177
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 6
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU42 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HAYNES H HORIZ DRILL THRU: 2012.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.08 YRS GAS: 0.000 7.500
HIGGINS W
73 BLK 43 H&T TONKAWA ROR: 99.9 PAYOUT: 0.44
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.44 0.45 INITIAL 100.0000 82.0312 82.0312
UNDEVELOPED ACT NET INC./INV: 11.47 7.97 AT 1997.01 100.0000 82.0312 82.0312
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 15.065 25.502 12.508 21.174 291.764 43.482 335.246 12.000 0.000 12.000
1998.12 12.654 20.401 10.507 16.940 245.082 34.785 279.867 12.000 0.000 12.000
1999.12 10.630 16.321 8.826 13.552 205.869 27.828 233.697 12.000 0.000 12.000
2000.12 8.929 13.057 7.414 10.841 172.930 22.263 195.192 12.000 0.000 12.000
2001.12 7.500 10.446 6.228 8.673 145.261 17.810 163.071 12.000 0.000 12.000
2002.12 6.300 8.356 5.231 6.938 122.019 14.248 136.267 12.000 0.000 12.000
2003.12 5.292 6.685 4.394 5.551 102.496 11.398 113.895 12.000 0.000 12.000
2004.12 4.445 5.348 3.691 4.441 86.097 9.119 95.216 12.000 0.000 12.000
2005.12 3.734 4.278 3.101 3.552 72.321 7.295 79.616 12.000 0.000 12.000
2006.12 3.137 3.423 2.604 2.842 60.750 5.836 66.586 12.000 0.000 12.000
2007.12 2.635 2.738 2.188 2.274 51.030 4.669 55.699 12.000 0.000 12.000
SUB-TOT 80.321 116.555 65.890 95.613 1536.887 196.340 1754.352 132.000 0.000 132.000
AFTER 7.047 6.550 5.779 5.372 134.805 11.032 147.615 49.000 0.000 49.000
TOTAL 87.368 123.105 71.669 100.985 1671.692 207.372 1901.967 181.000 0.000 181.000
ULT. 87.368 123.105
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 323.246 150.000 0.000 0.000 173.246 173.246 158.085 1.0 24.45 2.220
1998.12 267.867 0.000 0.000 0.000 267.867 441.113 389.096 1.0 24.45 2.220
1999.12 221.697 0.000 0.000 0.000 221.697 662.810 562.096 1.0 24.45 2.220
2000.12 183.192 0.000 0.000 0.000 183.192 846.003 691.448 1.0 24.45 2.220
2001.12 151.071 0.000 0.000 0.000 151.071 997.074 787.970 1.0 24.45 2.220
2002.12 124.267 0.000 0.000 0.000 124.267 1121.341 859.812 1.0 24.45 2.220
2003.12 101.895 0.000 0.000 0.000 101.895 1223.236 913.116 1.0 24.45 2.220
2004.12 83.216 0.000 0.000 0.000 83.216 1306.452 952.507 1.0 24.45 2.220
2005.12 67.616 0.000 0.000 0.000 67.616 1374.068 981.470 1.0 24.45 2.220
2006.12 54.586 0.000 0.000 0.000 54.586 1428.654 1002.627 1.0 24.45 2.220
2007.12 43.699 0.000 0.000 0.000 43.699 1451.228 1002.927 1.0 24.45 2.220
SUB-TOT 1601.228 150.000 0.000 0.000 1451.228 1451.228 1002.927 1.0 24.45 2.220
AFTER 98.838 0.000 0.000 0.000 96.838 1548.065 1030.370 1.0 24.45 2.220
TOTAL 1698.065 150.000 0.000 0.000 1548.065 1548.065 1030.370 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 1030.370 867.439 742.096 643.267 563.642 498.273 443.725 397.559 364.486 329.783
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 7
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU10 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
KWC DRILL NW/4 THRU: 2020.01 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY LIFE: 23.08 YRS GAS: 0.000 7.095
CENTRAHOMA
5 1N 10E CROMWELL WAP ROR: 48.0 PAYOUT: 1.74
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 1.74 1.96 INITIAL 72.7866 63.5762 63.5762
UNDEVELOPED ACT NET INC./INV: 3.68 2.28 AT 1997.01 72.7866 63.5762 63.5762
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 85.350 0.000 54.262 0.000 147.204 147.204 4.367 0.000 4.367
1998.12 0.000 59.638 0.000 37.916 0.000 102.859 102.859 4.367 0.000 4.367
1999.12 0.000 46.681 0.000 29.678 0.000 80.511 80.511 4.367 0.000 4.367
2000.12 0.000 38.727 0.000 24.621 0.000 66.794 66.794 4.367 0.000 4.367
2001.12 0.000 33.888 0.000 21.544 0.000 58.446 58.446 4.367 0.000 4.367
2002.12 0.000 30.499 0.000 19.390 0.000 52.602 52.602 4.367 0.000 4.367
2003.12 0.000 27.449 0.000 17.451 0.000 47.342 47.342 4.367 0.000 4.367
2004.12 0.000 24.704 0.000 15.706 0.000 42.607 42.607 4.367 0.000 4.367
2005.12 0.000 22.234 0.000 14.135 0.000 38.347 38.347 4.367 0.000 4.367
2006.12 0.000 20.010 0.000 12.722 0.000 34.512 34.512 4.367 0.000 4.367
2007.12 0.000 18.009 0.000 11.450 0.000 31.061 31.061 4.367 0.000 4.367
SUB-TOT 0.000 407.189 0.000 258.875 0.000 702.285 702.285 48.037 0.000 48.037
AFTER 0.000 116.706 0.000 74.198 0.000 201.284 201.284 52.772 0.000 52.772
TOTAL 0.000 523.895 0.000 333.073 0.000 903.569 903.569 100.809 0.000 100.809
ULT. 0.000 523.895
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 142.836 145.573 72.787 0.000 -75.523 -75.523 -81.918 1.0 0.00 2.920
1998.12 98.492 0.000 0.000 0.000 98.492 22.968 3.098 1.0 0.00 2.920
1999.12 76.144 0.000 0.000 0.000 76.144 99.112 62.532 1.0 0.00 2.920
2000.12 62.427 0.000 0.000 0.000 62.427 161.538 106.607 1.0 0.00 2.920
2001.12 54.079 0.000 0.000 0.000 54.079 215.617 141.136 1.0 0.00 2.920
2002.12 48.235 0.000 0.000 0.000 48.235 263.852 169.003 1.0 0.00 2.920
2003.12 42.974 0.000 0.000 0.000 42.974 306.826 191.468 1.0 0.00 2.920
2004.12 38.240 0.000 0.000 0.000 38.240 345.067 209.557 1.0 0.00 2.920
2005.12 33.979 0.000 0.000 0.000 33.979 379.046 224.100 1.0 0.00 2.920
2006.12 30.145 0.000 0.000 0.000 30.145 409.191 235.775 1.0 0.00 2.920
2007.12 26.694 0.000 0.000 0.000 26.694 435.885 245.129 1.0 0.00 2.920
SUB-TOT 654.245 145.573 72.787 0.000 435.886 435.885 245.129 1.0 0.00 2.920
AFTER 148.514 0.000 0.000 0.000 148.514 584.399 278.683 1.0 0.00 2.920
TOTAL 802.759 145.573 72.787 0.000 584.400 584.399 278.683 1.0 0.00 2.920
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 278.683 199.880 143.846 102.043 69.634 43.722 22.485 4.726 -10.374 -23.392
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 8
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU11 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
KWC HORIZ DRILL THRU: 2026.12 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CENTRAHOMA
5 1N 10E CROMWELL WAP ROR: 99.9 PAYOUT: 0.81
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.81 0.85 INITIAL 72.7866 63.5762 63.5762
UNDEVELOPED ACT NET INC./INV: 6.86 3.65 AT 1997.01 72.7866 63.5762 63.5762
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 75.519 0.000 48.012 0.000 129.356 129.356 2.184 0.000 2.184
1998.12 0.000 43.826 0.000 27.863 0.000 75.070 75.070 2.184 0.000 2.184
1999.12 0.000 32.866 0.000 20.895 0.000 56.297 56.297 2.184 0.000 2.184
2000.12 0.000 26.931 0.000 17.121 0.000 46.129 46.129 2.184 0.000 2.184
2001.12 0.000 23.114 0.000 14.695 0.000 39.593 39.593 2.184 0.000 2.184
2002.12 0.000 20.417 0.000 12.980 0.000 34.972 34.972 2.184 0.000 2.184
2003.12 0.000 18.391 0.000 11.692 0.000 31.502 31.502 2.184 0.000 2.184
2004.12 0.000 16.803 0.000 10.683 0.000 28.782 28.782 2.184 0.000 2.184
2005.12 0.000 15.519 0.000 9.867 0.000 26.583 26.583 2.184 0.000 2.184
2006.12 0.000 14.456 0.000 9.190 0.000 24.761 24.761 2.184 0.000 2.184
2007.12 0.000 13.558 0.000 8.619 0.000 23.223 23.223 2.184 0.000 2.184
SUB-TOT 0.000 301.400 0.000 191.617 0.000 516.268 516.268 24.024 0.000 24.024
AFTER 0.000 174.022 0.000 110.638 0.000 298.081 298.081 41.484 0.000 41.484
TOTAL 0.000 475.422 0.000 302.255 0.000 814.349 814.349 65.508 0.000 65.508
ULT. 0.000 475.422
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 127.173 109.180 0.000 0.000 17.993 17.993 12.657 1.0 0.00 2.900
1998.12 72.886 0.000 0.000 0.000 72.886 90.879 75.607 1.0 0.00 2.900
1999.12 54.113 0.000 0.000 0.000 54.113 144.992 117.851 1.0 0.00 2.900
2000.12 43.946 0.000 0.000 0.000 43.946 188.938 148.878 1.0 0.00 2.900
2001.12 37.409 0.000 0.000 0.000 37.409 226.347 172.770 1.0 0.00 2.900
2002.12 32.789 0.000 0.000 0.000 32.789 259.136 191.714 1.0 0.00 2.900
2003.12 29.318 0.000 0.000 0.000 29.318 288.454 207.039 1.0 0.00 2.900
2004.12 26.599 0.000 0.000 0.000 26.599 315.052 219.618 1.0 0.00 2.900
2005.12 24.399 0.000 0.000 0.000 24.399 339.452 230.058 1.0 0.00 2.900
2006.12 22.578 0.000 0.000 0.000 22.578 362.029 238.798 1.0 0.00 2.900
2007.12 21.039 0.000 0.000 0.000 21.039 383.068 246.168 1.0 0.00 2.900
SUB-TOT 492.249 109.180 0.000 0.000 383.069 383.068 246.168 1.0 0.00 2.900
AFTER 256.593 0.000 0.000 0.000 256.593 639.662 288.881 1.0 0.00 2.900
TOTAL 748.842 109.180 0.000 0.000 639.662 639.662 288.881 1.0 0.00 2.900
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 288.881 220.961 176.492 144.752 120.685 101.632 86.066 73.041 61.937 52.327
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 9
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU09 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
LANOY LEON HORIZ DRILL THRU: 2006.11 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 9.92 YRS GAS: 0.000 7.095
CENTRAHOMA
13 1N 9E CROMWELL WAP ROR: 74.5 PAYOUT: 1.19
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 1.19 1.28 INITIAL 49.1379 39.5887 39.5887
UNDEVELOPED ACT NET INC./INV: 3.18 2.49 AT 1997.01 49.1379 39.5887 39.5887
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 65.717 0.000 26.017 0.000 72.271 72.271 8.845 0.000 8.845
1998.12 0.000 52.574 0.000 20.813 0.000 57.817 57.817 8.845 0.000 8.845
1999.12 0.000 42.059 0.000 16.651 0.000 46.253 46.253 8.845 0.000 8.845
2000.12 0.000 33.647 0.000 13.321 0.000 37.003 37.003 8.845 0.000 8.845
2001.12 0.000 26.918 0.000 10.656 0.000 29.602 29.602 8.845 0.000 8.845
2002.12 0.000 21.534 0.000 8.525 0.000 23.682 23.682 8.845 0.000 8.845
2003.12 0.000 17.227 0.000 6.820 0.000 18.945 18.945 8.845 0.000 8.845
2004.12 0.000 13.782 0.000 5.456 0.000 15.156 15.156 8.845 0.000 8.845
2005.12 0.000 11.026 0.000 4.365 0.000 12.125 12.125 8.845 0.000 8.845
2006.11 0.000 8.158 0.000 3.230 0.000 8.972 8.972 8.108 0.000 8.108
TOTAL 0.000 292.642 0.000 115.854 0.000 321.826 321.826 87.713 0.000 87.713
ULT. 0.000 292.643
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 63.426 73.707 0.000 0.000 -10.281 -10.281 -13.222 1.0 0.00 2.990
1998.12 48.972 0.000 0.000 0.000 48.972 38.691 29.037 1.0 0.00 2.990
1999.12 37.408 0.000 0.000 0.000 37.408 76.099 58.250 1.0 0.00 2.990
2000.12 28.158 0.000 0.000 0.000 28.158 104.257 78.148 1.0 0.00 2.990
2001.12 20.757 0.000 0.000 0.000 20.757 125.014 91.424 1.0 0.00 2.990
2002.12 14.837 0.000 0.000 0.000 14.837 139.851 100.013 1.0 0.00 2.990
2003.12 10.101 0.000 0.000 0.000 10.101 149.951 105.306 1.0 0.00 2.990
2004.12 6.311 0.000 0.000 0.000 6.311 156.263 108.302 1.0 0.00 2.990
2005.12 3.280 0.000 0.000 0.000 3.280 159.543 109.714 1.0 0.00 2.990
2006.11 0.864 0.000 0.000 0.000 0.864 160.407 110.055 1.0 0.00 2.990
TOTAL 234.114 73.707 0.000 0.000 160.407 160.407 110.055 1.0 0.00 2.990
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 110.055 91.397 75.838 62.730 51.579 42.006 33.718 26.487 20.132 14.510
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page:10
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU87 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R 2-18 HORIZ DRILL THRU: 2013.04 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 16.33 YRS GAS: 0.000 7.095
CENTRAHOMA
18 1N 10E CROMWELL WAP ROR: 87.3 PAYOUT: 1.01
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 1.01 1.08 INITIAL 82.2544 61.6908 61.6908
UNDEVELOPED ACT NET INC./INV: 5.16 3.31 AT 1997.01 82.2544 61.6908 61.6908
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 0.000 73.668 0.000 45.446 0.000 124.554 124.554 2.468 0.000 2.468
1998.12 0.000 49.745 0.000 30.688 0.000 84.107 84.107 2.468 0.000 2.468
1999.12 0.000 38.357 0.000 23.663 0.000 64.853 64.853 2.468 0.000 2.468
2000.12 0.000 31.553 0.000 19.465 0.000 53.348 53.348 2.468 0.000 2.468
2001.12 0.000 26.978 0.000 16.643 0.000 45.614 45.614 2.468 0.000 2.468
2002.12 0.000 23.670 0.000 14.602 0.000 40.021 40.021 2.468 0.000 2.468
2003.12 0.000 21.155 0.000 13.051 0.000 35.768 35.768 2.468 0.000 2.468
2004.12 0.000 19.172 0.000 11.827 0.000 32.414 32.414 2.468 0.000 2.468
2005.12 0.000 17.563 0.000 10.835 0.000 29.695 29.695 2.468 0.000 2.468
2006.12 0.000 16.229 0.000 10.012 0.000 27.440 27.440 2.468 0.000 2.468
2007.12 0.000 15.104 0.000 9.318 0.000 25.537 25.537 2.468 0.000 2.468
SUB-TOT 0.000 333.194 0.000 205.550 0.000 563.351 563.351 27.148 0.000 27.148
AFTER 0.000 66.959 0.000 41.308 0.000 113.211 113.211 13.157 0.000 13.157
TOTAL 0.000 400.153 0.000 246.858 0.000 676.562 676.562 40.305 0.000 40.305
ULT. 0.000 400.153
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 122.087 123.382 0.000 0.000 -1.295 -1.295 -6.714 1.0 0.00 2.950
1998.12 81.639 0.000 0.000 0.000 81.639 80.344 63.766 1.0 0.00 2.950
1999.12 62.385 0.000 0.000 0.000 62.385 142.730 112.464 1.0 0.00 2.950
2000.12 50.880 0.000 0.000 0.000 50.880 193.610 148.387 1.0 0.00 2.950
2001.12 43.147 0.000 0.000 0.000 43.147 236.756 175.944 1.0 0.00 2.950
2002.12 37.553 0.000 0.000 0.000 37.553 274.310 197.642 1.0 0.00 2.950
2003.12 33.301 0.000 0.000 0.000 33.301 307.611 215.050 1.0 0.00 2.950
2004.12 29.947 0.000 0.000 0.000 29.947 337.557 229.214 1.0 0.00 2.950
2005.12 27.227 0.000 0.000 0.000 27.227 364.784 240.864 1.0 0.00 2.950
2006.12 24.972 0.000 0.000 0.000 24.972 389.757 250.533 1.0 0.00 2.950
2007.12 23.070 0.000 0.000 0.000 23.070 412.826 258.614 1.0 0.00 2.950
SUB-TOT 536.208 123.382 0.000 0.000 412.826 412.826 258.614 1.0 0.00 2.950
AFTER 100.050 0.000 0.000 0.000 100.050 512.876 284.803 1.0 0.00 2.950
TOTAL 636.258 123.382 0.000 0.000 512.876 512.876 284.803 1.0 0.00 2.950
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 284.803 222.244 177.081 143.149 116.758 95.623 78.278 63.753 51.383 40.701
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page:11
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU22 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R 3-20 HORIZ DRILL THRU: 2013.04 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 16.33 YRS GAS: 0.000 7.095
CENTRAHOMA
20 1N 10E CROMWELL WAP ROR: 99.9 PAYOUT: 0.89
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.89 0.94 INITIAL 100.0000 81.2500 81.2500
UNDEVELOPED ACT NET INC./INV: 5.73 3.67 AT 1997.01 100.0000 81.2500 81.2500
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 73.668 0.000 59.855 0.000 167.381 167.381 3.000 0.000 3.000
1998.12 0.000 49.745 0.000 40.418 0.000 113.026 113.026 3.000 0.000 3.000
1999.12 0.000 38.357 0.000 31.165 0.000 87.152 87.152 3.000 0.000 3.000
2000.12 0.000 31.553 0.000 25.637 0.000 71.691 71.691 3.000 0.000 3.000
2001.12 0.000 26.978 0.000 21.920 0.000 61.298 61.298 3.000 0.000 3.000
2002.12 0.000 23.670 0.000 19.232 0.000 53.782 53.782 3.000 0.000 3.000
2003.12 0.000 21.155 0.000 17.189 0.000 48.067 48.067 3.000 0.000 3.000
2004.12 0.000 19.172 0.000 15.577 0.000 43.560 43.560 3.000 0.000 3.000
2005.12 0.000 17.563 0.000 14.270 0.000 39.905 39.905 3.000 0.000 3.000
2006.12 0.000 16.229 0.000 13.186 0.000 36.875 36.875 3.000 0.000 3.000
2007.12 0.000 15.104 0.000 12.272 0.000 34.318 34.318 3.000 0.000 3.000
SUB-TOT 0.000 333.194 0.000 270.721 0.000 757.055 757.055 33.000 0.000 33.000
AFTER 0.000 66.959 0.000 54.403 0.000 152.136 152.136 16.000 0.000 16.000
TOTAL 0.000 400.153 0.000 325.124 0.000 909.191 909.191 49.000 0.000 49.000
ULT. 0.000 400.153
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 164.381 150.000 0.000 0.000 14.381 14.381 7.084 1.0 0.00 3.010
1998.12 110.026 0.000 0.000 0.000 110.026 124.407 102.069 1.0 0.00 3.010
1999.12 84.152 0.000 0.000 0.000 84.152 208.559 167.757 1.0 0.00 3.010
2000.12 68.691 0.000 0.000 0.000 68.691 277.250 216.255 1.0 0.00 3.010
2001.12 58.298 0.000 0.000 0.000 58.298 335.548 253.489 1.0 0.00 3.010
2002.12 50.782 0.000 0.000 0.000 50.782 386.330 282.830 1.0 0.00 3.010
2003.12 45.067 0.000 0.000 0.000 45.067 431.397 306.389 1.0 0.00 3.010
2004.12 40.560 0.000 0.000 0.000 40.560 471.957 325.572 1.0 0.00 3.010
2005.12 36.905 0.000 0.000 0.000 36.905 508.861 341.363 1.0 0.00 3.010
2006.12 33.875 0.000 0.000 0.000 33.875 542.736 354.479 1.0 0.00 3.010
2007.12 31.318 0.000 0.000 0.000 31.318 574.054 365.449 1.0 0.00 3.010
SUB-TOT 724.055 150.000 0.000 0.000 574.055 574.054 365.449 1.0 0.00 3.010
AFTER 136.136 0.000 0.000 0.000 136.136 710.191 401.078 1.0 0.00 3.010
TOTAL 860.191 150.000 0.000 0.000 710.191 710.191 401.078 1.0 0.00 3.010
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 401.078 316.391 255.293 209.417 173.755 145.206 121.787 102.181 85.488 71.075
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page:12
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU16 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R 4-20 HORIZ DRILL THRU: 2013.04 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 16.33 YRS GAS: 0.000 7.095
CENTRAHOMA
20 1N 10E CROMWELL WAP ROR: 88.1 PAYOUT: 1.01
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 1.01 1.07 INITIAL 100.0000 75.4395 75.4395
UNDEVELOPED ACT NET INC./INV: 5.19 3.33 AT 1997.01 100.0000 75.4395 75.4395
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 73.668 0.000 55.575 0.000 152.313 152.313 3.000 0.000 3.000
1998.12 0.000 49.745 0.000 37.527 0.000 102.851 102.851 3.000 0.000 3.000
1999.12 0.000 38.357 0.000 28.937 0.000 79.306 79.306 3.000 0.000 3.000
2000.12 0.000 31.553 0.000 23.803 0.000 65.237 65.237 3.000 0.000 3.000
2001.12 0.000 26.978 0.000 20.352 0.000 55.780 55.780 3.000 0.000 3.000
2002.12 0.000 23.670 0.000 17.857 0.000 48.940 48.940 3.000 0.000 3.000
2003.12 0.000 21.155 0.000 15.959 0.000 43.740 43.740 3.000 0.000 3.000
2004.12 0.000 19.172 0.000 14.463 0.000 39.638 39.638 3.000 0.000 3.000
2005.12 0.000 17.563 0.000 13.249 0.000 36.312 36.312 3.000 0.000 3.000
2006.12 0.000 16.229 0.000 12.243 0.000 33.555 33.555 3.000 0.000 3.000
2007.12 0.000 15.104 0.000 11.394 0.000 31.229 31.229 3.000 0.000 3.000
SUB-TOT 0.000 333.194 0.000 251.359 0.000 688.901 688.901 33.000 0.000 33.000
AFTER 0.000 66.959 0.000 50.514 0.000 138.443 138.443 16.000 0.000 16.000
TOTAL 0.000 400.153 0.000 301.873 0.000 827.344 827.344 49.000 0.000 49.000
ULT. 0.000 400.153
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 149.313 150.000 0.000 0.000 -0.687 -0.687 -7.314 1.0 0.00 2.950
1998.12 99.851 0.000 0.000 0.000 99.851 99.164 78.888 1.0 0.00 2.950
1999.12 76.306 0.000 0.000 0.000 76.306 175.471 138.452 1.0 0.00 2.950
2000.12 62.237 0.000 0.000 0.000 62.237 237.708 182.394 1.0 0.00 2.950
2001.12 52.780 0.000 0.000 0.000 52.780 290.488 216.104 1.0 0.00 2.950
2002.12 45.940 0.000 0.000 0.000 45.940 336.428 242.648 1.0 0.00 2.950
2003.12 40.740 0.000 0.000 0.000 40.740 377.168 263.945 1.0 0.00 2.950
2004.12 36.638 0.000 0.000 0.000 36.638 413.806 281.273 1.0 0.00 2.950
2005.12 33.312 0.000 0.000 0.000 33.312 447.119 295.527 1.0 0.00 2.950
2006.12 30.555 0.000 0.000 0.000 30.555 477.674 307.357 1.0 0.00 2.950
2007.12 28.229 0.000 0.000 0.000 28.229 505.903 317.246 1.0 0.00 2.950
SUB-TOT 655.901 150.000 0.000 0.000 505.901 505.903 317.246 1.0 0.00 2.950
AFTER 122.443 0.000 0.000 0.000 122.443 628.344 349.295 1.0 0.00 2.950
TOTAL 778.344 150.000 0.000 0.000 628.344 628.344 349.295 1.0 0.00 2.950
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 349.295 272.761 217.509 176.000 143.716 117.862 96.646 78.879 63.749 50.682
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996 PAN96 Page:13
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU86 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MAYER R 6-17 HORIZ DRILL THRU: 2013.04 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 16.33 YRS GAS: 0.000 7.095
CENTRAHOMA
18 1N 10E CROMWELL WAP ROR: 99.9 PAYOUT: 0.36
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.36 0.37 INITIAL 100.0000 77.5000 77.5000
UNDEVELOPED ACT NET INC./INV: 12.48 7.99 AT 1997.01 100.0000 77.5000 77.5000
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 73.668 0.000 57.092 0.000 181.403 181.403 3.000 0.000 3.000
1998.12 0.000 49.745 0.000 38.552 0.000 122.495 122.495 3.000 0.000 3.000
1999.12 0.000 38.357 0.000 29.727 0.000 94.453 94.453 3.000 0.000 3.000
2000.12 0.000 31.553 0.000 24.453 0.000 77.697 77.697 3.000 0.000 3.000
2001.12 0.000 26.978 0.000 20.908 0.000 66.433 66.433 3.000 0.000 3.000
2002.12 0.000 23.670 0.000 18.345 0.000 58.287 58.287 3.000 0.000 3.000
2003.12 0.000 21.155 0.000 16.395 0.000 52.094 52.094 3.000 0.000 3.000
2004.12 0.000 19.172 0.000 14.858 0.000 47.209 47.209 3.000 0.000 3.000
2005.12 0.000 17.563 0.000 13.611 0.000 43.248 43.248 3.000 0.000 3.000
2006.12 0.000 16.229 0.000 12.578 0.000 39.964 39.964 3.000 0.000 3.000
2007.12 0.000 15.104 0.000 11.706 0.000 37.193 37.193 3.000 0.000 3.000
SUB-TOT 0.000 333.194 0.000 258.225 0.000 820.476 820.476 33.000 0.000 33.000
AFTER 0.000 66.959 0.000 51.894 0.000 164.880 164.880 16.000 0.000 16.000
TOTAL 0.000 400.153 0.000 310.119 0.000 985.356 985.356 49.000 0.000 49.000
ULT. 0.000 400.153
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 178.403 75.000 0.000 0.000 103.403 103.403 95.482 1.0 0.00 3.420
1998.12 119.495 0.000 0.000 0.000 119.495 222.897 198.641 1.0 0.00 3.420
1999.12 91.453 0.000 0.000 0.000 91.453 314.350 270.028 1.0 0.00 3.420
2000.12 74.697 0.000 0.000 0.000 74.697 389.047 322.766 1.0 0.00 3.420
2001.12 63.433 0.000 0.000 0.000 63.433 452.480 363.279 1.0 0.00 3.420
2002.12 55.287 0.000 0.000 0.000 55.287 507.767 395.224 1.0 0.00 3.420
2003.12 49.094 0.000 0.000 0.000 49.094 556.861 420.887 1.0 0.00 3.420
2004.12 44.209 0.000 0.000 0.000 44.209 601.070 441.795 1.0 0.00 3.420
2005.12 40.248 0.000 0.000 0.000 40.248 641.317 459.018 1.0 0.00 3.420
2006.12 36.964 0.000 0.000 0.000 36.964 678.281 473.329 1.0 0.00 3.420
2007.12 34.193 0.000 0.000 0.000 34.193 712.474 485.306 1.0 0.00 3.420
SUB-TOT 787.476 75.000 0.000 0.000 712.476 712.474 485.306 1.0 0.00 3.420
AFTER 148.880 0.000 0.000 0.000 148.880 861.356 524.265 1.0 0.00 3.420
TOTAL 936.356 75.000 0.000 0.000 861.356 861.356 524.265 1.0 0.00 3.420
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 524.265 431.992 365.454 315.514 276.708 245.652 220.182 198.864 180.718 165.051
</TABLE>
<PAGE>
PEP 3.22 2/12/97 9:31 PAN WESTERN ENERGY CORP 1996 PAN96 Page: 6
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU42 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
HAYNES H HORIZ DRILL THRU: 2012.01 OIL: 0.000 4.600 Tier 2
PAN WESTERN ENERGY LIFE: 15.08 YRS GAS: 0.000 7.500
HIGGINS W
73 BLK 43 H&T TONKAWA ROR: 99.9 PAYOUT: 0.45
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
LIPSCOMB TX PRI: OIL PAYOUT (YRS) 0.45 0.46 INITIAL 100.0000 82.0312 82.0312
UNDEVELOPED ACT NET INC./INV: 11.32 7.87 AT 1997.01 100.0000 82.0312 82.0312
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 15.065 25.502 12.358 20.919 288.251 42.958 331.209 12.000 0.000 12.000
1998.12 12.654 20.401 10.381 16.736 242.131 34.366 276.497 12.000 0.000 12.000
1999.12 10.630 16.321 8.720 13.388 203.390 27.493 230.883 12.000 0.000 12.000
2000.12 8.929 13.057 7.325 10.711 170.848 21.995 192.842 12.000 0.000 12.000
2001.12 7.500 10.446 6.153 8.569 143.512 17.596 161.108 12.000 0.000 12.000
2002.12 6.300 8.356 5.168 6.855 120.550 14.076 134.627 12.000 0.000 12.000
2003.12 5.292 6.685 4.341 5.484 101.262 11.261 112.523 12.000 0.000 12.000
2004.12 4.445 5.348 3.647 4.387 85.060 9.009 94.069 12.000 0.000 12.000
2005.12 3.734 4.278 3.063 3.510 71.450 7.207 78.658 12.000 0.000 12.000
2006.12 3.137 3.423 2.573 2.808 60.018 5.766 65.784 12.000 0.000 12.000
2007.12 2.635 2.738 2.161 2.246 50.415 4.613 55.028 12.000 0.000 12.000
SUB-TOT 80.321 116.555 65.890 95.613 1536.887 196.340 1733.228 132.000 0.000 132.000
AFTER 7.047 6.550 5.779 5.372 134.805 11.032 145.838 49.000 0.000 49.000
TOTAL 87.368 123.105 71.669 100.985 1671.692 207.372 1879.065 181.000 0.000 181.000
ULT. 87.368 123.105
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 319.209 150.000 0.000 0.000 169.209 169.209 154.238 1.0 24.45 2.220
1998.12 264.497 0.000 0.000 0.000 264.497 433.706 382.342 1.0 24.45 2.220
1999.12 218.883 0.000 0.000 0.000 218.883 652.589 553.147 1.0 24.45 2.220
2000.12 180.842 0.000 0.000 0.000 180.842 833.432 680.840 1.0 24.45 2.220
2001.12 149.108 0.000 0.000 0.000 149.108 982.539 776.107 1.0 24.45 2.220
2002.12 122.627 0.000 0.000 0.000 122.627 1105.166 847.001 1.0 24.45 2.220
2003.12 100.523 0.000 0.000 0.000 100.523 1205.689 899.587 1.0 24.45 2.220
2004.12 82.069 0.000 0.000 0.000 82.069 1287.758 938.436 1.0 24.45 2.220
2005.12 66.658 0.000 0.000 0.000 66.658 1354.416 966.988 1.0 24.45 2.220
2006.12 53.784 0.000 0.000 0.000 53.784 1408.200 987.835 1.0 24.45 2.220
2007.12 43.028 0.000 0.000 0.000 43.028 1451.228 1002.927 1.0 24.45 2.220
SUB-TOT 1601.228 150.000 0.000 0.000 1451.228 1451.228 1002.927 1.0 24.45 2.220
AFTER 96.838 0.000 0.000 0.000 96.838 1548.065 1030.370 1.0 24.45 2.220
TOTAL 1698.065 150.000 0.000 0.000 1548.065 1548.065 1030.370 1.0 24.45 2.220
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 1030.370 867.439 742.096 643.267 563.642 498.273 443.725 397.559
</TABLE>
<PAGE>
PEP 3.22 2/07/97 19:07 PAN WESTERN ENERGY CORP 1996
SYCAMORE RESOURCES PROVED UNDEVELOPED 1996
<TABLE>
<CAPTION>
PU08 EFFECTIVE: 1997.01 -AD.VAL- --SEV.-- --CAT.--
MCKINNEY HORIZ DRILL THRU: 2026.12 OIL: 0.000 0.000 Tier 3
PAN WESTERN ENERGY CORP LIFE: 30.00 YRS GAS: 0.000 7.095
CENTRAHOMA
12 1N 9E CROMWELL WAP ROR: 99.9 PAYOUT: 0.60
UNDISC -DISC- OWNERSHIP: ---WI--- --OIL--NRI---GAS--
COAL OK PRI: GAS PAYOUT (YRS) 0.60 0.62 INITIAL 44.5313 36.5770 36.5770
UNDEVELOPED ACT NET INC./INV: 10.18 5.36 AT 1997.01 44.5313 36.5770 36.5770
---GROSS PRODUCTION-- ----NET PRODUCTION--- ---------NET REVENUE, M$-------- -----------EXPENSE, M$----------
Ending- OIL, MBBL GAS, MMCF OIL, MBBL GAS, MMCF OIL GAS TOTAL DIRECT WPT TOTAL
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997.12 0.000 92.085 0.000 33.682 0.000 102.638 102.638 1.336 0.000 1.336
1998.12 0.000 62.181 0.000 22.744 0.000 69.308 69.308 1.336 0.000 1.336
1999.12 0.000 47.947 0.000 17.537 0.000 53.442 53.442 1.336 0.000 1.336
2000.12 0.000 39.441 0.000 14.426 0.000 43.961 43.961 1.336 0.000 1.336
2001.12 0.000 33.723 0.000 12.335 0.000 37.588 37.588 1.336 0.000 1.336
2002.12 0.000 29.588 0.000 10.822 0.000 32.979 32.979 1.336 0.000 1.336
2003.12 0.000 26.444 0.000 9.672 0.000 29.475 29.475 1.336 0.000 1.336
2004.12 0.000 23.964 0.000 8.765 0.000 26.711 26.711 1.336 0.000 1.336
2005.12 0.000 21.954 0.000 8.030 0.000 24.470 24.470 1.336 0.000 1.336
2006.12 0.000 20.287 0.000 7.420 0.000 22.612 22.612 1.336 0.000 1.336
2007.12 0.000 18.880 0.000 6.906 0.000 21.044 21.044 1.336 0.000 1.336
SUB-TOT 0.000 416.494 0.000 152.339 0.000 464.228 464.228 14.696 0.000 14.696
AFTER 0.000 229.708 0.000 84.022 0.000 256.031 256.031 25.382 0.000 25.382
TOTAL 0.000 646.202 0.000 236.361 0.000 720.259 720.259 40.078 0.000 40.078
ULT. 0.000 646.202
NET -----UNDISCOUNTED---- CUM 10.0 AVERAGE -------PRICE, $------
NET OPER FUTURE INVESTMENT, M$ SALVAGE NET CASHFLOW, M$ PRESENT NUMBER BEFORE GPT
Ending- INCOME, M$ INTANGIBLE TANGIBLE VALUE, M$ YEARLY CUMULATIVE WORTH,M$ OF WELLS OIL GAS
- ------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1997.12 101.302 66.797 0.000 0.000 34.505 34.505 30.006 1.0 0.00 3.280
1998.12 67.972 0.000 0.000 0.000 67.972 102.477 88.685 1.0 0.00 3.280
1999.12 52.106 0.000 0.000 0.000 52.106 154.582 129.357 1.0 0.00 3.280
2000.12 42.625 0.000 0.000 0.000 42.625 197.207 159.451 1.0 0.00 3.280
2001.12 36.252 0.000 0.000 0.000 36.252 233.459 182.604 1.0 0.00 3.280
2002.12 31.643 0.000 0.000 0.000 31.643 265.102 200.887 1.0 0.00 3.280
2003.12 28.139 0.000 0.000 0.000 28.139 293.241 215.596 1.0 0.00 3.280
2004.12 25.375 0.000 0.000 0.000 25.375 318.616 227.597 1.0 0.00 3.280
2005.12 23.134 0.000 0.000 0.000 23.134 341.750 237.496 1.0 0.00 3.280
2006.12 21.276 0.000 0.000 0.000 21.276 363.025 245.733 1.0 0.00 3.280
2007.12 19.708 0.000 0.000 0.000 19.708 382.733 252.637 1.0 0.00 3.280
SUB-TOT 449.532 66.797 0.000 0.000 382.735 382.733 252.637 1.0 0.00 3.280
AFTER 230.649 0.000 0.000 0.000 230.649 613.384 291.458 1.0 0.00 3.280
TOTAL 680.181 66.797 0.000 0.000 613.384 613.384 291.458 1.0 0.00 3.280
PRESENT 10.0%= 15.0%= 20.0%= 25.0%= 30.0%= 35.0%= 40.0%= 45.0%= 50.0%= 55.0%=
WORTH,M$ 291.458 228.015 186.243 156.358 133.693 115.773 101.165 88.977 78.618 69.684
</TABLE>
<PAGE>
EXHIBIT 8.2
[LETTERHEAD OF SYCAMORE RESOURCES, LLC]
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
- ---------------------------------------------------------
We hereby consent to the inclusion of our oil and gas reserve report for the oil
and gas reserves of Pan Western Energy Corporation (the "Company") as of January
31, 1997, and to all references to our firm included or made a part of the
Company's Registration Statement of form 10-5SB and all amendments thereto filed
with the Securities and Exchange Commission.
SYCAMORE RESOURCES, LLC
By: /s/ Mike S. Mabry
--------------------
Mike S. Mabry PE
Managing Partner
March 24, 1997
Tulsa, Oklahoma
