RALPH E. DAVIS ASSOCIATES, INC.
CONSULTANTS-PETROLEUM AND NATURAL GAS
3555 TIMMONS LANE-SUITE 1105
HOUSTON, TEXAS 77027
(713) 622-8955
October 19, 2000
Seneca Resources Corporation
1201 Louisiana, Suite 400
Houston, Texas 77002
Attention: Mr. Don A. Brown
Vice President
Re: Oil, Condensate and Natural Gas Reserves,
Seneca Resources Corporation
As of October 1, 2000
Gentlemen:
At your request, the firm of Ralph E. Davis Associates, Inc. has audited an
evaluation of the proved oil, condensate and natural gas reserves on leaseholds
in which Seneca Resources Corporation has certain interests. This report
presents a summary of the Proved Developed (producing and non-producing shut-in)
and Proved Undeveloped reserves anticipated to be produced from Seneca
Resources' interest.
Liquid volumes are expressed in thousands of barrels (MBbls) of stock tank oil.
Gas volumes are expressed in millions of standard cubic feet (MMSCF) at the
official temperature and pressure bases of the areas wherein the gas reserves
are located.
The summarized results of the reserve audit are as follows:
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RALPH E. DAVIS ASSOCIATES, INC.
Seneca Resources Corp.
Mr. Don A. Brown
October 19, 2000
Page 2
<TABLE>
<CAPTION>
Estimated Proved Reserves
Net to Seneca Resources Corporation
As of October 1, 2000
Proved Develop
_________________________________________________ Proved
Producing Non Producing Shut-In Undeveloped Total
<S> <C> <C> <C> <C> <C>
Division:
---------
East Coast Division:
Oil/Condensate, MBbls 79.2 0.0 0.0 0.0 79.2
Gas, MMcf 74,743.8 0.0 0.0 0.0 74,743.8
Gulf Coast Division:
Oil/Condensate, MBbls 5,636.8 2,587.8 0.0 263.7 8,488.3
Gas, MMcf 53,054.5 54,855.3 0.0 5,480.8 113,401.6
West Coast Division:
Oil/Condensate, MBbls 46,140.6 11,127.8 502.6 11,173.4 68,944.4
Gas, MMcf 40,491.0 3,072.3 1,021.6 65,779.1 110,356.0
TOTAL:
Oil/Condensate, MBbls 51,856.6 13,715.6 502.6 11,437.0 77,511.9
Gas, MMcf 168,289.4 57,938.7 1,021.6 71,259.8 298,509.5
</TABLE>
DISCUSSION:
The scope of this study was to audit the proved reserves attributable to the
interests of Seneca Resources Corporation. Reserve estimates were prepared by
Seneca using acceptable evaluation principals for each source. The quantities
presented herein are estimated reserves of oil, condensate and natural gas that
geologic and engineering data demonstrate can be recovered from known reservoirs
under existing economic conditions with reasonable certainty.
Ralph E. Davis Associates, Inc. has audited the reserve estimates, the data
incorporated into preparing the estimates and the methodology used to evaluate
the reserves. In each of Seneca's producing divisions all current year additions
and those properties of significant value were reviewed by Ralph E. Davis.
Reserve estimates of current producing zones, productive zones behind
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RALPH E. DAVIS ASSOCIATES, INC.
Seneca Resources Corp.
Mr. Don A. Brown
October 19, 2000
Page 3
pipe and undrilled well locations were reviewed in detail. Certain changes to
either individual reserve estimates or the categorization of reserves were
suggested by Ralph E. Davis Associates, Inc. and accepted by Seneca Resources.
It is our opinion that the reserves presented herein meet all the criteria of
Proved Reserves.
Neither Ralph E. Davis Associates, Inc. nor any of its employees have any
interest in Seneca Resources Corporation or the properties reported herein. The
employment and compensation to make this study are not contingent on our
estimate of reserves.
We appreciate the opportunity to be of service to you in this matter, and will
be glad to address any questions or inquiries you may have.
Very truly yours,
RALPH E. DAVIS ASSOCIATES, INC.
/s/ Allen C. Barron
Allen C. Barron, P. E.
Vice President
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RALPH E. DAVIS ASSOCIATES, INC.
CLASSIFICATION OF RESERVES
Proved Oil and Gas Reserves
Proved oil and gas reserves are the estimated quantities of crude oil, natural
gas, and natural gas liquids which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions.
1. Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation
test. The area of a reservoir considered proved includes (A)
that portion delineated by drilling and defined by gas-oil
and/or oil-water contacts, if any; and (B) the immediately
adjoining portions not yet drilled, but which can be
reasonably judged as economically productive on the basis of
available geological and engineering data. In the absence of
information on fluid contacts, the lowest known structural
occurrence of hydrocarbons controls the lower proved limit of
the reservoir.
2. Reserves which can be produced economically through
application of improved recovery techniques (such as fluid
injection) are included in the "proved" classification when
successful testing by a pilot project, or the operation of an
installed program in the reservoir, provides support for the
engineering analysis on which the project or program was
based.
3. Estimates of proved reserves do not include the following: (A)
oil that may become available from known reservoirs but is
classified separately as "indicated additional reserves"; (B)
crude oil, natural gas, and natural gas liquids, the recovery
of which is subject to reasonable doubt because of uncertainty
as to geology, reservoir characteristics, or economic factors;
(C) crude oil, natural gas, and natural gas liquids, that may
occur in undrilled prospects; and (D) crude oil, natural gas,
and natural gas liquids, that may be recovered from oil
shales, coal, gilsonite and other such sources.
Proved Developed Reserves
Proved developed oil and gas reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and operating methods.
Additional oil and gas expected to be obtained through the application of fluid
injection or other improved recovery techniques for supplementing the natural
forces and mechanisms of primary recovery should be included as "proved
developed reserves" only after testing by a pilot project or after the operation
of an installed program has confirmed through production response that increased
recovery will be achieved.
Proved Undeveloped Reserves
Proved undeveloped oil and gas reserves are reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for recompletion. Reserves on undrilled
acreage shall be limited to those drilling units offsetting productive units
that are reasonably certain of production when drilled. Proved reserves for
other undrilled units can be claimed only where it can be demonstrated with
certainty that there is continuity of production from the existing productive
formation.
