Annual report pursuant to Section 13 and 15(d)

Supplemental Oil and Gas Disclosures (Unaudited)

v3.7.0.1
Supplemental Oil and Gas Disclosures (Unaudited)
12 Months Ended
Mar. 31, 2017
Supplemental Oil And Gas Disclosures  
Supplemental Oil and Gas Disclosures (Unaudited)

Supplemental Oil and Gas Disclosures (Unaudited)

 

The following disclosures for the Company are made in accordance with authoritative guidance regarding disclosures about oil and natural gas producing activities. Users of this information should be aware that the process of estimating quantities of “proved,” “proved developed,” and “proved undeveloped” crude oil, natural gas liquids and natural gas reserves is complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions (upward or downward) to existing reserve estimates may occur from time to time. Although reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures.

 

Proved reserves represent estimated quantities of crude oil, natural gas liquids and natural gas that geoscience and engineering data can estimate, with reasonable certainty, to be economically producible from a given day forward from known reservoirs under economic conditions, operating methods and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

 

Proved developed reserves are proved reserves expected to be recovered under operating methods being utilized at the time the estimates were made, through wells and equipment in place or if the cost of any required equipment is relatively minor compared to the cost of a new well.

 

Proved undeveloped 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. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Estimates for proved undeveloped reserves are not attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty. 

 

PROVED RESERVE SUMMARY

 

All of the Company’s reserves are located in the United States. The following tables sets forth the changes in Camber’s net proved reserves (including developed and undeveloped reserves) for the years ended March 31, 2017 and 2016. Reserves estimates as of March 31, 2017 were estimated by the independent petroleum consulting firm Ralph E. Davis Associates, LLC:

 

    March 31,  
    2017     2016  
Crude Oil (Bbls)                
Net proved reserves at beginning of year     3,841,362       4,578,535  
Revisions of previous estimates     (2,377,088 )     (444,710 )
Purchases in place     158,466        
Extensions, discoveries and other additions            
Sales in place     (3,072 )     (270,273 )
Production     (32,918 )     (22,190 )
Net proved reserves at end of year     1,586,750       3,841,362  
               
Natural Gas (Mcf)                
Net proved reserves at beginning of year     2,513,690       2,976,780  
Revisions of previous estimates     (1,930,708 )     (300,926 )
Purchases in place     9,725,345        
Extensions, discoveries and other additions            
Sales in place     (1,772 )     (162,164 )
Production     (502,545 )      
Net proved reserves at end of year     9,804,010       2,513,690  
               
NGL (Bbls)                
Net proved reserves at beginning of year            
Revisions of previous estimates            
Purchases in place     2,528,388        
Extensions, discoveries and other additions            
Sales in place            
Production     (108,278 )      
Net proved reserves at end of year     2,420,110        
                 
Oil Equivalents (Boe)                
Net proved reserves at beginning of year     4,260,312       5,074,665  
Revisions of previous estimates     (2,698,874 )     (494,863 )
Purchases in place     4,307,745        
Extensions, discoveries and other additions            
Sales in place     (3,367 )     (297,300 )
Production     (224,954 )     (22,190 )
Net proved reserves at end of year     5,640,862       4,260,312  

 

RESERVES

 

During the year ended March 31, 2017, Camber increased its reserves by approximately 1.4 million Boe of proved reserves. The increase was the result of a downward revision of previous estimates of 2.6 million Boe, offset by the purchases in place of 7.9 million Boe, which was reduced by the production volume of 3.9 million Boe. Camber had a transfer to proved non-producing reserves on existing leases of 0.8 million Boe due to certain properties which were previously producing, being shut-in, as they became uneconomic due to the decrease in commodity prices.

 

During the year ended March 31, 2016, Camber adjusted its reserves downward by approximately 0.8 million Boe of proved reserves. We had a downward revision primarily due to the sale of existing leases of 0.3 million Boe in Karnes County, Texas, the expiration of 0.4 million Boe on existing leases and the transfer of approximately 0.2 million Boe of proved undeveloped reserves to probable undeveloped reserves offset by the transfer of approximately 0.1 million probable undeveloped reserves to proved undeveloped reserves.

 

The following table sets forth Camber’s proved developed and undeveloped reserves at March 31, 2017 and 2016:

 

  At March 31,
    2017   2016
Proved Developed Reserves                
Crude Oil (Bbls)     312,070       117,778  
Natural Gas (Mcf)     7,458,350       —    
NGL (Bbls)     1,784,010       —    
Oil Equivalents (Boe)     3,339,140       117,778  
Proved Non-Producing Reserves                
Crude Oil (Bbls)     8,993       —    
Natural Gas (Mcf)     3,295,890       —    
NGL (Bbls)     294,522       —    
Oil Equivalents (Boe)     852,830       —    
Proved Undeveloped Reserves                
Crude Oil (Bbls)     1,265,689       3,723,585  
Natural Gas (Mcf)     520,674       2,513,691  
NGL (Bbls)     96,424       —    
Oil Equivalents (Boe)     1,448,892       4,142,534  
Proved Reserves                
Crude Oil (Bbls)     1,586,752       3,841,363  
Natural Gas (Mcf)     11,274,914       2,513,691  
NGL (Bbls)     2,174,958       —    
Oil Equivalents (Boe)     5,640,862       4,260,312  

 

*The Company engaged Ralph E. Davis Associates LLC, an independent reserve engineering firm, to provide a reserve report on the Company’s properties as of March 31, 2017. The reserve report has been included as Exhibit 99.1 to the Form 10-K which these financial statements are filed with. 

 

Proved Undeveloped Reserves

 

For the year ended March 31, 2017, total PUDs decreased by 1.8 million Boe to 2.3 million Boe. The proved undeveloped reserve decrease was primarily due to the:

 

transfer of approximately 0.2 million Boe of PUDs to probable undeveloped reserves as there has been no development within five years since initial disclosure; and
     
reduction of approximately 1.6 million Boe of PUDS due to expiring leases.

 

We had no proved developed non-producing Boe and we transferred no amounts of proved undeveloped reserves to proved developed reserves during the fiscal year ended March 31, 2017. In addition, our plan is to convert our remaining PUD balance as of March 31, 2017 to proved developed reserves within five years or prior to the end of fiscal year 2022 provided that we are able to obtain adequate funding and capital over the time period.

 

Our reserves concentrate mainly in the Hunton and Eagle Ford formations. At March 31, 2017, Camber’s proved reserves for the Hunton and Eagle Ford formations were 4.7 million Boe, or 84% of the total proved developed and undeveloped reserves of 5.6 million Boe.

 

The following table sets forth Camber’s net reserves in Boe by reserve category and by formation at March 31, 2017 and 2016:

 

    Proved     Proved     Proved     Total  
    Developed     Non-Producing     Undeveloped     Proved  
Hunton                                
At March 31, 2017     2,512,176       728,654             3,240,830  
At March 31, 2016                        
                                 
Mississippian - Woodford - Hun                                
At March 31, 2017     417,209       124,176             541,385  
At March 31, 2016                        
                                 
Fusselman                                
At March 31, 2017     10,141                   10,141  
At March 31, 2016                        
                                 
Red Fork                                
At March 31, 2017     66,859                   66,859  
At March 31, 2016                        
                                 
Trend Area                                
At March 31, 2017     129,554                   129,554  
At March 31, 2016                        
                                 
Segundo - Other                                
At March 31, 2017     29,798                   29,798  
At March 31, 2016                        
                                 
Eagle Ford                                
At March 31, 2017     35,526             1,448,892       1,484,418  
At March 31, 2016     9,675             4,142,534       4,152,209  
                                 
Austin Chalk                                
At March 31, 2017     126,739                   126,739  
At March 31, 2016     97,066                   97,066  
                                 
Eaglebine                                
At March 31, 2017                        
At March 31, 2016     10,328                   10,328  
                                 
Other                                
At March 31, 2017     11,138                   11,138  
At March 31, 2016     709                   709  
                                 
Total                                
At March 31, 2017     3,339,140       852,830       1,448,892       5,640,862  
At March 31, 2016     117,778             4,142,534       4,260,312  

  

Capitalized Costs Relating to Oil and Natural Gas Producing Activities. The following table sets forth the capitalized costs relating to Camber’s crude oil and natural gas producing activities at March 31, 2017 and 2016:

 

    At March 31,  
    2017     2016  
 Oil and gas properties subject to amortization   $ 72,318,163     $ 47,801,175  
 Oil and gas properties not subject to amortization     28,947,400        
 Capitalized asset retirement costs     1,473,199       717,337  
 Total oil & natural gas properties     102,738,762       48,518,512  
 Accumulated depreciation, depletion, and impairment     (67,036,915 )     (34,416,407 )
 Net Capitalized Costs   $ 35,701,847     $ 14,102,105  

 

Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development Activities. The following table sets forth the costs incurred in Camber’s oil and natural gas property acquisition, exploration and development activities for the years ended March 31, 2017 and 2016:

 

    2017     2016  
 Acquisition of properties                
 Proved   $ 3,488,406     $ 141,908  
 Unproved            
 Exploration costs            
 Development costs           130,813  
 Total   $ 3,488,406     $ 272,721  

 

Results of Operations for Oil and Natural Gas Producing Activities. The following table sets forth the results of operations for oil and natural gas producing activities for the years ended March 31, 2017 and 2016:

 

    2017     2016  
 Crude oil and natural gas revenues   $ 5,302,024     $ 968,146  
 Production costs     (3,517,345 )     (863,635 )
 Depreciation and depletion     (2,468,916 )     (688,213 )
Results of operations for producing activities,  excluding corporate overhead and interest costs   $ (684,237 )   $ (583,702 )

 

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves. The following information has been developed utilizing procedures prescribed by ASC Topic 932 and based on crude oil and natural gas reserves and production volumes estimated by the independent petroleum consultants of Camber. The estimates were based on a 12-month average of first-of-the-month commodity prices for the years ended March 31, 2017 and 2016. The following information may be useful for certain comparison purposes, but should not be solely relied upon in evaluating Camber or its performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the Standardized Measure of Discounted Future Net Cash Flows be viewed as representative of the current value of Camber.

 

The future cash flows presented below are based on cost rates and statutory income tax rates in existence as of the date of the projections and average prices over the preceding twelve months. It is expected that material revisions to some estimates of crude oil and natural gas reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used.

 

Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable and possible as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated. 

 

The following table sets forth the standardized measure of discounted future net cash flows from projected production of Camber’s oil, NGL, and natural gas reserves as of March 31, 2017 and 2016:

 

    At March 31,  
    2017     2016  
Future cash inflows   $ 151,612,190     $ 179,710,901  
Future production costs     (68,604,389 )     (48,202,264 )
Future development costs     (25,003,360 )     (78,632,113 )
Future income taxes     (20,301,568 )     (3,437,757 )
Future net cash flows     37,702,873       49,438,767  
Discount to present value at 10% annual rate     (21,690,451 )     (36,040,384 )
Standardized measure of discounted future net cash flows relating to proved oil and gas reserves   $ 16,012,422     $ 13,398,383  

 

Changes in Standardized Measure of Discounted Future Net Cash Flows. The following table sets forth the changes in the standardized measure of discounted future net cash flows for each of the years ended March 31, 2017 and 2016:

 

    2017     2016  
Standardized measure, beginning of year   $ 13,471,565     $ 61,627,716  
Crude oil and natural gas sales, net of production costs     (2,377,676 )     (104,515 )
Net changes in prices and production costs     (3,182,783 )     (41,178,131 )
Changes in estimated future development costs     922,149       (9,440,684 )
Revisions of previous quantity estimates     (4,089,299 )     (6,460,172 )
Accretion of discount     2,542,541       1,400,887  
Net change in income taxes     (8,875,682 )     13,592,568  
Purchases of reserves in place     17,126,575        
Sales of reserves in place     (55,894 )     (6,360,521 )
Change in timing of estimated future production     530,926       320,235  
Standardized measure, end of year   $ 16,012,422     $ 13,398,383