Annual report pursuant to Section 13 and 15(d)

Supplemental Oil and Gas Disclosures (Unaudited)

v3.20.2
Supplemental Oil and Gas Disclosures (Unaudited)
12 Months Ended
Mar. 31, 2020
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.

 

The Company reported financial results from its acquisition of 25% of the membership interests of Elysium effective February 3, 2020, based on information provided by Viking’s management, which was derived from reserve reports prepared by an independent third party in conjunction with the acquisition due diligence as of September 1, 2019. Those balances were then adjusted for production reported by the seller through December 31, 2019 and then for actual production from the acquisition date through March 31, 2020. Elysium reported estimated total net reserves as of March 31, 2020 were 2,988,160 barrels (Bbls) of crude oil and 41,576,500 thousand cubic feet (Mcf) of natural gas which translates to an equivalent of 9,917,580 barrel of oil equivalents (Boe). Camber’s 25% interest in Elysium equates to ownership of 747,040 Bbls of crude oil and 10,394,130 Mcf of natural gas, which translates to an equivalent of 2,479,390 Boe.

 

These reserves are based on the Oil and Gas Benchmark Prices to Estimate Year-End Petroleum Reserves and Values Using U.S. Securities and Exchange Commission Guidelines from the Modernization of Oil and Gas Reporting and on the quantities of oil, natural gas and natural gas liquids (NGLs), which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, under existing economic conditions, operating methods and government regulations, prior to the time at which contracts providing the rights to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Reserves and economic evaluation of all of the Company’s properties are prepared on a well-by-well basis. The accuracy of the reserve estimates is a function of the quality and quantity of available data; interpretation of that data; and accuracy of various mandated economic assumptions.

 

As of March 31, 2020, Viking had net capitalized costs of $30.2 million and a net operating income from its oil and gas properties of $1.6 million. Camber’s 25% ownership in Elysium equates to net capitalized costs of $7.6 million and net operating income from its interest in the Elysium oil and gas properties of $0.4 million.

 

Viking’s management used an average monthly crude oil price of $52.048 per Bbl and a natural gas price of $2.74 per Mcf, for the twelve months ended March 31, 2020, to calculate the estimated discounted future net cash flow (“PV-10”) before tax expenses for total proved reserves of Elysium of approximately $104.9 million. Camber’s 25% ownership of Elysium equates to a PV10 before tax expense $26.2 million. Oil, natural gas and NGL prices are market driven and have been historically volatile, and we expect that future prices will continue to fluctuate due to supply and demand factors, seasonality, and geopolitical and economic factors, and such volatility can have a significant impact on our estimates of proved reserves and the related PV-10 value.

 

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, 2020 and 2019. Reserves estimates as of March 31, 2020 and 2019, respectively, were estimated by the independent petroleum consulting firm Graves & Co. Consulting LLC:

 

    March 31,  
    2020     2019  
Crude Oil (Bbls)                
Net proved reserves at beginning of year     124,524       129,573  
Revisions of previous estimates     (64,275 )     (3,868 )
Purchases in place            
Extensions, discoveries and other additions            
Sales in place           (75 )
Production     (5,399 )     (8,846 )
Net proved reserves at end of year     54,850       124,520  
                 
Natural Gas (Mcf)                
Net proved reserves at beginning of year     208,710       8,147,168  
Revisions of previous estimates     18,005       (7,609,052 )
Purchases in place            
Extensions, discoveries and other additions            
Sales in place           (7,983 )
Production     (18,892 )     (321,423 )
Net proved reserves at end of year     207,823       208,710  
                 
NGL (Bbls)                
Net proved reserves at beginning of year     44,110       1,435,703  
Revisions of previous estimates     4,381       (1,338,916
Purchases in place            
Extensions, discoveries and other additions            
Sales in place           (1,418 )
Production     (4,536 )     (51,269 )
Net proved reserves at end of year     43,955       44,100  
                 
Oil Equivalents (Boe)                
Net proved reserves at beginning of year     203,406       2,923,138  
Revisions of previous estimates     (56,880 )     (2,603,224 )
Purchases in place            
Extensions, discoveries and other additions            
Sales in place           (2,823 )
Production     (13,084 )     (113,685 )
Net proved reserves at end of year     133,442       203,406  

  

The following table sets forth Camber’s proved developed and undeveloped reserves at March 31, 2020 and 2019:

  

    At March 31,  
    2020     2019  
Proved Developed Producing Reserves                
Crude Oil (Bbls)     54,850       76,490  
Natural Gas (Mcf)     207,823       208,710  
NGL (Bbls)     43,955       44,100  
Oil Equivalents (Boe)     133,442       155,376  
                 
Proved Developed Non-Producing Reserves                
Crude Oil (Bbls)           48,030   
Natural Gas (Mcf)            
NGL (Bbls)            
Oil Equivalents (Boe)           48,030   
                 
Proved Undeveloped Reserves                
Crude Oil (Bbls)            
Natural Gas (Mcf)            
NGL (Bbls)            
Oil Equivalents (Boe)            
                 
Proved Reserves                
Crude Oil (Bbls)     54,850       124,520  
Natural Gas (Mcf)     207,823       208,710  
NGL (Bbls)     43,955       44,100  
Oil Equivalents (Boe)     133,442       203,406  

  

*The Company engaged Graves & Co Consulting, LLC, an independent reserve engineering firm, to provide a reserve report on the Company’s properties as of March 31, 2020.

  

Proved Developed Not Producing Reserves

  

At March 31, 2020 and 2019, the Company had proved developed not producing reserves of crude oil of 0 Bbls and 48,030, respectively.

  

Proved Undeveloped Reserves

 

At March 31, 2020 and 2019, the Company had no proved undeveloped reserves.  

  

The following table sets forth Camber’s net reserves in Boe by reserve category and by formation at March 31, 2020 and 2019: 

 

   

Proved

Developed

  Proved
Non-Producing
 

Proved

Undeveloped

 

Total

Proved

 
Hutchinson Area                          
At March 31, 2020                  
At March 31, 2019     18,200     48,030         66,230  
Trend Area                          
At March 31, 2020     133,442             133,442  
At March 31, 2019     132,361             132,361  
Other                          
At March 31, 2020                  
At March 31, 2019     4,815             4,815  
Total                          
At March 31, 2020     133,442             133,442  
At March 31, 2019     155,376     48,030         203,406  

   

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, 2020 and 2019:

 

    At March 31,  
    2020     2019  
 Oil and gas properties subject to amortization   $ 50,352,033     $ 50,352,306  
 Oil and gas properties not subject to amortization     28,016,989       28,016,989  
 Capitalized asset retirement costs     91,850       176,649  
 Total oil & natural gas properties     78,460,872       78,545,944  
 Accumulated depreciation, depletion, and impairment     (78,350,605 )     (78,333,628 )
 Net Capitalized Costs   $ 110,267     $ 212,316  

  

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, 2020 and 2019: 

 

    2020     2019  
Acquisition of properties                
 Proved   $     $  
 Unproved            
 Exploration costs            
 Development costs           1,548,953  
 Total   $     $ 1,548,953  

 

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, 2020 and 2019:

 

    2020     2019  
 Crude oil and natural gas revenues   $ 397,118     $ 2,742,102  
 Production costs     (494,096 )     (3,003,901 )
 Depreciation and depletion     (16,977 )     (473,521 )
 Results of operations for producing activities,  excluding corporate overhead and interest costs   $ (113,955 )   $ (735,320 )

  

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, 2020 and 2019. 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, 2020 and 2019:

 

    At March 31,  
    2020     2019  
 Future cash inflows   $ 4,069,441     $ 9,223,561  
 Future production costs     (1,832,098 )     (4,073,084 )
 Future development costs           (595,000 )
 Future income taxes     (469,846 )     (956,650 )
 Future net cash flows     1,767,497       3,598,827  
 Discount to present value at 10% annual rate     (803,608 )     (1,520,346 )
 Standardized measure of discounted future net  cash flows relating to proved oil and gas reserves   $ 963,889     $ 2,078,481  

  

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, 2020 and 2019: 

 

    2020     2019  
 Standardized measure, beginning of year   $ 2,078,481     $ 7,468,115  
 Crude oil and natural gas sales, net of production costs     96,978       260,928  
 Net changes in prices and production costs     (408,944 )     1,842,171  
 Changes in estimated future development costs     (324,481 )     344,759  
 Revisions of previous quantity estimates     (145,373 )     17,112,424  
 Accretion of discount     122,014       263,955  
 Net change in income taxes     304,877       3,460,184  
 Purchases of reserves in place            
 Sales of reserves in place           (10,083 )
 Change in timing of estimated future production     (759,663 )     (28,663,972 )
 Standardized measure, end of year   $ 963,889     $ 2,078,481