Saratoga Resources' Total Reserves Reach New High of $880MM
Saratoga Resources has noted increases to its reserve base, resulting from ongoing full field studies and development activities. Collarini Associates, the Company's independent reserve engineers, estimated Saratoga's net proved reserves, as of July 1, 2009 using June 30, 2009 NYMEX strip pricing and Society of Petroleum Engineering methodology, to be 6.0 million barrels of oil ("MMBO") and 51.3 million cubic feet of gas ("MMCFG"), or 87.6 billion cubic feet of gas equivalent ("BCFE"), with a net present value of future cash flow, discounted at 10% ("PV10"), of $373 million. Over 40% of the total proved reserves are developed with proved developed producing reserves of 2.2 MMBO and 4.5 BCFG, or 17.7 BCFE with PV10 of $78 million. Saratoga’s internal reserve estimates are significantly greater than those stated above.
Saratoga has a development inventory of 71 proved developed non-producing ("PDNP") and 61 proved undeveloped ("PUD") opportunities, as of July 1, 2009. In addition, the Company's independently audited probable reserves are 3.0 MMBO and 43.7 BCFG, or 61.8 BCFE, with PV10 of $194 million, and possible reserves of 12.3 MMBO and 84.1 BCFG, or 157.7 BCFE, with PV10 of $312 million. In summary, Saratoga's 3P net reserves amount to 307.1 BCFE with PV10 of $880 million.
Thomas F. Cooke, Saratoga's Chairman/CEO, said, "We continue to increase production and reserves through select development activities and ongoing full field studies We have reached our goal of reducing operating costs by more than 20% in the last 12 months through improving operating efficiencies. This is especially significant as we have realized operating cost reductions while simultaneously increasing production. Our aggressive efforts to control costs and improve efficiencies have also resulted in marked improvements in the scope of our windstorm insurance coverage with essentially no increase in annual premium, which improvement was achieved in a market otherwise characterized by a marked deterioration in program cost and wind retention. I want to thank our operations group for their responsiveness and stellar efforts in meeting these operating cost goals."
Andy C. Clifford, Saratoga's President added, "Further reserve additions are expected in the third quarter of 2009 as a result of the full field studies at Grand Bay and Vermilion 16 supplemented by ongoing interpretation. Particularly exciting is our Zeus Prospect, which covers over 5,000 acres of closure that are held by shallow production and could hold up to 3 TCF of gas in Miocene Big Hum sands between 18,000-20,000' in the heart of Grand Bay, a world class oil field that has produced more than 300 MMBO from shallower intervals, adjacent to existing infrastructure, with multiple development bailouts in overlying Cib Carst (25 thru 30 sands) and Tex W (43 sand) above the Big Hum. The Zeus Prospect has been mapped using our proprietary 3D seismic data, tied to nearby Big Hum production. With the advent of lower drilling costs and multiple low risk, bailout zones in shallower sands, the economics of a well targeting the Big Hum are outstanding with a third-party dry hole cost estimate of $18.5 million."