Petrodelta Reserves
In connection with the preparation of the proxy statement to obtain the approval of our stockholders to proceed with the conversion of the operating service agreement to Petrodelta, Harvest Vinccler retained an independent engineering firm to estimate its share of Petrodelta's reserves as of April 1, 2006, assuming conversion is completed. The proved reserve and resource potential estimates were based on a detailed study of the properties. The proved reserves conform to the definition set forth in the Securities and Exchange Commission's Regulation S-X as clarified by subsequent Commission Staff Accounting Bulletins. The probable and possible reserves were determined based on Society of Petroleum Engineers and World Petroleum guidelines using deterministic methodology.
Based on the reserve report completed by an independent third party engineering firm, as of April 1, 2006, the six fields to be held by Petrodelta had gross proved reserves of 184 million barrels of oil and 160 billion cubic feet (Bcf) of natural gas, or 39 million barrels of oil and 34 Bcf of natural gas net to Harvest’s 32 percent interest after a one-third royalty. The estimated additional unrisked probable and possible reserves for the fields are 451 million barrels and 256 Bcf of natural gas, or 96 million barrels and 55 Bcf net to Harvest’s 32 percent interest after a one-third royalty. The pre-tax future net income of the proved reserves discounted at 10 percent is $617 million based on a realized oil price of $45.81 per barrel. The pre-tax future net income of the estimated additional unrisked probable and possible reserves discounted at 10 percent is $1.2 billion based on a realized oil price of $45.81 per barrel.
