{"id":42446,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/letter-report-on-proved-reserve-audit-hess.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"letter-report-on-proved-reserve-audit-hess","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/letter-report-on-proved-reserve-audit-hess.html","title":{"rendered":"Letter Report on Proved Reserve Audit – Hess"},"content":{"rendered":"

DeGolyer and MacNaughton<\/strong><\/p>\n

5001 Spring Valley Road
\nSuite 800 East
\nDallas, Texas 75244 LETTER REPORT
\non
\nPROVED RESERVES AUDIT
\nas of
\nDECEMBER 31, 2009
\nof
\nCERTAIN PROPERTIES
\nattributable to
\nHESS CORPORATION<\/strong><\/p>\n

\n

\n<\/p>\n

DeGolyer and MacNaughton<\/strong><\/p>\n

5001 Spring Valley Road
\nSuite 800 East
\nDallas, Texas 75244 January 15, 2010 Board of Directors
\nHess Corporation
\n1185 Avenue of the Americas
\nNew York, New York 10036 Gentlemen: Pursuant to your request, we have
\nconducted a reserves audit of the net proved crude oil, condensate, natural gas
\nliquids (NGL), and natural gas reserves, as of December 31, 2009, of certain
\nselected properties of Hess Corporation (Hess) to determine the reasonableness
\nof Hess estimates. Hess has represented to us that these properties account for
\n79 percent on a net equivalent barrel basis of Hess153 net proved reserves, as of
\nDecember 31, 2009. We have reviewed information provided to us by Hess that it
\nrepresents to be Hess153 estimates of the net reserves, as of December 31, 2009,
\nfor the same properties as those which we evaluated. Reserves included
\nherein are expressed as net reserves as represented by Hess. Gross reserves are
\ndefined as the total estimated petroleum to be produced from these properties
\nafter December 31, 2009. Net reserves are defined as that portion of the gross
\nreserves attributable to the interests owned by Hess after deducting all
\ninterests owned by others, except in Russia, where Hess owns 80 percent of a
\nconsolidated corporate joint venture. As a result, Hess net reserves include
\n20 percent of the Russian joint venture reserves not owned by Hess. Certain
\nproperties in which Hess has an interest are subject to the terms of various
\nprofit sharing agreements. The terms of these agreements generally allow for
\nworking interest participants to be reimbursed for portions of capital costs and
\noperating expenses and to share in the profits. The reimbursements and profit
\nproceeds are converted to a barrel of oil equivalent or standard cubic foot of
\ngas equivalent by dividing by product prices to determine the “entitlement
\nreserves.” These entitlement reserves are equivalent in principle to net
\nreserves and are used to calculate an equivalent net share, termed an
\n“entitlement interest.” In this report,<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton Hess net reserves or interest for certain
\nproperties subject to these agreements is the entitlement based on Hess153 working
\ninterest. Estimates of oil, condensate, NGL, and natural gas reserves
\nshould be regarded only as estimates. Such estimates are based upon information
\nthat is currently available and may change as further production history and
\nadditional information become available. Such estimates are also subject to the
\nuncertainties inherent in the application of judgmental factors in interpreting
\nsuch information. Data used in this audit were obtained from reviews with
\nHess personnel, Hess files, from records on file with the appropriate regulatory
\nagencies, and from public sources. Additionally, this information includes data
\nsupplied by Petroleum Information\/Dwights LLC; Copyright 2009 Petroleum
\nInformation\/Dwights LLC. In the preparation of this report we have relied,
\nwithout independent verification, upon such information furnished by Hess with
\nrespect to property interests, production from such properties, costs of
\noperation and development, prices for production, agreements relating to current
\nand future operations and sale of production, and various other information and
\ndata that were accepted as represented. A field examination of the properties
\nwas not considered necessary for the purposes of this report. In our opinion,
\nthe adequacy and quality of the data provided to us was sufficient for us to
\nconduct this reserves audit. The Hess net proved reserves attributable to
\nthese properties as of December 31, 2009, and which represent approximately
\n79 percent of total Hess net reserves on a net equivalent barrel basis, are as
\nfollows, expressed in millions of barrels (MMbbl), billions of cubic feet (Bcf),
\nand millions of barrels of oil equivalent (MMboe):<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nEstimated by Hess<\/strong><\/td>\n<\/tr>\n
<\/td>\n<\/td>\nNet Proved Reserves as of December 31, 2009<\/strong>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\nNatural<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\nOil and<\/strong><\/td>\n<\/td>\nGas<\/strong><\/td>\n<\/td>\nNatural<\/strong><\/td>\n<\/td>\nOil<\/strong><\/td>\n<\/tr>\n
<\/td>\n<\/td>\nCondensate<\/strong><\/td>\n<\/td>\nLiquids<\/strong><\/td>\n<\/td>\nGas<\/strong><\/td>\n<\/td>\nEquivalent<\/strong><\/td>\n<\/tr>\n
<\/td>\n<\/td>\n(MMbbl)<\/strong><\/td>\n<\/td>\n(MMbbl)<\/strong><\/td>\n<\/td>\n(Bcf)<\/strong><\/td>\n<\/td>\n(MMboe)<\/strong><\/td>\n<\/tr>\n
\n

United States<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

144.7<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

23.4<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

200.6<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

201.5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Europe including Russia<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

216.9<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

17.0<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

463.7<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

311.2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Africa<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

257.5<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

0.0<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

48.2<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

265.5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

Asia and other<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

61.1<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

7.7<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

1,724.8<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

356.3<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Total<\/strong><\/td>\n<\/td>\n<\/td>\n680.2<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n48.1<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n2,437.3<\/strong><\/td>\n<\/td>\n<\/td>\n<\/td>\n1,134.5<\/strong><\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
\n

Note:<\/p>\n<\/td>\n

<\/td>\n\n

Gas is converted to oil equivalent using a factor of 6,000 cubic feet of gas
\nper 1 barrel of oil equivalent.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

3<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton Opinion<\/strong><\/u> The
\nassumptions, data, methods and procedures used by DeGolyer and MacNaughton to
\nconduct the reserves audit are appropriate for purposes of this report. In
\nour opinion, the estimated net proved reserves prepared by Hess as shown in the
\ntable above comply with the definitions and disclosure guidelines of Paragraphs
\n932-235-50-4, 932-235-50-6 through 932-235-50-9 of the Accounting Standards
\nUpdate 932-235-50, Extractive Industries : Oil and Gas (Topic 932): Oil and
\nGas Reserve Estimation and Disclosures <\/em>(January 2010) of the Financial
\nAccounting Standards Board and Rules 4:10(a) (1):(32) of Regulation S:X and
\nItems 1201, 1202(a)(1), (2), (3), (4) and 1203 of Regulation S-K of the
\nSecurities and Exchange Commission (SEC) and the reserves estimation
\nmethodologies employed are appropriate. In comparing the detailed net
\nproved reserves estimates by field prepared by us and by Hess, we have found
\ndifferences, both positive and negative. It is our opinion that the total net
\nproved reserves estimates prepared by Hess as of December 31, 2009, on the
\nproperties reviewed by us and referred to in the table above, when compared on
\nthe basis of net equivalent barrels, do not differ materially from those
\nprepared by us. Methodology and Procedures<\/strong><\/u>
\n Estimates of reserves were prepared by the use of standard geological and
\nengineering methods generally accepted by the petroleum industry. The method or
\ncombination of methods used in the analysis of each reservoir was tempered by
\nexperience with similar reservoirs, stage of development, quality and
\ncompleteness of basic data, and production history. When applicable, the
\nvolumetric method was used to estimate the original oil in place (OOIP) and the
\noriginal gas in place (OGIP). Structure and isopach maps were constructed to
\nestimate reservoir volume. Electrical logs, radioactivity logs, core analyses,
\nand other available data were used to prepare these maps as well as to estimate
\nrepresentative values for porosity and water saturation. When adequate data were
\navailable and when circumstances justified, material balance and other
\nengineering methods were used to estimate OOIP or OGIP.<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton Estimates of ultimate recovery were obtained
\nafter applying recovery factors to OOIP or OGIP. These recovery factors were
\nbased on consideration of the type of energy inherent in the reservoirs,
\nanalyses of the fluid properties, the structural positions of the properties,
\nand the production histories. When applicable, material balance and other
\nengineering methods were used to estimate recovery factors. An analysis of
\nreservoir performance, including production rate, reservoir pressure, and
\ngas-oil ratio behavior, was used in the estimation of reserves. For
\ndepletion-type reservoirs or those whose performance disclosed a reliable
\ndecline in producing-rate trends or other diagnostic characteristics, reserves
\nwere estimated by the application of appropriate decline curves or other
\nperformance relationships. In the analyses of production-decline curves,
\nreserves were estimated only to the limits of economic production or to the
\nlimit of the production licenses as appropriate. Petroleum reserves
\nestimated by Hess and by us are classified as proved and are judged to be
\neconomically producible in future years from known reservoirs under existing
\neconomic and operating conditions and assuming continuation of current
\nregulatory practices using conventional production methods and equipment.
\nReserves were estimated only to the limit of economic production rates under
\nexisting economic and operating conditions using prices and costs consistent
\nwith the effective date of this report, including consideration of changes in
\nexisting prices provided only by contractual arrangements but not including
\nescalations based upon future conditions. Definition of
\nReserves<\/strong><\/u> Proved reserves classifications used in this report
\nare in accordance with the reserves definitions of Rules 4:10(a) (1):(32) of
\nRegulation S:X of the SEC of the United States. The petroleum reserves are
\nclassified as follows: Proved oil and gas reserves <\/em>: Proved oil and gas
\nreserves are those quantities of oil and gas, which, by analysis of geoscience
\nand engineering data, can be estimated with reasonable certainty to be
\neconomically producible:from a given date forward, from known reservoirs, and
\nunder existing economic conditions, operating methods, and government
\nregulations:prior to the time at which contracts providing the right to operate
\nexpire, unless evidence<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton indicates that renewal is reasonably certain,
\nregardless of whether deterministic or probabilistic methods are used for the
\nestimation. The project to extract the hydrocarbons must have commenced or the
\noperator must be reasonably certain that it will commence the project within a
\nreasonable time. (i) The area of the reservoir considered as proved includes:
\n(A) The area identified by drilling and limited by fluid contacts, if any; and,
\n(B) Adjacent undrilled portions of the reservoir that can, with reasonable
\ncertainty, be judged to be continuous with it and to contain economically
\nproducible oil or gas on the basis of available geoscience and engineering data.
\n(ii) In the absence of data on fluid contacts, proved quantities in a reservoir
\nare limited by the lowest known hydrocarbons (LKH) as seen in a well penetration
\nunless geoscience, engineering, or performance data and reliable technology
\nestablishes a lower contact with reasonable certainty. (iii) Where direct
\nobservation from well penetrations has defined a highest known oil
\n(HKO) elevation and the potential exists for an associated gas cap, proved oil
\nreserves may be assigned in the structurally higher portions of the reservoir
\nonly if geoscience, engineering, or performance data and reliable technology
\nestablish the higher contact with reasonable certainty. (iv) Reserves which can
\nbe produced economically through application of improved recovery techniques
\n(including, but not limited to, fluid injection) are included in the proved
\nclassification when: (A) Successful testing by a pilot project in an area of the
\nreservoir with properties no more favorable than in the reservoir as a whole,
\nthe operation of an installed program in the reservoir or an analogous
\nreservoir, or other evidence using reliable technology establishes the
\nreasonable certainty of the engineering analysis on which the project or program
\nwas based; and, (B) The project has been approved for development<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton by all necessary parties and entities, including
\ngovernmental entities. (v) Existing economic and operating conditions include
\nprices and costs at which economic producibility from a reservoir is to be
\ndetermined. The price shall be the average price during the 12-month period
\nprior to the ending date of the period covered by the report, determined as an
\nunweighted arithmetic average of the first-day-of-the-month price for each month
\nwithin such period, unless prices are defined by contractual arrangements,
\nexcluding escalations based upon future conditions. Developed oil and gas
\nreserves <\/em>: Developed oil and gas reserves are reserves of any category that
\ncan be expected to be recovered: (i) Through existing wells with existing
\nequipment and operating methods or in which the cost of the required equipment
\nis relatively minor compared to the cost of a new well; and (ii) Through
\ninstalled extraction equipment and infrastructure operational at the time of the
\nreserves estimate if the extraction is by means not involving a well.
\nUndeveloped oil and gas reserves : <\/em>Undeveloped oil and gas reserves are
\nreserves of any category that are expected to be recovered from new wells on
\nundrilled acreage, or from existing wells where a relatively major expenditure
\nis required for recompletion. (i) Reserves on undrilled acreage shall be limited
\nto those directly offsetting development spacing areas that are reasonably
\ncertain of production when drilled, unless evidence using reliable technology
\nexists that establishes reasonable certainty of economic producibility at
\ngreater distances. (ii) Undrilled locations can be classified as having
\nundeveloped reserves only if a development plan has been adopted indicating that
\nthey are scheduled to be drilled within five years, unless the specific
\ncircumstances justify a longer time.<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

7<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton (iii) Under no circumstances shall estimates for
\nundeveloped reserves be attributable to any acreage for which an application of
\nfluid injection or other improved recovery technique is contemplated, unless
\nsuch techniques have been proved effective by actual projects in the same
\nreservoir or an analogous reservoir, as defined in Rule 4-10(a)(2) of
\nRegulation S-X, or by other evidence using reliable technology establishing
\nreasonable certainty. Primary Economic Assumptions<\/strong><\/u>
\n The following economic assumptions were used for estimating existing and
\nfuture prices and costs: Oil and Condensate Prices<\/em> Hess has
\nrepresented that the oil and condensate prices were based on a 12-month average
\nprice (reference price), calculated as the unweighted arithmetic average of the
\nfirst-day-of-the-month price for each month within the 12-month period prior to
\nthe end of the reporting period, unless prices are defined by contractual
\narrangements. Hess supplied appropriate differentials by field to the relevant
\nreference prices and the prices were held constant thereafter. NGL
\nPrices<\/em> Hess has represented that the NGL prices were based on a 12-month
\naverage price, calculated as the unweighted arithmetic average of the
\nfirst-day-of-the-month price for each month within the 12-month period prior to
\nthe end of the reporting period, unless prices are defined by contractual
\narrangements. These prices were held constant over the lives of the properties.
\n Natural Gas Prices<\/em> Hess has represented that the natural gas
\nprices were based on a reference price, calculated as the unweighted arithmetic\n<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton average of the first-day-of-the-month price for each
\nmonth within the 12-month period prior to the end of the reporting period,
\nunless prices are defined by contractual arrangements. The gas prices were
\ncalculated for each property using differentials furnished by Hess and held
\nconstant thereafter. Operating Expenses and Capital Costs<\/em>
\nOperating expenses and capital costs, based on information provided by Hess,
\nwere used in estimating future costs required to operate the properties. Future
\ncosts are typically based on existing costs and where appropriate adjusted to
\nreflect planned changes in operating conditions. These costs were not escalated
\nfor inflation. Possible Effects of Regulations <\/strong><\/u>
\n Hess153 oil and gas reserves have been estimated assuming the continuation of
\nthe current regulatory environment. Foreign oil producing countries, including
\nmembers of the Organization of Petroleum Exporting Countries (OPEC) may impose
\nproduction quotas which limit the supply of oil that can be produced. Generally,
\nthese production quotas affect the timing of production, rather than the total
\nvolume of oil or gas reserves estimated. Changes in the regulatory
\nenvironment by host governments may impact the operating environment and oil and
\ngas reserves estimates of industry participants. Such regulatory changes could
\ninclude increased mandatory government participation in producing contracts,
\nchanges in royalty terms, cancellation or amendment of contract rights, or
\nexpropriation or nationalization of property. While the oil and gas industry is
\nsubject to regulatory changes that could affect an industry participant153s
\nability to recover its oil and gas reserves, neither we nor Hess are aware of
\nany such governmental actions which restrict the recovery of the December 31,
\n2009, estimated oil and gas volumes.<\/p>\n

\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton DeGolyer and MacNaughton is an independent
\npetroleum engineering consulting firm that has been providing petroleum
\nconsulting services throughout the world for over 70 years. DeGolyer and
\nMacNaughton does not have any financial interest, including stock ownership, in
\nHess. Our fees were not contingent on the results of our evaluation. This letter
\nreport has been prepared at the request of Hess and should not be used for
\npurposes other than those for which it is intended. DeGolyer and MacNaughton has
\nused all procedures and methods that it considers necessary to prepare this
\nreport.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n\n

Submitted,<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

\/s\/ DeGolyer and MacNaughton <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

DeGOLYER and MacNAUGHTON <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

Texas Registered Engineering Firm F-716 <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n\n

\/s\/ James W. Hail, Jr, P.E. <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

James W. Hail, Jr., P.E. <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

[SEAL]<\/p>\n<\/td>\n

\n

President
\nDeGolyer and MacNaughton <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n<\/p>\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

DeGolyer and MacNaughton CERTIFICATE of QUALIFICATION<\/strong><\/u>
\nI, James W. Hail, Jr., Petroleum Engineer with DeGolyer and MacNaughton, 5001
\nSpring Valley Road, Suite 800 East, Dallas, Texas, 75244 U.S.A., hereby certify:\n<\/p>\n\n\n\n\n\n
<\/td>\n\n

1.<\/p>\n<\/td>\n

<\/td>\n\n

That I am the President of DeGolyer and MacNaughton, which company did
\nprepare the letter report dated January 15, 2010 on the proved reserves audit of
\ncertain properties attributable to Hess Corporation, and that I, as President,
\nwas responsible for the preparation of this report.<\/p>\n<\/td>\n<\/tr>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

2.<\/p>\n<\/td>\n

<\/td>\n\n

That I attended the Texas A&M University, and that I graduated with a
\nBachelor of Science degree in Chemical Engineering in 1972; that I am a
\nRegistered Professional Engineer in the State of Texas; that I am a member of
\nthe International Society of Petroleum Engineers; the American Association of
\nPetroleum Geologists; and the Society of Petroleum Evaluation Engineers and that
\nI have in excess of 35 years of experience in oil and gas reservoir studies and
\nreserves evaluations.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n\n

\/s\/ James W. Hail, Jr, P.E. <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n\n

James W. Hail, Jr., P.E. <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

[SEAL]<\/p>\n<\/td>\n

\n

President
\nDeGolyer and MacNaughton <\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
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