RAM Energy Resources, Inc. (Nasdaq: RAME) announced today that
estimates of the company’s proved oil and natural gas reserves at
December 31, 2010, calculated using SEC rules (SEC Case) totaled
24.4 million barrels of oil equivalent (BOE) with a PV-10 value of
$364.2 million. In the fourth quarter 2010 RAM completed two
property divestitures in conjunction with the execution of its
strategic alternative initiative to reduce debt. RAM estimates that
proved reserves associated with the sales aggregated to 4.6 million
BOE and accounted for 48% of the decline in proved reserves at
December 31, 2010, compared to the prior year’s proved reserves of
33.9 million BOE.
In addition to the SEC Case, RAM also computed an estimate of
proved reserves at December 31, 2010, using NYMEX futures strip
pricing for the ensuing 36 months, the same pricing used by the
company’s lenders to support the company’s borrowing base. RAM’s
borrowing base was $145 million at year-end 2010, after adjusting
for property divestitures in the fourth quarter of the year. Proved
reserve volumes assessed using strip pricing at December 31, 2010,
which averaged $93.47 per barrel of oil and $5.03 per Mcf of
natural gas, were 25.3 million BOE with a PV-10 value of $483.8
million.
The company added 545 thousand BOE of reserves during the year,
replacing 25% of 2010 production of 2.2 million BOE. These results
are below RAM’s recent norm and reflect weather interruptions early
in the year, the limited availability of crews and equipment to
fracture and stimulate wells drilled in South Texas, both of which
reduced planned drilling activity, and RAM’s initiation of a review
of strategic alternatives in mid-2010, which effectively
reprioritized its capital spending and activity goals for the
second half of the year. RAM continues to employ, as it has in the
past, an independent petroleum engineering firm to prepare
estimates of its proved reserves in all of its operating areas.
Reserve Composition
Year-end 2010 estimated proved reserves of 24.4 million BOE are
composed of 13.1 million barrels of oil, 2.4 million barrels of
natural gas liquids (NGLs) and 53.6 Bcf of natural gas. Crude oil
and NGLs represent 64% of total proved reserves, and natural gas
reserves represent the remaining 36 % of reserves. Proved developed
reserves accounted for 62% of total proved reserves and accounted
for 71% of the total PV-10 value of $364.2 million, providing an
underpinning to the confidence in the cash flow stream in 2011 and
beyond.
Forward-Looking Statements
This release includes certain statements that may be deemed to
be “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts, that address
estimates of reserves, including prior year reserves, alternative
reserve calculations, the reconciliation of reserve quantities,
estimates of PV-10, prices of oil and gas and events or
developments that the company expects or believes are
forward-looking statements. Although RAM believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include oil and gas prices,
developmental, exploitation and exploration successes, actions
taken and to be taken by governments as a result of political and
economic conditions or other factors, inflation rates, continued
availability of capital and financing, and general economic, market
or business conditions as well as other risk factors described from
time to time in the company’s filings with the SEC. The company
assumes no obligation to update publicly such forward-looking
statements, whether as a result of new information, future events
or otherwise.
About RAM Energy
RAM is an independent energy company engaged in the acquisition,
development, exploitation and exploration of oil and gas properties
and the marketing of natural gas and crude oil. Company
headquarters are in Tulsa, Oklahoma, and its common shares are
traded on the Nasdaq Exchange under the symbol RAME. For additional
information, visit the company website at www.ramenergy.com.
TABLE 1
Proved Reserves (SEC Case) Oil Gas
Ngl. Equivalent Reserve PV10
(MBbl) (MMcf) (MBbl)
(MBOE) % M$ Year-End
2010 PDP 8,087 24,134 1,358 13,467 55 232,449 PDNP 327 7,642
128 1,729 7 26,903 PUD 4,672 21,832 889
9,200 38 104,896 Total Proved (1) 13,086
53,608 2,375 24,396 100 364,248 Developed 8,414 31,776 1,486
15,196 62 259,352
Year-End 2009 Total Proved (2)
14,067 89,227 4,983 33,922 100 336,053
Proved Reserves
(NYMEX Strip Case) Oil Gas Ngl.
Equivalent PV10 (MBbl) (MMcf)
(MBbl) (MBOE)
M$ Year-End 2010 Total Proved (3) 13,652
55,038 2,445 25,270 483,792
2010 Reserve
Reconciliation Equivalent (MBOE) Total
Proved As of Dececember 31, 2009 33,922 Ext., discoveries, and
Additions 545 Purchases 0 Sales (4,610 ) Production (2,161 )
Revisions of previous estimates (3,300 )
As of December 31,
2010 24,396
(1)
Reserve estimates as of December 31, 2010,
have been prepared under the SEC's new rules for oil and gas
reporting that are effective for fiscal years ending on or after
December 31, 2010. These new rules require SEC reporting companies
to prepare their reserve estimates using, among other things,
revised reserve definitions and revised pricing based on 12-month
unweighted NYMEX first-day-of-the-month average pricing, instead of
the prior requirement to use pricing at the end of the period.
Prices used to calculate 2010 year-end proved reserves were
$79.43/Bbl of oil and $4.38/MCF.
(2)
Prices used to calculate 2009 year-end
reserves were $61.18/Bbl of oil and $3.87/Mcf of natural gas and
reflect the price of oil and natural gas on December 31, 2009.
(3)
Estimates of proved reserves computed
using NYMEX Strip Prices for 36 months from December 31, 2010 with
costs held constant.
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