NOTE 22. STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL, NATURAL GAS AND NATURAL GAS LIQUIDS RESERVES (UNAUDITED)

The following tables present a standardized measure of discounted future net cash flows and changes therein relating to estimated proved oil, natural gas and natural gas liquids reserves. In computing this data, assumptions other than those required by the SEC could produce different results. Accordingly, the data should not be construed as representative of the fair market value of the Company’s estimated proved oil, natural gas and natural gas liquids reserves. The following assumptions have been made:

Future cash inflows were based on prices used in estimating the Company’s proved oil, natural gas and natural gas liquids reserves. Future price changes were included only to the extent provided by existing contractual agreements.

Future development and production costs were computed using year end costs assuming no change in present economic conditions.

Future net cash flows were discounted at an annual rate of 10%.

The standardized measure of discounted future net cash flows relating to estimated proved oil, natural gas and natural gas liquids reserves is presented below for the years ended December 31:


	2018		2017		2016
Future cash inflows	$	2,710,234	$	2,778,662	$	2,261,520
Future production and development costs		(1,622,040)		(1,603,373)		(1,480,900)
Future income tax expenses		(167,692)		(6,022)		(5,442)
Future net cash flows		920,502		1,169,267		775,178
10% annual discount for estimated timing of cash flows		(484,069)		(589,862)		(404,061)
Standardized measure of discounted future net cash flows	$	436,433	$	579,405	$	371,117

As specified by the SEC, the prices for oil, natural gas and natural gas liquids used in this calculation were the average prices during the year determined using the price on the first day of each month, except for volumes subject to fixed price contracts. The prices utilized in calculating the Company’s total estimated proved reserves at December 31, 2018, 2017 and 2016 were $65.56 per Bbl of oil, $3.10 per MMBtu of natural gas; $51.34 per Bbl of oil, $2.976 per MMBtu of natural gas; and $42.75 per Bbl of oil, $2.481 per MMBtu of natural gas, respectively. The Company does not include its commodity derivatives in the determination of its oil, natural gas and natural gas liquids reserves.

The principal sources of changes in the standardized measure of future net cash flows are as follows for the years ended December 31:


	2018		2017		2016
Standardized measure at beginning of period	$	579,405	$	371,117	$	536,450
Sales and transfers of oil, natural gas and natural gas liquids
produced, net of production costs		(126,181)		(111,118)		(71,939)
Net changes in prices and production costs		48,322		202,810		(83,146)
Extensions, discoveries and improved recovery, less related costs		3,148		5,451		1,712
Development costs incurred during the period		16		2,261		2,065
Revisions and other		88,587		13,516		(23,328)
Accretion of 10% timing discount		58,222		37,356		53,998
Changes in income taxes		(70,390)		(371)		1,093
Changes in estimated future development costs		3,174		20,177		3,976
Changes in timing and other		21,551		8,302		(26,920)
Purchase of minerals in place		—		32,949		—
Sales of minerals in place		(169,421)		(3,045)		(22,844)
Standardized measure of discounted future net cash flows	$	436,433	$	579,405	$	371,117