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Oil and Gas Reserve Information
 12 Months Ended
Dec. 31, 2019
Extractive Industries [Abstract]  
Oil and Gas Reserves Information
Oil and Gas Reserve Information
There are numerous uncertainties inherent in estimating quantities of proved crude oil and natural gas reserves. Crude oil and natural gas reserve engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be precisely measured. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of crude oil and natural gas that are ultimately recovered.
Estimates of our crude oil and natural gas reserves and present values as of December 31, 2019, 2018, and 2017, were prepared by Netherland, Sewell & Associates, Inc., independent reserve engineers.
A summary of changes in estimated quantities of proved reserves for the years ended December 31, 2019, 2018, and 2017 is as follows:
 
Gas
 
Oil
 
NGLS
 
Total
 
(MMcf)
 
(Mbbl)
 
(Mbbl)
 
(MMcfe) (1)
Company
 
 
 
 
 
 
 
Balance at January 1, 2017
330

 
7

 
8

 
420

Revisions of quantity estimate
109

 
2

 
3

 
139

Extensions and discoveries
—

 
—

 
—

 
—

Production
(47
)
 
(2
)
 
—

 
(59
)
Balance at December 31, 2017
392

 
7

 
11

 
500

Revisions of quantity estimate
(269
)
 
(2
)
 
(10
)
 
(341
)
Extensions and discoveries
—

 
—

 
—

 
—

Production
(34
)
 
(1
)
 
—

 
(40
)
Balance at December 31, 2018
89

 
4

 
1

 
119

Revisions of quantity estimate
222

 
1

 
7

 
270

Extensions and discoveries
—

 
—

 
—

 
—

Acquisitions and divestitures
(30
)
 
(3
)
 
—

 
(48
)
Production
(20
)
 
(1
)
 
—

 
(26
)
Balance at December 31, 2019
261

 
1

 
8

 
315

 
 
 
 
 
 
 
 
Company’s share of Laramie Energy
 
 
 
 
 
 
 
Balance at January 1, 2017
309,802

 
967

 
8,544

 
366,871

Revisions of quantity estimate
1,344

 
211

 
(434
)
 
3

Extensions and discoveries
—

 
—

 
—

 
—

Acquisitions and divestitures
—

 
—

 
—

 
—

Production
(18,104
)
 
(71
)
 
(608
)
 
(22,178
)
Balance at December 31, 2017 (2)
293,042

 
1,107

 
7,502

 
344,696

Revisions of quantity estimate
47,871

 
732

 
5,602

 
85,875

Extensions and discoveries
—

 
—

 
—

 
—

Acquisitions and divestitures
22,391

 
12

 
191

 
23,609

Production
(25,513
)
 
(106
)
 
(712
)
 
(30,421
)
Balance at December 31, 2018 (3)
337,791

 
1,745

 
12,583

 
423,759

Revisions of quantity estimate
(69,924
)
 
(681
)
 
(6,287
)
 
(111,732
)
Extensions and discoveries
—

 
—

 
—

 
—

Acquisitions and divestitures
—

 
—

 
—

 
—

Production
(29,677
)
 
(126
)
 
(883
)
 
(35,731
)
Balance at December 31, 2019 (4)
238,190

 
938

 
5,413

 
276,296

 
 
 
 
 
 
 
 
Total at December 31, 2019
238,451

 
939

 
5,421

 
276,611

__________________________________________________
(1)
MMcfe is based on a ratio of 6 Mcf to 1 barrel.
(2)
During 2017, the Company’s estimated proved reserves, inclusive of the Company’s share of Laramie Energy’s estimated proved reserves, decreased by 22,095 MMcfe or approximately 6%. Production volumes related to our share of Laramie Energy’s estimated proved reserves resulted in a decrease of 22,178 MMcfe. The remaining change in estimated proved reserves was due to performance and other changes to the Company’s share of Laramie Energy’s proved developed producing and developed non-producing reserves.
(3)
During 2018, the Company’s estimated proved reserves, inclusive of the Company’s share of Laramie Energy’s estimated proved reserves, increased by 78,682 MMcfe or approximately 23%. The Company’s share of Laramie Energy’s revisions of quantity estimate increased primarily due to: 1) additions of 60,679 MMcfe of proved undeveloped reserves primarily located within Laramie Energy’s northern acreage, 2) 11,614 MMcfe of positive revisions associated with 13 probable locations that
were converted to proved developed reserves during 2018, and 3) 13,582 MMcfe of positive revisions due to performance improvements and other changes to the Company’s share of Laramie Energy’s proved developed and undeveloped reserves. Production volumes related to our share of Laramie Energy’s estimated proved reserves resulted in a decrease of 30,421 MMcfe. During 2018, Laramie Energy closed on a purchase and contribution agreement with an unaffiliated third party that contributed 23,609 MMcfe of proved developed reserves in the Piceance Basin.
(4)
During 2019, the Company’s estimated proved reserves, inclusive of the Company’s share of Laramie Energy’s estimated proved reserves, decreased by 147,267 MMcfe or approximately 35%. The decreased was primarily due to: 1) 57,212 MMcfe downward revision driven by the removal of proved undeveloped locations from the development plan due to unfavorable market conditions, and 2) 54,520 MMcfe downward revision due to decreases in average natural gas prices in 2019 compared to 2018. Production volumes related to our share of Laramie Energy’s estimated proved reserves resulted in a decrease of 35,731 MMcfe.
A summary of proved developed and undeveloped reserves for the years ended December 31, 2019, 2018, and 2017 is presented below:
 
Gas
 
Oil
 
NGLS
 
Total
 
(MMcf)
 
(Mbbl)
 
(Mbbl)
 
(MMcfe) (1)
December 31, 2017
 
 
 
 
 
 
 
Proved developed reserves
 
 
 
 
 
 
 
Company
392

 
7

 
11

 
500

Company’s share of Laramie Energy
174,464

 
658

 
4,589

 
205,946

Total
174,856

 
665

 
4,600

 
206,446

Proved undeveloped reserves
 
 
 
 
 
 
 
Company
—

 
—

 
—

 
—

Company’s share of Laramie Energy
118,578

 
449

 
2,913

 
138,750

Total
118,578

 
449

 
2,913

 
138,750

 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
Proved developed reserves
 
 
 
 
 
 
 
Company
89

 
4

 
1

 
119

Company’s share of Laramie Energy
256,363

 
1,420

 
8,868

 
318,091

Total
256,452

 
1,424

 
8,869

 
318,210

Proved undeveloped reserves
 
 
 
 
 
 
 
Company
—

 
—

 
—

 
—

Company’s share of Laramie Energy
81,428

 
325

 
3,715

 
105,668

Total
81,428

 
325

 
3,715

 
105,668

 
 
 
 
 
 
 
 
December 31, 2019
 
 
 
 
 
 
 
Proved developed reserves
 
 
 
 
 
 
 
Company
261

 
1

 
8

 
315

Company’s share of Laramie Energy
238,190

 
938

 
5,413

 
276,296

Total
238,451

 
939

 
5,421

 
276,611

Proved undeveloped reserves
 
 
 
 
 
 
 
Company
—

 
—

 
—

 
—

Company’s share of Laramie Energy
—

 
—

 
—

 
—

Total
—

 
—

 
—

 
—

__________________________________________________
(1)
MMcfe is based on a ratio of 6 Mcf to 1 barrel.
 
Price 
per MMbtu
 
WTI 
per Bbl
Base pricing, before adjustments for contractual
differentials (Company and Laramie Energy): (1)
 
 
 
December 31, 2017
$
2.68

 
$
51.34

December 31, 2018
2.47

 
65.56

December 31, 2019
2.04

 
55.85

______________________________________________
(1)
Proved reserves are required to be calculated based on the 12-month, first day of the month historical average price in accordance with SEC rules. The prices shown above are base index prices to which adjustments are made for contractual deducts and other factors.
Future net cash flows presented below are computed using applicable prices (as summarized above) and costs and are net of all overriding royalty revenue interests.
 
December 31,
 
2019
 
2018
 
2017
 
(in thousands)
Company
 
 
 
 
 
Future net cash flows
$
833

 
$
398

 
$
1,802

Future costs
 
 
 
 
 
Production
509

 
123

 
902

Development and abandonment
37

 
35

 
—

Income taxes (1)
—

 
—

 
—

Future net cash flows
287

 
240

 
900

10% discount factor
(106
)
 
(110
)
 
(328
)
Discounted future net cash flows
$
181

 
$
130

 
$
572

 
 
 
 
 
 
Company’s share of Laramie Energy
 
 
 
 
 
Future net cash flows
$
669,271

 
$
1,283,890

 
$
1,026,005

Future costs
 
 
 
 
 
Production
398,193

 
583,112

 
491,748

Development and abandonment
25,277

 
93,546

 
109,248

Income taxes (1)
—

 
—

 
—

Future net cash flows
245,801

 
607,232

 
425,009

10% discount factor
(105,966
)
 
(288,130
)
 
(209,188
)
Discounted future net cash flows
$
139,835

 
$
319,102

 
$
215,821

 
 
 
 
 
 
Total discounted future net cash flows
$
140,016

 
$
319,232

 
$
216,393

_______________________________________________
(1)
No income tax provision is included in the standardized measure of discounted future net cash flows calculation shown above as we do not project to be taxable or pay cash income taxes based on its available tax assets and additional tax assets generated in the development of its reserves because the tax basis of its oil and gas properties and NOL carryforwards exceeds the amount of discounted future net earnings.

The principal sources of changes in the standardized measure of discounted net cash flows for the years ended December 31, 2019, 2018, and 2017 are as follows (in thousands):
 
Company
 
Company’s 
Share of Laramie
Energy
 
Total
 
 
 
 
 
 
Balance at January 1, 2017
$
285

 
$
141,142

 
$
141,427

Sales of oil and gas production during the period, net of production costs
(28
)
 
(29,911
)
 
(29,939
)
Net change in prices and production costs
(60
)
 
35,597

 
35,537

Revisions of previous quantity estimates, estimated timing of development and other
346

 
37,692

 
38,038

Previously estimated development and abandonment costs incurred during the period
—

 
17,187

 
17,187

Accretion of discount
29

 
14,114

 
14,143

Balance at December 31, 2017
572

 
215,821

 
216,393

Sales of oil and gas production during the period, net of production costs
(127
)
 
(47,165
)
 
(47,292
)
Acquisitions and divestitures
—

 
35,182

 
35,182

Net change in prices and production costs
20

 
(1,365
)
 
(1,345
)
Revisions of previous quantity estimates, estimated timing of development and other
(392
)
 
54,311

 
53,919

Previously estimated development and abandonment costs incurred during the period
—

 
40,736

 
40,736

Accretion of discount
57

 
21,582

 
21,639

Balance at December 31, 2018
130

 
319,102

 
319,232

Sales of oil and gas production during the period, net of production costs
(55
)
 
(59,093
)
 
(59,148
)
Acquisitions and divestitures
(143
)
 
—

 
(143
)
Net change in prices and production costs
(24
)
 
(114,195
)
 
(114,219
)
Revisions of previous quantity estimates, estimated timing of development and other
260

 
(64,333
)
 
(64,073
)
Previously estimated development and abandonment costs incurred during the period
—

 
26,444

 
26,444

Accretion of discount
13

 
31,910

 
31,923

Balance at December 31, 2019
$
181

 
$
139,835

 
140,016