NOTE K—OIL AND GAS RESERVE DATA (UNAUDITED)

The following estimates of proved reserve quantities and related standardized measure of discounted future net cash flows are estimates only, and do not purport to reflect realizable values or fair market values of the Company's reserves. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available. All of the Company's reserves are located in the United States.

Proved reserves are estimated reserves of crude oil (including condensate and natural gas liquids) and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those expected to be recovered through existing wells, equipment and operating methods.

The standardized measure of discounted future net cash flows were computed by applying 12-month average prices for oil and gas (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future production of proved oil and gas reserves, less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, less estimated future income tax expenses (based on year-end statutory tax rates, with consideration of future tax rates already legislated) to be incurred on pretax net cash flows less tax basis of the properties and available credits, and assuming continuation of existing economic conditions. The estimated future net cash flows are then discounted using a rate of 10%.

The following summaries of changes in reserves and standardized measure of discounted future net cash flows were prepared from estimates of proved reserves provided by Netherland, Sewell & Associates, Inc. for 2015 and 2014:

	Oil (MBbls)			Gas (MMcf)			Equivalent Units (MBoe)
Proved reserves:
Balance at December 31, 2013		16,074			106,028			33,745
Purchases of oil and gas reserves in place		—			204,839			34,140
Discoveries and extensions		481			23,533			4,403
Revisions of previous estimates		1,357			9,013			2,859
Production		(1,118	)		(16,085	)		(3,799	)

Balance at December 31, 2014		16,794			327,328			71,348


Purchases of oil and gas reserves in place		—			—			—
Discoveries and extensions		69			4,654			845
Revisions of previous estimates		(2,944	)		(140,218	)		(26,314	)
Production		(980	)		(28,033	)		(5,652	)

Balance at December 31, 2015		12,939			163,731			40,227


Proved reserves at December 31, 2014:
Proved developed reserves		8,561			203,272			42,439
Proved undeveloped reserves		8,233			124,056			28,909

		16,794			327,328			71,348


Proved reserves at December 31, 2015:
Proved developed reserves		6,824			153,093			32,339
Proved undeveloped reserves		6,115			10,638			7,888

		12,939			163,731			40,227

At December 31, 2015, our proved reserves were 40.2 MMBoe, all of which are scheduled to be drilled within five years of initial disclosure. Undeveloped reserves transferred to developed reserves were 0.8 MMBoe for the year ended December 31, 2015 and capital costs incurred to convert these proved undeveloped reserves were $12.9 million. Revisions decreased 2015 proved natural gas reserves and oil reserves by a net amount of 140 Bcf and 2.9 MMbbls, of which for natural gas 124 Bcf was due to pricing, 16 Bcf due to performance, and for oil 2.2 MMBbl was due to pricing and 0.7 MMBbl was due to performance. In 2015, total oil extensions and discoveries of 0.07 MMbbls resulted from the Company's drilling and completion activities in the Wilmington Townlot and North Wilmington Units in California. In 2015, total gas extensions and discoveries of 4.7 Bcf were from drilling activities in the Marcellus.

At December 31, 2014, our proved reserves were 71.3 MMBoe, all of which are scheduled to be drilled within five years of initial disclosure. Undeveloped reserves transferred to developed reserves were 3.9 MMBoe for the year ended December 31, 2014 and capital costs incurred to convert these proved undeveloped reserves to proved developed reserves were $92.9 million. Positive revisions increased 2014 proved natural gas reserves and oil reserves by a net amount of 9 Bcf and 1.4 MMbbls, of which for natural gas 5.7 Bcf was due to pricing, 3.3 Bcf due to performance, and for oil a negative 0.2 MMBbl was due to pricing and 1.6 MMBbl was due to performance. In 2014, total oil extensions and discoveries of 0.5 MMbbls resulted from the Company's drilling and completion activities in the Wilmington Townlot and North Wilmington Units in California. In 2014, total gas extensions and discoveries of 24 Bcf consisted of 18 Bcf which resulted from drilling activities in the Marcellus and 6 Bcf which related to drilling activities in Wyoming. During 2014, we acquired acreage in the Marcellus Shale in Pennsylvania which contributed 204.8 Bcf to our reserves and is reflected in Purchases of reserves in place. Proved undeveloped gas reserves increased from 28 Bcf at December 31, 2013 to 124 Bcf at December 31, 2014, this increase reflects the addition of 93 Bcf of proved undeveloped reserves associated with the acquisition of Marcellus acreage during the year.

Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves

	2015			2014
Future cash inflows	$	862,751		$	2,510,062
Future production costs and taxes		(503,702	)		(967,776	)
Future development costs(1)		(180,790	)		(390,057	)
Future income tax expenses		—			(140,458	)

Net future cash flows		178,259			1,011,771
Discounted at 10% for estimated timing of cash flows		(82,236	)		(456,704	)

Standardized measure of discounted future net cash flows	$	96,023		$	555,067


(1)	Includes future estimated asset retirement obligations of $55.8 million in 2015 and $69.7 million in 2014.

Changes in Standardized Measure of Discounted Future Net Cash Flows
Related to Proved Oil and Gas Reserves

	2015			2014
Sales, net of production costs and taxes	$	(34,176	)	$	(97,028	)
Discoveries and extensions		2,540			40,720
Purchases of reserves in place		—			206,334
Changes in prices and production costs		(342,650	)		(84,548	)
Revisions of quantity estimates		(202,716	)		47,425
Development costs incurred		12,869			92,983
Net changes in development costs		131,919			(134,255	)
Interest factor—accretion of discount		55,506			50,371
Net change in income taxes		(54,059	)		(25,354	)
Changes in production rates (timing) and other		(28,277	)		(16,582	)

Net (decrease) increase		(459,044	)		80,066
Balance at beginning of year		555,067			475,001

Balance at end of year	$	96,023		$	555,067

Estimated future net cash flows represent an estimate of future net revenues from the production of proved reserves using average prices for 2015 and 2014 along with estimates of the operating costs, production taxes and future development and abandonment costs (less salvage value) necessary to produce such reserves. The prices used at December 31, 2015 and were $42.81 and $86.71 per Bbl and $1.74, $3.22 per Mcf, respectively. No deduction has been made for depreciation, depletion or any indirect costs such as general corporate overhead or interest expense.

Operating costs and production taxes are estimated based on current costs with respect to producing oil and natural gas properties. Future development costs including abandonment costs are based on the best estimate of such costs assuming current economic and operating conditions. The future cash flows estimated to be spent to develop the Company's portion of proved undeveloped and proved developed non-producing properties through December 31, 2020 is $124.9 million.

Income tax expense is computed based on applying the appropriate statutory tax rate to the excess of future cash inflows less future production and development costs over the current tax basis of the properties involved, less applicable carryforwards, for both regular and alternative minimum tax.

The future net revenue information assumes no escalation of costs or prices, except for oil and natural gas sales made under terms of contracts which include fixed and determinable escalation. Future costs and prices could significantly vary from current amounts and, accordingly, revisions in the future could be significant.