Provable Reserves: Gross $79 Million???? NET of $23 Million??? Not sure how to read these numbers. RK
"During the year ended May 31, 2008, The Company had reserve studies and estimates prepared on its various properties. The difficulties and uncertainties involved in estimating proved oil and gas reserves makes comparisons between companies difficult. Estimation of reserve quantities is subject to wide fluctuations because it is dependent on judgmental interpretation of geological and geophysical data.
(5) Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves
May 31, 2008 May 31, 2007
------------ ------------
Future cash inflows $ 76,423,350 $ --
------------ ------------
Future production (18,905,800) --
------------ ------------
Future development costs (7,315,340) --
Future income tax expense (10,726,992) --
Future net cash flows 39,475,218 --
------------ ------------
Discounted for estimated timing of
cash flows (16,457,167) --
------------ ------------
Standardized measure of discounted
future net cash flows $ 23,018,051 $ --
------------ ------------
Future income taxes were determined by applying the statutory income tax rate to future pre-tax net cash flow relating to proved reserves.
The following schedule summarizes changes in the standardized measure of discounted future net cash flow relating to proved oil and gas reserves:
Years ended March 31,
----------------------------
2008 2007
------------ ------------
Standardized measure, beginning of year $ -- $ --
Extensions, discoveries and improved recovery -- --
Revisions of previous estimates -- --
Purchases of minerals in place 29,623,803 --
Sales of minerals in place -- --
Net change in prices and production costs -- --
Accretion of discount -- --
Oil and gas sales, net of production costs (350,823) --
Changes in estimated future development costs -- --
Previously estimated development cost incurred -- --
Net change in income taxes (6,254,929) --
Change in timing of estimated future production -- --
------------ ------------
Standardized measure, end of year $ 23,018,051 $ --
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The above schedules relating to proved oil and gas reserves, standardized measure of discounted future net cash flows and changes in the standardized measure of discounted future net cash flows have their foundation in engineering estimates of future net revenues that are derived from proved reserves and prepared using the prevailing economic conditions. These reserve estimates are made from evaluations conducted by independent geologists, of such properties and will be periodically reviewed based upon updated geological and production data. Estimates of proved reserves are inherently imprecise. The above standardized measure does not include any restoration costs due to the fact the Company does not own the land.
