Case 11-13028

Claim 25-1 Part 4

Filed 05/11/12 Page 1 of 8

Exhibit Exhibit B to Supplement

OIL

COMPANY I1C

November 21 2008

TO ALL EMPIRE PARTNERS Re

Schiumberger Reserve Report Parish

Empire Well Plaquemines

LA

Gentlemen

Virgin
its

utilizes

Schlumberger-Holditch

Reservoir

Engineers
their

for third-party estimates

calculation
for

of
at

reserve

estimates

They have

just

completed
for

reserve

our

well

Empire The summary pages To

assist

are enclosed

your information

you in estimating
interest

the value the

first

of your interest
first

will

1% now
net

ownership

On
in

page
at that future

column

you

will see
is

show you calculation for Proved Undeveloped

the estimated reserves
If

Reserves
have

with Future Net

Income our well

$74518734

This

we
you

behind-pipe

we

will

be producing you

in the

near future

multiply

your percentage times the

In

net income

will get

your estimated The

value

future

income

my example
the future

of

1% 1%

$74518734
discounted

$745187.34
to present

bottom row
at

of numbers

show

net income

estimate

10%

The

1%

would be $455116.41

Please assessed

be advised
at this

that

this

is

only an

estimate

of the reserves

based

on the information
less

time and

the

actual

production

may

turn out to be significantly

Ii

OL_
iith
ki

Robert Presiden1

909

Poydras

Street

Suite

2200

New

Orleans

Louisiana

70112

504-52569O9

504-529-2362

Fax

Case 11-13028
Data Division Consulting Seivices of Schlumborger

Claim 25-1 Part 4

Corporation

Filed 05/11/12 Page 2 of 8

Exhibit Exhibit B to Supplement

Technology

1515

Poydras Orleans 504-592-5200

Street LA

Suite

2700

New
Tel

70112

Scklumherger

November 20 2008

Virgin Oil

Company Inc
Street Suite

909 Poydras

2200 70112

New

Orleans Louisiana

Attention

Mr

Tony Smith

Dear

Mr

Smith
of

At

the

request

Virgin

Oil

Company

Inc

Virgin
prepared

Data

Schiumberger Technology Corporation and gas interests in the Empire Field

Louisiana evaluation

DCS
owned below

has

COnSulting Services Division reserve and economjc evaluation of

its

of
oil

The

by Virgin and was prepared

as

investors

reserve and economic

and located

evaluation

onshore

in

are summarized in the tables

of August

2008 The

results

of our

ESTIMATED GROSS RESERVES INCOME CERTAIN OIL GAS INTERESTS ONSHORE LOUISIANA EVALUATED FOR VIRGIN OIL COMPANY INC AS OF AUGUST 2008

Proved

Probable Proved Reserves

Undeveloped
Reserves

Undeveloped
Reserves

Probable Reserves

All

Gross Reserves

Reserves

OilMBbls
Gas

996.841

996.841

6.365 937.739

MMscf
-MBbls

6.365 937.739

1003.206 6853.481

5915.743

5915.743

Net Reserves
Oil

747.631

747.63

GasMMscf
Income Data

4.774 703.304

4.774 703.304

752.405 5J40.111

4436.807

4436.807

M$
83391.805 83391.805 5257.311 5257.311
88649.1 17

Future Net Revenue Deductions Operating Severance Investment

Expenses Taxes

1015.000 7083.059
775.000 0.000

1015.000

90.000 127.576 750.000 0.000

90.000 127.576 750.000 0.000

1105.000

7083059
775.000 500.000

7210.634 1525.000
500.000

Abandonment
Future Net Income

74518.734

74018.734

4289.735

4289.735

78308.46

Discounted

FNI

10%

45511.641

45391.945

954.741

972.984

46364.930

Case 11-13028
Data
Division

Claim 25-1 Part 4

Corporation

Filed 05/11/12 Page 3 of 8

Exhibit Exhibit B to Supplement

Consulting
of

SeMcos
Technology

Schiumberger

Schiumberger
November Page

20 2008

The
been
tables

Gross

Reserves
for the

in the

above

table

are

to

100%

made
are to

working

interest

in

the
all

royalties net

and

lee

No

overriding
that

royalties

The

Net Reserves

deductions
in the

have above

and

interests

Virgin provided

and overriding

Appropriate

deductions

Income have been

data

royalties

made

for royalties

The values shown

values
to

in the tables

above

are

from the economic

to

summaries

in

may

not add

EXhibit

up

arithmetically

due

rounding

of the report Those software program used

also include reserve they are

prepare

the economic

procedures in the computer summaries

projections

Exhibit

contains

contains

individual

by reserves
tables

property economics and Possible reserves

In those cases
the the reserves

category

Exhibit Exhibit various

where
and

the

above

Proved
categories

Probable

or

in the to the

income

have not been

attributable

adjusted to reflect

varying

degrees

not comparable

of risk associated

with them and

RESERVE CATEGORIES
This report includes proved
to

and gas
categories

reserves

belong

undeveloped one of the

into

and

probable

reserves

as

of August

2008 By
or

definition

oil

following

categories
status

are further

proved
categories

divided

probable

possible

These

appropriate
is

reserve

The

devekped

reserve

developed and
reserve

category

even

further

divided

undeveloped
status

into

the

categories reserves

producing

and

appropriate include

nonproducing

sub

Nonproducing

reserves

shut-in

and

behind-pipe

The by

reserve
the

categories

used

in

this

report

conform

to

the

definitions

Society

of Petroleum and

Deterministic

Engineers

proved probable

Inc Board of Directors

Method
The

approved of

March

1997

possible reserves are presented in Exhibit

definitions

of this report

RESERVE ESTIMATES
The
reserves
that

DCS

estimated

or

audited

were by

estimated

engineering

practices

These

using

generally

reserves

accepted

estimated

petroleum and

performance

volumetric calculations

analysis

material

balance

Reserve
the

estimates

are

strictly

technical judgments The and

this

quality

of data available

accuracy
geological report are

prepared estimates
the

by or audited
only and

and of engineering by DCS and presented in

be acepted

of any reserve estimate

interpretation believed

is

function

of

The

reserve

estimates

should

reasonable

date of the estimate

may justify

with the understanding their revision

however

they are
to

that

reservoir performance

subsequent

Case 11-13028
Data
Division

Claim 25-1 Part 4

Filed 05/11/12 Page 4 of 8

Exhibit Exhibit B to Supplement

Consulting
of

Services Technology Corporation

Schiumberger

Schhinthorger November20
Page 2008

PRICING
All
oil

AND ESCALATION
gas product
escalation

PARAMETERS
operating expenses capital by Virgin prior to preparation abandonment costs and escalation
differentials

and and

prices

price

costs

parameters

were provided

Investments

abandonment The prices below

differentials

expenses

of

this

investments

report

parameters

are listed

gas not escalated

price

of $7.000

per

MMscf

was used

for

the

life

of the project

Gas

prices

were

Oil

An

oil price

of $70.00

per Bbl was

used

for the

life

escalated

of the project

Oil prices

were

not

Monthly

Lease

Operating
lease

Expense
operating

Monthly
costs

lease

made by Virgin The

Investments

operating

Costs

were based on

estimates

were not escalated

Capital

The

capital capital

investments

were based
for

purposes been

of

this

report

the

investments were

Drilling

excluded The

on estimates made by Virgin For and Completing the well have

capital

investments

not escalated

Abandonment
capital

Costs

The

abandonment

costs

were based on estimates made

investments

were not escalated

by Virgin

The

Severance

Tax

Louisiana

Severance

taxes

were included

OWNERSHIP
The leasehold
title

interests

were provided

or

ownership

evaluated

by Virgin No attempt was made by the undersigned

to verify

the

GENERAL
All data used
in this

study were

obtained

from
files

Virgin

the

operator

information

sources

or the non-confidential with the preparation of

of

DCS
to

field

made

in

connection

of the welt public inspection of the properties

costs

industry

was not
report

this

report Abandonment ownership

were included
operation

but other potential

in this the

environmental
in this

liabilities

attendant

and/or

of

were not included

properties

report

In

evaluating

the
all

information

at

our

disposal legal

related

to

this

report

we have

excluded

from

consideration

matters

which

our
other

require

or accounting

interpretation

or geological nature In assessing the conclusions expressed in this report of oil and gas evaluations pertaining aspects especially to reserve pertaining evaluations there are uncertainties inherent in the interpretation of engineering such data and conclusions represent only informed professional judgments engineering
to
all

than those of an

or any interpretation

Case 11-13028
Data Division Consulting
of

Claim 25-1 Part 4

Corporation

Filed 05/11/12 Page 5 of 8

Exhibit Exhibit B to Supplement

Services Technology

Schiumberger

Schlumberger
November Page

20 2008

Data

and

worksheets

used
available

in the for

preparation

of this evaluation having

Orleans

and

will

be

will

be

maintained

in

inspection by anyone

our

files

in

New

proper

authorization

by Virgin

This

report

was prepared
this

solely

for the

use

by

said in

party of

of the party

to

whom

it is

addressed the

report

and/or the contents thereofshafl be

and any

disclosure

made

shall

no way

solely

constitute

any

representation

of any kind

responsibility of said party and

the

whatsoever

of

the matters being

addressed

Undersigned

with respect

to

Should you need

further

assistance

in this

matter

answer your questions James Hubbard

please contact the following

DCS

employee

who

can

Principal

Petroleum

Engineer

New

Orleans

We

appreciate

the

opportunity

to

serve

you and

look forward

to

doing

business

with

you

in the

future

Very

truly

yours

DATA
DIVISION

CONSULTING SERVICES OF SCHLUMBERGER

TECHNOLOGy CORPORATION

James
Principal

Hubbard
Petroleum

P.13

Engineer

Case 11-13028

Claim 25-1 Part 4

SI

Filed 05/11/12 Page 6 of 8

Exhibit Exhibit B to Supplement

Date

19-Jan-09

Virgin

Oil

Project Location Field

Well State

Hookup

Lease

18165

Empire

AFE
Est Start Date Est

Comp

Date

____________ 2nd Qtr 2009

Estimated

Intangibles

Expenses

Description
Mobilization Transportation

Total

Costs

7000 1900 250 4250 21000 96000

Services

Communications
Permitting Inspection Construction

Permanent

Temporary

Regulatory Costs Servits Consulting

Site

Engineering Shallow Hazard Insurance

15900 9000 25600 6000 8000

Survey

Bonds

lE

Instrumentation/Electrical/SCADA

Construction

Overhead
lntanaibles total

194900

Estimated

Tangibles

Expenses

Description
Site Preparation

Total

93000
Equipment

Surface Production

205200 42000 66000

SCADA
Gulf

Electrical

Equipment
Station Flowline

South

Meter

ATMOS
Pipe/Pipe

Energy

Hot Tap

35000 50000 7500 6000 35000 539700

Support/Fittings/ValvesHook-Up

Supplies
Pipeline

Chemicals Labor
Hot tap Materials

Gas

Sales

and

meter skid total

Tangibles

Contingencies

20%

146900

Grand

Total

881500
Days
25

Estimated

Construction

Prepared

By By

Earl

Landrv

Reviewed

Brennan

Disher

Case 11-13028

Claim 25-1 Part 4

II

Filed 05/11/12 Page 7 of 8

Exhibit Exhibit B to Supplement

October

28

2008

MEMO TO
Re
Virgin

PARTNERS
Offshore

USA

Inc S.L 18165

Sidetrack

Empire Prospect

Plaquemines Parish Louisiana

Ladies

and Gentlemen

The

following

is

brief

summary of
to

the results

obtained

in

the drilling
last

of the above
as

referenced

well

have

tried

provide

daily updates

throughout

week

we
true as

encountered
vertical

the objective

Sands

have attached

an annotated of objective of the

LWD Sand

100
in

depth log over these objective

expected gas

Sands Each

sands came

mapped
residual

and are productive with the exception

probabjy as
result

which showed

saturations

of cross

fault

drainage

The

subject

well reached

its

planned
casing

total

depth

of

11860
will
is

MD 9537 TVD
to total

October

22 2008
in

5/8

production

has been successfully

drill

run

place

We

depth and cemented

rig

are currently

laying

down

pipe

and

release the drilling being

rig

over the

course

of the next few days

will

completion
with

procedure work-over

currently

planned

designed and
effective tubing

be

implemented

completion

much more
well

cost

and

efficient

method
selective

Current

plans

are to dually complete the

in

i.e two

strings in the well

bore with

primary completion

each

string

producing
for immediate

simultaneously

and

completion

in each string which

allows

production of an up-hole

Once same

this

procedure

zone immediately upon the depletion of the primary completion has been finalized and costs estimated we will immediately forward
in

to

you

Included

these costs will be the installation

of

production than

facility to

including
gas

tank

battery for the storing of oil and

gas line less

100 yards

our

market Obviously Our

goal
is

we

intend

to

expedite

the completion

first

production

of the

well

to

have the well on-line within

90 days

As

stated

above we
depletion

intend

to

dually
to

complete the well

aid

to

maximize
profiles

cash flow and While

expedite

of the reserves
it is

the present

worth
to

on the reserves

more
on

costly on the front-end dual are as follows String

tremendous boost

economics

My

current thoughts

this

Long

Primary Completion
Selective Short String

K-6 Sand
K-5 K-5
Sand

Estimated

rate

.75MMCFGD
rate

25BCPD 75BCPD

Completion

Lwr
Upr

Estimated

.75MMCFGD
25OBOPD

Primary Completion
Selective

Sand

Estimated

rate

Completion

K-2B Sand

Estimated

rate

25OBOPD

Case 11-13028

Claim 25-1 Part 4

Filed 05/11/12 Page 8 of 8

estimated
initial

Exhibit Exhibit B to Supplement

Consequently
pricing

our initial rate

would be

to

be

.75MMCFGD
flow

375B0PD

At current
is

and

after

lease operating This

expenses

monthly net cash

rate to

from the well

estimated

to

be $750000.00
in

would provide an extraordinary

are

of return on Our investment change

mind

Please keep
as

that

these rates

my estimates

and are subject

estimates

upward

or

downward
of the

we

test

the

zones

do believe
in the

them to be reasonable

based on

my

knowledge

offset

production

Empire

Field and interpretation in both

in

of the well logs

Upon

depletion
to

of the Primary
in the

and Selective

Completions

strings the well

would be worked-over

capture reserves

K-2A

and possible reserves

the

K-i Sand

My

current

estimates 3.5

of reserves 500

are as follows

Proved
Possible

BCFG 1.0 BCFG

would

MBO
MBO
future net revenue

400

The Proved

reserves

yield estimated

under

current

approximately $3

8MM
nice

pricing

of

undiscounted

and before

lease operating

expenses These
engineers

future will

revenues have the

would
final

provide

multiple but
feel

on the investment
these estimates

Obviously

the reservoir

say on reserves

are reasonable

Sincerely
Charlie Roberts

Exploration

Manager