Proved undeveloped oil and gas reserves are proved reserves that are expected to
be recovered from new wells on undrilled acreage or from existing wells where a
relatively major expenditure is required for recompletion or secondary or
tertiary recovery. Reserves assigned to undrilled acreage are limited to those
drilling units that offset productive units reasonably certain of production
No major discovery or other favorable or adverse event has occurred since July
1, 1995 which is believed to have caused a significant change in the estimated
proved oil and gas reserves of OEI.
OEI's estimate of reserves has not been filed with or included in reports to any
federal agency other than the Securities and Exchange Commission.
Oil and gas reserve quantity estimates are subject to numerous uncertainties
inherent in the estimation of quantities of proved reserves and in the
projection of future rates of production and the timing of development
expenditures. The accuracy of such estimates is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Results of subsequent drilling, testing and production may cause either upward
or downward revision of previous estimates. Further, the volumes considered to
be commercially recoverable fluctuate with changes in prices and operating
costs. Key emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries are more imprecise than those of currently
producing oil and gas properties. Accordingly, these estimates are expected to
change as additional information becomes available in the future.