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Name | Symbol | Market | Type |
---|---|---|---|
Gulf Coast Ultra Deep Royalty Trust (PK) | USOTC:GULTU | OTCMarkets | Trust |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.00001 | -0.08% | 0.01292 | 0.0129 | 0.013 | 0.01296 | 0.01292 | 0.01296 | 1,912 | 16:49:38 |
Delaware
|
46-6448579
|
||
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
||
|
|
||
The Bank of New York Mellon Trust Company, N.A., as trustee
Institutional Trust Services
919 Congress Avenue, Suite 500
|
|
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Austin, Texas
|
78701
|
||
(Address of principal executive offices)
|
(Zip Code)
|
||
|
|
|
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(512) 236-6599
|
|||
(Registrant's telephone number, including area code)
|
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|
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Securities registered pursuant to Section 12(b) of the Act: None
|
|||
|
|||
Securities registered pursuant to Section 12(g) of the Act:
|
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|
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Royalty Trust Units
|
|||
(Title of Class)
|
NONE
|
TABLE OF CONTENTS
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Page
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•
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collecting income attributable to the overriding royalty interests;
|
•
|
paying expenses, charges and obligations of the Royalty Trust from the Royalty Trust’s income and assets;
|
•
|
distributing distributable income to the Royalty Trust unitholders; and
|
•
|
prosecuting, defending or settling any claim of or against the Trustee, the Royalty Trust or the overriding royalty interests, including the authority to dispose of or relinquish title to any of the overriding royalty interests that are the subject of a dispute upon the receipt of sufficient evidence regarding the facts of such dispute.
|
•
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charge for its services as trustee;
|
•
|
retain funds to pay for future expenses and deposit them with one or more banks or financial institutions (which may include the Trustee to the extent permitted by law);
|
•
|
lend funds at commercial rates to the Royalty Trust to pay the Royalty Trust’s expenses (however, the Trustee does not intend to lend funds to the Royalty Trust); and
|
•
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seek reimbursement from the Royalty Trust for its out-of-pocket expenses.
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•
|
alter the purposes of the Royalty Trust or permit the Trustee to engage in any business or investment activities other than as specified in the royalty trust agreement;
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•
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alter the rights of the Royalty Trust unitholders as among themselves;
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•
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permit the Trustee to distribute the overriding royalty interests in kind; or
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•
|
adversely affect the rights and duties of the Trustee unless such amendment is approved by the Trustee.
|
Subject Interest
|
|
McMoRan's Estimated
Working
Interest Related to the Subject Interests
|
|
Operator
|
|
Royalty Trust's Estimated
Overriding
Royalty Interest
(5% proportionately
reduced to reflect
the Estimated
Working Interest)
|
Davy Jones
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Blackbeard East
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Lafitte
(b)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Blackbeard West
(a)
|
|
—
|
|
McMoRan
|
|
—
|
England
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Barbosa
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Morgan
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Barataria
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Blackbeard West #3
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Drake
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Davy Jones West
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Hurricane
(c)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Hook
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Captain Blood
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Bonnet
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Queen Anne's Revenge
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Calico Jack
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Highlander
(d)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Lineham Creek
(a)
|
|
—
|
|
Chevron
|
|
—
|
Tortuga
(a)
|
|
—
|
|
McMoRan
|
|
—
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
2016
(a)
|
|
2015
(b)
|
|
2014
(c)
|
||||||||||||
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||
Exploratory
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Productive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Oil
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Gas
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Dry
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|
3
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
5
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Productive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Oil
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Gas
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Dry
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
5
|
|
|
3
|
|
|
|
Developed
|
|
Undeveloped
(a)
|
|
||||||||
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
||||
|
|
Acres
|
|
Acres
|
|
Acres
|
|
Acres
|
|
||||
Offshore (federal waters)
|
|
—
|
|
|
—
|
|
|
23,403
|
|
|
11,912
|
|
|
Onshore South Louisiana
|
|
9,000
|
|
|
6,480
|
|
|
1,848
|
|
|
1,030
|
|
|
Total as of December 31, 2016
|
|
9,000
|
|
|
6,480
|
|
|
25,251
|
|
|
12,942
|
|
|
|
|
Gross Acres
|
|
Net Acres
|
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
Offshore
|
|
Onshore
|
|
Offshore
|
|
Onshore
|
||||
Total as of December 31, 2015
|
|
32,627
|
|
|
57,482
|
|
|
15,232
|
|
|
39,559
|
|
Lease expirations and other
|
|
9,224
|
|
(a)
|
46,634
|
|
(a)
|
3,320
|
|
(a)
|
32,049
|
|
Total as of December 31, 2016
|
|
23,403
|
|
|
10,848
|
|
|
11,912
|
|
|
7,510
|
|
(a)
|
In accordance with SEC guidelines, estimates of future net cash flows from proved reserves and the present value thereof are made using the twelve-month average of the first-day-of-the-month historical reference prices as adjusted for location and quality differentials. The reference price as of
December 31, 2016
, was
$2.48
per MMBtu of natural gas. These prices are held constant throughout the life of the oil and natural gas properties, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations. In accordance with the guidelines, the average realized price used in the Royalty Trust reserve report as of
December 31, 2016
, was
$2.38
per Mcf of natural gas. The Royalty Trust's reference prices are the Henry Hub spot price for natural gas.
|
(b)
|
The present value of estimated future net cash flows before income taxes (PV-10) is not considered a U.S. generally accepted accounting principle (GAAP) financial measure. The Royalty Trust believes that the PV-10 presentation is relevant and useful to its investors because it presents the discounted future net cash flows attributable to the subject interest's proved reserves. PV-10 is not a measure of financial or operating performance under GAAP and is not intended to represent the current market value of our estimated oil and natural gas reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure of discounted future net cash flows as defined under GAAP (see Note 8).
|
(c)
|
For tax reporting purposes, the Royalty Trust is considered a non-taxable "pass-through" entity (see Note 4).
|
•
|
regional, domestic and foreign supply of, and demand for, oil and natural gas, as well as perceptions of supply of, and demand for, oil and natural gas;
|
•
|
the price of foreign imports;
|
•
|
U.S. and worldwide political and economic conditions;
|
•
|
weather conditions and seasonal trends;
|
•
|
anticipated future prices of oil and natural gas, alternative fuels and other commodities;
|
•
|
technological advances affecting energy consumption and energy supply;
|
•
|
the proximity, capacity, cost and availability of pipeline infrastructure, treating, transportation and refining capacity;
|
•
|
natural disasters and other acts of force majeure;
|
•
|
domestic and foreign governmental regulations and taxation;
|
•
|
energy conservation and environmental measures; and
|
•
|
the price and availability of alternative fuels.
|
•
|
as a result of other risk factors discussed in this Form 10-K;
|
•
|
the failure of the subject interests to produce hydrocarbons;
|
•
|
decisions by McMoRan to delay or not to pursue the exploration or development of some or all of the subject interests;
|
•
|
reasons unrelated to operational performance, such as reports by industry analysts, investor perceptions, or announcements by competitors regarding their own performance;
|
•
|
legal or regulatory changes that could impact the business of McMoRan; and
|
•
|
general economic, securities markets and industry conditions.
|
•
|
tropical storms and hurricanes, which are particularly common in the Gulf of Mexico and South Louisiana during the summer and early fall of each year, and which can damage or completely destroy drilling, production and treatment facilities, which can result in the interruption or permanent cessation of production from associated wells;
|
•
|
extensive governmental regulation (including regulations that may, in certain circumstances, impose strict liability for pollution damage);
and
|
•
|
interruption or termination of operations by governmental authorities based on environmental, safety or other considerations, including those relating to other operators and/or other geographical areas.
|
|
|
2016
|
|
2015
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
|
0.17
|
|
|
$
|
0.08
|
|
|
$
|
1.36
|
|
|
$
|
0.66
|
|
Second Quarter
|
|
$
|
0.14
|
|
|
$
|
0.05
|
|
|
$
|
0.97
|
|
|
$
|
0.66
|
|
Third Quarter
|
|
$
|
0.11
|
|
|
$
|
0.06
|
|
|
$
|
0.79
|
|
|
$
|
0.27
|
|
Fourth Quarter
|
|
$
|
0.17
|
|
|
$
|
0.03
|
|
|
$
|
0.35
|
|
|
$
|
0.13
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Operating cash
|
$
|
261,537
|
|
|
$
|
176,074
|
|
Reserve fund cash
|
1,001,656
|
|
|
1,000,052
|
|
||
Overriding royalty interests in subject interests, net
|
3,745,893
|
|
|
6,085,310
|
|
||
Total assets
|
$
|
5,009,086
|
|
|
$
|
7,261,436
|
|
|
|
|
|
||||
LIABILITIES AND TRUST CORPUS
|
|
|
|
||||
Reserve fund liability
|
$
|
1,001,656
|
|
|
$
|
1,000,052
|
|
Loan payable to Freeport-McMoRan Inc. (FCX)
|
500,000
|
|
|
650,000
|
|
||
Trust corpus (230,172,696 royalty trust units authorized, issued and outstanding as of December 31, 2016 and 2015)
|
3,507,430
|
|
|
5,611,384
|
|
||
Total liabilities and trust corpus
|
$
|
5,009,086
|
|
|
$
|
7,261,436
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Royalty income
|
|
$
|
835,963
|
|
|
$
|
301,944
|
|
Interest income and other
|
|
928
|
|
|
1
|
|
||
Administrative expenses
|
|
(601,428
|
)
|
|
(616,343
|
)
|
||
Income in excess of administrative expenses (administrative expenses in excess of income)
|
|
$
|
235,463
|
|
|
$
|
(314,398
|
)
|
|
|
|
|
|
||||
Distributable income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Distributable income per royalty trust unit
|
|
$
|
—
|
|
|
$
|
—
|
|
Royalty trust units outstanding at end of year
|
|
230,172,696
|
|
|
230,172,696
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Trust corpus, beginning of period
|
|
$
|
5,611,384
|
|
|
$
|
168,058,172
|
|
Trust contributions
|
|
—
|
|
|
350,000
|
|
||
Amortization of overriding royalty interests in subject interests
|
|
(2,339,417
|
)
|
|
(671,390
|
)
|
||
Impairment of subject interests
|
|
—
|
|
|
(161,811,000
|
)
|
||
Income in excess of administrative expenses (administrative expenses in excess of income)
|
|
235,463
|
|
|
(314,398
|
)
|
||
Overriding royalty interests in subject interests
|
|
—
|
|
|
—
|
|
||
Trust corpus, end of period
|
|
$
|
3,507,430
|
|
|
$
|
5,611,384
|
|
Subject Interest
|
|
McMoRan's Estimated
Working
Interest Related to the Subject Interests
|
|
Operator
|
|
Royalty Trust's Estimated
Overriding
Royalty Interest
(5% proportionately
reduced to reflect
the Estimated
Working Interest)
|
Davy Jones
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Blackbeard East
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Lafitte
(b)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Blackbeard West
(a)
|
|
—
|
|
McMoRan
|
|
—
|
England
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Barbosa
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Morgan
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Barataria
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Blackbeard West #3
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Drake
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Davy Jones West
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Hurricane
(c)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Hook
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Captain Blood
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Bonnet
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Queen Anne's Revenge
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Calico Jack
(a)
|
|
—
|
|
McMoRan
|
|
—
|
Highlander
(d)
|
|
72%
|
|
McMoRan
|
|
3.6%
|
Lineham Creek
(a)
|
|
—
|
|
Chevron
|
|
—
|
Tortuga
(a)
|
|
—
|
|
McMoRan
|
|
—
|
|
Natural Gas
(MMcf) (a) |
|
Oil
(MBbls) (a) |
|
Total (MMcfe)
(a)
|
|||
2016
|
|
|
|
|
|
|||
Proved reserves:
|
|
|
|
|
|
|||
Balance at beginning of year
|
991
|
|
|
—
|
|
|
991
|
|
Revisions of previous estimates
|
373
|
|
(b)
|
—
|
|
|
373
|
|
Extensions and discoveries
|
—
|
|
|
—
|
|
|
—
|
|
Acquisition of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Sale of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Purchase of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Production
|
(420
|
)
|
|
—
|
|
|
(420
|
)
|
Balance at end of year
|
944
|
|
|
—
|
|
|
944
|
|
|
|
|
|
|
|
|||
Proved developed reserves at December 31, 2016
|
944
|
|
|
—
|
|
|
944
|
|
Proved undeveloped reserves at December 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
Natural Gas
(MMcf) (a) |
|
Oil
(MBbls) (a) |
|
Total (MMcfe)
(a)
|
|||
2015
|
|
|
|
|
|
|||
Proved reserves:
|
|
|
|
|
|
|||
Balance at beginning of year
|
2,071
|
|
|
7
|
|
|
2,113
|
|
Revisions of previous estimates
|
(949
|
)
|
(c)
|
(7
|
)
|
|
(991
|
)
|
Extensions and discoveries
|
—
|
|
|
—
|
|
|
—
|
|
Acquisition of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Sale of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Purchase of reserves in-place
|
—
|
|
|
—
|
|
|
—
|
|
Production
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
Balance at end of year
|
991
|
|
|
—
|
|
|
991
|
|
|
|
|
|
|
|
|||
Proved developed reserves at December 31, 2015
|
991
|
|
|
—
|
|
|
991
|
|
Proved undeveloped reserves at December 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
MMcf = millions of cubic feet; MBbls = thousands of barrels; MMcfe = MMcf equivalent.
|
(b)
|
For the year ended December 31, 2016, 373 Mmcfe of positive revisions associated with the onshore Highlander subject interest was primarily due to positive well performance for the Highlander well.
|
(c)
|
For the year ended December 31, 2015, proved undeveloped reserves of 729 Mmcfe related to the onshore Lineham Creek subject interest were reduced to zero. McMoRan informed the Trustee that it did not plan to further develop the subject interest and intended to relinquish the related leases. The remaining 262 Mmcfe of negative revisions associated with the onshore Highlander subject interest were primarily caused by reduced trailing twelve-month average natural gas reference prices.
|
|
|
|
|
|
||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Future cash inflows
|
|
$
|
2,242,300
|
|
|
$
|
2,427,300
|
|
Future costs applicable to future cash flows:
|
|
|
|
|
||||
Production costs (primarily production and ad valorem taxes)
|
|
(346,900
|
)
|
|
(351,400
|
)
|
||
Development and abandonment costs
|
|
—
|
|
|
—
|
|
||
Future income taxes
(a)
|
|
—
|
|
|
—
|
|
||
Future net cash flows
|
|
1,895,400
|
|
|
2,075,900
|
|
||
Discount for estimated timing of net cash flows (10% discount rate)
(b)
|
|
(165,600
|
)
|
|
(169,400
|
)
|
||
Standardized measure
|
|
$
|
1,729,800
|
|
|
$
|
1,906,500
|
|
(a)
|
No taxes are presented given the Royalty Trust's status as a non-taxable "pass-through" entity (see Note 4).
|
(b)
|
Amounts reflect application of the required 10% discount rate to the estimated future net cash flows associated with production of estimated proved reserves.
|
|
|
|
|
||||
|
2016
|
|
2015
|
||||
Balance at beginning of year
|
$
|
1,906,500
|
|
|
$
|
6,860,057
|
|
Changes during the year
|
|
|
|
||||
Sales, net of production expense
|
(835,962
|
)
|
|
(301,944
|
)
|
||
Net changes in sales and transfer prices, net of production expenses
|
(84,268
|
)
|
|
(3,323,252
|
)
|
||
Extensions, discoveries and improved recoveries
|
—
|
|
|
—
|
|
||
Changes in estimated future development costs
|
—
|
|
|
—
|
|
||
Previously estimated development costs incurred during the year
|
—
|
|
|
—
|
|
||
Sales of reserves in-place
|
—
|
|
|
—
|
|
||
Revisions of quantity estimates
|
686,243
|
|
|
(1,658,558
|
)
|
||
Changes due to timing and other
|
(133,363
|
)
|
|
(355,809
|
)
|
||
Accretion of discount
|
190,650
|
|
|
686,006
|
|
||
Net change in income taxes
|
—
|
|
|
—
|
|
||
Total changes
|
(176,700
|
)
|
|
(4,953,557
|
)
|
||
Balance at end of year
|
$
|
1,729,800
|
|
|
$
|
1,906,500
|
|
|
|
Royalty Income
|
|
Income in Excess of Administrative Expenses (Administrative Expenses in Excess of Income)
|
|
Distributable Income
(a)
|
|
Distributable Income Per Unit
(a)
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
||||||||
1
st
Quarter
|
|
$
|
170,044
|
|
|
$
|
34,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2
nd
Quarter
|
|
128,918
|
|
|
(115,116
|
)
|
|
—
|
|
|
—
|
|
||||
3
rd
Quarter
|
|
249,862
|
|
|
144,761
|
|
|
—
|
|
|
—
|
|
||||
4
th
Quarter
|
|
287,139
|
|
|
171,818
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
835,963
|
|
|
$
|
235,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
2015
|
|
|
|
|
|
|
|
|
||||||||
1
st
Quarter
|
|
$
|
—
|
|
|
$
|
(128,166
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
2
nd
Quarter
|
|
120,475
|
|
|
(93,027
|
)
|
|
—
|
|
|
—
|
|
||||
3
rd
Quarter
|
|
133,922
|
|
|
40,944
|
|
|
—
|
|
|
—
|
|
||||
4
th
Quarter
|
|
47,547
|
|
|
(134,149
|
)
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
301,944
|
|
|
$
|
(314,398
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
As of December 31, 2016, only the onshore Highlander subject interest had established commercial production. In accordance with the master conveyance, in the second quarter of 2015, the Royalty Trust began receiving royalties from McMoRan. Royalties received by the Royalty Trust must first be used to (i) satisfy Royalty Trust administrative expenses and (ii) reduce Royalty Trust indebtedness (
$500,000
as of
December 31, 2016
). Additionally, the Trustee has implemented a minimum cash
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Total Number
of Royalty Trust Units Beneficially Owned |
|
Percent of Outstanding Royalty Trust Units
(a)
|
|
|
|
|
|
|
|
Freeport-McMoRan Inc.
|
|
|
|
|
|
McMoRan Oil & Gas LLC
|
|
|
|
|
|
333 North Central Avenue
|
|
|
|
|
|
Phoenix, AZ 85004
|
|
62,286,299
|
|
(b)
|
27.1%
|
|
|
|
|
|
|
Lloyd I. Miller, III
|
|
|
|
|
|
3300 South Dixie Highway
|
|
|
|
|
|
Suite 1-365
|
|
|
|
|
|
West Palm Beach, FL 33405
|
|
46,278,326
|
|
(c)
|
20.1%
|
|
|
|
|
|
|
Leon G. Cooperman
|
|
|
|
|
|
11431 W. Palmetto Park Road
|
|
|
|
|
|
Boca Raton, FL 33428
|
|
21,651,695
|
|
(d)
|
9.4%
|
|
|
|
|
|
|
Akanthos Capital Management, LLC
|
|
|
|
|
|
21700 Oxnard Street, Suite 1730
|
|
|
|
|
|
Woodland Hills, CA 91367
|
|
11,678,000
|
|
(e)
|
5.1%
|
|
|
|
|
|
(a)
|
Based on 230,172,696 royalty trust units outstanding as of
December 31, 2016
.
|
(b)
|
Based on an amended Schedule 13G filed with the SEC on February 14, 2017 by FCX and McMoRan.
|
(c)
|
Based on a Schedule 13D filed with the SEC on October 28, 2016, by Lloyd I. Miller, III in his individual capacity and as manager, managing member or trustee of certain limited liability companies and trusts. Mr. Miller has (a) sole voting and investment power over 46,015,980 of the royalty trust units reported and (b) shared voting and investment power over 262,346 of the royalty trust units reported.
|
(d)
|
Based on an amended Schedule 13G filed with the SEC on November 13, 2015, by Leon G. Cooperman, on his own behalf and on behalf of affiliated investment firms and managed accounts identified therein. Mr. Cooperman represents that he has sole voting and investment power over 5,000,000 royalty trust units. Mr. Cooperman subsequently filed an amended Form 4 on December 4, 2015, reporting an additional 16,651,695 royalty trust units held in managed accounts and private investment entities over which he has investment discretion but disclaims beneficial ownership except to the extent of his pecuniary interest therein.
|
(e)
|
Based on a Schedule 13G filed with the SEC on January 18, 2017 by Akanthos Capital Management, LLC.
|
|
|
|
|
|
||||
|
|
2016
|
|
2015
|
||||
Audit Fees
|
|
$
|
170,000
|
|
|
$
|
225,000
|
|
Audit-Related Fees
|
|
—
|
|
|
—
|
|
||
Tax Fees
|
|
—
|
|
|
—
|
|
||
All Other Fees
|
|
—
|
|
|
—
|
|
(a)(1)
|
Financial Statements
. Reference is made to Part II, Item 8. "Financial Statements and Supplementary Data" of this Form 10-K.
|
(a)(2)
|
Financial Statement Schedules
. All financial statement schedules are either not required under the related instructions or are not applicable because the information has been included elsewhere herein.
|
(a)(3)
|
Exhibits
. Reference is made to the Exhibit Index on page E-1 hereof.
|
|
Gulf Coast Ultra Deep Royalty Trust
|
||
|
By:
|
The Bank of New York Mellon
|
|
|
|
Trust Company, N.A., as Trustee
|
|
|
|
|
|
|
|
By:
|
/s/ Michael J. Ulrich
|
|
|
|
Michael J. Ulrich
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: March 10, 2017
|
|
|
|
|
|
Gas Reserves (MMCF)
|
|
Future Net Revenue (M$)
|
||||||||
|
|
Gross
|
|
|
|
|
|
Present Worth
|
||||
Category
|
|
(100)%
|
|
Net
|
|
Total
|
|
at 10%
|
||||
|
|
|
|
|
|
|
|
|
||||
Proved Developed Producing
|
|
31,474.4
|
|
|
943.6
|
|
|
1,895.4
|
|
|
1,729.8
|
|
|
|
|
|
Sincerely,
|
||
|
|
|
|
|
||
|
|
|
|
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
||
|
|
|
|
Texas Registered Engineering Firm F-2699
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ C.H. (Scott) Rees III
|
|
|
|
|
|
|
C.H. (Scott) Rees III, P.E.
|
|
|
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
|
By:
|
/s/ John R. Cliver
|
|
|
By:
|
/s/ Shane M. Howell
|
|
|
John R. Cliver, P.E. 107216
|
|
|
|
Shane M. Howell, P.G. 11276
|
|
|
Vice President
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
Date Signed:
|
February 27, 2017
|
|
Date Signed:
|
February 27, 2017
|
||
|
|
|
|
|
|
|
JRC:JLM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.
|
(i)
|
Same geological formation (but not necessarily in pressure communication with the reservoir of interest);
|
(ii)
|
Same environment of deposition;
|
(iii)
|
Similar geological structure; and
|
(iv)
|
Same drive mechanism.
|
(i)
|
Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and
|
(ii)
|
Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
|
Supplemental definitions from the 2007 Petroleum Resources Management System:
Developed Producing Reserves - Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate. Improved recovery reserves are considered producing only after the improved recovery project is in operation.
Developed Non-Producing Reserves - Developed Non-Producing Reserves include shut-in and behind-pipe Reserves. Shut-in Reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate but which have not yet started producing, (2) wells which were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe Reserves are expected to be recovered from zones in existing wells which will require additional completion work or future recompletion prior to start of production. In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
|
(i)
|
Gain access to and prepare well locations for drilling, including surveying well locations for the purpose of determining specific development drilling sites, clearing ground, draining, road building, and relocating public roads, gas lines, and power lines, to the extent necessary in developing the proved reserves.
|
(ii)
|
Drill and equip development wells, development-type stratigraphic test wells, and service wells, including the costs of platforms and of well equipment such as casing, tubing, pumping equipment, and the wellhead assembly.
|
(iii)
|
Acquire, construct, and install production facilities such as lease flow lines, separators, treaters, heaters, manifolds, measuring devices, and production storage tanks, natural gas cycling and processing plants, and central utility and waste disposal systems.
|
(iv)
|
Provide improved recovery systems.
|
(i)
|
Costs of topographical, geographical and geophysical studies, rights of access to properties to conduct those studies, and salaries and other expenses of geologists, geophysical crews, and others conducting those studies. Collectively, these are sometimes referred to as geological and geophysical or "G&G" costs.
|
(ii)
|
Costs of carrying and retaining undeveloped properties, such as delay rentals, ad valorem taxes on properties, legal costs for title defense, and the maintenance of land and lease records.
|
(iii)
|
Dry hole contributions and bottom hole contributions.
|
(iv)
|
Costs of drilling and equipping exploratory wells.
|
(v)
|
Costs of drilling exploratory-type stratigraphic test wells.
|
(i)
|
Oil and gas producing activities include:
|
(A)
|
The search for crude oil, including condensate and natural gas liquids, or natural gas ("oil and gas") in their natural states and original locations;
|
(B)
|
The acquisition of property rights or properties for the purpose of further exploration or for the purpose of removing the oil or gas from such properties;
|
(C)
|
The construction, drilling, and production activities necessary to retrieve oil and gas from their natural reservoirs, including the acquisition, construction, installation, and maintenance of field gathering and storage systems, such as:
|
(1)
|
Lifting the oil and gas to the surface; and
|
(2)
|
Gathering, treating, and field processing (as in the case of processing gas to extract liquid hydrocarbons); and
|
(D)
|
Extraction of saleable hydrocarbons, in the solid, liquid, or gaseous state, from oil sands, shale, coalbeds, or other nonrenewable natural resources which are intended to be upgraded into synthetic oil or gas, and activities undertaken with a view to such extraction.
|
a.
|
The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal; and
|
b.
|
In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser prior to upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility which upgrades such natural resources into synthetic oil or gas.
|
(ii)
|
Oil and gas producing activities do not include:
|
(A)
|
Transporting, refining, or marketing oil and gas;
|
(B)
|
Processing of produced oil, gas, or natural resources that can be upgraded into synthetic oil or gas by a registrant that does not have the legal right to produce or a revenue interest in such production;
|
(C)
|
Activities relating to the production of natural resources other than oil, gas, or natural resources from which synthetic oil and gas can be extracted; or
|
(D)
|
Production of geothermal steam.
|
(i)
|
When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.
|
(ii)
|
Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.
|
(iii)
|
Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.
|
(iv)
|
The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.
|
(v)
|
Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.
|
(vi)
|
Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.
|
(i)
|
When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.
|
(ii)
|
Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.
|
(iii)
|
Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.
|
(iv)
|
See also guidelines in paragraphs (a)(17)(iv) and (a)(17)(vi) of this section.
|
(i)
|
Costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities. They become part of the cost of oil and gas produced. Examples of production costs (sometimes called lifting costs) are:
|
(A)
|
Costs of labor to operate the wells and related equipment and facilities.
|
(B)
|
Repairs and maintenance.
|
(C)
|
Materials, supplies, and fuel consumed and supplies utilized in operating the wells and related equipment and facilities.
|
(D)
|
Property taxes and insurance applicable to proved properties and wells and related equipment and facilities.
|
(E)
|
Severance taxes.
|
(ii)
|
Some support equipment or facilities may serve two or more oil and gas producing activities and may also serve transportation, refining, and marketing activities. To the extent that the support equipment and facilities are used in oil and gas producing activities, their depreciation and applicable operating costs become exploration, development or production costs, as appropriate. Depreciation, depletion, and amortization of capitalized acquisition, exploration, and development costs are not production costs but also become part of the cost of oil and gas produced along with production (lifting) costs identified above.
|
(i)
|
The area of the reservoir considered as proved includes:
|
(A)
|
The area identified by drilling and limited by fluid contacts, if any, and
|
(B)
|
Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.
|
(ii)
|
In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
|
(iii)
|
Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
|
(iv)
|
Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
|
(A)
|
Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and
|
(B)
|
The project has been approved for development by all necessary parties and entities, including governmental entities.
|
(v)
|
Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
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Excerpted from the FASB Accounting Standards Codification Topic 932, Extractive Activities-Oil and Gas:
932-235-50-30 A standardized measure of discounted future net cash flows relating to an entity's interests in both of the following shall be disclosed as of the end of the year:
a.
Proved oil and gas reserves (see paragraphs 932-235-50-3 through 50-11B)
b.
Oil and gas subject to purchase under long-term supply, purchase, or similar agreements and contracts in which the entity participates in the operation of the properties on which the oil or gas is located or otherwise serves as the producer of those reserves (see paragraph 932-235-50-7).
The standardized measure of discounted future net cash flows relating to those two types of interests in reserves may be combined for reporting purposes.
932-235-50-31 All of the following information shall be disclosed in the aggregate and for each geographic area for which reserve quantities are disclosed in accordance with paragraphs 932-235-50-3 through 50-11B:
a.
Future cash inflows. These shall be computed by applying prices used in estimating the entity's proved oil and gas reserves to the year-end quantities of those reserves. Future price changes shall be considered only to the extent provided by contractual arrangements in existence at year-end.
b.
Future development and production costs. These costs shall be computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. If estimated development expenditures are significant, they shall be presented separately from estimated production costs.
c.
Future income tax expenses. These expenses shall be computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pretax net cash flows relating to the entity's proved oil and gas reserves, less the tax basis of the properties involved. The future income tax expenses shall give effect to tax deductions and tax credits and allowances relating to the entity's proved oil and gas reserves.
d.
Future net cash flows. These amounts are the result of subtracting future development and production costs and future income tax expenses from future cash inflows.
e.
Discount. This amount shall be derived from using a discount rate of 10 percent a year to reflect the timing of the future net cash flows relating to proved oil and gas reserves.
f.
Standardized measure of discounted future net cash flows. This amount is the future net cash flows less the computed discount.
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(i)
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Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.
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(ii)
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Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.
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From the SEC's Compliance and Disclosure Interpretations (October 26, 2009):
Although several types of projects - such as constructing offshore platforms and development in urban areas, remote locations or environmentally sensitive locations - by their nature customarily take a longer time to develop and therefore often do justify longer time periods, this determination must always take into consideration all of the facts and circumstances. No particular type of project per se justifies a longer time period, and any extension beyond five years should be the exception, and not the rule.
Factors that a company should consider in determining whether or not circumstances justify recognizing reserves even though development may extend past five years include, but are not limited to, the following:
The company's level of ongoing significant development activities in the area to be developed (for example, drilling only the minimum number of wells necessary to maintain the lease generally would not constitute significant development activities);
The company's historical record at completing development of comparable long-term projects;
The amount of time in which the company has maintained the leases, or booked the reserves, without significant development activities;
The extent to which the company has followed a previously adopted development plan (for example, if a company has changed its development plan several times without taking significant steps to implement any of those plans, recognizing proved undeveloped reserves typically would not be appropriate); and
The extent to which delays in development are caused by external factors related to the physical operating environment (for example, restrictions on development on Federal lands, but not obtaining government permits), rather than by internal factors (for example, shifting resources to develop properties with higher priority).
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(iii)
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Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.
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Filed
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Exhibit
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with this
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Incorporated by Reference
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Number
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Exhibit Title
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Form 10-K
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Form
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File No.
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Date Filed
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||
3.1
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Composite Certificate of Trust of Gulf Coast Ultra Deep Royalty Trust
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10-Q
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333-185742
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August 14, 2013
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10.1
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Amended and Restated Royalty Trust Agreement of Gulf Coast Ultra Deep Royalty Trust, dated as of June 3, 2013
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8-K
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333-185742
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June 4, 2013
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10.2
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Master Conveyance of Overriding Royalty Interest by and between McMoRan Oil & Gas LLC and Gulf Coast Ultra Deep Royalty Trust, dated as of June 3, 2013
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8-K
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333-185742
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June 4, 2013
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||
Consent of Netherland, Sewell & Associates, Inc.
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X
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Certification pursuant to Rule 13a-14(a)/15d-14(a)
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X
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Certification pursuant to 18 U.S.C. Section 1350
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X
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Report of Netherland, Sewell & Associates, Inc.
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X
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1 Year Gulf Coast Ultra Deep Ro... (PK) Chart |
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