10040 Delivered-To: rhb@rspdc.com Received: by 10.217.128.14 with SMTP id dq14csp336008web; Thu, 20 Mar 2014 20:43:49 -0700 (PDT) X-Received: by 10.224.80.134 with SMTP id t6mr54845187qak.34.1395373427888; Thu, 20 Mar 2014 20:43:47 -0700 (PDT) Return-Path: Received: from mail-qc0-x22d.google.com (mail-qc0-x22d.google.com [2607:f8b0:400d:c01::22d]) by mx.google.com with ESMTPS id q64si2347817qgd.70.2014.03.20.20.43.47 for (version=TLSv1 cipher=ECDHE-RSA-RC4-SHA bits=128/128); Thu, 20 Mar 2014 20:43:47 -0700 (PDT) Received-SPF: pass (google.com: domain of perowan@gmail.com designates 2607:f8b0:400d:c01::22d as permitted sender) client-ip=2607:f8b0:400d:c01::22d; Authentication-Results: mx.google.com; spf=pass (google.com: domain of perowan@gmail.com designates 2607:f8b0:400d:c01::22d as permitted sender) smtp.mail=perowan@gmail.com; dkim=pass header.i=@gmail.com; dmarc=pass (p=NONE dis=NONE) header.from=gmail.com Received: by mail-qc0-f173.google.com with SMTP id r5so2170967qcx.18 for ; Thu, 20 Mar 2014 20:43:47 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=20120113; h=from:content-type:content-transfer-encoding:mime-version:subject :message-id:date:references:to; bh=b/n1hxN2j1c5jEIeXqh7pRUMpVoUXDWsjbCO+320Roc=; b=gWqLriqE7i4xC3xxE/DWvSUhouPGlbCvfHQ2omQ07kHrKI/siD1W0rT6mWfYqkf57T K9M4/J4ttDDv0HZgB7PvbYCAYTDDTyGXjlgO3q7Kh7W+c47tsVDjDMcXAkTExbqg9k5P yeLH/UC7ElQ8XoJJWb0xeBO1UJFwFBPORdopb8eEDHwxk3lpczyBv9/zt117vGUuvgl8 D22jaBeRuNJ8CkNKwS4UrFjC03fVZgf/Rqu/qqLYqY8UPdamr54ZuzWIJY4k0tHp2/Rn TDf43giW2dseTUhskp5dhJbqdwXujS6IKzjQW0cQxmWYr0luqciJwvbU1qAE3wgS2cMy 3jrw== X-Received: by 10.140.106.116 with SMTP id d107mr8576728qgf.44.1395373427106; Thu, 20 Mar 2014 20:43:47 -0700 (PDT) Return-Path: Received: from [192.168.1.5] (pool-173-66-170-5.washdc.fios.verizon.net. [173.66.170.5]) by mx.google.com with ESMTPSA id e69sm5196003qgf.17.2014.03.20.20.43.46 for (version=TLSv1 cipher=ECDHE-RSA-RC4-SHA bits=128/128); Thu, 20 Mar 2014 20:43:46 -0700 (PDT) From: Paul Rowan Content-Type: multipart/alternative; boundary=Apple-Mail-F991EE02-AEE6-41DB-87D3-4B2E71F72B88 Content-Transfer-Encoding: 7bit Mime-Version: 1.0 (1.0) Subject: Fwd: Your question of pricing Message-Id: Date: Thu, 20 Mar 2014 23:43:47 -0400 References: <3780D958-EE1E-46E4-A8B6-10749C213F5A@aol.com> To: Hunter 1/7/14 X-Mailer: iPad Mail (11B651) --Apple-Mail-F991EE02-AEE6-41DB-87D3-4B2E71F72B88 Content-Transfer-Encoding: QUOTED-PRINTABLE Content-Type: TEXT/PLAIN; charset=us-ascii H: Thanks again for dinner - have a great time in SC. Please send me your home a= ddress. ttyl pal PR Sent from my iPad Begin forwarded message: > From: Richard Preis > Date: March 18, 2014 at 7:57:40 PM EDT > To: paul rowan , Dan McHale > Subject: Fwd: Your question of pricing >=20 >=20 >=20 > Richard Preis > 2254130712 cell > 2252472912 cell > 2253393343 off >=20 > Begin forwarded message: >=20 >> From: Bill Miller >> Date: March 18, 2014 at 6:42:34 PM CDT >> To: Richard Preis >> Subject: Your question of pricing >>=20 >> Richard, >>=20 >> Thanks for the call. In answer to your question about how we priced the o= ffering: >>=20 >> In public companies, proved undeveloped oil and gas reserves are priced f= rom 25% of the engineering projected value to 100% of the value. We have pr= oposed valuing the Proved Undeveloped Reserves in the DOR Engineering report= ($300 million) at 50% of the projected engineering value ($150 million - $1= 5 million equals 10% of the company). There are many factors that we consid= ered, including: >>=20 >> First, the oil and gas leases that we own (20,000 acres) have 65 producin= g shallow gas wells. While these have been producing for 50 years, the shall= ow reserves still have many years of remaining life. This fact was consider= ed because first, the shallow reserves have a value that we did not consider= and, more important, the shallow gas reserves maintain the existence of the= leases without further drilling obligations. Consequently, we are under no s= train to start developing the Barnett Shale reserves. >>=20 >> Second, the exceptional richness of the Barnett Shale reserves adds value= to the Proved Undeveloped reserves because lower gas prices are more than o= ffset by the much higher value of the liquids in the gas. >>=20 >> Third, the fact that the shallow gas field (which we own and is part of t= he company) was the largest gas field in the Fort Worth basin before the dev= elopment of the Barnett Shale adds value in two ways: >>=20 >> Since all of the shallow gas originally came from the underlying Barnett S= hale, it indicates that the Barnett Shale under the leases will have excepti= onal reserve potential. >> The gas pipeline infrastructure is already in place. >> Additionally, because of the location of the field, there is an opportuni= ty to add value through the construction and operation of a regional gatheri= ng system.. This has proved to be very profitable in the area. >>=20 >> There are a number of other good reasons for the valuation that we have u= sed, but I believe the above reflects the validity of our valuation. =20 >>=20 >> Since the $15 million will be the first new money in, I also felt that th= e $150 million valuation, at 50% of the engineering projected value, was fai= r to both sides. >>=20 >> I will be glad to discuss at your convenience. >>=20 >> Best regards, >> Bill >> \ --Apple-Mail-F991EE02-AEE6-41DB-87D3-4B2E71F72B88 Content-Transfer-Encoding: QUOTED-PRINTABLE Content-Type: TEXT/HTML; charset=utf-8
H:
Thanks again for dinner -= have a great time in SC. Please send me your home address. ttyl pal
PR

Sent from my iPad

Begin forwarded message:
From: Richard Preis <richpreis@aol.com>
Date: Marc= h 18, 2014 at 7:57:40 PM EDT
To: paul rowan <perowan@gmail.com>, Dan McHale <dmchale@rspinv.com>
Subject: Fwd:= Your question of pricing



Richard Preis
2254130712 cell
2252472912 cell
2253393343 off

Begin forwarded message:

<= div>From: Bill Miller <bmiller@millerenergyllc.com>
Date: March 18, 2014 at 6:= 42:34 PM CDT
To: Richard Preis <richpreis@aol.com>
Subject: Your question of prici= ng

Richard= ,

Thanks for the call. In answer to your question a= bout how we priced the offering:

In public companie= s, proved undeveloped oil and gas reserves are priced from 25% of the engine= ering projected value to 100% of the value.  We have proposed valuing t= he Proved Undeveloped Reserves in the DOR Engineering report ($300 million) a= t 50% of the projected engineering value ($150 million - $15 million equals 1= 0% of the company).  There are many factors that we considered, includi= ng:

First, the oil and gas leases that we own (20,0= 00 acres) have 65 producing shallow gas wells. While these have been produci= ng for 50 years, the shallow reserves still have many years of remaining lif= e.  This fact was considered because first, the shallow reserves have a= value that we did not consider and, more important, the shallow gas reserve= s maintain the existence of the leases without further drilling obligations.= Consequently, we are under no strain to start developing the Barnett Shale r= eserves.

Second, the exceptional richness of the Ba= rnett Shale reserves adds value to the Proved Undeveloped reserves because l= ower gas prices are more than offset by the much higher value of the liquids= in the gas.

Third, the fact that the shallow gas f= ield (which we own and is part of the company) was the largest gas field in t= he Fort Worth basin before the development of the Barnett Shale adds value i= n two ways:

  1. Since all of the shallow gas origina= lly came from the underlying Barnett Shale, it indicates that the Barnett Sh= ale under the leases will have exceptional reserve potential.
  2. The ga= s pipeline infrastructure is already in place.
Additionally, b= ecause of the location of the field, there is an opportunity to add value th= rough the construction and operation of a regional gathering system.. This h= as proved to be very profitable in the area.

There a= re a number of other good reasons for the valuation that we have used, but I= believe the above reflects the validity of our valuation.  
=
Since the $15 million will be the first new money in, I also f= elt that the $150 million valuation, at 50% of the engineering projected val= ue, was fair to both sides.

I will be glad to discu= ss at your convenience.

Best regards,
Bil= l
\
= --Apple-Mail-F991EE02-AEE6-41DB-87D3-4B2E71F72B88-- conversation-id 81426 date-last-viewed 0 date-received 1395373427 flags 25770064901 remote-id 145731