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APPENDIX A <br />JOHN J. WANNER <br />COM[ULTIMO P[T110L[UY EYGIY[[• <br />!O] COLORADO lUILDINO <br />IC13 CALIiORN1A STR[ET <br />DENV[R. COLORADO •O]03 <br />March 4, 1987 <br />Mr. K. W. Nickerson <br />Royal Resources Corporation <br />1660 Wynkoop Street, Suite 1000 <br />Denver. CO 80202-1 132 <br />RE: Sale of All of Royal Resources Corporation <br />Producing Oil & Gas Reserves and Australia <br />Permit EP231, But Excluding Australia Permit <br />EP164 to Victoria Exploration lnc, for $3,650,000. <br />Dear Mr. Nickerson: <br />Based upon current conditions in the industry in the United Slates, tfle price offered, $3,6 <br />Victoria Exploration, Inc. for the Royal Resources Corporation (RRC) producing reserves falls <br />range of market values that exist at this date for these assets and in my opinion the price is fair. <br />In making this evaluation, 1 received the following information and documents, all suppli <br />RRC. <br />1. All bids received by RRC. <br />2. In-house reserve estimates of RRC's oil and gas reserves. <br />3. Individual well production history. <br />4. Abstract of oil and gas income to RRC. <br />5. Current prices being received by RRC for their oil and gas production. <br />6. The Tulare Lake Field, California operator's report of minimum well charges to be <br />plugging and abandonment work at Tulare Lake. <br />7. The contract and financial requirement of the Australia Permil EP231. <br />I prepared [he annual reserve report for Royal Resources for the years 1984 and 1985 and r. <br />approved the in-house reserve estimation for 1986. Market value is not to be confused with press <br />used in Royal's annual reserve reports. The market value is the price a person will pay for the a <br />time, considering all the conditions a[ the time of the sale. In my opinion the sale falls within tl <br />values. <br />Very truly yours, <br />. ~V Qn~l~--~ <br />John J. Wanner <br />Registered Professional Engineer <br />State of Colorado 3598 <br />by <br />the <br />[o me by <br />rred for <br />wed and <br />worth as <br />s at that <br />range of <br />A-I <br />