In oil and gas transactions, reserve reports and engineering assumptions can directly impact valuation, financing, and investment decisions—but not every estimate tells the full story. In this episode of An Ounce of Prevention, host Rachel Reese sits down with Thad Toups, President of Haas & Cobb and a licensed professional engineer, to discuss the role third-party engineering firms play in evaluating reserves, forecasting production, and helping buyers, sellers, lenders, and investors understand risk.

Thad explains how Haas & Cobb approaches reserve analysis across both conventional and unconventional assets, including the growing challenges of forecasting mature shale wells. He breaks down why “best fit” decline curves can overstate reserves, how well interference changes production behavior over time, and why buyers relying on overly optimistic forecasts can significantly overpay for assets. The conversation also explores confidence intervals in reserve reporting, the difference between proved reserves and P50 estimates, and how reserve assumptions change depending on whether the audience is a buyer, lender, or public company auditor.

Rachel and Thad also discuss several emerging trends in the industry, including renewed interest in water flooding and conventional recovery techniques, increasing scrutiny from the PCAOB on reserve reporting assumptions, and growing disputes related to water disposal and seismicity in the Permian Basin. In addition, Thad shares insight into the rapid development of Argentina’s Vaca Muerta shale play and why international opportunities are drawing more attention as high-quality domestic inventory becomes increasingly concentrated among large public operators.

Before the discussion, Rachel delivers a case law update on Clarke v. Yu, a California dispute involving an alleged oral joint venture agreement related to a proposed biomedical technology company. The court held that because the proposed venture could not reasonably be completed within one year, the statute of frauds required the agreement to be in writing. Without a written agreement, the plaintiff’s claims failed. The decision serves as an important reminder that informal business discussions and exchanged ideas are not substitutes for properly documented agreements.

If you’re involved in oil and gas transactions, reserve evaluations, energy investing, or business partnerships, this episode provides a practical look at how engineering assumptions, legal structures, and risk analysis intersect in today’s energy market.

Time Stamps / Chapters

00:00 — Why reserve forecasting in unconventional wells is getting more difficult
01:07 — Host intro and case law update setup
01:32 — Clarke v. Yu: oral joint venture dispute and statute of frauds ruling
04:38 — Key Takeaway: Why business discussions are not enough without written agreements
05:08 — Guest introduction: Thad Toups, President of Haas & Cobb
05:38 — What third-party engineering firms actually do
07:20 — Renewed interest in water flooding and conventional assets
08:09 — Water flooding, unitization, and regulatory considerations
08:56 — Forecasting challenges in unconventional shale wells
10:24 — Expert witness work and water disposal disputes in the Permian Basin
12:32 — PCAOB scrutiny and increased diligence on reserve reporting
14:17 — Proved reserves vs P50 estimates explained
16:50 — Why lenders require conservative reserve estimates
17:49 — Argentina’s Vaca Muerta shale play and international opportunities
20:47 — Final thoughts on engineering, clients, and industry growth