BlackPearl Resources Inc.



Reserves/Resources


The following tables summarize certain information contained in the independent reserves report prepared by Sproule Associates Unconventional Limited ("Sproule") as of December 31, 2010. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 31.

Summary of Oil and Gas Reserves -- Forecasted Prices and Costs

(Company interest, before royalties)

Oil&NGL Reserves

Natural Gas Reserves

2010
BOE (1)

2009
BOE (1)

 

(Mbbls)

(MMcf)

(Mboe)

(Mboe)

 

 

 

 

 

Proved developed producing

4,459

1,846

4,767

3,482

Proved developed non-producing

360

13

363

1,080

Proved undeveloped

6,527

310

6,578

7,013

Total proved

11,346

2,169

11,708

11,573

Probable

12,912

1,307

13,130

12,071

Total proved plus probable

24,258

3,476

24,838

23,645

Notes:
  • (1) BOE's may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of 6 Mcf: 1barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.


Net Present Value of Reserves -- Forecasted Prices and Costs

Net Present Values of Before Tax Future Net Revenue
Discounted at

 

0%

5%

8%

10%

12%

15%

20%

($000's)

Proved

 

 

 

 

 

 

 

   Developed producing

173,864

163,756

158,387

155,058

151,909

147,495

140,858

   Developed non-producing

7,812

6,668

6,093

5,747

5,429

4,995

4,371

   Undeveloped

157,468

130,379

117,259

109,511

102,439

92,919

79,422

Total proved

339,145

300,803

281,739

270,317

259,778

245,409

224,652

Probable

397,635

278,904

234,469

211,170

191,516

167,172

136,221

Total proved plus probable

736,780

579,707

516,209

481,487

451,293

412,581

360,873


Net Present Values of After Tax Future Net Revenue
Discounted at

 

0%

5%

8%

10%

12%

15%

20%

($000's)

Proved

 

 

 

 

 

 

 

   Developed producing

173,864

163,756

158,387

155,058

151,909

147,495

140,858

   Developed non-producing

7,812

6,668

6,093

5,747

5,429

4,995

4,371

   Undeveloped

149,517

123,479

110,900

103,481

96,701

87,614

74,728

Total proved

331,194

293,903

275,380

264,286

254,037

240,104

219,958

Probable

306,959

213,017

177,803

159,357

143,887

124,629

100,351

Total proved plus probable

638,152

506,920

453,183

423,643

397,845

364,732

320,308

Notes:
Columns may not add due to rounding


Reconciliation of Changes in Reserves

The following table summarizes the changes in the Company's share of oil and natural gas reserves (before royalties) from December 31, 2009 to December 31, 2010.

 

Oil & NGLs

Natural gas

BOE

 

Proved

Probable

Total

Proved

Probable

Total

Total

 

(Mbbls)

(Mbbls)

(Mbbls)

(MMcf)

(MMcf)

(MMcf)

(Mboe)

Balance, Dec 31, 2009

10,754

11,795

22,549

4,914

1,659

6,573

23,645

   Production

(2,327)

-

(2,327)

(1,261)

-

(1,261)

(2,537)

   Extensions

3,242

1,624

4,866

36

10

46

4,874

   Technical revisions

1,841

42

1,883

773

407

1,181

2,080

   Improved recovery

128

31

159

-

-

-

159

   Acquisitions

154

253

407

43

15

58

417

   Dispositions

(2,489)

(944)

(3,434)

(2,327)

(782)

(3,110)

(3,952)

   Economic factors

42

113

155

(8)

(2)

(10)

153

Balance, Dec 31, 2010

11,347

12,912

24,259

2,170

1,307

3,477

24,838



The pricing assumptions used in the Sproule evaluation are summarized below.

Pricing Assumptions -- Forecast Prices and Costs

Year

WTI
Cushing
40° API

 Edmonton Par Price
40° API

Western
Canadian Select
20.5° API

Alberta
AECO-C
Spot

Inflation rate

Exchange rate

 

(US$/bbl)

(CDN$/bbl)

(CDN$/bbl)

(CDN$/MMBtu)

(%/yr)

(US$/Cdn$)

2011

88.40

93.08

80.04

4.04

1.5

.932

2012

89.14

93.85

80.71

4.66

1.5

.932

2013

88.77

93.43

78.48

4.99

1.5

.932

2014

88.88

93.54

76.70

6.58

1.5

.932

2015

90.22

94.95

77.86

6.69

1.5

.932

2016

91.57

96.38

79.03

6.80

1.5

.932

2017

92.94

97.84

80.23

6.91

1.5

.932

2018

94.34

99.32

81.44

7.02

1.5

.932

2019

95.75

100.81

82.67

7.14

1.5

.932

2020

97.19

102.34

83.92

7.26

1.5

.932

Escalation rate of 1.5% thereafter

Notes:
  • (1) The pricing assumptions were provided by Sproule Associates Unconventional Limited
  • (2) None of the Company's future production is subject to a fixed or contractually committed price.


On a net present value basis (10% discount, before tax), approximately 64% of the value of reserves were attributable to the Onion Lake area and 31% was attributable to the Mooney area. No reserves were assigned to the Blackrod project.

Definitions:
  • (a) "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
  • (b) "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
  • (c) "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.
  • (d) "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
  • (e) "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
  • (f) "Undeveloped" reserves are those reserves expected to be recovered from know accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.
  • (g) The Net Present Value (NPV) is based on Sproule Forecast Pricing and costs. The estimated NPV does not necessarily represent the fair market value of our reserves. There is no assurance that forecast prices and costs assumed in the Sproule evaluations will be attained, and variances could be material.

Contingent Resources

The following tables summarize certain information contained in the contingent resource evaluations prepared by Sproule as of December 31, 2010. The reports were independently prepared in accordance with definitions, standards and procedures contained in the COGE Handbook.

It should not be assumed that the estimates of recovery, production, and net revenue presented in the tables below represent the fair market value of the Company's contingent resources. There is no assurance that the forecast prices and cost assumptions will be realized and variances could be material. The recovery and production estimates of the Company's contingent resources provided herein are only estimates and there is no guarantee that the estimated contingent resources will be recovered or produced. Actual contingent resources may be greater than or less than the estimates provided here. The contingencies which currently prevent the classification of these contingent resources as reserves consist of further delineation drilling, regulatory applications, preparation of firm development plans and corporate approvals to proceed with development. Once all regulatory and corporate approvals are received and any other contingencies are removed, the resources may then be reclassified as reserves. There is no certainty that it will be commercially viable for the Company to produce any portion of the contingent resources on any of its properties.

Summary of Best Estimate (P50) Contingent Resource -- By Property (1)(3)

Project

Gross(2)
Heavy Oil//Bitumen

Net Present Values of Before Tax Future Net Revenue
as of December 31, 2010
Contingent Resources -- Best Estimate
Discounted at

 

 

0%

5%

8%

10%

12%

15%

20%

 

(MMboe)

($million)

 

 

 

 

 

 

 

 

 

Blackrod

619

14,882

5,041

2,854

2,011

1,447

912

453

Onion Lake

80

3,307

1,551

1,044

817

647

465

276

Mooney

40

998

474

325

257

205

148

87

Total

739

19,187

7,066

4,223

3,085

2,299

1,525

816


Project

Gross(2)
Heavy Oil//Bitumen

Net Present Values of After Tax Future Net Revenue
as of December 31, 2010
Contingent Resources -- Best Estimate
Discounted at

 

 

0%

5%

8%

10%

12%

15%

20%

 

(MMboe)

($million)

 

 

 

 

 

 

 

 

 

Blackrod

619

11,132

3,700

2,065

1,438

1,020

627

294

Onion Lake

80

2,414

1,117

742

574

449

314

173

Mooney

40

749

352

239

188

148

105

59

Total

739

14,295

5,169

3,046

2,200

1,617

1,046

526

Notes:
    (1) These volumes are arithmetic sums of multiple estimates of contingent resources, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class as explained.
  • (2) Contingent Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as Contingent Resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.
  • (3) Best estimate (P50) is a classification of estimated resources described in the COGE Handbook as being considered to be the best estimate of the quantity that will be actually recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the best estimate.
  • (4) The estimates of contingent resources (best estimate) and future net revenue for individual properties may not reflect the same confidence levels as estimates of contingent resources (best estimate) and future net revenues for all properties, due to the effects of aggregation.
  • (5) "Gross" means the Company's working interest share in the contingent resources of bitumen and heavy oil before deducting royalties. The Company has a 100% working interest at Blackrod and Mooney, and a 87.5% working interest at Onion Lake.
  • (6) The amounts included in these tables do not include the volume and value of BlackPearl's proved and probable reserves previously assigned by Sproule to these properties.
 



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