BlackPearl Resources Inc.



Reserves


Oil and Gas Reserves

The following tables summarize certain information contained in the independent reserves report prepared by Sproule Unconventional Limited ("Sproule") as of December 31, 2016. 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"). It should not be assumed that the net present value of reserves estimated by Sproule represents the fair market value of these reserves. Additional reserve information as required under NI 51-101 has been included in the Company's Annual Information Form which has been filed on SEDAR or on our website.

Summary of Oil and Gas Reserves

(Company interest, before royalties) Heavy
Crude Oil
Bitumen Natural
Gas
2016
Total
2015
Total
  (Mbbl) (Mbbl) (MMcf) (MBoe) (MBoe)
Proved developed producing 18,461 628 216 19,125 19,907
Proved developed non-producing 3,400 0 169 3,428 2,673
Proved undeveloped 53,399 429 71 53,840 41,376
Total proved 75,260 1,057 456 76,393 63,956
Probable 56,374 178,742 421 235,186 230,010
Total proved plus probable 131,634 179,799 877 311,579 293,966

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: 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
  2. Based on Sproule's December 31, 2016 forecast prices.
  3. Columns may not add due to rounding.

Net Present Value of Reserves

($000s) 0% 5% 10% 15% 20%
Before Tax
Proved          
    Developed producing 459,650 409,646 364,468 326,303 294,658
    Developed non-producing 57,041 44,809 35,721 28,902 23,723
    Undeveloped 1,436,295 660,090 335,306 184,234 106,443
Total proved 1,952,986 1,114,545 735,495 539,439 424,824
Probable 6,101,866 2,705,896 1,319,121 681,908 358,751
Total proved plus probable 8,054,852 3,820,441 2,054,616 1,221,347 783,575
After Tax
Proved          
    Developed producing 459,650 409,646 364,468 326,303 294,658
    Developed non-producing 57,041 44,809 35,721 28,902 23,723
    Undeveloped 1,064,317 492,031 250,036 136,658 77,834
Total proved 1,581,008 946,486 650,225 491,863 396,215
Probable 4,418,620 1,928,767 910,614 445,040 210,965
Total proved plus probable 5,999,628 2,875,253 1,560,839 936,903 607,180

Notes:

  1. Based on Sproule's December 31, 2016 forecast prices.
  2. Columns may not add due to rounding.

Estimated Future Development Capital

The following table summarizes the future development capital ("FDC") Sproule estimates is required to bring the proved, and proved plus probable reserves on production.

($ Millions) Total Proved Total Proved + Probable
2017 47.6 183.9
2018 25.4 91.1
2019 26.3 50.4
2020 11.5 86.6
2021 55.8 357.2
Remainder 465.5 1,927.0
Total FDC undiscounted 632.1 2,696.2
Total FDC discounted at 10% 246.0 1,160.1

Reconciliation of Changes in Reserves

The following table summarizes the changes in Sproule's evaluation of the Company's share of oil and natural gas reserves (before royalties) from December 31, 2015 to December 31, 2016.

  Heavy
Crude Oil
Bitumen Natural
Gas
BOE
(Mbbl) (Mbbl) (MMcf) (MBOE)
Proved
Balance, Dec 31, 2015 63,446 429 487 63,956
    Extensions and improved recovery 9,388 0 0 9,388
    Technical revisions 6,144 930 322 7,128
    Economic factors (281) (98) (67) (390)
    Production (3,437) (204) (286) (3,689)
Balance, Dec 31, 2016 75,260 1,057 456 76,393
Probable
Balance, Dec 31, 2015 50,612 179,338 363 230,010
    Extensions and improved recovery 6,901 0 0 6,901
    Technical revisions (1,177) (299) 35 (1,470)
    Economic factors 38 (297) 23 (255)
    Production 0 0 0 0
Balance, Dec 31, 2016 56,374 178,742 421 235,187
Proved plus Probable
Balance, Dec 31, 2015 114,058 179,767 850 293,966
    Extensions and improved recovery 16,289 0 0 16,289
    Technical revisions 4,967 631 357 5,658
    Economic factors (243) (395) (44) (645)
    Production (3,437) (204) (286) (3,689)
Balance, Dec 31, 2016 131,634 179,799 877 311,579

Note:

  1. Columns may not add due to rounding

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

Pricing Assumptions

Year WTI
Cushing
40° API
Canadian Light
Sweet Crude
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$/Cdn$)
2017 55.00 65.58 53.12 3.44 0.0 0.78
2018 65.00 74.51 61.85 3.27 2.0 0.82
2019 70.00 78.24 64.94 3.22 2.0 0.85
2020 71.40 80.64 66.93 3.91 2.0 0.85
2021 72.83 82.25 68.27 4.00 2.0 0.85
2022 74.28 83.90 69.64 4.10 2.0 0.85
2023 75.77 85.58 71.03 4.19 2.0 0.85
2024 77.29 87.29 72.45 4.29 2.0 0.85
2025 78.83 89.03 73.90 4.40 2.0 0.85
2026 80.41 90.81 75.38 4.50 2.0 0.85
2027 82.02 92.63 76.88 4.61 2.0 0.85
Escalation rate of 2.0% thereafter

Notes:

  1. The pricing assumptions were provided by Sproule.
  2. None of the Company's future production is subject to a fixed or contractually committed price.

Definitions:

  1. "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.
  2. "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.
  3. "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.
  4. "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.
  5. "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.
  6. "Undeveloped" reserves are those reserves expected to be recovered from known 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.
  7. 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.

 



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