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Reserves

The following tables summarize certain information contained in the independent reserves report prepared by Sproule Associates Limited ("Sproule") as of December 31, 2009. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE") 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 is included in the Company's Annual Information Form.
Summary of Oil and Gas Reserves - Forecasted Prices and Costs
|
(Company interest, before royalties) |
Oil&NGL Reserves |
Natural Gas Reserves |
2009
BOE (1) |
2008
BOE (1) |
| |
(Mbbls) |
(MMcf) |
(Mboe) |
(Mboe) |
| |
|
|
|
|
| Proved developed producing |
2,733 |
4,484 |
3,482 |
5,405 |
| Proved developed non-producing |
1,048 |
190 |
1,080 |
1,594 |
| Proved undeveloped |
6,973 |
240 |
7,013 |
3,475 |
| Total proved |
10,754 |
4,914 |
11,573 |
10,474 |
| Probable |
11,795 |
1,659 |
12,071 |
15,856 |
| Total proved plus probable |
22,549 |
6,573 |
23,645 |
26,330 |
(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% |
10% |
15% |
20% |
| |
($000 €(tm)s) |
| Proved |
|
|
|
|
|
| Developed producing |
117,404 |
107,986 |
100,361 |
94,023 |
88,655 |
| Developed non-producing |
38,930 |
32,594 |
28,022 |
24,613 |
21,997 |
| Undeveloped |
194,445 |
148,960 |
119,799 |
99,424 |
84,324 |
| Total proved |
350,779 |
289,540 |
248,181 |
218,060 |
194,975 |
| Probable |
403,044 |
261,218 |
188,571 |
144,494 |
114,923 |
| Total proved plus probable |
753,823 |
550,759 |
436,752 |
362,554 |
309,899 |
| |
Net Present Values of After Tax Future Net Revenue
Discounted at |
| |
0% |
5% |
10% |
15% |
20% |
| |
($000 €(tm)s) |
| Proved |
|
|
|
|
|
| Developed producing |
117,404 |
107,986 |
100,361 |
94,023 |
88,655 |
| Developed non-producing |
38,930 |
32,594 |
28,022 |
24,613 |
21,997 |
| Undeveloped |
194,445 |
148,960 |
119,799 |
99,424 |
84,324 |
| Total proved |
350,779 |
289,540 |
248,181 |
218,060 |
194,975 |
| Probable |
302,282 |
197,515 |
143,295 |
110,119 |
87,725 |
| Total proved plus probable |
653,061 |
487,055 |
391,476 |
328,179 |
282,701 |
Notes:
Columns may not add due to rounding
The pricing assumptions used in the Sproule evaluation are summarized below.
Pricing Assumptions - Forecast Prices and Costs
|
Year |
WTI
Cushing
40 ° API |
Edmonton Par Price
40 ° API |
Hardisty
Lloydblend
20.5 ° API |
Alberta
AECO-C
Spot |
Inflation rate |
Exchange rate |
| |
(US$/bbl) |
(CDN$/bbl) |
(CDN$/bbl) |
(CDN$/MMBtu) |
(%/yr) |
(US$/Cdn$) |
| 2010 |
79.17 |
84.25 |
74.14 |
5.36 |
2.0 |
0.92 |
| 2011 |
84.46 |
89.99 |
78.29 |
6.21 |
2.0 |
0.92 |
| 2012 |
86.89 |
92.61 |
76.86 |
6.44 |
2.0 |
0.92 |
| 2013 |
90.20 |
96.19 |
78.87 |
7.23 |
2.0 |
0.92 |
| 2014 |
92.01 |
98.13 |
79.49 |
7.98 |
2.0 |
0.92 |
| 2015 |
93.85 |
100.11 |
81.09 |
8.16 |
2.0 |
0.92 |
| 2016 |
95.72 |
102.13 |
82.73 |
8.34 |
2.0 |
0.92 |
| 2017 |
97.64 |
104.19 |
84.40 |
8.52 |
2.0 |
0.92 |
| 2018 |
99.59 |
106.30 |
86.10 |
8.71 |
2.0 |
0.92 |
| 2019 |
101.58 |
108.44 |
87.84 |
8.90 |
2.0 |
0.92 |
| 2020 |
103.61 |
110.63 |
89.61 |
9.10 |
2.0 |
0.92 |
Escalation rate of 2.0% thereafter |
Notes:
(1)The pricing assumptions were provided by Sproule Associates Limited
(2)None of the Company's future production is subject to a fixed or contractually committed price.
This was the first year Sproule was engaged to prepare a reserves evaluation for the Company. In the prior year the Company requested another independent engineer to evaluate possible ("3P") reserves on the Company's properties. The 2008 reserves report included possible reserves for the Company's SAGD project at Blackrod. In 2009, the Company elected not to undertake an evaluation of its possible reserves. Given the significant capital expenditures required and the uncertainty of the timing of those expenditures, the Company felt it was appropriate to defer further review of possible reserves until we have results from our proposed pilot project and a commitment from the Company's Board of Directors to proceed with commercial development of the Blackrod lease.
On a net present value basis (10% discount, before tax), approximately 58% of the value of reserves were attributable to the Onion Lake area and 24% was attributable to the Mooney area. No reserves were assigned to the Blackrod project.
Definitions:
- "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.
- "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.
- "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.
- "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.
- "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.
- "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.
- The Net Present Value (NPV) based on Sproule Forecast Pricing and costs, before taxes, discounted at 10%. 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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