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, 2015. 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
2015
Total
2014
Total
  (Mbbl) (Mbbl) (MMcf) (MBoe) (MBoe)
Proved developed producing 19,859 0 291 19,907 8,766
Proved developed non-producing 2,652 0 126 2,673 2,114
Proved undeveloped 40,935 429 71 41,376 55,275
Total proved 63,446 429 487 63,956 66,165
Probable 50,612 179,338 363 230,010 230,456
Total proved plus probable 114,058 179,767 850 293,966 296,621
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, 2015 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 563,561 468,219 393,887 336,878 292,798
    Developed non-producing 62,301 47,527 36,832 28,956 23,061
    Undeveloped 1,341,432 687,208 388,170 238,426 156,510
Total proved 1,967,294 1,202,954 818,889 604,260 472,369
Probable 6,449,560 2,843,921 1,396,392 736,310 403,222
Total proved plus probable 8,416,854 4,046,875 2,215,281 1,340,569 875,591
After Tax
Proved          
    Developed producing 563,561 468,219 393,887 336,878 292,798
    Developed non-producing 62,301 47,527 36,832 28,956 23,061
    Undeveloped 992,882 511,591 291,152 180,650 119,979
Total proved 1,618,744 1,027,336 721,871 546,484 435,838
Probable 4,676,236 2,030,874 969,327 488,295 248,237
Total proved plus probable 6,294,980 3,058,210 1,691,198 1,034,779 684,075
Notes:
  1. Based on Sproule's December 31, 2015 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
2016 7.5 5.0
2017 31.6 118.6
2018 30.0 139.2
2019 28.2 95.8
2020 26.0 336.4
Remainder 268.8 1,660.6
Total FDC undiscounted 392.1 2,355.6
Total FDC discounted at 10% 180.5 1,018.2

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, 2014 to December 31, 2015.

  Heavy
Crude Oil
Bitumen Natural
Gas
BOE
(Mbbl) (Mbbl) (MMcf) (MBOE)
Proved
Balance, Dec 31, 2014 64,358 1,739 407 66,165
    Extensions 44 0 0 44
    Technical revisions 2,182 0 975 2,344
    Economic factors (425) (1,112) (109) (1,555)
    Production (2,712) (198) (786) (3,041)
Balance, Dec 31, 2015 63,446 429 487 63,956
Probable
Balance, Dec 31, 2014 50,947 179,456 319 230,456
    Extensions 99 0 0 99
    Technical revisions (608) 0 83 (594)
    Economic factors 174 (119) (39) 49
    Production 0 0 0 0
Balance, Dec 31, 2015 50,612 179,338 363 230,010
Proved plus Probable
Balance, Dec 31, 2014 115,305 181,195 726 296,621
    Extensions 143 0 0 143
    Technical revisions 1,574 0 1,058 1,750
    Economic factors (251) (1,231) (148) (1,507)
    Production (2,712) (198) (786) (3,041)
Balance, Dec 31, 2015 114,058 179,767 850 293,966
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$/Cdn$)
2016 45.00 55.20 45.26 2.25 0.0 0.75
2017 60.00 69.00 57.96 2.95 0.0 0.80
2018 70.00 78.43 65.88 3.42 1.5 0.83
2019 80.00 89.41 75.11 3.91 1.5 0.85
2020 81.20 91.71 77.03 4.20 1.5 0.85
2021 82.42 93.08 78.19 4.28 1.5 0.85
2022 83.65 94.48 79.36 4.35 1.5 0.85
2023 84.91 95.90 80.55 4.43 1.5 0.85
2024 86.18 97.34 81.76 4.51 1.5 0.85
2025 87.48 98.80 82.99 4.59 1.5 0.85
2026 88.79 100.28 84.23 4.67 1.5 0.85
Escalation rate of 1.5% 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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