Reserve and Resource Tables

The Company’s Reserves, Contingent resources and Prospective Resources were evaluated and audited, respectively, by the Company’s independent reserves evaluators, Sproule International Limited (“Sproule”) in the Sarqala Jeribe / Upper Dhiban reservoir on the Garmian Block located in Kurdistan, Iraq in two reports, the first report dated February 28, 2017 (the “Sproule Garmian Reserves Report”), and the second report dated March 14, 2017 (the “Sproule Garmian Resources Report”). The Company’s Contingent Resources and Prospective Resources volumes in the Oligocene reservoir on the Kurdamir Block were audited by Sproule dated March 14, 2017 and effective December 31, 2016 (the “Sproule Kurdamir Report”). As is the Company’s historical practice, all reports were prepared as part of its regular updates. The Contingent and Prospective Resources reports were prepared for risked and unrisked volumes pursuant to the Canadian Resources other than Reserves (“ROTR”) disclosure requirements.

The Company’s reserves and resources at Kurdamir and Sarqala are contained in fractured carbonate reservoirs. These have been assessed for both the matrix and fracture porosity components, although the majority of the hydrocarbon volumes for both fields are contained in the matrix porosity. Since the Company considers the current petroleum industry techniques for assessing hydrocarbon volumes in the matrix porosity are better understood and more reliable than those for fracture porosity, it has worked with Sproule, the Company’s reserve auditors, to determine and utilize a realistic range of fracture porosities based on the observations from the Company’s wells and the study of analogue fields, both in the Middle East and elsewhere. As the Company’s reserves and resources are contained primarily in the matrix porosity, and the Company uses audited, benchmarked values for fracture porosity estimation, these facts help mitigate against the potential risk for overestimating the resource volumes associated with the fractures.

The table below summarizes the Company’s Reserves, Contingent Resources and Prospective Resources for the Kurdamir and Garmian Blocks as at December 31, 2016.

r-r-table

Notes:

  • 1. Values may not add or be consistent from one presentation to the next due to rounding.
  • 2. “Gross Block Oil Reserves” are the total remaining recoverable reserves associated with the acreage in which the Company has an interest.
  • 3. “Company Gross” without any adjustment for the Company’s working interest therein means the Company’s 40% working interest (operating or non-operating) share before deduction of royalty petroleum, profit petroleum, production bonuses and capacity building support payments to the Kurdistan Regional Government pursuant to the provisions of the applicable PSC.
  • 4. “Company Net” means the Company’s cost and profit petroleum volume entitlements, pursuant to the provisions of the Garmian PSCs.
  • 5. The classifications shown are Proved (1P), Proved plus Probable (2P) and Proved plus Probable plus Possible (3P). Possible Reserves are those additional Reserves that are less certain to be recovered than Probable Reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the 3P Reserves.
  • 6. After-tax net present value of future net revenue associated therewith using forecast prices and costs and a10 percent and 15 percent discount rates. Reserves estimates used to calculate future net revenue are estimated based on the economically recoverable volumes within the development/exploitation period specified in the PSCs. The estimated net present values disclosed do not represent fair market value.
  • 7. Contingent Resources are those quantities of petroleum, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources have an associated chance of development. There is no certainty as to the timing of such development or whether it will be commercially viable to produce any portion of the resources.
  • 8. Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. The chance of commerciality is the product of these two risk components. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.