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Definitions and notes to reserves data tables

RESERVE CATEGORIES

Reserves

Estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on:
(a) analysis of drilling, geological, geophysical and engineering data;
(b) the use of established technology; and (c) specified economic conditions (see the discussion of “Economic Assumptions” below).

Reserves are classified according to the degree of certainty associated with the estimates.

Proved reserves

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

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.

Possible reserves

Those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves.

Gross reserves

The Group’s working interest reserves before the deduction of royalties.

Net reserves

The Group’s net working interest reserves after the deduction of royalties.

Gross

(a) in relation to our interest in production and reserves, our interest (operating and non-operating) share before deduction of royalties and without including any of our royalty interests;
(b) “royalties” in this context refers to EGPC’s share of gross production/revenue as per the Lagia Concession;
(c) in relation to wells, the total number of wells in which we have an interest; and
(d) in relation to properties, the total area of properties in which we have an interest.

Net

(a) in relation to our interest in production and reserves, our interest (operating and non-operating) share after deduction of royalty obligations, plus our royalty interest in production or reserves;
(b) in relation to wells, the number of wells obtained by aggregating our working interest in each of our gross wells; and
(c) in relation to our interest in a property, the total area in which we have an interest multiplied by our working interest.

Levels of certainty for reported reserves

The qualitative certainty levels referred to in the definitions above are applicable to individual reserve entities (which refers to the lowest level at which reserves calculations are performed) and to reported reserves (which refers to the highest level sum of individual entity estimates for which reserves are presented).

Reported reserves should target the following levels of certainty under a specific set of economic conditions:
(a) at least a 90 per cent probability that the quantities actually recovered will equal or exceed the estimated Proved reserves;
(b) at least a 50 per cent probability that the quantities actually recovered will equal or exceed the sum of the estimated Proved plus Probable reserves; and
(c) at least 10 per cent probability that the quantities actually recovered will equal or exceed the sum of the estimated Proved plus Probable plus Possible reserves.

A qualitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle there should be no difference between estimates prepared using probabilistic or deterministic methods.

DEVELOPMENT AND PRODUCTION STATUS

Each of the reserve categories (Proved and Probable) may be divided into developed and undeveloped categories:

Developed reserves

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 (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing:

(a) Developed producing reserves
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.

(b) Developed non-producing reserves
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

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) to which they are assigned.