2017 YEAR-END RESERVES

The reserves data outlined below is based upon an evaluation by Netherland, Sewell & Associates, Inc. (“NSAI”) with an effective date of December 31, 2017.  The reserves data summarizes PetroShale’s crude oil and natural gas reserves and the net present value of future net revenue for these reserves using forecast prices and costs. All references to reserves are to gross Company reserves, meaning PetroShale’s working interest reserves before consideration of royalty interests. The reserve report has been prepared in accordance with the standards contained in the COGE Handbook and the reserve definitions contained in National Instrument 51‑101 (“NI 51-101”) and CSA Staff Notice 51‑324.  No attempt was made to evaluate possible reserves.  Please see PetroShale’s Annual Information Form for the year ended December 31, 2017 for complete reserves disclosure.

2017 YEAR-END RESERVES

Gross Company Interest Reserves

Reserves
Tight Oil Shale Gas BOE
Reserves Category Gross
(Mbbls)
Net
(Mbbls)
Gross
(Mmcf)
Net
(Mmcf)
Gross
(Mboe)
Net
(Mboe)
PROVED:
Developed Producing 4,324.3 3,445.3 7,202.5 5,706.3 5,524.7 4,396.4
Developed Non-Producing 0.4 0.3 0.9 0.7 0.6 0.4
Undeveloped 21,263.9 17,039.9 22,879.7 18,294.5 25,077.2 20,089.0
TOTAL PROVED 25,588.6 20,485.6 30,083.1 24,001.5 30,602.5 24,485.8
PROBABLE 5,180.2 4,115.5 5,726.1 4,545.5 6,134.6 4,873.1
TOTAL PROVED PLUS PROBABLE 30,768.8 24,601.1 35,809.2 28,547.0 36,737.0 29,358.8

Columns may not add due to rounding.
All of our shale gas reserves represent solution gas associated with our tight oil reserves.

 

Net Present Value of Future Net Revenue ($ US)

Before Income Taxes Discounted at (%/year)
Reserves Category 0%
($US 000s)
5%
($US 000s)
10%
($US 000s)
15%
($US 000s)
20%
($US 000s)
PROVED:
Developed Producing 172,209.8 120,064.1 92,538.8 75,947.0 64,947.3
Developed Non-Producing (4.4) (3.9) (3.6) (3.3) (3.0)
Undeveloped 782,755.4 487,142.5 334,467.5 244,155.3 185,430.9
TOTAL PROVED 954,960.8 607,202.7 427,002.8 320,099.1 250,375.2
PROBABLE 169,594.1 101,903.1 65,986.8 44,771.3 31,237.4
TOTAL PROVED PLUS PROBABLE 1,124,555.0 709,105.8 492,989.6 364,870.4 281,612.6

Columns may not add due to rounding.

As a reporting issuer in Canada, PetroShale is required to report its reserves and NPV10 using forecast pricing and costs, as stipulated under NI 51-101. The forecast prices are reflected in the Net Present Values shown above.

 

Reserves Reconciliation

Total (Mboe)
Total Proved Total Probable Total Proved Plus
Probable
December 31, 2016 25,134.0 6,316.3 31,450.3
     Discoveries
    Infill Drilling(1) 275.0 275.0
     Technical Revisions 160.0 45.5 205.4
     Acquisitions(2) 5,688.9 5,688.9
     Dispositions
     Economic Factors 237.1 (227.2) 9.9
     Production (892.5) (892.5)
December 31, 2017(3) 30,602.5 6,134.6 36,737.0

(1) Infill drilling reflects additional well locations assigned through enhanced technology and understanding of the reservoir.
(2) The acquisitions amount is the estimate of reserves at December 31, 2017.
(3) Columns may not add due to rounding.

Net Asset Value (“NAV”) per Share as at December 31, 2017

($ thousands, except share and per share amounts)
Proved Plus Probable Reserve Value (NPV10 Before Tax) $618,702
Undeveloped Land Value 6,802
Net Debt (including Decommissioning Obligation)(2) (95,617)
Total Net Assets $529,887
Common Shares Outstanding 157,137,767
Estimated Net Asset Value per Basic Common Share(1) $3.37

(1)Net asset value is calculated as at a particular date and is, by its nature, historical, and may not be reflective of PetroShale’s future performance. The NAV reflects the NPV10 of the Company’s reserves at an exchange rate of US$1.00 = Cdn$1.26.
(2)See “Non-GAAP Measures”.