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2015 YEAR-END RESERVES

The reserves data outlined below is based upon an evaluation by Netherland, Sewell & Associates, Inc. (“NSAI”) with respect to PetroShale’s assets in the United States with an effective date of December 31, 2015. 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 NI 51-101 and CSA 51-324. No attempt was made to evaluate possible reserves.  Please see PetroShale’s Annual Information Form for the year ended December 31, 2015 for complete reserves disclosure.

2015 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 2,934.5 2,327.3 4,067.8 3,222.6 3,612.5 2,864.4
Undeveloped 13,260.3 10,548.2 15,485.1 12,324.4 15,841.2 12,602.3
TOTAL PROVED 16,194.8 12,875.5 19,552.9 15,547.0 19,453.6 15,466.7
PROBABLE 5,122.0 4,082.7 5,443.4 4,341.1 6,029.2 4,806.2
TOTAL PROVED PLUS PROBABLE 21,316.8 16,958.2 24,996.3 19,888.2 25,482.9 20,272.9

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 110,717.4 77,434.5 59,293.3 48,214.4 40,844.5
Undeveloped 474,546.3 287,259.9 190,194.5 133,250.8 96,810.2
TOTAL PROVED 585,263.7 364,694.4 249,487.8 181,465.2 137,654.6
PROBABLE 158,344.7 93,767.0 59,226.4 39,054.7 26,471.4
TOTAL PROVED PLUS PROBABLE 743,608.4 458,461.4 308,714.2 220,519.9 164,126.1

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 reflected in the NPV10 is included in Note 8 to our consolidated financial statements.

 

Reserves Reconciliation

Total (Mboe)
Gross Proved Gross Probable Gross Proved Plus
Probable
December 31, 2014 6,599.7 3,660.2 10,259.9
     Discoveries
     Extensions and Improved Recovery-
     Technical Revisions(1) 7,373.3 2,003.3 9,376.6
     Acquisitions(2) 6,156.9 1,061.8 7,218.7
     Dispositions (21.5) (494.0) (515.5)
     Economic Factors (123.2) (200.9) (324.1)
     Production(3) (531.5) (1.3) (532.7)
December 31, 2015 19,453.6 6,029.2 25,482.9

Columns may not add due to rounding.
(1) Technical revisions include additional well locations assigned proved undeveloped and probable reserves as well as increased proved and probable reserve assignments to well locations included in the December 31, 2014 reserve report. These revisions are based on additional information gathered in 2015 from analogous wells drilled and completed near our lands and increases in the number of wells planned by operators on our lands.
(2) The acquisitions amount is the estimate of reserves at December 31, 2015 plus any production since the acquisition dates.
(3) Approximately 300.7 MMcf of our gross proved shale gas production was flared by the operators of certain wells and not sold.

Net Asset Value (“NAV”) per Share as at December 31, 2015

($ thousands, except share and per share amounts)
Proved Plus Probable Reserve Value (NPV10 Before Tax) $411,359
Undeveloped Land (not associated with reserves) $11,383
Net Debt (including Decommissioning Obligation) ($120,031)
Total Net Assets $302,711
Common Shares Outstanding 34,207,574
Estimated Net Asset Value per Diluted Common Share $8.37

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. Includes the NPV10 of the remaining Canadian royalty interest reserves as at December 31, 2015 ($0.8 million) and reflects the NPV10 of the Company’s US reserves at an exchange rate of US$1.00 = Cdn$1.33.