____________________________ Gaffney, C/ine & Associates

Digital Copy

Reserve and Resource Statement

•

Pluspetrol Pero Corporation.

Camisea Project FieldsBlock 88

(Peru)

Effective February 28, 2009

Prepared tor

PLuspetrol Peru Corporation S.A.

May 2009

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RW/CG/C1716/LT1818 May 15, 2009

109. José LuquezManager Camisea Reservoir G&G GroupPluspetrol Peru Corporation S.A.República de Panamá 3055 - Piso 7San IsidroUrna 27, Perú

Reserve and Resource Statement far theCamisea Project Fields in Block 88, Perú

as af February 28, 2009

Dear In9. Luquez:

This reserve and resource statement has been prepared by Gaffney I Cline & Associates(GCA) at the request ef Pluspetrol Peru Corporation S.A., operator af and 27.20% ¡nterestparticipant in the Camisea Project fields in Blocks 88 in the Cuzco Province af Peru. GCA hasconducted an ¡ndependent audit examination as af February 28, 2009, of the hydrocarbonliquids and natural gas Reserves and Contingent Resources of the Camisea fields.

On the basis of technical and other information made available to us concerning theseproperty units we hereby provide the reserve statement for the San Martin and Cashiriari fieldsgiven in the table below:

Statement of Remaining Hydrocarbon Reserve VolumesCamisea Block 88 Fields, Perú

fF b 282009

Gross (100%) Fleld Volumes ReservesNet to Pluspetrol's Interest

Liquids Gas Liquids Gas(MMslb) (Bscf) (MMslb) (Bscf)

ProvedDeveloped 165 2,613 45 711Undevelooed 230 4,238 62 1,152

Total Proved 395 6851 107 1,863Probable 105 1,985 29 540Possible 43 845 12 230

Hydrocarbon liquid volumes represent LPG and condensate estimated to be recoveredduring field separation and plant processing, and are reported in millions of stock tank barreIs.Natural gas volumes represent expected gas sales and are reported in billions (109

) of cubicfeet (at standard conditions of 14.7 psia and 60° Fahrenheit). The volumes have been reducedfor fuel usage in the fields. Royalties payable to the State have been treated as an operatingexpense as the concession contracts for the respective blocks specify the royalty to be paid incash. On this basis the reserve volumes net to Pluspetrol's interest given above have not beenreduced for royalty.

UNlTEO KlNGOOM UNlTEO STA.TES SINGAPORE ARGENTINA. MOSCOW

--------------------------~-----Gaffney. Cfine & AssociatesRWICGlC1716IL11818Pluspetrol Peru Corporation S.A.May 15, 2009Page 2

Gas reserve volumes are based on firm and existing gas contracts, and on 1hereasonable expectalion thal gas sales contracts being negotiated as of February 2009 will beexecuted within Ihe reasonably near future. Renewals of these contracts or replacements undersubstantially Ihe 5ame terms is also is assumed reasonable.

A Maximum Deliverable Quantity (CDM) is slipulated in each contracto Based on actualrecent gas sales, Ihe fareeast rate for the Industrial, Petrochemical and Ihe LNG c1ients wasestimated al 95% af the COMo This percentage was reduced to 70% for the Distribution andElectricity generation companies. The estimated rate tor each contract was assumed constantwith the exception ot the Callida Distribution Company agreement, where the contract providesarate per year table which increases steadity up to the year 2033. Proved reserves are Iimitedto the volumes to be soId during the current contract term plus one extension except for the twodistribution contracts, which are assumed to continue through to concession expiry in 2040.The rates and corresponding volumes for the Proved reserves are shown in the table below.

Duration Gas Sales GasVolume

Commencement End MMscfd BsefINDUSTRIAL 173

Aceros Arequip~ 2006 2014 2 ,Alicorp 2004 2014 2 5

Cementos Lima 2006 2014 2S 53

Ceramica Lima 2004 2014 7 15

Ceramica San Lorenzo 2004 2014 3 6Corporaclon Ceramica 2005 2014 1 3

IrradIa (lNG) 2009 2013 15 28

Mlnsur 2006 2014 2 ,Owens IIlInols 2004 2014 3 6Sudamericana de Energla 2009 2018 13 49

POWER PLANTS 1,425

Edegel 2004 2019 97 383

Egesur 2009 2021 , 17

Ene~ur 2006 2021 67 315

Ene~urExpansion 20'0 2021 33 146Kallpa Generaclon 2007 2022 62 315

Kallpa Gen.racion Ellpansion 2010 2022 43 198Egasa 2010 2019 14 51

DlSTRIBUTION 1,788

Calidda (Callao and Urna) 2005 2040 68·146 1,492

TGI (lea) 2012 2040 28 298PETROCHEMICAL 1,245

CFI (Urea) 2013 2033 94 721Pelroquimica (Nitratos del Perú) 2012 2032 68 52'

LNG ProJect 2010 2028 589 4,086

TOTAL 8,717

Existing Gas Sales Contracts Appliedtor Proved Reserves

fF b 282009

-----------------------------Gaffney, C6ne &. AssociatesRW/CGfC1716ILT1818Pluspetrol Peru Corporation S.A.May 15, 2009Page 3

As noted, the Proved reserves are sufficient to supply existing contacts plus eneextension/renewal, and the continuation 01 the distribution contracts. To meet the demand taradditional gas, commitment of Probable and Possible reserves or sorne part thereof would berequired. While historical industry practice has been to limit firm commitments to ProvedReserves, the opening up 01 gas markets and sorne lessening of reguJatory controls has led tothe willingness 01 sorne companies to commit to volumes beyond Preved. The extent of such acommitment is an individual corporate decision, and there is no standard or -rule of thumb-.

In addition to the existing contracts GCA reviewed several other potential domesticbuyers that would generate a demand on the order ot 700 MMscfd. An extension ot theserequirements up to concession end in 2040 could result in a total additional sales volumebetween 7 and 8 TCF.

Supply tor domestic sales will derive from the San Martin field for as long as possible;however, during the year 2010 it will start being supplemented with gas production fromCashiriari in order to mee! demand and produce Iiquids from this field. Also ¡ncluded as Provedare the volumes of gas required to supply the signed LNG contract for Block 56. Thesevolumes wiJl be supplied from both the Pagoreni and Cashiriari fields as the volumes availabletrom Pagoreni alone, which are dedicated exclusively to the LNG contract, are insufficient tomeet the contract requirements (the contract allows for make-up gas to be supplied, ifnecessary, from Block 88 where Cashiriari is located).

Previously, GCA conducted audit examinations ot reserves and resources tor thesefields as of December 31, 2005, 2006 and 2007. For this evaluation (Feb 2009), Pluspetrolprovided GCA with updated maps tor San Martin and Cashiriari fields. GCA reviewed the newinformation and re-evaluated the petrophysical ana!yses including the data obtained from threenew wells in Cashiriari.

For San Martin field, GCA estimated volumes of Original Gas-In-Place (OGIP) based onthe updated maps and petrophysical analysis. AJthough the field continued on production during2008, its production history remains insufficient 1'0 allow any valid performance analysis. OGIPtor the Nia formation was based on well defined gas water contact (GWC). For the Noi, theProved OGIP relied on a lowest known gas (LKG) while a GWC estimated from test data wasused tor Probable and Possible. For the Ene formation, a LKG depth and a highest known water(HKW) depth were derived from logs. Proved OGIP was estimated down to the LKG and 3POGIP down to the HKW while the 2P OGIP was estimated down to an intermediate depth.Uncertainties in petrophysical properties also were incorporated in the estimates for Lower Niaand Lower Noi.

The San Martin Este structure, connected through a saddle with the main structure, wascategorized as Probable and Possible in the Nia sequence while the deeper Noi and Enetormations are considered as exploration opportunities. Pluspetrol plans to drill the SM-10Q7welJ in San Martin Este during 2011.

In Cashiriari, three new wells CR-1RE, CR1001D and CR-1002D were drilled in 2008.Pluspetrol plans on driHing 6 additional wells in 2009 and 2010.

Proved OGIP was estimated from structure maps down to the respective welllog derived

•

-----------------------------Gatrney, Cline & AssociatesRW/CG/C1716JlT1818Pluspetrol Peru Corporation S.A.May 15, 2009Page4

GWC for the Basal Chonta and Nia formations,and to LKG for the Vivían, Lower Chanta, Noiand Ene formations. In these latter cases, Probable and Possible valumes were based onreservoir limits estimated from highest know water, seismic amplitudes, test data, etc.variations in petrophysical parameters also were incorporatecl.

O" 11 . PIN t I G V I •

Property~Natural Gas (Bsef)

Field Low Sesl HighEstimate Estimate Estimate

San Martín 3.388 4.300 4.379Cashiriari 7,112 9,483 10078

Total 10500 13783 14457

Natural Gas Recoverable Volumes

Property-Natural Gas (Ssef)

Field Low Besl HighEstimate Estimate Estimate

San Martin 2,541 I 3.225 3.503Cashiriari 5.334 I 7.112 8.062

Total 7875 I 10337 11 565

It is GCA's opinion that the estimates of total remaining recoverable hydracarbon liquidand gas volumes at February 28, 2009, are, in the aggregate, reasonable and have beenprepared in accordance with the resource definitions in the Petroleum Resources ManagementSystem (PRMS) appraved by the Society of Petroleum Engineers, World Petroleum Council,American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineersin March 2007, which is attached in Appendix 111.

This audit examinaban was based on Reserve and Contingent Resource estimates andother information provided by Pluspetral to GCA thraugh May 14, 2009, and included such tests,procedures and adjustments as were considered necessary. AH questions that arase during thecourse of the audit process were resolved to our satisfaction. The reported hydrocarbonvolumes are estimates based on professional engineering judgment and are subject to futurerevisions, upwards or downwards, as a result of future operations or as additional informationbecomes available.

The commerciality and economic tests for the February 28, 2009 Reserve volumes werebased on contract gas sales prices of US$1.59/MMBtu - US$2.70/MMBtu for the local marketsales, USS4.00/MMBtu tor the sales to petrachemical industries and USSO.51/MMBtu for salesto the LNG project as advised by Pluspetrol. The calorific content of the sales gas was taken at1,085 MBtu/cf as measured after pracessing at the Malvinas plants.

-----------------------------Galfney, GIme &. AssociatesRW/CG/C1716ILT1818Pluspetrol Peru Corporation S.A.May 15, 2009Page5

Liquids revenue was based on Pluspetrol's future scenario which gives realized prices afUSS40.94IBbl - US$49.131Bbl for Naphla, US$63.89IBbl - 76.671Bbl for Diesel andUS$30.56IBbl - US$36.67IBbl for LPG.

Future capital costs were derived from development program forecasts prepared byPluspetrol tar the fietd. Historieal operating expense data up through December 2008 wereutilized as the basis ter operating cost projections. GCA has found that Pluspetrol has projectedsufficient capital investments and operating expenses economicalty to produce the projectedvolumes.

For this assignment, GCA served as independent reserve and resource auditors. Thefirm's employees have no direct or indirect interest holding in Pluspetrol's Camisea units,GCA's remuneration was not in any way contingent on reported reserve or resource estimates.No representations are made herein in respect of property title or encumbrances thereon.Pluspetrol will obtain GCA's approval for the use and context of the use of any results,statements or opinions expressed to Pluspetrol, which are attributed to GCA. Such approvalshall inelude, but not be confined to, statements or references in documents of a public or semi­public nature such as loan agreements, prospectuses, reserve statements, press releases etc.

Very truly yours,

GAFFNEY, CUNE & ASSOCIATES, INC.

César GuzzettiSouthern Cone Regional Manager

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EnelosuresAppendices l'

11:Reserves StatementsPetroleum Resources Management System Definitions and Guidefines

APPENDICES

Gaf(ney, C/ine & Associates

•

---------------------- Gaffn8y, CJine & Assodates

Appendix 1:

Reserves Statements

•

Block 88 Camisea(FieId I Area Name)

Crude Di! and Natural Gas Reserve StatementReserves Certification @ February 28, 2009

GCA Audlt Code:Basin:ProYince:Country;

CamiseaUcayaliCuzcoPero

Pluspetrol 011 Interest;Pluspetrol Gas IntereseField Gas Usage;Sales Gas:Oparator Name:

27.20%27.20%

100.00%

Pluspetrol Pero SA.

A. Cumulatiye Production to February 28, 2009

.. . .. . .. ..~~~~~~~

B. Gross Field Reserves@February 28, 2009

Crude Oil Condensate LPG Natural GasPnmary Secondary Total 50lution TotalMMbbl MMbbl MMbbl MMbbl MMbbl BoJ BoJ

ProvedDeyeloped Prod. " 44 1,534Developed Non·Prod. 32 J3 1,079Undeveloped 10. 126 4,238

Sub·total Proved 192 203 6,851Probable " " 1,985Posslble 17 26 8"

C. Pluspetrot Ne! Interest Reserves@ February 28, 2009

Crude 011 Condensate LPG Natural GasPrlmary Secondary Total Solution TotalMMbbl MMbbl MMbbl MMbbl MMbbl BoJ BoJ

ProvedDeveloped Prod. 15 12 417Oeveloped Non·Prod. 9 9 294Undevelooed 28 34 1,153

Sub·total Proved 52 55 1,863Probable 13 16 540Possible 5 7 230

o. Notes:

I==-

Galfney Cime & A$S(lQa¡es

Block 88 Camisail(rl8ld I Aru Neme)

Crude Di! and Natural Gas Reserve StatementReserves Certiftcation @ February 28, 2009

Supporting Sub·unlt Data Sheet

•

GCA Audit Coda;Sub-l.Jnit Name:

Provlnee:Country:

C.1San MartinCuzcoPeru

Pluspetrol Oillnterest:

Pluspetrol Gas lnteresl:

Field Gas Usage:Sales Gas:Oparator Name:

27.20%27.20%

100.00%

Pluspetrol Perú S.A.

A. Cumulative Productlon to February 28, 2009

. . . .. . .. . .

~~~~~~~

B. Gross Field Reserves @ February 28, 2009

Crude Di! Condensate LPG Natural Ory GasPrImal)' Secondary Total Solution TotalMMbbl MMbbl MMbbl MMbbl MMbbl Be' Be!

ProvedOeveloped Prod. 56 44 1,534Oeveloped Non-Prad.Undeveloped 12 12 509

Sub·total Proved 58 56 2,043Probable 12 12 477Posslble 4 4 145

C. Pluspetrol Net lnterest Reserves @ February 28, 2009

Crude 011 Condensate LPG Natural Dry GasPrlmary Secondary Total Solution TotalMMbbl MMbbl MMbbt MMbbl MMbbl Be! Be'

ProvedDeveloped Prod. 15 12 417Devetoped Non-Prod.Undeveloped 3 3 138

Sub-total Proved 19 15 55'Prob..ble 3 3 130Posslble 1 1 39

O. Notes:

--

2 Gaflney. Cline oS. As5OClate$

Block 88 Camisea(FlIIld I Ara Neme)

Crude Oil and Natural Gas Reserve StatementReserves CertificatJon@ February 28, 2009

Supporting Sub-unlt Data Sheet

GCA Audit Coda:Sub·unit Name:Provlnee:Country:

Ca'CashiriariCuzcoPerú

Pluspetrol Oillnterest:Pluspetrol Gas lnterest:Field Gas Usage:Sales Gas:Operator Name:

27.20%27.20%

100.00",4,

Pluspetro! Peru S.A.

A. Cumulative Production to February 28, 2009

.. : . '. . . .. ..

~~~~~~~

B. Gross Field Reserves@February 28,2009

Crude OH Condensate LPG Natural Dry GasPrimary Secondary Total Solution TotalMMbbl MMbbl MMbbl MMbbl MMbbl Bel Bel

ProvedDeveloped Prod.Developed Non-Prod. 32 33 1,079Undeveloped 92 114 3,729

Sub-total Proved 123 147 4,808

Probable 34 46 1,508

Possible 13 22 700

C. Pluspetrol Net Interest Reserves @ February 28, 2009

Crude 011 Condensate LPG Natural Dry GasPrlmary Secondary Total Solutlon TotalMMbbl MMbbl MMbbl MMbbl MMbbl Bel Bel

ProvedDeveloped Prod.Developed Non-Prod. • • 294Undeveloped 25 31 1,014

Sub-total Proved 34 40 1,308Probable • 13 410

Possible 4 • 191

3 Gattney. Cline & AsSOClates

-------------------- Gaffney, Gline &. Associates

Appendix 11:

Petroleum Resources Management System Definitionsand Guidelines

GaJfney, Cine & Associaios

Society of Petroleum Engineers, World Petroleum Council, American Association ofPetroleum Geologists and Society af Petroleum Evaluation Engineers

Petroleum Resources Management System

Definitions and Guidelines e)March 2007

Preamble

Petroleum resources are the estimated quantities of hydrocarbons naturally occurring on or within !he Earth'sousl Resource assessments estimate total quantities in knoM1 an::l yet-to-be-discovered aceumulations;resources evaluations are fcx:used on those quantities that can potentially be recovered and markeled bycommeroal projects. A petroleum (esources management system provides a consistent approach to estimatingpetroleum quantities, evaluating developmenl pro.iects, and presenting resutts within a comprehensivedassffication frall'le\o\lOl'k.

Intemational efforts to standarnize the definition of petroleum rescurces and how they are estimated began in the1930s. Earty guidance focused on Proved Reserves. Building on won< initiated by the Society of PetroleumEvaluation Engineers (SPEE), SPE published definitions ter all ReseNes categories in 1987. In the same year,the World Petroleum Council (\I\IPC, lhen knO'Nn as the World Petroleum Congress), warking independently,published ReseNes definitjons that were strikingly similar. In 1997, the two organizations jointly released a singleset of definitions for Reserves !hat courd be used warldw1de. In 2000, lhe American Association of PetroleumGeoIogists (AAPG), SPE and WPC jointly developed a classificatlon system for all petroleum resources. Thiswas foI1owed by additional supporting documents· supplemental apphc;atlon evaluation guidelines (2001) and aglossary of tenns utilized in Resources definiOOns (2005). SPE also published standards for estirnating andauditing reserves information (revised 2007).

These definitions and the related classificabon system are noN in common use intemationally within thepetroleum industry. They provide a measure of comparability and reduce the subjective nature of resourcesestimation. HOYt'eVer, the technologies employed in petroleum exploration, deveIopment, production andprocessing continue to evolve and lmprove. The SPE Oil and Gas Reserves Committee works closeIy with otherorganizations to maintain the definitions and issues periodic revisions to keep currenl wilh evolving technologiesand changing commercial opportunilies.

The SPE PRMS document consolidates, builds on, and replaces guidance previously conlained in the 1997Petroleum ReseNes Definitions, the 2000 Petroleum Resources Classification and Definitions publications, andthe 2001 "Guidelines fer the Evaluation of ·Petroleum ReseNes and Resources";. the latter document remains avaluable source of more detalled background information.

These definitions and guidehnes are designed lo provide a common reference for !he Intemational petroleumindustry, including national rep:>rting and regulatory disclosure agencies, and to support petroleum project andportfoIio management requirements. They are intended to improve clarity in global communications regardingpetroleum resources. It is expected !hat SPE PRMS will be supplemented with industry education programs andapplication guides addressing their jmplementation in a wide spectrum of technicaJ andlor commercial setbngs.

It is understcxx:l that these definilions and guidelines allO'N f1exibility for users and agendes lo tailor application fortheir particular needs; however, any modifications to the guidance conlained herein should be clearly identified.The definitions and guidefines contained in this documenl must nol be conslrued as modifying the inlerpretationor application of any existing regulatory reporting requirements.

The full text of the SPE PRMS Definitions and Guidelines can be viewed at

WVoW.spe.Q(q!specmalbinarylfiles/6859916Petroleum Resources Management System 2007.00f

1 These Delinibons aod GUldelrrtes are extracted from lhe Society of Petroleum Englneers 1World Peltoleum Council JAmericanAssOClallon of Petroleum Geologists I SOCIety of Petroleum Evaluation Englneers (SPEM'Pe1AA?G/SPEE) PetroleumResourees Managemenl System cIoeumenl íSPE PRMSj. approveC' In March 2007.

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Gaffney, Cline & Associates

RESERVES

Reserves are those quantities o(petra/eum anticipated to be commercially recoverable by applicationo(development projects to known accumulations (rom a given date forward under defined condmons.

Reserves must satisfy four eritena: they must be discovered, recoverable, commercial, and remaining basedon !he development project(s) applied. Reserves are further subdivided in accordance wilh the leve! ofcertainty associated with the estimates and may be sub-classified based on project maturity andlorcharacterized by their development and production status. To be included in the Reserves c1ass, a projectmust be sufficiently defined to establish its commercial viability. There must be a reasonable expectation thatall required intemal and external approvals will be forthcoming, and there Is evidence 01 firm intention toproceed with development within a reasonable time trame. A reasonable time frame far the initiation 01development depends on Ihe specific circumslances and varies according to the scope of the project. V\lhile 5years is recommended as a benchmark, a longer time frame could be applied where, for example,development of economic projects are defened at the option of the producer for, among other things, market·relaled reasons, or to meet contractual or strategic objeclives. In all cases, the justification for c!assification asReserves should be clear1y documented. To be ineluded in lhe Reserves c1ass, lhere must be a highconfidence in !he commercial producibilily of the reservoir as supported by actual production or formatian lests.In certain cases, Reserves may be assjgned en !he basis of 'Nell logs andJor core analysis that indicate that thesubject reservoir is hydrocarbon-bearing and is anaJogous to reservoirs in the same area that are producing orhave demonstrated the abilily to produce on formation tests.

On Production

The devefopment proled IS currentJy producing and se/lino petro/eum to mari<et.

The key criterion is that lhe project is recelVlng income frcm sales, rather than !he approveddevelopment project necessarily being complete. This is !he point at which !he project ~chance ofcommerciality" can be said to be 100%. The project "decision gateO is !he decision to initiatecomrnercial production from the project.

Approved for Development

A discovered accumu/a!ion where project activities are ongoing to jus!ify commerciaf deve/opment inthe foreseeab/e future.

Al this point, it must be certain tha! the development project is gojng ahead. The project mus! not besubject lo any contingencies such as outstanding regulalory approvals or sajes contracts. Forecastcapital expenditures should be ineluded in !he reporting entity's current or foHowing year's approvedbudgel The project "decision gale" is the decision to slart investing capital in the conslruction ofproduction facilities andlor drilling development 'Nells.

Justified for Development

Implementa/ion o(!he c!evelopment Proiect is justifted on !he basis of reasonable (orecas! commercialconditions at the time of reporling, and there are reasonable expectations that all necessaryapprovalslcontracts will be obtained.

In arder to move to this Ievel of project matuñty, and hence have reserves associated with it, thedevelopment project must be commercially viable at the time 01 reporting, based on the reportingentily's assumpUons of Mure poces, costs, etc. ("forecast case") and the specific circumslances 01 theproject. Evidence of a firrn intention to proceed with development wilhin a reasonable time trame willbe sufficienl to demonstrate commercialily. There should be a development plan in sufficient detail tosupport the assessment of commerciality and a reasonable expectation that any regulatory approvalsor sales contracts required prior to project implementation will be forthcoming. Other than suchapprovalslcontracts, there should be no known contingencies that could preclude the developrnentfrom proceeding wilhin a reasonable limeframe (see Reserves c1ass). The project "decision gate" isthe decision by the reporting entity and ils partners, il any, that the project has reached a level of

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Gaffney, Gline &. Associates

technical and commercial maturity sufficient lo justify proceeding with deveJopment at that poin! in

"me.Proved Reserves

Preved Reserves are those quantities of petra/euro. which by analysis of geoscience and enq;neerinqdata. can be estimated wfth reasonable certainty to be commercially recoverabfe. from a given dateforward, from known reservoirs and under defined economic condftions. operatinq methods. andqovemment requlations.

If deterministic methods are used, !he term reasonable certainty is ¡ntended lo express a high degreeof confK:lence tila! the quantities INiIl be recovered. If probabilisüc methods are used, there should bealleast a 90% probability that the quantities actually recovered wíU equal or exceed the estimate. Thearea of the reservoir considered as Proved includes:

(1) the area delineated by driHíng and defined by fluid contacts, if any, and

(2) adjacent undrilled partions of the reservoir thal can reasonably be judged as continuous withil and commercialty productive on the baSIS of available geoscience and engineering data.

In the absence of data on fluid oontacts, Proved quantities in a reservoir are limitéd by the 10000tknown hydrocarbon (LKH) as seen in a well penetration unless otherwise indicated by definitivegeoscience, engineering, or performance data. Such definitive information rnay indude pressuregradlent analysis and seismic indicators. Seismic data alone may not be sufficient to define fluidoontacts for Proved reserves (see "2001 Supplemental Guidelines: Chapler 8). Reserves inundeveloped locatlons may be c1assified as Proved provlded that the Iocations are in undrilled areasof the reservoir thal can be judged with reasonable certainty lo be commercially productive.Inlerpretations of avaifable geoscience and engineering data indicate with reasonable certainty thatthe objective formation is laterally continuous with drilied Proved localions. For Proved Reserves, therecovery efficiency applied to these reservoirs should be defined based on a range of possibilitiessupported by analogs and sound engineering judgmenl considering the characterislics of the Provedarea and the applied developmenl programo

Probable Reserves

Probable Reserves are those addilional Reserves which analvsis of geoscience and engineenhg dataindicate are less fikely to be recovered lhan Proved Reserves but more cerlain lo be recovered thanPossible Reserves.

It is equally likely that actual remaining quantities recovered will be greater than or less than the sumof the eslimaled Proved plus Probable Reserves (2P). In this context, when probabilistic melhods areused, lhere should be at least a 50% probability that the actual quantities recovered will equal orexceed the 2P estirnate. Probable Reserves may be assigned to areas of a reservoir adjacent teProved where data control or interpretations of available data are less certain. The interpretedreservoir conlinuity rnay not meet the reasonable certainty entena. Probable estimates also ineludeincremental recoveries associated with project recovery efficiencies beyond that assumed for Proved.

Posslble Reserves

Possible Reserves are those additional reserves which anafvsis of qeoscience and engineerinq dataindicare are Jess fkelv to be recoverabfe than Probable Reserves.

The total quantities ultimately recovered from the project have a low probability to exceed the sum ofProved plus Probable plus Possible (3P), which is equivalent to the high estimate scenano. VVhenprobabilistic melhods are used, there should be at leasl a 10% probability !hat the actual quantitiesrecovered will equal or exceed the 3P estimate. Possible Reserves may be assigned to areas of areservoir adjacent to Probable where data control and lnterpretations of available data areprogressively less certain. Frequently, this may be in areas VoIhere geoscience ane! engineering dataare unable to cleariy define the afea and vertical reservolr limits of commercial production from the

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Gaffney, eMe &. Associales

reservoir by a defined pl'Ojecl Possible estimates also include incremental quantities associated withproject recovery efficiencies beyond tha! assumed for Probable.

Probable and Possible Reserves

($ee above for separate entena rO{ Probable Reserves and Possible Reserves.}

The 2P and 3P estimates may be based on reasonable altemabve technical and commercialinterpretations within the reservoir andlor subject project that are clear1y documented, indudingcomparisons lo results in successful similar projects. In conventional accumulations, Probable and/orPossible Reserves may be asstgned where geosdence and engineering data identify directly adjacentportions of a reservoir within the same accumulalion tha! may be separated from Proved areas byminar faurting or olher geologicaJ disconlinuities and have no! been penetrated by a wellbore bul areinterpreled lo be in cornmunication with the I<nown (Proved) reservoir. Probable or Possible Reservesmay be assigned to areas that are structurally higher than the Proved area. Possibie (and in somecases, Probable) Reserves may be assigned to areas that are strudurally lower than the adjacentPreved or 2P area. Caulion should be exercised in assigning Reserves lo adjacent reservoirs isotatedby majar, patentially sealing, faults until this reservoir is penetrated and evaluated as commercialiyprcx:luctive. Justification for assigning Reserves in such cases should be c1eany documented.Reserves should not be assigned to areas that are cleany separated from a known accumulation bynon--productive reservoir (Le., absence of reservoir, structurally IOIN reservoir, or negative test results);such areas may cantain Prospective Resources. In conventional accumulations, where drilling hasdefined a htghest known oil (HKO) elevation and there exists the potential for an associated gas cap,Proved oíl Reserves should only be assigned in the structuraily higher partions of the reservoir if thereis reasonable certainty !hat such portions are InitiaHy above bubble point pressure based ondocumenled engineering analyses. Reservoir portions that do not meet this certainty may beassigned as Probable and Possible oíl and/or gas based on reservoir fluid properties and pressuregradient interpretations.

Developed Reserves

Develooed Reserves are expected quantities to be recovered fmm existinq wefls and facilities.

Reserves are considered developed only after the necessary equipment has been installed, or whenthe costs to do so are relativefy minor compared to the cast af a well. V\lhere required facilitiesbecome unavailable, it may be necessary to reclassify Developed Reserves as Undeveloped.Developed Reserves may be further sub-cJassified as Producing ar Non~Producing.

Developed Producing Reserves

DevelopecJ Producing Reserves are expected to be recovered fmm comp/etien intervals that 8rt? openand producinq al the time of the estimate,

Improved recovery reserves are considered producing only afier the improved recovery project is inoperation.

Developed Non-Producing Reserves

Developed Non-Producinq Reserves inc!ude shut~in and behind-pipe Reserves.

Shut-in Reserves are expecled to be recovered from:

(1) completion intervals which are open at the time of the estimate but which have not yet startedproducing,

(2) wells which were shut~in for markel conditions or pipeline connections. or

(3) weUs not capable of production for mechanical reasons.

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Gaffney, Cfine &. Associates

Behind·pipe Reserves are expected to be recovered from zones in existing wens which will requireadditional completion work or tuture re-completion prior to start of production. In all cases, productioncan be initiated or restered with relatively low expenditure compared lo !he cost of drilling a new well.

Undeveloped Reserves

Undeveloped Reserves are quantities expected lo be recovered throuqh future investments:

(1) from newwetfs on undrilled acreage in kt1OYlT1 accumulations,

(2) from deepening existing wells to a different (but known) reservoir,

(3) from infill wells that will increase recovery, or

(4) where a relatively large expenditure (e.g. wtIen compared to the cost of drilling a new well) isrequired to:

(a) recomplete an existing weU, or

(b) install production or transportation facilities far primary or improved recovery projects.

CONTINGENT RESOURCES

Those quantities o(petroleum estimated, as of a given date, to be potentially recoverable trom knownaccumulations by application of devefopment projects, but which are not currently considered to becommercially recoverable due to one or more contingencies.

Contingenl Resourees may inelude, for example, projeels for whieh there are currently no viable markets,or where commercial recovery is dependent on teehnology under development, or where evaluation 01the aeeumulation is insufficienl lo clearly assess eommereiality. Conlingent Resourees are furthercategorized in aeeordanee with Ihe leve1 of eertainty assoeialed with the eslimates and may be sub·c1assified based on projeet maturity and/or charaeterized by thelr eeonomie slatus.

Development Pending

A discovered accumulation where project activities are ol7qoínq to justitv commercial development inthe foreseeable future.

The projecl is seen lo have reasonable potential for evenlual eommercial developmen~ to the extenlthat further data acquisition (e.g. drilling, seismie dala) and/or evaluations are eurrently on90in9 with aview to confirming thal the project is commerciaUy viable and providing Ihe basis for selection of anappropriate development plan. The critical contingencies have been identified and are reasonablyexpected to be resolved within a reasonable time trame. Note Ihal disappointing appraisaVevaluationresulls could lead to a re-classification of the project to MDn HoldM or MNot Viable- status. The project"decision gale- is Ihe decision lo undertake further data acquisition andlor studies designed lo move!he project to a level 01 technica1 and commercial maturity at "Ntlich a decision can be rnade toproceed wilh deve10pment and production.

Development Unclarified or on Hold

A discovered accumulation where proiect activities are on hold andlor where justification as acommercial devefopment may be subject to signiflCémt de/av.

The project is seen lo have potential for eventual commercial development, but furtherappraisaVevafuation activities are on hold pendlng Ihe removal of significant contingencies external te!he project, or substantial further appraisaVevafuatlon actlvitles are required to darify the JX)tential foreventual commercial developmenl Development may be subject to a significant time delay. NoteIhat a change in circumstances, such that !here is no Ionger a reasonable expectation Ihat a criticalcontlngency can be removed in !he foreseeable future, for example, could lead lo a redassification 01

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Gaffney, Cline & Associates

the project lo MNot Viable- status. The project "decision gateO is the dedsion to either proceed withadditionaJ evaluabon designed to clarity the potential for eventual rommerciaJ development or totemporarily suspend or delay further activities pendjng resoIution of external contingencies.

Development Not Viable

A discovered accumulation tor which there are no curren! plans fa develop or lo acauire additionaldata at [he time due to 1Imited production DO/ential.

The project is nol seen to have potential for eventual commerdal development at the time of reporting,bul the theoretically recoverable quantities are recorded so thal the potenlial opportunity wiU berecognized in lhe event of a major change in lechnology or commercial conditions. The project"decision gateO is the decision nol lo undertake any further data acquisilion or studies on the projectfor lhe foreseeabje future.

PROSPECTIVE RESOURCES

Those quantities of petro/eum which are estimated, as o, a given date, to be potentially recoverablefrom undiscovered accumulations.

Potential accumulations are evaluated according to their chance of discovery and, assuming a discovery, theestimated quantities that would be recoverable under defined development projects I is recognized thal thedevelopment programs wiU be of S1Qnificantly less detail and depend more heavily on analog developments inthe eanier phases of exploration.

Prospect

A proiect associated with a ootentiaf accumulatiQn (ha! is sufficiently wel/ defined lo represent a viabledrillinq tarne!.

Project activities are focused on assessing the chance of discovery and, assum¡ng discovery. therange of polential recoverable quantities under a commercial development program.

Lead

A project associated with a pafenna! accumulation ¡hat is currentJy pooriy defined and requires moredata acauisition and/or evaluation in arder fa be classified as a prospect.

Project activities are focused on acquiring additional data and/or undertaking further evaluationdesigned to confirm whether or nol the lead can be malured into a prospect. Such evaluation ¡neludes!he assessment of the chance of discovery and, assuming d¡scovery, the range of potentiaJ recoveryunder feasible development scenarios.

Play

A proiect associated wffh a prospectñte trend of potential prospects, buf which requires more dataacquisition andlor evaluation in arder fa define specffic leads or prospects.

Project activities are focusecl on acqu¡ring additionaJ data andJor undertaking further evaJuationdesigned to define spedfic Ieads or prospects for more deta~ed analys¡s of their chance of discoveryand, assuming discovery. the range of potential recovery under hypothetical development scenarios.

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Gaffney, Cline & Associates

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