GLJ consultants issued a report June 30 before new drillingNet Prospective Resources Summary The Prospect Resource Report evaluates prospective intervals contiguous to producing, discovered accumulations in the SASB Gas Field for the following six exploration prospects: Akcakoca South, Akcakoca-6, Bayhanli, Eskikale East, Eskikale West and Guluc North, with results as follows:
| | | Prospective Resources (Bcf) |
| | | Low | | Best | | High |
| | | Estimate | | Estimate | | Estimate |
| UPIIP | | 34.0 | | 65.9 | | 104.4 |
| Unrisked | | 19.2 | | 37.5 | | 59.7 |
| Risked | | 11.8 | | 23.0 | | 36.4 |
Net Present Value Summary | | | Unrisked | | Risked |
| Before Income Tax | | Low | Best | High | | Low | Best | High |
| Net Present Value (US$MM) | | Estimate | Estimate | Estimate | | Estimate | Estimate | Estimate |
| 0.0% | | $95.6 | $217.1 | $378.4 | | $59.4 | $132.6 | $230.5 |
| 5.0% | | $74.1 | $169.4 | $290.9 | | $46.2 | $103.4 | $177.2 |
| 10.0% | | $58.6 | $136.0 | $232.9 | | $36.6 | $83.0 | $141.9 |
| 15.0% | | $47.1 | $111.6 | $191.9 | | $29.5 | $68.0 | $116.9 |
| 20.0% | | $38.4 | $93.1 | $161.5 | | $24.0 | $56.7 | $98.3 |
Notes:
1. This Prospect Resource Report has been prepared in accordance with resource definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation (COGE) Handbook. The resources definitions used in preparing this report are those contained in the COGE Handbook and the Canadian Securities Administrators National Instrument 51-101 (NI 51-101).
2. Net present value is the discounted value of the reserves after all capital development, operating, costs, and royalties before taxes, discounted to present day dollars
3. Company management calculated the summations of the UPIIP, Unrisked and Risked prospect resources from GLJ’s report for the six prospects. Totals may not necessarily reflect actual outcomes.
Prospective resources have both an associated chance of discovery and a chance of development to derive a final chance of commerciality. GLJ has assigned a 90% chance of development for all six prospects and a chance of discovery ranging from 50% to 90% resulting in a range of chance of commerciality from 45% to 81%.
Reserves Summary In addition to the Prospect Resource Report, are the Company’s petroleum reserves, which as of December 31, 2019, GLJ estimated the proven plus probable reserves were 20.2 Bcf (net)
with a before tax, estimated net present value discounted at 10% (“NPV-10”) US$79.5MM (C$0.94/share). Net Proven Plus Probable Reserves Summary | | | Nat. | | Oil | | Before Tax | After Tax | | Before Tax | |
| | | Gas | | Equiv. | | NPV 10% | | NPV 10% | | NPV 10% | |
| Reserve Category | | (Bcf) | | (Mboe) | | (US$MM) | | (US$MM) | | (C$MM) | C$/Share |
| Proved | | | | | | | | | | | |
| Producing | | 0.0 | | 234.0 | | $3.9 | | $3.9 | | $5.2 | $0.05 |
| Developed Non-Producing | | 0.0 | | 0.0 | | $0.0 | | $0.0 | | $0.0 | $0.00 |
| Undeveloped | | 11.5 | | 1,924.0 | | $34.9 | | $26.5 | | $46.5 | $0.41 |
| Total Proved | | 11.5 | | 2,158.0 | | $38.9 | | $30.4 | | $51.7 | $0.46 |
| Probable | | 8.6 | | 1,506.0 | | $40.6 | | $31.7 | | $54.0 | $0.48 |
| Total Proved Plus Probable | | 20.2 | | 3,663.0 | | $79.5 | | $62.1 | | $105.7 | $0.94 |
| | | | | | | | | | | | |
Notes:
1. This reserves evaluation has been prepared in accordance with resource definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation (COGE) Handbook. The resources definitions used in preparing this report are those contained in the COGE Handbook and the Canadian Securities Administrators National Instrument 51-101 (NI 51-101).
2. (*NPV 10 Valuation is the discounted value of the reserves after all capital development, operating, costs, and royalties before taxes, discounted to present day dollars)
Summary Total Net 2P Reserves plus the Risked Prospective Resources from the six prospects evaluated by GLJ is 43.2 BCF with a NPV-10 of US$162.5MM (C$1.93/share). The SASB Gas Field has further potential upside from at least seven additional exploration prospects, which have not yet been evaluated. The SASB Natural Gas Field is a Black Sea offshore development consisting of four platforms and currently has five gas wells producing from the Eocene Kusuri Sandstones. Production commenced in 2007 with approximately 41 Bcf produced to date from four gas pools.