The report is encapsulated as follows:
Gustavson prepared a probabilistic reserves estimate for this area as described in our report dated April 30, 2006. As stated in the latest SPE/WPC reserves definitions, estimates of Proved reserves based on a probabilistic analysis must have at least a 90 percent probability of occurring, while Proved plus Probable reserves must have at least 50 percent probability of occurring. Finally, Proved plus Probable plus Possible must have at least 10 percent probability of occurring. Thus, our opinion of reserve categorization for the area, based on the probabilistic analysis, can be summarized as follows:
1. Proved Undeveloped: 15.3 MMBO Gross, 2.9 MMBO Net 2. Probable: 6.5 MMBO Gross, 1.2 MMBO Net 3. Possible: 7.7 MMBO Gross, 1.5 MMBO Net
Net reserves are those attributed to Radial's 20% working interest share, less the 5% royalty paid to the Peruvian government, for a 19% net revenue interest.
Reserve estimates presented in this report were based on data and records obtained from Radial Energy, Ziegler-Peru, Inc., Compania Consultora de Petroleo, or publicly available industry literature. Ownership interests have been accepted without verification.
Gustavson Associates, LLC, holds neither direct nor indirect financial interest in the subject property, the company operating the subject well, or in any other affiliated companies.
Company President G. Leigh Lyons commented, "This third party classification of proved undeveloped reserves further corroborates Radial's confidence in the Block 100 project and reflects the growth potential of our strategy of targeting overlooked or underdeveloped reserves."
Radial Energy identifies, acquires and develops low risk oil and natural gas exploration and development opportunities throughout the Americas. The company's innovative strategy involves targeting overlooked or under-developed reserves that are under the radar of multinational oil companies and out of the reach of small independents.
Radial Energy has rapidly assembled an impressive portfolio of oil and gas plays including working interests in three separate oil and gas prospects located in Cherokee County, Texas as well as in the Block 100 oil project located within the Huaya Anticline area in the Ucayali Basin of eastern Peru. The company has also executed a Letter of Intent to acquire rights to explore and develop oil reserves on the Bosques Block play located in the prolific Middle Magdalena Valley of Colombia. The Company targets highly prospective oil and natural gas plays in historically productive regions with a primary focus on identifying previously drilled but undeveloped exploratory wells that due to factors at the time of initial drilling including the absence of pipeline infrastructure, lack of modern recovery technology, poor geological or engineering interpretation or low oil and gas prices, weren't fully exploited.
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