The technical data utilized in the McDaniel & Associates' review included approximately 445 kilometers of 2D seismic data shot across the western portion of the Astrakhanskiy acreage during the fourth quarter of 2006. The report estimates the geologically risked mean prospective resources from four prospects and leads at 559.5 million barrels of oil equivalent ("boe"), calculated in accordance with the standards of the Society of Petroleum Engineers.
The key highlights from the report prepared by McDaniel are as follows:
--Risked mean prospective resources of 559.5 million boe, including 174.6 million barrels of condensate and 2.3 trillion cubic feet ("tcf") of natural gas using a conversion factor for gas to liquids of 6:1; --Unrisked mean prospective resources of approximately 1.1 billion boe, with unrisked P10 resources of 2.3 billion boe and P90 resources of 312.6 million boe; and --The largest structure identified in Astrakhanskiy was estimated by McDaniel to have 457.6 million boe of mean risked resources, including 1.9 tcf feet of natural gas and 142.9 million barrels of condensate. Unrisked mean resources are estimated at 794.5 million boe, with unrisked P10 resources of 1.7 billion boe and P90 resources of 194.9 million boe.
Jim Jeffs, Executive Chairman, commented:
"The results of the McDaniel report are extremely encouraging and verify our expectations about the prospectivity of the western portion of our Astrakhanskiy acreage. The average geological chance of success is approximately 50%, which we consider to be very favorable for an exploration block with such large resource potential. We have shot 2D seismic across 35% of the license area and have an entirely different structure on the eastern portion of the block, which could prove to be highly prospective as well. We believe the results further support our confidence that there are very substantial opportunities across our portfolio of assets, which we intend to methodically and pragmatically exploit for the benefit of our stockholders."
Proved reserves are those quantities of petroleum, which by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimate.
Probable reserves are those unproved reserves which analysis of geological and engineering data suggest are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves.
Risk - Risk is defined as the probability of loss or failure. In the oil and gas industry, risk is commonly applied to the estimation of prospective (undiscovered) resources to account for the possibility that the outcome of drilling a well may not be successful. Risk is defined through the term geological chance of success, which considers the geological factors that, will result in the formation of a hydrocarbon reservoir with sufficient quality to allow for sustained flow rates of oil or gas.
Prospective Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations.
Unrisked Resources - Unrisked prospective resource volumes are commonly categorized as Unrisked P90, P50, P10 or Mean Resources and are estimated before multiplying by the geological chance of success which assumes that the drilling of an exploration well is successful.
Risked Resources - Risked prospective resource volumes are commonly categorized as Risked Mean Resources and are calculated by multiplying the unrisked mean resources by the geological chance of success to account for the risk of drilling an unsuccessful exploration well.
P90 - The quantity for which there is a 90% probability that the quantities actually recovered will equal or exceed the estimate. In reserves estimation, this is the number quoted as the proven value.
P10 - The quantity for which there is a 10% probability that the quantities actually recovered will equal or exceed the estimate. In reserves estimation, this is the number quoted as the proven value.
Mean - The mean is also known as the expectation or expected value. It is the average over the entire probability range, weighted with the probability of occurrence.
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