These estimates do not include any of the potential resources from the recently acquired 76 sections of land. This acquisition was announced on July 12, 2007. The total potential resource base of the Corporation, which will include these results as well as the report on the new lands, will be available in the next 30 days. The aggressive land acquisition and exploration program of the Corporation will continue through the summer and into the next winter's exploration program.
The resource reserve report was prepared by D&M, effective April 30, 2007, estimating the extent and value of the probable, possible and contingent reserves on the 25 sections of land. The report was prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101.
Southern Pacific's probable and possible recoverable reserves on the lands at Leismer South were estimated to be 198.0 million barrels, 115.8 million barrels of probable recoverable reserves, with possible recoverable reserves estimated to be 82.2 million barrels. This is an increase of 42.3 million barrel in the probable and possible categories; D & M were also able to assign contingent and prospective resources to the Leismer lands at a best estimate basis of an additional 119.8 million barrels. This gives the Corporation a total of probable, possible and best estimate contingent reserves of 312.3 million barrels. This is 101% increase on the initial report, which was published in August 2006.
Probable, possible reserves and low-estimate total resources (contingent and prospective) were estimated at 275.6 million barrels. Proved and probable reserves and best-estimate total resources were estimated at 312.3 million barrels. Proved, probable and possible reserves and high-estimate total resources were estimated at 350.6 million barrels.
The probable and possible recoverable reserves were utilized by D&M to generate the forecast future before tax net value of $697-million at 10-percent discount factor, using D&M's forecast pricing structure. The D&M report used D&M's current price deck, adjusted for the type of crude oil to be produced at Leismer South. The prices used commenced in 2009 at $40.22 per barrel and with increases at a rate of approximately 2 per cent per year thereafter for the life of the project. These estimated values disclosed herein do not represent fair market value.
August 31, April 30, 2006 2007 (Millions of Barrels) Proved 0 0 Proved and probable 100.5 115.8 Proved, probable and possible 155.7 198.0 Proved plus low-estimate contingent resources 0 275.6 Proved and probable plus best-estimate contingent resources 155.7 312.3 Proved, probable and possible plus high-estimate contingent resources 155.7 350.6Probable reserves are those additional reserves that are less certain to be recovered than proven reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the proven plus probable reserves.
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