MegaWest Ramps Up Reserves

MegaWest announced that GLJ Petroleum Consultants (GLJ) has confirmed and updated prior estimates of volumes and has completed a net present value (NPV) cash flow evaluation report of reserves and contingent resources for the core assets held in Missouri, Kansas and Kentucky. The GLJ report was prepared as of April 12, 2010 with an effective date of April 30, 2010 pursuant to National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators.

Summary

The increases in Reserves as of April 30, 2010 reflect the Company's success in continuing to demonstrate the viability of its operating projects. GLJ has assigned a net present value (discounted at 10% per annum) of US$35.96 million to total Proved plus Probable plus Possible Reserves ("PPP"). The PPP reserves are comprised of 0.445 million barrels of Total Proved Reserves, 0.921 million barrels of Probable Reserves, and 1.884 million barrels of Possible Reserves. Possible Reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

The valuations indicate current and future upside to our shareholders when compared to current market capitalization. Readers are cautioned that the estimated values disclosed do not necessarily represent fair market value. MegaWest will continue to pursue recognition of this value through prudent management of the business and effective execution of activities in the field.

Reserves and Resource Valuation

Reserves valuation was conducted for the three reserves categories of Total Proved, Total Proved plus Probable and Total Proved plus Probable plus Possible, as well as for Best and High Estimates of Contingent Resources. As is typical, economic valuation of Prospective Resources was not completed. The GLJ valuation is based on preliminary cost and timing estimates provided to GLJ by MegaWest. NPV cash flows were generated using the April 1, 2010 GLJ price forecast. The WTI price was discounted by 20% to obtain the estimated field-gate oil price.

 

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