MAGELLAN PETROLEUM CORP.                           ESTIMATED      FUTURE RESERVES AND INCOME      ATTRIBUTABLE TO CERTAIN      LEASEHOLD INTERESTS               SEC PARAMETERS                        As of      JUNE 30, 2012
 FAX (303) 623-4258       621 SEVENTEENTH STREET SUITE 1550 DENVER, COLORADO 80293 TELEPHONE (303) 623-9147     July 6, 2012          Magellan Petroleum Corp.   700 East 9th Avenue   Denver, CO 80203      Gentlemen:      At your request, Ryder Scott Company (Ryder Scott) has prepared an estimate of the proved   and probable reserves, future production, and income attributable to certain leasehold interests of   Magellan Petroleum Corporation as of June 30, 2012. The subject properties are located in the country   of Australia. The reserves and income data were estimated based on the definitions and disclosure   guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17,   Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14,   2009 in the Federal Register (SEC regulations).  Our third party study, completed on July 6, 2012 and   presented herein, was prepared for public disclosure by Magellan Petroleum Corp. in filings made with   the SEC in accordance with the disclosure requirements set forth in the SEC regulations.       The properties evaluated by Ryder Scott represent 100 percent of the total net proved and   probable gas reserves of Magellan Petroleum Australia Limited, a wholly owned subsidiary of Magellan   Petroleum Corp as of June 30, 2012.        The estimated reserves and future net income amounts presented in this report, as of June 30,   2012 are related to hydrocarbon prices.  The hydrocarbon prices used in the preparation of this report   are based on prices defined by contractual arrangements. Following the term of the defined contractual   arrangements the hydrocarbon prices used are based on average prices during the 12-month period   prior to the ending date of the period covered in this report, determined as the unweighted arithmetic   averages of the prices in effect on the first-day-of-the-month for each month within such period as   required by the SEC regulations.  Actual future prices may vary significantly from the prices required by   SEC regulations; therefore, volumes of reserves actually recovered and the amounts of income actually   received may differ significantly from the estimated quantities presented in this report.  The results of   this study are summarized below.      SEC PARAMETERS   Estimated Net Reserves and Income Data   Certain Leasehold  Interests of   Magellan Petroleum Corp.   As of June 30, 2012     Proved     Developed  Total     Producing  Non-Producing  Proved   Net Remaining Reserves           Gas – MMCF  6,514  4,979  11,493            Income Data           Future Gross Revenue  $25,448,114  $19,297,392  $44,745,506     Deductions  17,312,159  12,972,887  30,285,046     Future Net Income (FNI)  $8,135,955  $6,324,505  $14,460,460              Discounted FNI @ 10%  $5,954,825  $4,200,627  $10,155,452
 Magellan Petroleum Corp.   July 6, 2012   Page 2        Probable     Developed   Total     Producing  Non-Producing   Probable   Net Remaining Reserves            Gas – MMCF  3,759  10,065   13,824      Income Data            Future Gross Revenue  $10,621,882  $32,074,902   $42,696,784     Deductions  8,563,038  18,996,450   27,559,488     Future Net Income (FNI)  $2,058,844  $13,078,452   $15,137,296               Discounted FNI @ 10%  $337,469  $4,113,384   $4,450,853          All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMCF)   at the official temperature and pressure bases of the areas in which the gas reserves are located.       The estimates of the reserves, future production, and income attributable to properties in this   report were prepared using the economic software package PHDWin Petroleum Economic Evaluation   Software, a copyrighted program of TRC Consultants L.C. Ryder Scott has found this program to be   generally acceptable, but notes that certain summaries and calculations may vary due to rounding and   may not exactly match the sum of the properties being summarized.  Furthermore, one line economic   summaries may vary slightly from the more detailed cash flow projections of the same properties, also   due to rounding.  The rounding differences are not material.      The future gross revenue is after the deduction of royalties, which are treated as a production   tax since they are based on the well head value of the royalty and the royalty owners have no right to   take the royalty in-kind.  The deductions incorporate the normal direct costs of operating the wells and   recompletion costs. The future net income is before the deduction of  state and federal income taxes   and general administrative overhead, and has not been adjusted for outstanding loans that may exist   nor does it include any adjustment for cash on hand or undistributed income.        Gas reserves account for 100 percent of total future gross revenue from proved reserves and   probable reserves.         The discounted future net income shown above was calculated using a discount rate of 10   percent per annum compounded monthly.  Future net income was discounted at four other discount   rates which were also compounded monthly.  These results are shown in summary form as follows.            Discounted Future Net Income     As of June 30, 2012   Discount Rate  Total    Total   Percent  Proved    Probable              5  $12,663,586    $7,878,065     8  $11,130,675    $5,544,554   12  $9,255,790    $3,609,599   15  $8,064,987    $2,680,986      The results shown above are presented for your information and should not be construed as our   estimate of fair market value.
 Magellan Petroleum Corp.   July 6, 2012   Page 3      Reserves Included in This Report      The proved and probable reserves included herein conform to the definitions as set forth in the   Securities and Exchange Commission’s Regulations Part 210.4-10(a).  An abridged version of the SEC   reserves definitions from 210.4-10(a) entitled “Petroleum Reserves Definitions” is included as an   attachment to this report.      The various reserve status categories are defined under the attachment entitled “Petroleum   Reserves Definitions” in this report.  The proved developed non-producing reserves included herein   consist of the shut-in category and the probable developed non-producing reserves included herein   consist of the behind-pipe and shut-in categories.  No attempt was made to quantify or otherwise   account for any accumulated gas production imbalances that may exist.  The proved and probable gas   volumes included herein do not attribute gas consumed in operations as reserves.        Reserves are “estimated remaining quantities of oil and gas and related substances anticipated   to be economically producible, as of a given date, by application of development projects to known   accumulations.”  All reserve estimates involve an assessment of the uncertainty relating the likelihood   that the actual remaining quantities recovered will be greater or less than the estimated quantities   determined as of the date the estimate is made.  The uncertainty depends chiefly on the amount of   reliable geologic and engineering data available at the time of the estimate and the interpretation of   these data.  The relative degree of uncertainty may be conveyed by placing reserves into one of two   principal classifications, either proved or unproved.  Unproved reserves are less certain to be recovered   than proved reserves and may be further sub-classified as probable or possible reserves to denote   progressively increasing uncertainty in their recoverability.  At Magellan Petroleum Corp.’s request, this   report addresses the proved and probable reserves attributable to the properties evaluated herein.      Proved gas reserves are those quantities of gas which, by analysis of geoscience and   engineering data, can be estimated with reasonable certainty to be economically producible from a   given date forward.  If deterministic methods are used, the SEC has defined reasonable certainty for   proved reserves as a “high degree of confidence that the quantities will be recovered.”  Probable   reserves are “those additional reserves that are less certain to be recovered than proved reserves but   which, together with proved reserves, are as likely as not to be recovered.”          The reserves included herein were estimated using deterministic methods. Under the   deterministic approach, discrete quantities of reserves are estimated and assigned separately as   proved or probable based on their individual level of uncertainty. Because of the differences in   uncertainty, caution should be exercised when aggregating quantities of oil and gas from different   reserves categories.  Furthermore, the reserves and income quantities attributable to the different   reserve categories that are included herein have not been adjusted to reflect these varying degrees of   risk associated with them and thus are not comparable.        Reserve estimates will generally be revised only as additional geologic or engineering data   become available or as economic conditions change.  For proved reserves, the SEC states that “as   changes due to increased availability of geoscience (geological, geophysical, and geochemical),   engineering, and economic data are made to the estimated ultimate recovery (EUR) with time,   reasonably certain EUR is much more likely to increase or remain constant than to decrease.”    Moreover, estimates of proved and probable reserves may be revised as a result of future operations,   effects of regulation by governmental agencies or geopolitical or economic risks.  Therefore, the proved   and probable reserves included in this report are estimates only and should not be construed as being   exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could   be more or less than the estimated amounts.
 Magellan Petroleum Corp.   July 6, 2012   Page 4         The proved reserves reported herein are limited to the period prior to expiration of current gas   sales contracts. Probable reserves reported herein consist of two reworks to return currently non-   productive zones to production during the contract period. Additional probable reserves were assigned   to the continuation of all production past the current contract period. Based on current activity, it is   reasonably certain that these volumes will be contracted in the future.       This report includes certain volumes of proved and probable reserves attributable to royalties   owed to the host government that are treated as taxes to be paid in cash.       Magellan Petroleum Australia Limited’s operations may be subject to various levels of   governmental controls and regulations. These controls and regulations may include, but may not be   limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling   and production practices, environmental protection, marketing and pricing policies, royalties, various   taxes and levies including income tax, and are subject to change from time to time.  Such changes in   governmental regulations and policies may cause volumes of proved and probable reserves actually   recovered and amounts of proved and probable income actually received to differ from the estimated   quantities.      The estimates of reserves presented herein were based upon a detailed study of the properties   in which Magellan Petroleum Corp. owns an interest; however, we have not made any field examination   of the properties.  No consideration was given in this report to potential environmental liabilities that   may exist nor were any costs included for potential liabilities to restore and clean up damages, if any,   caused by past operating practices.         Estimates of Reserves      The estimation of reserves involves two distinct determinations.  The first determination results   in the estimation of the quantities of recoverable oil and gas and the second determination results in the   estimation of the uncertainty associated with those estimated quantities in accordance with the   definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a).  The   process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain   generally accepted analytical procedures.  These analytical procedures fall into three broad categories   or methods: (1) performance-based methods, (2) volumetric-based methods and (3) analogy.  These   methods may be used singularly or in combination by the reserve evaluator in the process of estimating   the quantities of reserves.  Reserve evaluators must select the method or combination of methods   which in their professional judgment is most appropriate given the nature and amount of reliable   geoscience and engineering data available at the time of the estimate, the established or anticipated   performance characteristics of the reservoir being evaluated and the stage of development or   producing maturity of the property.        In many cases, the analysis of the available geoscience and engineering data and the   subsequent interpretation of this data may indicate a range of possible outcomes in an estimate,   irrespective of the method selected by the evaluator.  When a range in the quantity of reserves is   identified, the evaluator must determine the uncertainty associated with the incremental quantities of   the reserves.  If the reserve quantities are estimated using the deterministic incremental approach, the   uncertainty for each discrete incremental quantity of the reserves is addressed by the reserve category   assigned by the evaluator.  Therefore, it is the categorization of reserve quantities as proved and/or   probable that addresses the inherent uncertainty in the estimated quantities reported.  For proved   reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually   recovered are much more likely than not to be achieved.”  The SEC states that “probable reserves are
 Magellan Petroleum Corp.   July 6, 2012   Page 5      those additional reserves that are less certain to be recovered than proved reserves but which, together   with proved reserves, are as likely as not to be recovered.”  All quantities of reserves within the same   reserve category must meet the SEC definitions as noted above.      Estimates of reserves quantities and their associated reserve categories may be revised in the   future as additional geoscience or engineering data become available.  Furthermore, estimates of   reserves quantities and their associated reserve categories may also be revised due to other factors   such as changes in economic conditions, results of future operations, effects of regulation by   governmental agencies or geopolitical or economic risks as previously noted herein.      The proved and probable reserves for the properties included herein were estimated by   performance methods. Approximately 100 percent of the proved and 100 percent of the probable   producing reserves attributable to producing wells and/or reservoirs were estimated by performance   methods. The performance method utilized was decline curve analysis which utilized extrapolations of   historical production data available through April, 2012. The data utilized in this analysis were furnished   to Ryder Scott by Magellan Petroleum Australia Limited and were considered sufficient for the purpose   thereof.       Approximately 100 percent of the probable developed non-producing reserves included herein   were also estimated by the performance method.       To estimate economically recoverable proved and probable oil and gas reserves and related   future net cash flows, we consider many factors and assumptions including, but not limited to, the use   of reservoir parameters derived from geological and engineering data which cannot be measured   directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future   production rates.  Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved and probable   reserves must be anticipated to be economically producible from a given date forward based on   existing economic conditions including the prices and costs at which economic producibility from a   reservoir is to be determined.  While it may reasonably be anticipated that the future prices received for   the sale of production and the operating costs and other costs relating to such production may increase   or decrease from those under existing economic conditions, such changes were, in accordance with   rules adopted by the SEC, omitted from consideration in making this evaluation.      Magellan Petroleum Australia Limited has informed us that they have furnished us all of the   material accounts, records, geological and engineering data, and reports and other data required for   this investigation.  In preparing our forecast of future proved and probable production and income, we   have relied upon data furnished by Magellan Petroleum Australia Limited with respect to property   interests owned, production and well tests from examined wells, normal direct costs of operating the   wells or leases, other costs such as transportation and/or processing fees, recompletion costs,   abandonment costs after salvage, product prices based on the SEC regulations, adjustments or   differentials to product prices, geological structural and pressure measurements.  Ryder Scott reviewed   such factual data for its reasonableness; however, we have not conducted an independent verification   of the data furnished by Magellan Petroleum Australia Limited.  We consider the factual data used in   this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future   net revenues herein.      In summary, we consider the assumptions, data, methods and analytical procedures used in   this report appropriate for the purpose hereof, and we have used all such methods and procedures that   we consider necessary and appropriate to prepare the estimates of reserves herein.  The proved and   probable reserves included herein were determined in conformance with the United States Securities   and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all   references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC
 Magellan Petroleum Corp.   July 6, 2012   Page 6      Regulations.”  In our opinion, the proved and probable reserves presented in this report comply with the   definitions, guidelines and disclosure requirements as required by the SEC regulations.            Future Production Rates      For wells currently on production, our forecasts of future production rates are based on historical   performance data.  If no production decline trend has been established, future production rates were   held constant, or adjusted for the effects of contract volumes where appropriate, until a decline in ability   to produce was anticipated.  An estimated rate of decline was then applied to depletion of the reserves.    If a decline trend has been established, this trend was used as the basis for estimating future   production rates.        Test data and other related information were used to estimate the anticipated initial production   rates for those wells or locations that are not currently producing.  For reserves not yet on production,   sales were estimated to commence at an anticipated date furnished by Magellan Petroleum Australia   Limited or on the dates required to provide capacity to meet contract quantities.  Wells that are not   currently producing may start producing earlier or later than anticipated in our estimates due to   unforeseen factors causing a change in the timing to initiate production.  Such factors may include   delays due to weather, the availability of rigs, the sequence of recompleting wells and/or constraints set   by regulatory bodies.        The future production rates from wells currently on production or wells that are not currently   producing may be more or less than estimated because of changes including, but not limited to,   reservoir performance, operating conditions related to surface facilities, compression and artificial lift,   pipeline capacity and/or operating conditions, producing market demand and/or allowables or other   constraints set by regulatory bodies.        Hydrocarbon Prices      The hydrocarbon prices used herein are based on SEC price parameters using the average   prices during the 12-month period prior to the ending date of the period covered in this report,   determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month   for each month within such period, unless prices were defined by contractual arrangements.  For   hydrocarbon products sold under contract, the contract prices, including fixed and determinable   escalations, exclusive of inflation adjustments, were used until expiration of the contract.  Upon contract   expiration, the prices were adjusted to the 12-month unweighted arithmetic average as previously   described.        Magellan Petroleum Australia Limited furnished us with the above mentioned average prices in   effect on June 30, 2012.  These initial SEC hydrocarbon prices were determined using the 12-month   average first-day-of-the-month benchmark prices appropriate to the geographic area where the   hydrocarbons are sold.  These benchmark prices are prior to the adjustments for differentials as   described herein.  The table below summarizes the “benchmark prices” and “price reference” used for   the geographic area included in the report.  In certain geographic areas, the price reference and   benchmark prices may be defined by contractual arrangements. For the probable gas reserves the gas   price utilized was the volume weighted annual price based on the contract prices contained in the latest   available term sheets.       The product prices which were actually used to determine the future gross revenue for each   property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or
 Magellan Petroleum Corp.   July 6, 2012   Page 7      distance from market, referred to herein as “differentials.”  The differentials used in the preparation of   this report were estimated by us based on information furnished by Magellan Petroleum Australia   Limited.      In addition, the table below summarizes the net volume weighted benchmark prices adjusted for   differentials and referred to herein as the “average realized prices.” The average realized prices shown   in the table below were determined from the total future gross revenue before any deductions and the   total net reserves by reserve category for the geographic area and presented in accordance with SEC   disclosure requirements for each of the geographic areas included in the report.               Geographic   Area Product         Price   Reference      Avg Benchmark   Prices   Avg  Proved    Realized   Prices   Avg Probable   Realized   Prices         Australia Gas         Contract Prices       $4.64/MCF         $3.68/MCF      The effects of derivative instruments designated as price hedges of oil and gas quantities are   not reflected in our individual property evaluations.       Costs      Operating costs for the leases and wells in this report are based on the operating expense   reports of Magellan Petroleum Australia Limited and include only those costs directly applicable to the   leases or wells. The operating costs include a portion of general and administrative costs allocated   directly to the leases and wells. The operating costs used in the preparation of this report were   estimated by us based on information furnished by Magellan Petroleum Australia Limited. No deduction   was made for loan repayments, interest expenses, or exploration and development prepayments that   were not charged directly to the leases or wells.      Development costs were furnished to us by Magellan Petroleum Australia Limited and are   based on authorizations for expenditure for the proposed work or actual costs for similar projects.    Magellan Petroleum Australia Limited provided abandonment costs net of salvage.  Ryder Scott has not   performed a detailed study of the abandonment costs or the salvage value and makes no warranty for   Magellan Petroleum Australia Limited’s estimate.      The probable developed non-producing reserves in this report have been incorporated herein in   accordance with Magellan Petroleum Australia Limited’s plans to develop these reserves as of June 30,   2012. The implementation of Magellan Petroleum Australia Limited’s development plans as presented   to us and incorporated herein is subject to the approval process adopted by Magellan Petroleum   Australia Limited’s management.  As the result of our inquiries during the course of preparing this   report, Magellan Petroleum Australia Limited has informed us that the development activities included   herein have been subjected to and received the internal approvals required by Magellan Petroleum   Australia Limited’s management at the appropriate local, regional and/or corporate level.  Since   Magellan Petroleum Australia Limited has a 100% working interest in all properties contained in this   report, no external approval is required. Additionally, Magellan Petroleum Australia Limited has   informed us that they are not aware of any legal, regulatory, political or economic obstacles that would   significantly alter their plans.
 Magellan Petroleum Corp.   July 6, 2012   Page 8      Current costs used by Magellan Petroleum Australia Limited were held constant throughout the   life of the properties.               Standards of Independence and Professional Qualification      Ryder Scott is an independent petroleum engineering consulting firm that has been providing   petroleum consulting services throughout the world for over seventy years.  Ryder Scott is employee-   owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada.  We   have over eighty engineers and geoscientists on our permanent staff.  By virtue of the size of our firm   and the large number of clients for which we provide services, no single client or job represents a   material portion of our annual revenue.  We do not serve as officers or directors of any publicly-traded   oil and gas company and are separate and independent from the operating and investment decision-   making process of our clients.  This allows us to bring the highest level of independence and objectivity   to each engagement for our services.      Ryder Scott actively participates in industry-related professional societies and organizes an   annual public forum focused on the subject of reserves evaluations and SEC regulations.  Many of our   staff have authored or co-authored technical papers on the subject of reserves related topics.  We   encourage our staff to maintain and enhance their professional skills by actively participating in ongoing   continuing education.      Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and   geoscientists have received professional accreditation in the form of a registered or certified   professional engineer’s license or a registered or certified professional geoscientist’s license, or the   equivalent thereof, from an appropriate governmental authority or a recognized self-regulating   professional organization.      We are independent petroleum engineers with respect to Magellan Petroleum Corp.  Neither we   nor any of our employees have any interest in the subject properties and neither the employment to do   this work nor the compensation is contingent on our estimates of reserves for the properties which were   reviewed.      The results of this study, presented herein, are based on technical analysis conducted by teams   of geoscientists and engineers from Ryder Scott.  The professional qualifications of the undersigned,   the technical person primarily responsible for overseeing the evaluation of the reserves information   discussed in this report, are included as an attachment to this letter.      Terms of Usage      The results of our third party study, presented in report form herein, were prepared in   accordance with the disclosure requirements set forth in the SEC regulations and intended for public   disclosure as an exhibit in filings made with the SEC by Magellan Petroleum Corp..       We have provided Magellan Petroleum Corp. with a digital version of the original signed copy of   this report letter.  In the event there are any differences between the digital version included in filings   made by Magellan Petroleum Corp. and the original signed report letter, the original signed report letter   shall control and supersede the digital version.
 Magellan Petroleum Corp.   July 6, 2012   Page 9         The data and work papers used in the preparation of this report are available for examination by   authorized parties in our offices.  Please contact us if we can be of further service.      Very truly yours,      RYDER SCOTT COMPANY, L.P.   TBPE Firm Registration No. F-1580                                                                                         Larry T. Nelms, P.E.                     Approved:       James L. Baird, P.E.   Managing Senior Vice President
 RYDER SCOTT COMPANY   PETROLEUM CONSULTANTS                              Professional Qualifications of Primary Technical Person         The conclusions presented in this report are the result of technical analysis conducted by teams of   geoscientists and engineers from Ryder Scott Company, L.P.  Larry Thomas Nelms is the primary   technical person responsible for the estimate of the reserves, future production and income.      Nelms, a former employee of Ryder Scott Company L.P. (Ryder Scott) from 1983 through 2011, was a   Managing Senior Vice President and also served as a member of the Board of Directors, responsible   for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir   evaluation studies worldwide.  Before joining Ryder Scott, Nelms served in a number of engineering   positions with Dome Petroleum, Mizel Petro Resources and Exxon.  For more information regarding Mr.   Nelms’ geographic and job specific experience, please refer to the Ryder Scott Company website at   www.ryderscott.com/Experience/Employees.      Nelms earned a Bachelor of Science degree in Mechanical Engineering from Mississippi State   University in 1963 and a Master of Science from the University of New Mexico in 1965, and he is a   registered Professional Engineer in the State of Colorado.  He is also a member of the Society of   Petroleum Engineers and the Society of Petroleum Evaluation Engineers, where he serves as chairman   of the Denver Section and also served for three years on the board of directors.      As part of his 2009 continuing education hours, Nelms attended an internally presented 16 hours of   formalized training as well as the  day long 2009 RSC Reserves Conference  forum, and a presentation   at the Denver Section of SPEE by Dr. John Lee relating to the definitions and disclosure guidelines   contained in the United States Securities and Exchange Commission Title 17, Code of Federal   Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the   Federal Register.  Nelms serves as the instructor of the PetroSkills course entitled “Oil & Gas Reserve   Evaluation” for a period of four years.      Based on his educational background, professional training and more than 25 years of practical   experience in the estimation and evaluation of petroleum reserves, Nelms has attained the professional   qualifications as a Reserves Estimator and Reserves Auditor set forth in Article III of the “Standards   Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the   Society of Petroleum Engineers as of February 19, 2007.
 PETROLEUM RESERVES DEFINITIONS      As Adapted From:   RULE 4-10(a) of REGULATION S-X PART 210   UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)         PREAMBLE      On January 14, 2009, the United States Securities and Exchange Commission (SEC) published   the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives   and Records Administration (NARA).  The “Modernization of Oil and Gas Reporting; Final Rule”   includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and   additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry   Guide 2 in Regulation S-K.  The “Modernization of Oil and Gas Reporting; Final Rule”, including all   references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC   regulations”.  The SEC regulations take effect for all filings made with the United States Securities and   Exchange Commission as of December 31, 2009, or after January 1, 2010.  Reference should be made   to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for   the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC   document are denoted in italics herein).       Reserves are estimated remaining quantities of oil and gas and related substances anticipated   to be economically producible, as of a given date, by application of development projects to known   accumulations.  All reserve estimates involve an assessment of the uncertainty relating the likelihood   that the actual remaining quantities recovered will be greater or less than the estimated quantities   determined as of the date the estimate is made.  The uncertainty depends chiefly on the amount of   reliable geologic and engineering data available at the time of the estimate and the interpretation of   these data.  The relative degree of uncertainty may be conveyed by placing reserves into one of two   principal classifications, either proved or unproved.  Unproved reserves are less certain to be recovered   than proved reserves and may be further sub-classified as probable and possible reserves to denote   progressively increasing uncertainty in their recoverability.  Under the SEC regulations as of   December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities   of probable or possible oil and gas reserves in documents publicly filed with the SEC.  The SEC   regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and   any estimated values of such resources in any document publicly filed with the SEC unless such   information is required to be disclosed in the document by foreign or state law as noted in §229.1202   Instruction to Item 1202.      Reserves estimates will generally be revised only as additional geologic or engineering data   become available or as economic conditions change.      Reserves may be attributed to either natural energy or improved recovery methods.  Improved   recovery methods include all methods for supplementing natural energy or altering natural forces in the   reservoir to increase ultimate recovery.  Examples of such methods are pressure maintenance, natural   gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible   displacement fluids.  Other improved recovery methods may be developed in the future as petroleum   technology continues to evolve.      Reserves may be attributed to either conventional or unconventional petroleum accumulations.    Petroleum accumulations are considered as either conventional or unconventional based on the nature   of their in-place characteristics, extraction method applied, or degree of processing prior to sale.    Examples of unconventional petroleum accumulations include coalbed or coalseam methane   (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits.    These unconventional accumulations may require specialized extraction technology and/or significant   processing prior to sale.
 PETROLEUM RESERVES DEFINITIONS   Page 2            Reserves do not include quantities of petroleum being held in inventory.       Because of the differences in uncertainty, caution should be exercised when aggregating   quantities of petroleum from different reserves categories.         RESERVES (SEC DEFINITIONS)      Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as   follows:      Reserves.  Reserves are estimated remaining quantities of oil and gas and related substances   anticipated to be economically producible, as of a given date, by application of development projects to   known accumulations.  In addition, there must exist, or there must be a reasonable expectation that   there will exist, the legal right to produce or a revenue interest in the production, installed means of   delivering oil and gas or related substances to market, and all permits and financing required to   implement the project.       Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major,   potentially sealing, faults until those reservoirs are penetrated and evaluated as economically   producible.  Reserves should not be assigned to areas that are clearly separated from a known   accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or   negative test results).  Such areas may contain prospective resources (i.e., potentially recoverable   resources from undiscovered accumulations).          PROVED RESERVES (SEC DEFINITIONS)      Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and   gas reserves as follows:      Proved oil and gas reserves.  Proved oil and gas reserves are those quantities of oil and gas, which,   by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be   economically producible—from a given date forward, from known reservoirs, and under existing   economic conditions, operating methods, and government regulations—prior to the time at which   contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably   certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The   project to extract the hydrocarbons must have commenced or the operator must be reasonably certain   that it will commence the project within a reasonable time.       (i) The area of the reservoir considered as proved includes:       (A) The area identified by drilling and limited by fluid contacts, if any, and       (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be   judged to be continuous with it and to contain economically producible oil or gas on the   basis of available geoscience and engineering data.       (ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the   lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience,   engineering, or performance data and reliable technology establishes a lower contact with   reasonable certainty.
 PETROLEUM RESERVES DEFINITIONS   Page 3            PROVED RESERVES (SEC DEFINITIONS) CONTINUED      (iii) Where direct observation from well penetrations has defined a highest known oil (HKO)   elevation and the potential exists for an associated gas cap, proved oil reserves may be   assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or   performance data and reliable technology establish the higher contact with reasonable certainty.       (iv) Reserves which can be produced economically through application of improved recovery   techniques (including, but not limited to, fluid injection) are included in the proved classification   when:    (A) Successful testing by a pilot project in an area of the reservoir with properties no   more favorable than in the reservoir as a whole, the operation of an installed program in   the reservoir or an analogous reservoir, or other evidence using reliable technology   establishes the reasonable certainty of the engineering analysis on which the project or   program was based; and       (B) The project has been approved for development by all necessary parties and   entities, including governmental entities.       (v) Existing economic conditions include prices and costs at which economic producibility from a   reservoir is to be determined. The price shall be the average price during the 12-month period   prior to the ending date of the period covered by the report, determined as an unweighted   arithmetic average of the first-day-of-the-month price for each month within such period, unless   prices are defined by contractual arrangements, excluding escalations based upon future   conditions.          PROBABLE RESERVES (SEC DEFINITIONS)      Securities and Exchange Commission Regulation S-X §210.4-10(a)(18) defines probable oil and   gas reserves as follows:      Probable reserves.  Probable reserves are those additional reserves that are less certain to be   recovered than proved reserves but which, together with proved reserves, are as likely as not to be   recovered.       (i) When deterministic methods are used, it is as likely as not that actual remaining quantities   recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic   methods are used, there should be at least a 50% probability that the actual quantities   recovered will equal or exceed the proved plus probable reserves estimates.       (ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves   where data control or interpretations of available data are less certain, even if the interpreted   reservoir continuity of structure or productivity does not meet the reasonable certainty criterion.    Probable reserves may be assigned to areas that are structurally higher than the proved area if   these areas are in communication with the proved reservoir.       (iii) Probable reserves estimates also include potential incremental quantities associated with a   greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.      (iv) See also guidelines in paragraphs (a)(17)(iv) and (a)(17)(vi) of this section.
 RESERVES STATUS DEFINITIONS AND GUIDELINES      As Adapted From:   RULE 4-10(a) of REGULATION S-X PART 210   UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)      and      PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)   Sponsored and Approved by:   SOCIETY OF PETROLEUM ENGINEERS (SPE)   WORLD PETROLEUM COUNCIL (WPC)   AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)   SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)         Reserves status categories define the development and producing status of wells and   reservoirs.  Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part   210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on   excerpts from the original documents (direct passages excerpted from the aforementioned SEC and   SPE-PRMS documents are denoted in italics herein).         DEVELOPED RESERVES (SEC DEFINITIONS)      Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil   and gas reserves as follows:      Developed oil and gas reserves are reserves of any category that can be expected to be   recovered:       (i) Through existing wells with existing equipment and operating methods or in which the   cost of the required equipment is relatively minor compared to the cost of a new well;   and       (ii) Through installed extraction equipment and infrastructure operational at the time of   the reserves estimate if the extraction is by means not involving a well.       Developed Producing (SPE-PRMS Definitions)      While not a requirement for disclosure under the SEC regulations, developed oil and gas   reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as   Producing or Non-Producing.      Developed Producing Reserves    Developed Producing Reserves are expected to be recovered from completion intervals that are   open and producing at the time of the estimate.       Improved recovery reserves are considered producing only after the improved recovery project   is in operation.       Developed Non-Producing   Developed Non-Producing Reserves include shut-in and behind-pipe reserves.
 RESERVES STATUS DEFINITIONS AND GUIDELINES   Page 2            Shut-In   Shut-in Reserves are expected to be recovered from:   (1) completion intervals which are open at the time of the estimate, but which have not    started producing;    (2) wells which were shut-in for market conditions or pipeline connections; or    (3) wells not capable of production for mechanical reasons.       Behind-Pipe   Behind-pipe Reserves are expected to be recovered from zones in existing wells, which will   require additional completion work or future re-completion prior to start of production.        In all cases, production can be initiated or restored with relatively low expenditure compared to   the cost of drilling a new well.          UNDEVELOPED RESERVES (SEC DEFINITIONS)      Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil   and gas reserves as follows:      Undeveloped oil and gas reserves are reserves of any category that are expected to be   recovered from new wells on undrilled acreage, or from existing wells where a relatively major   expenditure is required for recompletion.       (i) Reserves on undrilled acreage shall be limited to those directly offsetting   development spacing areas that are reasonably certain of production when drilled,   unless evidence using reliable technology exists that establishes reasonable certainty of   economic producibility at greater distances.       (ii) Undrilled locations can be classified as having undeveloped reserves only if a   development plan has been adopted indicating that they are scheduled to be drilled   within five years, unless the specific circumstances, justify a longer time.       (iii) Under no circumstances shall estimates for undeveloped reserves be attributable to   any acreage for which an application of fluid injection or other improved recovery   technique is contemplated, unless such techniques have been proved effective by actual   projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2)   of this section, or by other evidence using reliable technology establishing reasonable   certainty.