Exhibit 15.1
 
 
 
 
 
 CNOOC LIMITED
 
 
 Estimated
  Future Reserves and Income
  Attributable to Certain Leasehold Interests
  And
  Derived Through Certain Production Sharing Contracts
   SEC Parameters
   As of
  December 31, 2010
  
 
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
    TBPE REGISTERED ENGINEERING FIRM F-1580

1100 LOUISIANASUITE 3800
HOUSTON, TEXAS 77002-5235
FAX (713) 651-0849

TELEPHONE (713) 651-9191
  
 March 18, 2011
 
 CNOOC Limited
 No. 25, ChaoYangMenNei Dajie
 DongC heng District
 Beijing 100010
 China
 
 Gentlemen:
  At your request, Ryder Scott Company (Ryder Scott) has prepared an estimate of the proved reserves, future production and income attributable to certain leasehold interests and derived through certain production sharing contracts of CNOOC Limited (CNOOC) as of December 31, 2010. The subject properties are located in the countries of Australia, China and Indonesia. 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 March 8, 2011 and presented herein, was prepared for public disclosure by CNOOC in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.
 
 The properties evaluated by Ryder Scott account for a portion of CNOOC’s total net proved, probable and possible reserves as of December 31, 2010. Based on information provided by CNOOC, the third party estimate conducted by Ryder Scott addresses 82.9 percent of the total proved developed net liquid hydrocarbon reserves, 72.8 percent of the total proved developed net gas reserves, 79.1 percent of the total proved undeveloped net liquid hydrocarbon reserves and 79.5 percent of the total proved undeveloped net gas reserves of CNOOC.
 
 The estimated reserves and future net income amounts presented in this report, as of December 31, 2010, are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on 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, 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 in the following table.
    600, 1015  4TH STREET, S.W.
CALGARY, ALBERTA T2R 1J4
TEL (403) 262-2799
FAX (403) 262-2790621 17TH STREET, SUITE 1550
DENVER, COLORADO 80293-1501
TEL (303) 623-9147
FAX (303) 623-4258
  
  CNOOC Limited
 March 18, 2011
 Page 2
  SEC PARAMETERSEstimated Net Reserves and Income DataAttributable to Certain Leasehold Interests andDerived Through Certain Production Sharing Contracts ofCNOOC LimitedAs of December 31, 2010
   ProvedDeveloped





TotalProducing


Non-Producing


Undeveloped


ProvedNet Remaining ReservesOil/Condensate – Barrels


804,459,522



61,655,340



662,844,501



1,528,959,363Plant Products – Barrels


17,320,563



1,891,565



7,232,467



26,444,595Gas – MMCF


1,693,418



294,445



2,962,641



4,950,504Income Data (M$)Future Gross Revenue


$66,454,838



$6,019,830



$67,527,251



$140,001,919Deductions


26,978,537



2,544,982



38,156,387



67,679,906Future Net Income (FNI)


$39,476,301



$3,474,848



$29,370,864



$  72,322,013Discounted FNI @ 10%


$31,608,494



$2,330,434



$12,717,285



$  46,656,213
 
 Liquid hydrocarbons are expressed in standard 42 gallon barrels. 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. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars (M$).
 
 The future gross revenue is after the deduction of production taxes and/or value added taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, China windfall profit tax, recompletion costs, development costs and certain abandonment costs net of salvage. The future net income is before the deduction of foreign government 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. Liquid hydrocarbon reserves account for approximately 79 percent and gas reserves account for the remaining 21 percent of total future gross revenue from proved 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 December 31, 2010Discount Rate

Percent

Total

Proved (M$)7

$52,753,0408

$50,596,4959

$48,567,17611

$44,855,404
 
 The results shown above are presented for your information and should not be construed as our estimate of fair market value.
 
  
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  CNOOC Limited
 March 18, 2011
 Page 3
 
 
 Reserves Included in This Report
 
 The proved reserves included herein conform to the definition 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 proved 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 and behind pipe categories.
 
 No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved 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 and possible reserves to denote progressively increasing uncertainty in their recoverability. At CNOOC’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.
 
 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. The proved reserves included herein were estimated using deterministic methods. 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.”
 
 Proved 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 reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved 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.
 
 The proved reserves reported herein are limited to the period prior to expiration of current contracts providing the legal rights to produce, or a revenue interest in such production, unless evidence indicates that contract renewal is reasonably certain. Furthermore, properties in the different countries may be subjected to significantly varying contractual fiscal terms that affect the net revenue to CNOOC for the production of these volumes. The prices and economic return received for these net volumes can vary significantly based on the terms of these contracts. Therefore, when applicable, Ryder Scott reviewed the fiscal terms of such contracts and discussed with CNOOC the net economic benefit attributed to such operations for the determination of the net hydrocarbon volumes and income thereof. Ryder Scott has not conducted an exhaustive audit or verification of such contractual information. Neither our review of such contractual information nor our acceptance of CNOOC’s representations regarding such contractual information should be construed as a legal opinion on this matter.
  
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
  CNOOC Limited
 March 18, 2011
 Page 4
 
 
 
 This report includes certain volumes of proved, probable and possible reserves attributable to royalties owed to the host government that are treated as taxes to be paid in cash. In Australia, the government has received the royalty payments in cash, and CNOOC is reasonably certain the government will continue to receive its royalty in cash. These future royalty payments, if converted to reserves, are equivalent to 0.3% of the total CNOOC’s reserves that Ryder Scott reviewed on a barrel equivalent basis.
 
 Ryder Scott did not evaluate the country and geopolitical risks in the countries where CNOOC operates or has interests. CNOOC’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 including the granting, extension or termination of production sharing contracts, the fiscal terms of various production sharing contracts, 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 reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.
 
 The estimates of proved reserves presented herein were based upon a detailed study of the properties in which CNOOC owns and derives 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, probable and/or possible 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 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 SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserve category must meet the SEC definitions as noted above.
  
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
  CNOOC Limited
 March 18, 2011
 Page 5
 
 
 
 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 reserves for the properties included herein were estimated by performance methods, the volumetric method, analogy or a combination of methods. The followingtable summarizes the approximate percent of reserves estimated by each of these methods.
  Approximate Percent Proved Reserves Estimated by the Various MethodsLiquid Hydrocarbons

GasMethod

Developed

Undeveloped

Developed

UndevelopedPerformance

52%

1%

27%

0%Volumetric

19%

92%

59%

100%Analogy

2%

2%

0%

0%Combination

27%

6%

14%

0%
  These performance methods include, but may not be limited to, decline curve analysis and material balance which utilized extrapolations of historical production and pressure data available through November 30, 2010 in those cases where such data were considered to be definitive. The data utilized in this analysis were supplied to Ryder Scott by CNOOC and were considered sufficient for the purpose thereof. The volumetric method was used where there were inadequate historical performance data to establish a definitive trend and where the use of production performance data as a basis for the reserve estimates was considered to be inappropriate. The volumetric analysis utilized pertinent well and seismic data supplied to Ryder Scott by CNOOC that were available through November 30, 2010. The data utilized from the well and seismic data incorporated into our volumetric analysis were considered sufficient for the purpose thereof.
 
 To estimate economically recoverable proved 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, geophysical and engineering data that 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 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.
 
 CNOOC 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 production and income, we have relied upon data furnished by CNOOC with respect to property interests owned or derived, 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, ad valorem and production taxes, value added taxes, China windfall profit tax, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses 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 CNOOC. 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.
 
   RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
  CNOOC Limited
 March 18, 2011
 Page 6
 
 
 
 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 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 Regulations.” In our opinion, the proved 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 curtailment 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 CNOOC. Wells or locations 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 drilling, completing and/or recompleting wells and/or constraints set by regulatory bodies.
 
 The future production rates from wells currently on production or wells or locations 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.
   RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 CNOOC Limited
 March 18, 2011
 Page 7
 
 
 
 CNOOC furnished us with the above mentioned average prices in effect on December 31, 2010. 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 areas included in the report. In certain geographic areas, the price reference and benchmark prices may be defined by contractual arrangements.
 
 The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, gathering and transportation fees and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to us by CNOOC. The differentials furnished by CNOOC were reviewed by us for their reasonableness using information furnished by CNOOC for this purpose.
 
 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 production taxes and the total net reserves 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
Average

Benchmark

Prices
Average

Realized

PricesChina
Oil/Condensate
Daqing
$77.64/Bbl
$74.64/BblDuri
$74.11/BblTapis
$74.75/BblWTI Cushing
$79.43/BblNGLs
Jinzhou
$750.90/MT
$68.60/BblMaoming
$880.60/MTGas
Gas Sales Agreements
$7.33/MCFAsia
Oil/Condensate
Ardjuna
$78.91/Bbl
$77.76/BblCinta
$77.02/BblBontang Return Condensate
$77.23/BblLalang
$81.49/BblWiduri
$77.12/BblNGLs
Bontang Return Condensate
$77.23/Bbl
$69.72/BblGas
Gas Sales Agreements
$3.83/MCFJCC
$79.21/BblSoCal Border (ICE)
$4.47/MMBTUOceania
Oil/Condensate
NWS Condensate
$74.59/Bbl
$76.13/BblNGLs
Saudi CP
$713.23/MT
$87.04/BblGas
JCC
$79.21/Bbl
$3.24/MCF
  
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
 
 
  CNOOC Limited
 March 18, 2011
 Page 8
 
 
 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 CNOOC 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 furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the operating cost data used by CNOOC. 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 CNOOC and are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were significant. The estimates of the net abandonment costs furnished by CNOOC were accepted without independent verification.
 
 The proved developed non-producing and undeveloped reserves in this report have been incorporated herein in accordance with CNOOC’s plans to develop these reserves as of December 31, 2010. The implementation of CNOOC’s development plans as presented to us and incorporated herein is subject to the approval process adopted by CNOOC’s management. As the result of our inquiries during the course of preparing this report, CNOOC has informed us that the development activities included herein have been subjected to and received the internal approvals required by CNOOC’s management at the appropriate local, regional and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements or other administrative approvals external to CNOOC. Additionally, CNOOC has informed us that they are not aware of any legal, regulatory, political or economic obstacles that would significantly alter their plans.
 
 The initial production date of certain proved undeveloped gas fields/reservoirs in Australia, China and Indonesia were scheduled beyond the SEC nominal 5 year development period because these fields/reservoirs are associated with long term gas contracts or LNG sales, and their gas deliverability are not needed within the 5 year period. The reserves from these fields/reservoirs represent 1.9% of the total BOE reserves reviewed by Ryder Scott. CNOOC and its partners anticipated for these fields/reservoirs to be developed prior to the expiration of the long term gas sales and LNG sales and purchase agreement period.
 
 Current costs used by CNOOC 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 COMPANY  PETROLEUM CONSULTANTS
  
 
 CNOOC Limited
 March 18, 2011
 Page 9
 
 
 
 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 CNOOC Limited. 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 CNOOC Limited.
 
 CNOOC Limited makes periodic filings on Form 20-F with the SEC under the 1934 Exchange Act. Furthermore, CNOOC Limited has certain registration statements filed with the SEC under the 1933 Securities Act into which any subsequently filed Form 20-F is incorporated by reference. We have consented to the incorporation by reference in the registration statements of CNOOC Limited of the references to our name as well as to the references to our third party report for CNOOC Limited, which appears in the December 31, 2010 annual report on Form 20-F of CNOOC Limited. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by CNOOC Limited.
  We have provided CNOOC Limited 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 CNOOC Limited and the original signed report letter, the original signed report letter shall control and supersede the digital version.
  
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 CNOOC Limited
 March 18, 2011
 Page 10
 
 
 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.
  HG/sm
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
 
 
  
 Professional Qualifications of Primary Technical Engineer
 
 
 The conclusions presented in this independent reserves report for CNOOC Limited dated March 18, 2011 are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Harris Ghozali was the primary technical person responsible for overseeing the estimate of the reserves, future production and income prepared by Ryder Scott presented herein.
 
 Mr. Ghozali, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1997, is a Senior Vice President and an Engineering Group Coordinator responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Ghozali served in a number of engineering positions with ExxonMobil. For more information regarding Mr. Ghozali’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Experience/Employees.
 
 Mr. Ghozali earned a Bachelor of Science degree in Petroleum Engineering with High Scholastic Honors from the Colorado School of Mines in 1990 and a Master of Science degree in Petroleum Engineering from the University of Houston in 1997. He is a registered Professional Engineer in the State of Texas and also a member of the Society of Petroleum Engineers.
 
 In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Ghozali fulfills. As part of his 2010 continuing education hours, Mr. Ghozali attended 8 hours of formalized training including the 2010 RSC Reserves Conference and/or various professional society presentations specifically 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. Mr. Ghozali attended an additional 6 hours of formalized in-house training during 2010 covering such topics as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants. Mr. Ghozali is also an instructor and has taught several one day and three day seminars on Hydrocarbon Reserves and Resources Evaluation Methods.
 
 Based on his educational background, professional training and more than 21 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Ghozali 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.
 
 
  
 
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
    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.
   RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 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 substancesanticipated 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.
 
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 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.
 
 
 
  RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 
 
 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.
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS
  
 
 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.
 
 
 
 
 
 RYDER SCOTT COMPANY  PETROLEUM CONSULTANTS


Pan American Energy LLC
 
 
 
 Estimated
 
 Future Reserves and Income
 
 Attributable to Certain
 
 Interests
 
 
 
 SEC Parameters
 
 
 
 As of
 
 December 31, 2010
  
  RYDER SCOTT COMPANY, L.P.

TBPE Firm Registration No. F-1580
       RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
 
 
  TBPE REGISTERED ENGINEERING FIRM F-1580FAX (713) 651-08491100 LOUISIANA
SUITE 3800
HOUSTON, TEXAS 77002-5235
TELEPHONE (713) 651-9191
 
 
 
 April 13, 2011
 
 Pan American Energy LLC
 Mr. Carlos Bulgheroni, CEO and
 Mr. Alejandro P. Bulgheroni, Chairman
 Leandro N. Alem 1180
 1001 Buenos Aires, Argentina
 
 
 Gentlemen:
 
 At your request, we have prepared an estimate of the proved reserves, future production, and income attributable to certain interests of Pan American Energy LLC (Pan American) as of December 31, 2010. The subject properties are located in the provinces of Chubut, Neuquen and Tierra del Fuego (onshore and offshore) Argentina. The reserves and income data were estimated based on 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 (SEC regulations). The income data were estimated using the Securities and Exchange Commission (SEC) requirements for future price and cost parameters. The results of our third party study, completed on January 20, 2011, are presented herein
 
 Based on information provided by Pan American, the proved reserves summarized in our report represent approximately 13.7 percent of the total net proved reserves on a barrel equivalent, BOE basis of Pan American.
 
 The estimated reserves and future income amounts presented in this report, as of December 31, 2010, are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on SEC parameters using the average prices during the 12-month period prior to the ending date of the period covered in this report, determined as 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 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 on the following pages.
 
 
 600, 1015  4TH STREET, S.W.
CALGARY, ALBERTA T2R 1J4
TEL (403) 262-2799
FAX (403) 262-2790621 17TH STREET, SUITE 1550
DENVER, COLORADO 80293-1501
TEL (303) 623-9147
FAX (303) 623-4258
  
  Pan American Energy LLC
 April 13, 2011
 Page 2
 
 PROVED RESERVES - SEC PARAMETERS
 Estimated Net Reserves and Income Data
 Certain Interests of
 Pan American Energy LLC
 As of December 31, 2010
 
 ProvedDevelopedProducing


Non-Producing


Undeveloped


Total ProvedNet Remaining ReservesGasoline/Condensate–Barrels


9,847,694



246,703



7,161,568



17,255,965Plant Products–Bbls


5,914,901



0



4,584,568



10,499,469Gas–MMCF


488,822



7,301



381,012



877,135Income DataFuture Gross Revenue

$
1,623,405,732


$
42,683,977


$
1,171,649,400


$
2,837,739,109Deductions


690,184,458



17,775,389



732,474,046



1,440,433,893Future Net Income (FNI)

$
933,221,274


$
24,908,588


$
439,175,354


$
1,397,305,216Discounted FNI @ 10%

$
712,809,041


$
20,430,409


$
108,663,041


$
841,902,491
 Liquid hydrocarbons are expressed in standard 42 gallon barrels. 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.
 
 Pan American has indicated that according to their concession agreements in Argentina, there are no deductions made for statutory provincial royalties, but instead these are treated as costs. As a result, the hydrocarbon reserves included in this report are reported as working interest volumes.
 
 The future gross revenue is not subject to direct production taxes. The deductions incorporate the normal direct costs of operating the wells, royalty payments, recompletion costs, development costs, and certain abandonment costs net of salvage. The future net income is before the deduction of Argentine 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 approximately 55 percent of the total future gross revenue from proved reserves and liquid hydrocarbon reserves account for the remaining 45 percent of the total future gross revenue from proved 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  Pan American Energy LLC
 April 13, 2011
 Page 3
 Discounted Future Net Income

As of December 31, 2010Discount Rate

Percent


Total

Proved8



$921,843,65815



$685,981,12820



$574,957,68825



$493,566,719
  The results shown above are presented for your information and should not be construed as our estimate of fair market value.
 
 Reserves Included in This Report
 
 The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4- 10 (a). An abridged version of the SEC proved reserves definitions from 210.4-10(a) is included as an attachment to this report.
 
 The various reserve status categories are defined in the attachment to this report entitled “Petroleum Reserves Definitions.” The developed proved non-producing reserves included herein consist of the shut-in category.
 
 No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The gas volumes included herein do not attribute gas consumed in operations as reserves.
 
 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 also increase or decrease from existing levels, such changes were omitted from consideration in making this evaluation.
 
 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.
 
 The proved reserves and income quantities presented herein may increase or decrease as a result of future operations, effects of regulation by governmental agencies or geopolitical risks. As a result, the estimates of oil and gas reserves have an intrinsic uncertainty. The reserves included in this report are therefore estimates only and should not be construed as being exact quantities. They may or may not be actually recovered, and if recovered, the revenues therefrom and the actual costs related thereto could be more or less than the estimated amounts.
 
 The reserves reported herein are limited to the period prior to expiration of current contracts providing the legal right to produce or a revenue interest in such production unless evidence indicates that contract renewal is reasonably certain. Furthermore, the subject properties in the country of Argentina may be subject to significantly varying contractual fiscal terms that affect the net revenue to Pan American for the production of these volumes. The prices and economic return received for these net volumes can vary significantly based on the terms of these contracts. Ryder Scott has not conducted an exhaustive audit or verification of such contractual information. Our acceptance of Pan American’s representations regarding such contractual information should not be construed as a legal opinion on this matter.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 Pan American Energy LLC
 April 13, 2011
 Page 4
  
 Ryder Scott did not evaluate country and geopolitical risks in the country of Argentina, where the subject properties are located. Pan American’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include matters relating to land tenure, drilling, production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax, and foreign trade and investment and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of reserves actually recovered and amounts of income actually received to differ significantly from the estimated quantities.
 
 The estimates of reserves presented herein were based upon a detailed study of the properties in which Pan American 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 liability to restore and clean up damages, if any, caused by past operating practices.
 
 Estimates of Reserves
 
 The reserves for the properties included herein were estimated by performance methods or the volumetric method. In general, reserves attributable to producing wells and/or reservoirs were estimated by performance methods such as decline curve analysis, material balance and/or reservoir simulation which utilized extrapolations of historical production and pressure data available through December 2010 in those cases where such data were considered to be definitive. In certain cases, producing reserves were estimated by the volumetric method where there were inadequate historical performance data to establish a definitive trend and where the use of production performance data as a basis for the reserve estimates was considered to be inappropriate. Reserves attributable to proved undeveloped reserves included herein were estimated by the analogy method or the volumetric method.
 
 Major fields which were evaluated based primarily on performance methods include the Cañadon Alfa field in the Austral Basin, and Aguada Pichana, Aguada San Roque, Loma Las Yeguas, and Lindero Atravesado fields in the Neuquen Basin. Major fields, which were evaluated by the volumetric method, include the Fenix Carina and Vega Pleyade fields in the Austral Basin. Proved reserves for the remaining fields, with the exception of the Aries and Kaus fields, were evaluated using performance methods. Material balance methods were also used to support our results for Aguada San Roque, Aries and Loma Las Yeguas fields.
 
 To estimate economically recoverable 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, geophysical 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 reserves must be demonstrated to be economically producible based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined as of the effective date of the report. Pan American has informed us that they have furnished us all of the accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future production and income, we have relied upon data furnished by Pan American with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or properties, other costs such as transportation and/or processing fees, and royalty payments, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data supplied by Pan American.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 Pan American Energy LLC
 April 13, 2011
 Page 5
  
 Table A presents a one line summary of proved reserve and income data for each of the subject properties which are ranked according to their future net income discounted at 10 percent per year. Table B presents a one-line summary of gross and net reserves and income data for each of the subject properties. Tables 1 through 72 present our estimated projection of production and income by years beginning January 1, 2011, as summarized for the total Pan American Energy LLC and by basin, area, and field.
 
 Future Production Rates
 
 Our forecasts of future production rates are based on historical performance from wells now on production. 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. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment 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. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Pan American.
 
 The future production rates from wells now on production may be more or less than estimated because of changes in market demand or allowables set by regulatory bodies. Wells or locations that are not currently producing may start producing earlier or later than anticipated in our estimates.
 
 Hydrocarbon Prices
 
 Pan American provided us with hydrocarbon prices. Pan American has informed us that 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. Certain gas prices for low permeability reservoirs were determined by Pan American based on governmental price allowances for such gas. Such higher gas price allowances under a program designated as “Gas Plus” by the Argentine government were paid in year 2010 for certain volumes of gas delivered by Pan American from its Neuquen based properties. A greater volume of gas has been granted Gas Plus status and according to Pan American will receive such a price starting in 2011. Product prices which were actually used for each property reflect adjustment for gravity, quality, local conditions, and/or distance from market.
 
 The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 Pan American Energy LLC
 April 13, 2011
 Page 6
 
 
 Costs
 
 Operating costs for the properties and wells in this report are based on the operating expense reports of Pan American and include only those costs directly applicable to the properties or wells. The operating costs include a portion of general and administrative costs allocated directly to the properties and wells. When applicable for operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the overhead costs that are allocated directly to the properties and wells under terms of operating agreements. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the properties or wells.
 
 Development costs were furnished to us by Pan American and are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were significant. The estimates of the net abandonment costs furnished by Pan American were accepted without independent verification. Ryder Scott has not performed a detailed study of the abandonment costs or the salvage value and makes no warranty for Pan American’s estimates.
 
 Because of the direct relationship between volumes of proved undeveloped reserves and development plans, we include in the proved undeveloped categories only reserves assigned to undeveloped locations that we have been assured will definitely be drilled. Pan American has informed us of their intent and ability to proceed with the development activities included in this report, and that they are not aware of any legal, regulatory or political obstacles that would significantly alter their plans. The plan of development for the gas reserves to be produced from the offshore fields in the Austral Basin calls for two future wells in the Carina field which are scheduled to be drilled beyond five years from the as of date of this report. Pan American has provided us with a letter explaining the reasons for such a delay. In our opinion Pan American has a coherent and reasonable explanation for deferring the drilling of these wells as scheduled and we have assigned the reserves corresponding to this development as proven.
 
 Current costs 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 Pan American Energy LLC
 April 13, 2011
 Page 7
 
 
 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 Pan American. 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.
 
 Terms of Usage
 
 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





Managing Senior Vice President - InternationalGR/sm
  
 
 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. Guadalupe Ramirez was the primary technical person responsible for overseeing the estimate of the reserves, future production and income.
 
 Mr. Ramirez, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1981, is a Managing Senior Vice President and also serves as a member of the Board of Directors. He is responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Ramirez served in a number of engineering positions with Sun Oil Company and Natomas North America. For more information regarding Mr. Ramirez’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Experience/Employees.
 
 Ramirez earned a Bachelor of Science Degree in Mechanical Engineering with honors from Texas A&M University in 1976 and is a licensed Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers.
 
 In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Ramirez fulfills. As part of his 2009 continuing education hours, Mr. Ramirez attended an internally presented 19 hours of formalized training as well as a day long public forum, the, 2009 RSC Reserves Conference 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. Mr. Ramirez has also presented courses on the new SEC Reserves definitions on various occasions during the year 2009 as well as 2 hours of formalized external training during 2009 covering such topics as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants.
 
 Based on his educational background, professional training and more than 34 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Ramirez 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 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 likelihoodthat 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 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 substancesanticipated 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 PETROLEUM RESERVES DEFINITIONS
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 PROVED RESERVES (SEC DEFINITIONS) CONTINUED
 
 (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.
 
 (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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS
  
 RESERVES STATUS DEFINITIONS AND GUIDELINES
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 Developed Non-Producing
 Developed Non-Producing Reserves include shut-in and behind-pipe reserves.
 
 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.
 
 
 
 RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS