Exhibit
15.4



|                                        |                           |                          | 
|--------------------------------------- | ------------------------- | ------------------------ | 
|TBPE REGISTERED ENGINEERING FIRM F-1580 |                           | FAX (713) 651-0849      
|1100 LOUISIANA    SUITE 4600            | HOUSTON, TEXAS 77002-5294 | TELEPHONE (713) 651-9191



January 26,
2016



CNOOC Limited

c/o Nexen Energy ULC

801-7th Avenue S.W.

Calgary, Alberta T2P 3P7

Canada



Gentlemen:



At the request of CNOOC
Limited (CNOOC), Ryder Scott Company, L.P. (Ryder Scott) has conducted a reserves audit of the estimates of the proved reserves
attributable to certain leasehold and royalty interests of OOGC America, LLC. (OOGC) as of December 31, 2015 prepared by OOGC’s
engineering and geological staff 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). CNOOC indirectly retains a 100 percent ownership of OOGC. Our reserves
audit, completed on January 11, 2016 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 estimated reserves shown herein represent
OOGC’s estimated net reserves attributable to the leasehold and royalty interests in certain properties owned by OOGC and
reviewed by Ryder Scott, as of December 31, 2015. The properties reviewed by Ryder Scott incorporate OOGC reserve determinations
and are located in the states of Colorado, Texas and Wyoming.



The properties reviewed
by Ryder Scott account for all of OOGC’s total net proved reserves as of December 31, 2015. CNOOC has represented that these
properties represent 3 percent of its total company proved reserves on an equivalent barrel basis as of December 31, 2015. The
portions reviewed by Ryder Scott as determined by various metrics are as follows:



|Portions Reviewed             
|------------------------------
|CNOOC Limited                 
|                              
|                              
|Net Liquid Reserves           
|Net Gas Reserves              
|Net Liquid Equivalent Reserves



As prescribed by the
Society of Petroleum Engineers in Paragraph 2.2(f) of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves
Information (SPE auditing standards), a reserves audit is defined as “the process of reviewing certain of the pertinent facts
interpreted and assumptions made that have resulted in an estimate of reserves prepared by others and the rendering of an opinion
about (1) the appropriateness of the methodologies employed; (2) the adequacy and quality of the data relied upon; (3) the depth
and thoroughness of the reserves







|SUITE  600,  1015  4TH  STREET,
    S.W. | CALGARY,
    ALBERTA T2R 1J4 | TEL (403)
    262-2799 | FAX (403)
    262-2790
|---------------------------------------- | ---------------------------- | ---------------------- | ----------------------
|621  17TH
    STREET, SUITE 1550         | DENVER, COLORADO 80293-1501  | TEL (303) 623-9147     | FAX (303) 623-4258    






CNOOC Limited January 26, 2016 Page 2




estimation process;
(4) the classification of reserves appropriate to the relevant definitions used; and (5) the reasonableness of the estimated reserve
quantities.”



Based on our review,
including the data, technical processes and interpretations presented by OOGC, it is our opinion that the overall procedures and
methodologies utilized by OOGC in preparing their estimates of the proved reserves as of December 31, 2015 comply with the current
SEC regulations and that the overall proved reserves for the reviewed properties as estimated by OOGC are, in the aggregate, reasonable
within the established audit tolerance guidelines of 10 percent as set forth in the SPE auditing standards.



The estimated reserves
presented in this report are related to hydrocarbon prices. OOGC has informed us that in the preparation of their reserve and income
projections, as of December 31, 2015, they used average prices during the 12-month period prior to the “as of date”
of 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 net
reserves as estimated by OOGC attributable to OOGC's interest in properties that we reviewed are summarized as follows:



SEC PARAMETERS

OOGC’s Estimates of Net Reserves

Certain Leasehold and Royalty Interests
of

OOGC America, LLC

|As of December 31, 2015
|-----------------------



|                              |  | Proved   
|----------------------------- |  | ---------
|                              |  | Developed
|                              |  | Producing
|Total Net Reserves            |  |          
|Oil/Condensate – MBarrels     |  |          
|Plant Products – MBarrels     |  |          
|Gas – MMcf                    |  |          
|Total Oil Equivalents – MBOE* |  |          



* 6 Mcf = 1 bbl liquid
equivalents



Liquid hydrocarbons
are expressed in thousands of standard 42 gallon barrels (MBarrels). 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 net remaining reserves are also shown herein on an equivalent unit basis wherein natural gas is converted to oil
equivalent using a factor of 6,000 cubic feet of natural gas per one barrel of oil equivalent. MBOE means thousand barrels of oil
equivalent.



Reserves Included in This Report



In our opinion, the
proved reserves presented in this report 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.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 3




The various proved reserve
status categories are defined under the attachment entitled “Petroleum Reserves Status Definitions and Guidelines”
in this report.



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 OOGC’s request, this report addresses only the proved reserves attributable to the properties
reviewed 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. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, 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,could be more or less than the estimated amounts.



Audit Data, Methodology, Procedure
and Assumptions



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



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 4




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.



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,
prepared by OOGC, for the properties that we reviewed were estimated by performance methods, analogy, or a combination of methods.
All of the proved producing reserves attributable to producing wells and/or reservoirs that we reviewed were estimated by performance
methods, primarily decline curve analysiswhich utilized extrapolations of historical production
and pressure data available through December 2015, in those cases where such data were considered to be definitive. The data utilized
in this analysis were furnished to Ryder Scott by OOGC or obtained from public data sources and were considered sufficient for
the purpose thereof. All of the proved developed non-producing and undeveloped reserves that we reviewed were estimated by the
analogy method. The data utilized from the analogues were considered sufficient for the purpose thereof. All of the proved reserves
that were reviewed are attributable to horizontal wells and locations.



To estimate economically
recoverable proved oil and gas reserves, many factors and assumptions are considered 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 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 conducting this review.



As stated previously,
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. To confirm that the proved
reserves reviewed by us meet the SEC requirements to be economically producible, we have reviewed certain primary economic data
utilized by OOGC relating to hydrocarbon prices and costs as noted herein.



Data used in this audit
were obtained from reviews with OOGC personnel, OOGC files, from records on file with the appropriate regulatory agencies, and
from public sources. In the preparation of this report Ryder Scott have relied, without independent verification, upon such information
furnished by



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 5




OOGC with respect
to property interests, production from such properties, current costs of operation and development, prices for production, agreements
relating to current and future operations and sale of production, and various other information and data that were accepted as
represented. Furthermore, if in the course of our examination something came to our attention which brought into question the
validity or sufficiency of any of such information or data, we did not rely on such information or data until we had satisfactorily
resolved our questions relating thereto or had independently verified such information or data. A field examination of the properties
was not considered necessary for the purposes of this report. OOGC did not place any limitations on the Ryder Scott work performed.



The hydrocarbon prices
furnished by OOGC for the properties reviewed are based on SEC price parameters using the average prices during the 12-month period
prior to the “as of date” of 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.



The initial SEC hydrocarbon
prices in effect on December 31, 2015 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 by OOGC
for the geographic area(s). In certain geographic areas, the price reference and benchmark prices may be defined by contractual
arrangements.



The product prices which
were actually used by OOGC 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 by OOGC were accepted as factual data and reviewed by us for their reasonableness using information furnished
by OOGC for this purpose; however, we have not conducted an independent verification of this data used by OOGC.



The table below summarizes
OOGC’s net volume weighted benchmark prices adjusted for differentials for the properties and referred to herein as OOGC’s
“average realized prices.” The average realized prices shown in the table below were determined from OOGC’s estimate
of the total future gross revenue before production taxes for the properties reviewed by us and OOGC’s estimate of the total
net reserves for the properties reviewed by us. The data shown in the following table is presented in accordance with SEC disclosure
requirements for each of the geographic areas.



|Geographic Area | Product        | Price Reference | Average Benchmark Prices | Average Realized Prices at Point of Sale | Average Prices Net of Marketing, Transmission and Processing
|--------------- | -------------- | --------------- | ------------------------ | ---------------------------------------- | ------------------------------------------------------------
|North America  
|United States   | Oil/Condensate | WTI Cushing     | $50.28/Bbl               | $47.88/Bbl                               | $43.98/Bbl                                                  
|NGLs*           | Mt Belvieu     | $16.14/Bbl      | $10.90Bbl**              | $(5.51)/Bbl                             
|Gas             | Henry Hub      | $2.59/MMBTU     | $2.76/Mcf**              | $(0.81)/Mcf                             



| | * | NGL price was based upon the Mt. Belvieu benchmarks
for each NGL constituent multiplied by fractional contribution
| | - | ------------------------------------------------------------------------------------------------------------------



| | ** | Excludes certain gas gathering and related services
fees – see remarks below
| | -- | ----------------------------------------------------------------------------



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 6




OOGC field production
is subject to charges and fees attributable to field transmission, processing and marketing of petroleum products within the field
to the point of sale. The average prices received net of transmission, processing and marketing costs are shown above.



The effects of derivative
instruments designated as price hedges of oil and gas quantities are not reflected in OOGC’s individual property evaluations.



Accumulated gas production
imbalances, if any, were not taken into account in the proved gas reserve estimates reviewed. The proved gas volumes presented
herein do not include volumes of gas consumed in operations as reserves.



Operating costs furnished
by OOGC are based on the operating expense reports of OOGC and include only those costs directly applicable to the leases or wells
for the properties reviewed by us. The operating costs include a portion of general and administrative costs allocated directly
to the leases and wells. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly
to the leases and wells under terms of operating agreements. The operating costs furnished by OOGC were reviewed by us for their
reasonableness using information furnished by OOGC for this purpose; however, we have not conducted an independent verification
of the data used by OOGC.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 furnished
by OOGC are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The development
costs furnished by OOGC were reviewed by us for their reasonableness using information furnished by OOGC for this purpose; however,
we have not conducted an independent verification of the data used by OOGC. The estimated net cost of abandonment after
salvage was included by OOGC for properties where abandonment costs net of salvage were significant. OOGC’s estimates of
the net abandonment costs were accepted without independent verification.



The proved developed
non-producing and undeveloped reserves for the properties reviewed by us have been incorporated herein in accordance with the operator’s
plans to develop these reserves as of December 31, 2015. The implementation the development plans as presented to us is subject
to the approval process adopted by OOGC’s management. As the result of our inquiries during the course of our review, OOGC
has informed us that the development activities have been subjected to and received the internal approvals required by OOGC’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 OOGC. Additionally, OOGC has informed us that they are not aware of any legal, regulatory, or political obstacles
that would significantly alter their plans. While these plans could change from those under existing economic conditions as of
December 31, 2015, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.



Current costs used by
OOGC were held constant throughout the life of the properties.



OOGC’s forecasts
of future production rates are based on historical performance from wells currently on production. 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.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 7




Test data and other
related information were used by OOGC 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 OOGC. Wells or locations that are not currently producing may start producing earlier or later than anticipated in OOGC’s
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.



OOGC’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 taxand 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 review of the properties in which OOGC 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 by OOGC for potential liabilities to restore and clean up damages, if any, caused by past
operating practices.



Certain technical personnel
of OOGC are responsible for the preparation of reserve estimates on new properties and for the preparation of revised estimates,
when necessary, on old properties. These personnel assembled the necessary data and maintained the data and workpapers in an orderly
manner. We consulted with these technical personnel and had access to their workpapers and supporting data in the course of our
audit.



OOGC 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 performing our audit of OOGC’s forecast of future proved production, we have relied upon
data furnished by OOGC 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, ad valorem and production taxes, recompletion
and development costs, development plans, 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 OOGC. We consider the factual data furnished to us by OOGC to be appropriate and sufficient for the purpose of
our review of OOGC’s estimates of reserves. In summary, we consider the assumptions, data, methods and analytical procedures
used by OOGC and as reviewed by us appropriate for the purpose hereof, and we have used all such methods and procedures that we
consider necessary and appropriate under the circumstances to render the conclusions set forth herein.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 8




Audit Opinion



Based on our review,
including the data, technical processes and interpretations presented by OOGC, it is our opinion that the overall procedures and
methodologies utilized by OOGC in preparing their estimates of the proved reserves as of December 31, 2015 comply with the current
SEC regulations and that the overall proved reserves for the reviewed properties as estimated by OOGC are, in the aggregate, reasonable
within the established audit tolerance guidelines of 10 percent as set forth in the SPE auditing standards.



We were in reasonable
agreement with OOGC's estimates of proved reserves for the properties which we reviewed; although in certain cases there was more
than an acceptable variance between OOGC's estimates and our estimates due to a difference in interpretation of data or due to
our having access to data which were not available to OOGC when its reserve estimates were prepared.However,
notwithstanding, it is our opinion that, on an aggregate basis, the data presented herein for the properties that we reviewed fairly
reflects the estimated net reservesowned by OOGC.



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 since 1937. 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 privately-owned or 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 OOGC. Neither we nor any of our employees have any financial 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
audit, 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, reviewing and approving
the review of the reserves information discussed in this report, are included as an attachment to this letter.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


CNOOC Limited January 26, 2016 Page 9




Terms of Usage



The results of our third
party audit, 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 makes periodic
filings on Form 20-F with the SEC under the 1934 Exchange Act. Furthermore, CNOOC 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 on Form F-3 of CNOOC of the references to our name as well as
to the references to our third party report for CNOOC, which appears in the December 31, 2014 annual report on Form 20-F of CNOOC.
Our written consent for such use is included as a separate exhibit to the filings made with the SEC by CNOOC.



We have provided OOGC
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 and the original signed report letter, the original signed report letter shall control
and supersede the digital version.



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



\s\ Jeffrey D. Wilson



Jeffrey D. Wilson, P.E.

TBPE License No. 86426

Managing Senior Vice President



\s\ John F. Sharp



John F. Sharp

Senior Petroleum Engineer



JDW-JFS (DCR)/pl



|cc: | Mr. Lichuan Lan, Eagle Ford Asset Manager, OOGC-Management                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Ms. Corinne Richmond,
Asset Team Lead – OOGC Eagle Ford, Nexen Energy ULC

Mr. Todd Nicol, Asset
Team Lead – OOGC Rockies, Nexen Energy ULC

Sydney Frazer, Deloitte
LLP





RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS







Professional Qualifications of Primary
Technical Engineer



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. Jeffrey D.
Wilson was the primary technical person responsible for the estimate of the reserves, future production and income presented herein.



Mr. Wilson, an employee of Ryder Scott Company,
L.P. (Ryder Scott) since 1998, is a Managing Senior Vice President and also serves 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, Mr. Wilson served in a number of engineering positions with Exxon. For more information regarding Mr.
Wilson’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Company/Employees.



Mr. Wilson earned a Bachelor of Science
degree in Mechanical Engineering from the University of Houston in 1991, graduating with Magna Cum Laude honors, and is a licensed
Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers and currently serves as
an advising member of the SPE Oil and Gas Reserves Committee.



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. Wilson fulfills. As part of his 2015 continuing education hours, Mr. Wilson attended or participated as a discussion
panelist in four different multiday conferences and symposiums focused primarily on unconventional (shale) resource evaluations,
SEC oil and gas reporting requirements, the SPE/WPC/AAPG/SPEE Petroleum Resources Management System and ethics training. Mr. Wilson
also earned additional continuing education credits by attending various SPE Oil and Gas Reserves Committee meetings and making
presentations of the results of his study of the SEC’s 2014 comment letters.



Based on his educational background, professional
training and 25 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Wilson 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.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


PETROLEUM RESERVES DEFINITIONS Page 2




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.



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.



RYDER SCOTT COMPANY    PETROLEUM CONSULTANTS


PETROLEUM RESERVES DEFINITIONS Page 3




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







PETROLEUM 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


PETROLEUMRESERVES STATUS DEFINITIONS AND GUIDELINES Page 2


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







|                                        |                           |                          | 
|--------------------------------------- | ------------------------- | ------------------------ | 
|TBPE REGISTERED ENGINEERING FIRM F-1580 |                           | FAX (713) 651-0849      
|1100 LOUISIANA    SUITE 4600            | HOUSTON, TEXAS 77002-5294 | TELEPHONE (713) 651-9191



March 4, 2016



CNOOC Limited

No. 25, ChaoYangMenBei Dajie

DongCheng District

Beijing 100010

China



Gentlemen:



At your request, Ryder
Scott Company, L.P. (Ryder Scott) has reviewed the methods and procedures for estimating the proved reserves attributable to certain
interests of CNOOC Limited (CNOOC) located in China as of December 31, 2015, as prepared by the engineering and geological staff
of CNOOC. The methods and procedures followed by CNOOC for estimating these reserves were 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).



The properties subjected
to the procedural audit by Ryder Scott account for a portion of CNOOC’s total net proved reserves as of December 31, 2015
in China. Based on information provided by CNOOC, the procedural audit conducted by Ryder Scott addresses the following percentage
of the total proved reserves of CNOOC as summarized in the following table:





|Reserves   |  | Net Liquid Hydrocarbon Reserves |    | Net Gas Reserves
|---------- |  | ------------------------------- | -- | ----------------
|Categories |  | Developed                       |    | Undeveloped     
|Proved     |  |                                 | 22 | %               





In our opinion, the
overall procedures and methodologies utilized in determining the reserves for the reviewed properties as estimated by CNOOC are
reasonable and consistent with industry standards. In summary, we consider that the assumptions, data, methods and analytical procedures
used by CNOOC are appropriate for the purpose of preparing their estimates of reserves. This procedural review does not offer an
opinion as to the reasonableness of the actual estimated reserve quantities as this was outside the scope of the procedural audit.



Ryder Scott Procedural Audit



In order to arrive at
our conclusions and to substantiate our opinion relative to CNOOC’s procedures and methodologies in estimating proved reserves,
we have conducted our investigation in a manner that closely conforms to the SPE auditing standards for a reserves audit. Under
Paragraph 2.2(f) of the SPE auditing standards, a reserves audit is defined as follows:



2.2 (f) Reserves Audit.A
Reserves Audit is the process of reviewing certain of the pertinent facts interpreted and assumptions made that have resulted in
an estimate of reserves and/or Reserves Information prepared by others and the rendering of an opinion about (1) the appropriateness
of the methodologies employed, (2) the adequacy and quality of the data relied







|SUITE  600,  1015  4TH  STREET,
    S.W. | CALGARY, ALBERTA T2R 1J4    | TEL (403) 262-2799 | FAX (403) 262-2790
|---------------------------------------- | --------------------------- | ------------------ | ------------------
|621  17TH STREET, SUITE 1550             | DENVER, COLORADO 80293-1501 | TEL (303) 623-9147 | FAX (303) 623-4258






CNOOC Limited March 4, 2016 Page 2




upon, (3) the depth and thoroughness
of the reserves estimation process, (4) the classification of reserves appropriate to the relevant definitions used, and (5) the
reasonableness of the estimated reserves quantities and/or the Reserves Information. The term “reasonableness” cannot
be defined with precision but should reflect a quantity and/or value difference of not more than plus or minus 10%, or the subject
Reserves Information does not meet minimum recommended audit standards. This tolerance can be applied to any level of reserves
or Reserves Information aggregation, depending upon the nature of the assignment, but is most often limited to Proved Reserves
Information. A separate predetermined and disclosed tolerance may be appropriate for other reserves classifications. Often a reserves
audit includes a detailed review of certain critical assumptions and independent assessments with acceptance of other information
less critical to the reserves estimation. Typically, a reserves audit letter or report is prepared, clearly stating the assumptions
made. A reserves audit should be of sufficient rigor to determine the appropriate reserves classification for all reserves in the
property set evaluated and to clearly state the reserves classification system being utilized. In contrast to the term “audit”
as used in a financial sense, a reserves audit is generally less rigorous than a reserves report.



Our procedural review,
however, differs from an SPE reserves audit in that we did not conduct our investigation with sufficient rigor to express an opinion
as to “(5) the reasonableness of the estimated reserve quantities and/or the Reserves Information” as required under
item (5) Paragraph 2.2(f) of the SPE auditing standards for a reserves audit. Our review should not be construed to be a complete
and comprehensive appraisal of the subject properties or deemed to convey the same level of information contained in a third party
reserves audit or reserves evaluation report. Ryder Scott was not engaged to render an opinion as to the reasonableness of reserves
quantities being prepared by CNOOC.



Procedural Audit Opinion



In our opinion, CNOOC's
estimates of future reserves for the reviewed properties were prepared in accordance with generally accepted petroleum engineering
and evaluation principles for the estimation of future reserves as set forth in the Society of Petroleum Engineers in Paragraph
2.2(f) of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (SPE Auditing Standards),
and we found no bias in the utilization and analysis of data in estimates for these properties.



Certain technical personnel
of CNOOC are responsible for the preparation of reserve estimates. These personnel assembled the necessary data and maintained
the data and workpapers in an orderly manner. We consulted with these technical personnel and had access to their workpapers and
supporting data in the course of our review.



In conducting this procedural
audit, Ryder Scott has used all methods and procedures that we considered necessary and appropriate to prepare this report.



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 since 1937. 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 privately-owned or



RYDER SCOTT COMPANY   PETROLEUM CONSULTANTS


CNOOC Limited March 4, 2016 Page 3




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 CNOOC. Neither we nor any of our employees have any financial 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
procedural audit, presented herein, are based on the procedural reviews 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



We have provided CNOOC
with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital
version and the original signed report letter, the original signed report letter shall control and supersede the digital version.



This report was prepared
for the use of CNOOC Limited and we hereby consent to the references to our name as well as the filing of this procedural audit
letter as an exhibit to CNOOC Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2015. 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



\s\ Eric T. Nelson



Eric T. Nelson, P.E.

TBPE License No. 102286

Managing Senior Vice President	 [SEAL]



ETN (DPR)/pl



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. Mr. Eric
T. Nelson is the primary technical person responsible for the estimate of the reserves, future production and income.



Mr. Nelson, an employee of Ryder Scott Company,
L.P. (Ryder Scott) since 2005, is a Managing Senior Vice President responsible for ongoing reservoir evaluation studies worldwide.
Before joining Ryder Scott, Mr. Nelson served in a number of engineering positions with Exxon Mobil Corporation. For more information
regarding Mr. Nelson’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Company/Employees.



Mr. Nelson earned a Bachelor of Science
degree in Chemical Engineering from the University of Tulsa in 2002 (summa cum laude) and a Master of Business Administration from
the University of Texas in 2007 (Dean’s Award). He is a licensed Professional Engineer in the State of Texas. Mr. Nelson
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 15 hours of continuing education
annually, including at least one hour in the area of professional ethics, which Mr. Nelson fulfills. As part of his 2015 continuing
education hours, Mr. Nelson attended over 20 hours of training during 2015 covering such topics as updates concerning the implementation
of the latest SEC oil and gas reporting requirements, evaluations of resource play reserves, evaluation of simulation models, procedures
and software, and ethics training.



Based on his educational background, professional
training and more than 10 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Nelson has
attained the professional qualifications as a Reserves Estimator 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.



RYDER SCOTT COMPANY   PETROLEUM CONSULTANTS


PETROLEUM RESERVES DEFINITIONS Page 2




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.



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.



RYDER SCOTT COMPANY   PETROLEUM CONSULTANTS







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







PETROLEUM 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





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