Exhibit 15.6
  
  
 
 
 Hydrocarbon Liquids & Natural Gas Reserves Audit
 Report at Year End 2012.
  
 Cerro Dragon, Anticlinal Funes, Piedra Clavada, Koluel Kaike and Acambuco in Argentina and Caipipendi in Bolivia
 
 CNOOC Limited
  
 SubmittedBy:RPS
 Date Submitted:January 31, 2013
  
 Project Number: UCV02233
 411 North Sam Houston Parkway STE 400, Houston TX 77060
  
  rpsgroup.com
 
 
  Hydrocarbon Liquids & Natural Gas
 Reserves Audit Report at Year End 2012
 
 
  
 Cerro Dragon, Anticlinal Funes, Piedra Clavada,
 Koluel Kaike and Acambuco in Argentina
 and
 Caipipendi in Bolivia
 
 
 
 Prepared For:
 CNOOC Limited
  
 
 
 January 2013
 
 
 
  
 Victor Wayne Taylor
 Texas, USA PE License# 71417
 Principal Engineer
 
  
 
  
 411 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060-3545 USA
 T+1 281 448 6188  F+1 281 488 6189  Wwww.rpsgroup.com
 
 
 RPS
Reserve Audit Report YE2012
  
 
  
 AUDIT LETTER
 
  
 
  UCV02233
Page 2
January 2013
 
 RPS
Reserve Audit Report YE2012
 
 411 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060-3545 USA
 T+1 281 448 6188   F+1 281 488 6189   Wwww.rpsgroup.com
   January 31, 2013
 
 CNOOC Limited
 No. 25, Chaoyangmenbei Dajie
 Dongcheng District
 Beijing 100010, P.R. China
 
 Gentlemen:
  As per your request, RPS has prepared an estimate of the proved reserves, future production and income attributable to certain leasehold interests owned by CNOOC Limited (CNOOC) as of December 31, 2012.  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, including all references to Regulation S-X and Regulation S-K (SEC regulations).  Our third party revision, completed on January 30, 2013 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 and future net income amounts presented in this report, as of December 31, 2012, are based on the reserve audit review that RPS performed for PAE’s year-end 2012 reserve report. In our opinion, the assumptions, data, methods, and procedures used in the preparation of this report are appropriate for such purpose.
  CNOOC holds 50% interest in Bridas Corporation and Bridas Corporation holds 40% interests in PAE. Therefore CNOOC, through Bridas Corporation, owns 20% of participating interests in PAE.
  Based on information provided by CNOOC, the third party estimate conducted by RPS addresses 7.2 percent of the total proved reserves of CNOOC.
  The subject properties are located in Argentina and Bolivia, South America. The properties evaluated by RPS account for a portion of CNOOC Limited’s total net proved reserves as of December 31, 2012.
  Area
CNOOC Limited Net WI %ARGENTINA
Cerro Dragon
20.0%Anticlinal Funes
16.0%Piedra Clavada
20.0%Koluel Kayke
20.0%Acambuco
10.4%
 BOLIVIA
Caipipendi
5.0%
 
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January 2013
 
 RPS
Reserve Audit Report YE2012
 The estimated reserves and future net income amounts presented in this report, as of December31, 2012, 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 estimatedquantities presented in this report. The results of this study are summarized in the following table.
 SEC PARAMETERS
 Estimated Net CNOOC Limited Reserves and Income Data
 As of December 31, 2012 
 NETREMAININGRESERVES
Total

Argentina
Total

Bolivia
TotalOil/Condensate/ Gasoline

M Bbl
ProvedDeveloped
97,673
3,358
101,031Undeveloped
93,374
631
94,005Total Proved
191,047
3,989
195,036GAS MM cf

* includes sales & field

usage
ProvedDeveloped
199,311
91,945
291,256Undeveloped
98,566
23,425
121,991Total Proved
297,877
115,370
413,247GAS Sales

MM cf
ProvedDeveloped
142,891
90,900
233,791Undeveloped
65,804
23,158
88,962Total Proved
208,695
114,058
322,753
  INCOMEDATA(MUS$)
Total

Argentina
Total

Bolivia
TotalFuture Gross

Revenue
ProvedDeveloped
4,797,512
288,068
5,085,580Undeveloped
4,421,396
75,073
4,496,469Total Proved
9,218,908
363,141
9,582,049OPEX & CAPEX
ProvedDeveloped
2,404,590
82,562
2,487,152Undeveloped
2,650,165
34,439
2,684,604Total Proved
5,054,755
117,001
5,171,756Future Net Income

(FNI)
ProvedDeveloped
2,392,921
205,506
2,598,427Undeveloped
1,771,232
40,634
1,811,866Total Proved
4,164,153
246,140
4,410,293Discounted FNI

@ 10 %
ProvedDeveloped
1,203,570
122,852
1,326,422Undeveloped
373,218
20,108
393,326Total Proved
1,576,788
142,960
1,719,748
  UCV02233
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Reserve Audit Report YE2012
  
  Note: Liquid hydrocarbons are expressed in standard 42 gallon barrels. All gas volumes reported include gas sales and fuel gas expressed 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$).
  Note: Values by property are showed in Table 1 included in the report.
  Note:The future gross revenue is after the deduction of royalty and turnover taxes in Argentina, and royalty IDH & YPFB Part in Bolivia. The deductions incorporate the normal direct costs of operating the wells, recompletion costs, development costs, certain abandonment costs, which are shown as “other” deductions.  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.
  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.
  Total Proved Discounted Future Net Income

As of December 31, 2012Discount Rate

(Percent)
Argentina

(MUS$)
Bolivia

(MUS$)
Total

(MUS$)7.0%
$ 2,023,885
$ 164,897
$ 2,188,7828.0%
$ 1,856,194
$ 156,969
$ 2,013,1639.0%
$ 1,708,111
$ 149,679
$ 1,857,79010.0%
$ 1,576,788
$ 142,960
$ 1,719,74811.0%
$ 1,459,864
$ 136,755
$ 1,596,619
  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 Rules and Regulations Part 210.4-10(a).  An abridged version of the SEC reserves definitions from Part 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.
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  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 Limited’s request, this report addresses only the proved reserves attributable to the properties evaluated herein
  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 Limited 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.
  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 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
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  characteristics of the reservoir being evaluated and the stage of development or producing maturity of the property.
  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 December 31, 2012 in those cases where such data were considered to be definitive. The volumetric method, analogy or a combination of methods were 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 RPS by PAE that were available through December 31, 2012. The data utilized from the analogues as well as the well and seismic data incorporated into our volumetric analysis were considered sufficient and appropriate for the purpose thereof.
  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.  Therefore, it is the categorization of reserve quantities as proved, probable and/or possible that addresses the inherent uncertainty in the estimated quantities reported. All quantities of reserves within the same reserve category must meet the SEC definitions.
  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.
  PAE has made all of the material accounts, records, geological and other data required for this investigation available to us. In preparing our forecast of future proved production and income, we have relied upon data furnished by CNOOC Limited joint venture partner. RPS considers the factual  data  used  in  this  report  appropriate  and  sufficient  for  the  purpose  of  preparing  the estimates of reserves and future net revenues herein.
  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.
  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 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.
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Reserve Audit Report YE2012
  
  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, in which case 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 PAE. 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.
  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 PAE. The differentials furnished by PAE were reviewed by us for their reasonableness using information furnished by PAE for this purpose.
  Costs
  Operating costs for the leases and wells in this report are based on the operating expense reports of PAE and include only those costs directly applicable to the leases or wells. The operating costs
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Reserve Audit Report YE2012
  
 
 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 PAE. 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 PAE 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 estimates of the net abandonment costs furnished by PAE were accepted without independent verification. Current costs used by PAE were held constant throughout the life of the properties.
  Standards of Independence and Professional Qualification
  RPS is a multi-disciplinary consultancy, providing technical, commercial and project management support services in the fields of operations, geoscience, engineering and health, safety and environment to the energy sector worldwide. RPS’s clients around the world include governments, national oil companies, integrated majors, independents, and start-ups, legal and financial institutions.
  RPS USA is part of the larger UK based RPS Group plc that employs nearly 5,000 staff based in offices located in the UK, Ireland, the Netherlands, USA, Canada, Australia and Brazil.
  As an independent and experienced consultancy company with a global capability, RPS is well qualified to provide both technical and economic assessments of reserves/resources, prospect evaluation, field discoveries and producing fields. In the Oil and Gas Sector, RPS personnel have provided SPE and SEC and Competent Persons reports for inclusion in both public and private circulars for funding purposes. We have provided investors with confidential valuations and assessments during mergers and acquisitions.  Asset appraisal and valuation have always been a core element of RPS consulting business.
  As indicated above, this study was based on data supplied by PAE. The supplied information was reviewed for reasonableness from a technical perspective. As is common in oil field situations, basic physical measurements taken over time cannot be verified independently in retrospect. As such, beyond the application of normal professional judgment, such data must be accepted as representative.   While we are not aware of any falsification of records or data pertinent to the results of this study, RPS does not warrant the accuracy of the data and accepts no liability for any losses from actions based upon reliance on data, which is subsequently shown to be falsified or erroneous.
  RPS personnel who prepared this report are degreed professionals with the appropriate qualifications and experience to complete the audit work. RPS and its staff do not claim expertise in accounting, legal and environmental matters, and opinions on such matters do not form part of this report.
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Reserve Audit Report YE2012
  
  The  results  and  conclusions  represent  informed  professional  judgments  based  on  the  data available and time frame allowed to perform this work. No warranty is implied or expressed that actual results will conform to these estimates.   RPS accepts no liability for actions or losses derived from reliance on this report or the data on which it was based.
 
 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.
 
  
 Very truly yours,
 
 RPS
 
 
 
 Victor Wayne Taylor
 PE License# 71417
 Principal Engineer
 
  
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Reserve Audit Report YE2012
 
 
 
 
 
 TABLE
     UCV02233
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 RPS
Reserve Audit Report YE2012
 Table1
  SEC PARAMETERS
 Estimated Net CNOOC Limited Reserves and Income Data
 As of December 31, 2012
  
 UCV02233
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January 2013
 
 
 SEC DEFINITIONS
 
  
 
 
 
 APPENDIX 1
  
 Petroleum Reserves Definition
 As Adapted From:
 Rule 4-10(a) of Regulation S-X Part 210
 United States Securities and Exchange Commission (SEC)
 RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(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 ofdevelopmentprojects to known accumulations.Inaddition,theremustexist,ortheremustbeareasonableexpectationthattherewillexist,thelegalrighttoproduceorarevenueinterestintheproduction,installedmeans 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 areclearlyseparatedfromaknown accumulationbyanon-productivereservoir(f.e.,absenceofreservoir,structurallylowreservoir,or negative test results).Such areas may contain propective resources (f.e., potentially recoverable resources from undiscovered accumulations).
  PROVED RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (22) defines proved oil and gas reserves as follows:
  Proved oil and gas reserves.
  Provedoilandgasreservesarethosequantitiesof oilandgas,which,by analysisof geoscienceand engineeringdata, can beestimatedwith reasonable certainty to be economically producible-froma givendateforward,from knownreservoirs,andunderexistingeconomicconditions,operating methods, and government regulations-prior to the timeatwhichcontractsproviding the right to operate expire, unlessevidence indicates thatrenewalis reasonably certain, regardlessof whether deterministicor probabilistic methods are usedfor theestimation.Theprojecttoextractthe hydrocarbonsmust have commencedor theoperatormust be reasonably certain that it will commence the project withinareasonable time.
  (i) The areaof the reservoir consideredas proved includes:
 (A) The area identified by drilling and limited by fluid contacts, if any, and
 
 
  (B)
Adjacent undrilled portionsofthe reservoir that can, withreasonable certainty, be judged to becontinuouswithitandtocontaineconomicallyproducibleoilorgas onthebasisofavailable geoscience and engineering data.
  (ii)
Intheabsenceofdataonfluidcontacts,provedquantitiesinareservoirare limitedbythe lowest known hydrocarbons (LKH)as seenina wellpenetrationunlessgeoscience,engineering,orperformance data and reliable technology establishesalower contact withreasonable certainty.
  (iii)
Where direct observation from wellpenetrations has definedahighest known oil(HKO) elevation andthepotentialexistsforan associatedgascap,provedoilreservesmaybeassignedin the structurallyhigherportionsofthe reservoir only if geoscience, engineering,orperformance data and reliable technologyestablish thehigher contact with reasonable certainty.
  (iv)
Reserves which canbe producedeconomically through applicationof improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
  (A)
Successful testing bya pilot project in an areaof thereservoir withpropertiesnomore favorable than in thereservoiras a whole, theoperationof an installedprogram inthe reservoiroran·analogousreservoir,orotherevidenceusingreliabletechnology establishes the reasonable certaintyof the engineeringanalysis onwhich the projector program was based; and
 (B)
The projecthas been approved for development byall necessaryparties and entities, including governmental entities
  (v)
Existing economic conditions include prices and costs at which economic producibility fromareservoiristobedetermined.Thepriceshallbetheaveragepriceduringthe12-monthperiod priortotheendingdateof theperiodcoveredbythereport,determinedas anuneighted arithmetic averageof the first-day-of-the-monthprice for each monthwithinsuch period, unless prices aredefined bycontractual arrangements, excluding escalations based upon future conditions.
  PROBABLE RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (18) defines probable oil and gas reserves as follows:
  Probable reserves.
  Probablereservesarethoseadditionalreservesthatareless certaintoberecoveredthanproved reserves but which, togetherwith proved reserves, areas likelyas not to berecovered.
  (i)
Whendeterministicmethodsareused,itisas likelyas notthatactualremainingquantities recovered will exceed the sumof estimated proved plus probable reserves. When probabilistic methodsareused,thereshouldbeatleasta50%probabilitythattheactualquantitiesrecovered will equal orexceed the proved plusprobable reserves estimates.
  (ii)
Probablereservesmaybeassignedtoareasof a reservoiradjacenttoprovedreserveswhere data controlor interpretationsof availabledataareless certain, even if the interpretedreservoir continuityof structureorproductivitydoesnotmeetthereasonablecertaintycriterion.Probable reservesmaybeassignedtoareasthatarestructurallyhigherthantheprovedareaifthese areas are incommunication with the proved reservoir.
  
 
 (iii)
Probablereservesestimatesalsoinclude  potentialincrementalquantitiesassociatedwithagreaterpercentage recoveryof the hydrocarbons in place than assumed forproved reserves.
  (iv)
See alsoguidelines inparagraphs(a)(17)(iv) and (a)(17)(vi)of this section.
  POSSIBLE RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (18) defines possible oil and gas reserves as follows:
  Possible reserves.
  Possible reserves are those additional reserves that are less certain to be recovered than probable reserves
  (i)
When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.
  (ii)
Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geosciences and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.
  (iii)
Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.
  (iv)
The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.
  (v)
Possible reserves may be assigned where geosciences and engineering data identify directly adjacent portions of reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.
  (vi)
Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.
 
  
 
  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-PMRS)
  
 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.
  DEVELOPED RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (6) defines developed oil and gas reserves as follows:
  Developed oil andgas reservesarereserves ofany category thatcan beexpected tobe recovered:
  (i)
Throughexisting wellswith existingequipment and operatingmethods or in which the costofthe required equipment is relatively minor compared to the costofa new well; and
  (ii)
Through installed extraction equipment and infrastructure operational at the timeof thereservesestimate if the extraction is by meansnot involvingawell.
  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 ProducingReserves areexpected tobe recovered from completion intervals that are openand producing at the timeof the estimate. Improved recoveryreserves are considered producing only afterthe improved recovery project isin operation.
  Developed Non-Producing
  DevelopedNon-ProducingReserves include shut-in and behind-pipereserves.
  Shut-In
  Shut-in Reserves are expected to be recovered from:
 
 
  (1)
completion intervalswhich are open at the timeof the estimate but which have notyet started producing;
 (2)
wells which were shut-in for market conditions or pipeline connections; or
 (3)
wells not capableof production for mechanical reasons.
  Behind-Pipe
  Behind-pipeReserves areexpected to be recoveredfrom zones in existingwells which will require additional completionworkor futurere-completion prior to startof production. In all cases, production can be initiated or restored with relatively low expenditure compared to the costof drillinga new well.
  UNDEVELOPED RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (31) defines undeveloped oil and gas reserves as follows:
 
 Undeveloped oil and gas reserves are reservesof any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells wherea relativelymajor expenditure is required forrecompletion.
  (i)
Reserves on undrilled acreageshall be limited to those directlyoffsettingdevelopmentspacing areas that are reasonably certainof production when drilled, unless evidence using reliable technology existsthat establishes reasonable certaintyof economic producibility at greater distances.
  (ii)
Undrilledlocations can be classifiedas having undevelopedreserves only ifa development plan has been adopted indicating that theyare scheduled to be drilled within fiveyears, unless the specificcircumstances,justifyalonger time.
  (iii)
Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an applicationof fluid injection or other improved recovery technique is contemplated, unless suchtechniqueshave been proved effectiveby actual projects inthesame reservoir or an analogous reservoir,as defined in paragraph(a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.ed upon future conditions.
  PROBABLE RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (18) defines probable oil and gas reserves as follows:
  Probable reserves.
  Probablereservesarethoseadditionalreservesthatareless certaintoberecoveredthanproved reserves but which, togetherwith proved reserves, areas likelyas not to berecovered.
  (i)
Whendeterministicmethodsareused,itisas likelyas notthatactualremainingquantities recovered will exceed the sumof estimated proved plus probable reserves. When probabilistic methodsareused,thereshouldbeatleasta50%probabilitythattheactualquantitiesrecovered will equal orexceed the proved plusprobable reserves estimates.
  (ii)
Probablereservesmaybeassignedtoareasof a reservoiradjacenttoprovedreserveswhere data controlor interpretationsof availabledataareless certain, even if the interpretedreservoir continuityof structureorproductivitydoesnotmeetthereasonablecertaintycriterion.Probable reservesmaybeassignedtoareasthatarestructurallyhigherthantheprovedareaifthese areas are incommunication with the proved reservoir.
 
 
  (iii)
Probablereservesestimatesalsoinclude  potentialincrementalquantitiesassociatedwithagreaterpercentage recoveryof the hydrocarbons in place than assumed forproved reserves.
 (iv)
See alsoguidelines in paragraphs (a)(17)(iv) and (a)(17)(vi)of this section.
  POSSIBLE RESERVES (SEC DEFINITIONS)
  Securities and Exchange Commission Regulation S-X §229.4-10(a) (18) defines possible oil and gas reserves as follows:
  Possible reserves
 
 Possible reserves are those additional reserves that are less certain to be recovered than probable reserves
  (i)
When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.
  (ii)
Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geosciences and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.
  (iii)
Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.
  (iv)
The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.
  (v)
Possible reserves may be assigned where geosciences and engineering data identify directly adjacent portions of reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.
  (vi)
Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.
 
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