EX-99 2 ex1-form40f_2005.txt EXHIBIT 1 EXHIBIT 1 --------- SUPPLEMENTARY OIL & GAS INFORMATION (UNAUDITED) This supplementary oil and natural gas information is provided in accordance with the United States FAS 69, "Disclosures about Oil and Gas Producing Activities", and where applicable is reconciled to the US GAAP financial information. NET PROVED OIL AND NATURAL GAS RESERVES The Company retains qualified independent reserves evaluators to evaluate the Company's proved oil and natural gas reserves. o For the year ended December 31, 2005, the reports by Sproule Associates Limited ("Sproule") and Ryder Scott Company covered 100% of the Company's conventional reserves; o For the year ended December 31, 2004, the reports by Sproule and Ryder Scott Company covered 100% of the Company's conventional reserves; o For the year ended December 31, 2003, the reports by Sproule covered 100% of the Company's conventional reserves; and o For the year ended December 31, 2002, the reports by Sproule covered 89% of the Company's conventional reserves. Proved oil and natural gas reserves are the estimated quantities of oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are reserves that can be expected to be recovered from existing wells with existing equipment and operating methods. Estimates of oil and natural gas reserves are subject to uncertainty and will change as additional information regarding producing fields and technology becomes available and as future economic and operating conditions change. The following table summarizes the Company's proved and proved developed conventional crude oil and natural gas reserves, net of royalties, as at December 31, 2005, 2004 and 2003:
------------------------------------------------------------------------------------------------------------- Offshore Crude oil and NGLs (mmbbl) North America North Sea West Africa Total ------------------------------------------------------------------------------------------------------------- Net proved reserves Reserves, December 31, 2002 571 202 75 848 Extensions and discoveries 1 -- 13 14 Improved recovery 63 -- -- 63 Purchases of reserves in place 7 27 -- 34 Sales of reserves in place -- -- -- -- Production (56) (21) (4) (81) Revisions of previous estimates 2 14 1 17 ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2003 588 222 85 895 Extensions and discoveries 17 -- -- 17 Improved recovery 25 45 -- 70 Purchases of reserves in place 36 38 -- 74 Sales of reserves in place -- -- -- -- Production (66) (24) (4) (94) Revisions of previous estimates 48 22 34 104 ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2004 648 303 115 1,066 Extensions and discoveries 98 -- -- 98 Improved recovery 3 3 2 8 Purchases of reserves in place -- -- 15 15 Sales of reserves in place (3) -- -- (3) Production (70) (25) (8) (103) Revisions of previous estimates 18 9 10 37 ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2005 694 290 134 1,118 ============================================================================================================= Net proved developed reserves: December 31, 2002 340 107 27 474 December 31, 2003 348 138 23 509 December 31, 2004 367 218 20 605 December 31, 2005 402 214 80 696 =============================================================================================================
------------------------------------------------------------------------------------------------------------- Offshore Natural gas (bcf) North America North Sea West Africa Total ------------------------------------------------------------------------------------------------------------- Net proved reserves Reserves, December 31, 2002 2,446 71 71 2,588 Extensions and discoveries 58 -- 6 64 Improved recovery 251 -- -- 251 Purchases of reserves in place 50 19 -- 69 Sales of reserves in place (3) -- -- (3) Production (355) (17) (3) (375) Revisions of previous estimates (21) (11) (10) (42) ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2003 2,426 62 64 2,552 Extensions and discoveries 334 -- -- 334 Improved recovery 80 -- -- 80 Purchases of reserves in place 182 10 -- 192 Sales of reserves in place (8) -- -- (8) Production (383) (18) (3) (404) Revisions of previous estimates (40) (27) 11 (56) ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2004 2,591 27 72 2,690 Extensions and discoveries 506 -- -- 506 Improved recovery 30 -- -- 30 Purchases of reserves in place 6 -- -- 6 Sales of reserves in place (23) -- -- (23) Production (411) (7) (1) (419) Revisions of previous estimates 42 9 1 52 ------------------------------------------------------------------------------------------------------------- Reserves, December 31, 2005 2,741 29 72 2,842 ============================================================================================================= Net proved developed reserves: December 31, 2002 2,185 57 27 2,269 December 31, 2003 2,140 46 12 2,198 December 31, 2004 2,213 12 5 2,230 December 31, 2005 2,300 16 10 2,326 =============================================================================================================
CAPITALIZED COSTS RELATED TO OIL AND NATURAL GAS ACTIVITIES
------------------------------------------------------------------------------------------------------------------------ 2005 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Proved properties $ 20,886 $ 2,675 $ 1,365 $ 14 $ 24,940 Unproved properties 1,372 28 182 13 1,595 ------------------------------------------------------------------------------------------------------------------------- 22,258 2,703 1,547 27 26,535 Less: accumulated depletion and depreciation (7,993) (1,022) (294) (14) (9,323) ------------------------------------------------------------------------------------------------------------------------- Net capitalized costs $ 14,265 $ 1,681 $ 1,253 $ 13 $ 17,212 ========================================================================================================================= ------------------------------------------------------------------------------------------------------------------------ 2004 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Proved properties $ 18,749 $ 2,506 $ 563 $ 14 $ 21,832 Unproved properties 1,028 44 528 8 1,608 ------------------------------------------------------------------------------------------------------------------------- 19,777 2,550 1,091 22 23,440 Less: accumulated depletion and depreciation (6,410) (727) (190) (14) (7,341) ------------------------------------------------------------------------------------------------------------------------- Net capitalized costs $ 13,367 $ 1,823 $ 901 $ 8 $ 16,099 ========================================================================================================================== ------------------------------------------------------------------------------------------------------------------------ 2003 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Proved properties $ 15,125 $ 1,905 $ 566 $ 14 $ 17,610 Unproved properties 789 56 231 6 1,082 -------------------------------------------------------------------------------------------------------------------------- 15,914 1,961 797 20 18,692 Less: accumulated depletion and depreciation (4,984) (522) (140) (12) (5,658) -------------------------------------------------------------------------------------------------------------------------- Net capitalized costs $ 10,930 $ 1,439 $ 657 $ 8 $ 13,034 ==========================================================================================================================
COSTS INCURRED IN OIL AND NATURAL GAS ACTIVITIES ------------------------------------------------------------------------------------------------------------------------ 2005 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Property acquisitions Proved $ (448) $ (3) $ 63 $ - $ (388) Unproved 210 - (52) - 158 Exploration 360 22 16 5 403 Development 2,288 368 412 - 3,068 ------------------------------------------------------------------------------------------------------------------------ Finding and development costs 2,410 387 439 5 3,241 Asset retirement costs 98 (136) 27 - (11) Actual retirement expenditures (46) - - - (46) ------------------------------------------------------------------------------------------------------------------------ Costs incurred $ 2,462 $ 251 $ 466 $ 5 $ 3,184 ======================================================================================================================== ------------------------------------------------------------------------------------------------------------------------ 2004 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Property acquisitions Proved $ 1,748 $ 302 $ - $ - $ 2,050 Unproved 298 4 - - 302 Exploration 290 11 35 2 338 Development 1,403 308 259 - 1,970 ------------------------------------------------------------------------------------------------------------------------- Finding and development costs 3,739 625 294 2 4,660 Asset retirement costs 98 165 (10) - 253 Actual retirement expenditures (32) - - - (32) ------------------------------------------------------------------------------------------------------------------------ Costs incurred $ 3,805 $ 790 $ 284 $ 2 $ 4,881 ========================================================================================================================= ------------------------------------------------------------------------------------------------------------------------ 2003 North North Offshore (millions of Canadian dollars) America Sea West Africa Other Total ------------------------------------------------------------------------------------------------------------------------ Property acquisitions Proved $ 236 $ 100 $ - $ - $ 336 Unproved 116 23 - - 139 Exploration 190 41 27 7 265 Development 1,227 193 148 - 1,568 ------------------------------------------------------------------------------------------------------------------------- Finding and development costs 1,769 357 175 7 2,308 Asset retirement costs 80 59 9 - 148 Actual retirement expenditures (30) (1) (9) - (40) ------------------------------------------------------------------------------------------------------------------------ Costs incurred $ 1,819 $ 415 $ 175 $ 7 $ 2,416 =========================================================================================================================
RESULTS OF OPERATIONS FROM OIL AND NATURAL GAS PRODUCING ACTIVITIES The Company's results of operations from oil and natural gas producing activities for the years ended December 31, 2005, 2004 and 2003 are summarized in the following tables:
------------------------------------------------------------------------------------------------------------------------- 2005 North North Offshore (millions of Canadian dollars) America Sea West Africa Total ------------------------------------------------------------------------------------------------------------------------- Oil and natural gas revenue, net of royalties $ 5,727 $ 1,499 $ 472 $ 7,698 Production (1,211) (379) (53) (1,643) Transportation (287) (20) - (307) Depletion, depreciation and amortization (1,588) (306) (104) (1,998) Asset retirement obligation accretion (34) (34) (1) (69) Petroleum revenue tax - (172) - (172) Income tax (1,007) (235) (110) (1,352) -------------------------------------------------------------------------------------------------------------------------- Results of operations $ 1,600 $ 353 $ 204 $ 2,157 ========================================================================================================================== ------------------------------------------------------------------------------------------------------------------------- 2004 North North Offshore (millions of Canadian dollars) America Sea West Africa Total ------------------------------------------------------------------------------------------------------------------------- Oil and natural gas revenue, net of royalties $ 4,579 $ 1,203 $ 216 $ 5,998 Production (976) (370) (36) (1,382) Transportation (256) (32) - (288) Depletion, depreciation and amortization (1,438) (265) (53) (1,756) Asset retirement obligation accretion (28) (22) (1) (51) Petroleum revenue tax - (145) - (145) Income tax (690) (148) (44) (882) -------------------------------------------------------------------------------------------------------------------------- Results of operations $ 1,191 $ 221 $ 82 $ 1,494 ========================================================================================================================== ------------------------------------------------------------------------------------------------------------------------- 2003 North North Offshore (millions of Canadian dollars) America Sea West Africa Total ------------------------------------------------------------------------------------------------------------------------- Oil and natural gas revenue, net of royalties $ 3,961 $ 962 $ 150 $ 5,073 Production (845) (314) (38) (1,197) Transportation (263) (30) (1) (294) Depletion, depreciation and amortization (1,203) (250) (42) (1,495) Asset retirement obligation accretion (23) (39) (1) (63) Petroleum revenue tax - (97) - (97) Income tax (673) (93) (24) (790) -------------------------------------------------------------------------------------------------------------------------- Results of operations $ 954 $ 139 $ 44 $ 1,137 ==========================================================================================================================
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS FROM PROVED OIL AND NATURAL GAS RESERVES AND CHANGES THEREIN The following standardized measure of discounted future net cash flows from proved oil and natural gas reserves has been computed using year-end sales prices and costs and year-end statutory income tax rates. A discount factor of 10% has been applied in determining the standardized measure of discounted future net cash flows. The Company does not believe that the standardized measure of discounted future net cash flows will be representative of actual future net cash flows and should not be considered to represent the fair value of the oil and natural gas properties. Actual net cash flows will differ from the presented estimated future net cash flows due to several factors including: o Future production will include production not only from proved properties, but may also include production from probable and potential reserves; o Future production of oil and natural gas from proved properties will differ from reserves estimated; o Future production rates will vary from those estimated; o Future rather than year-end sales prices and costs will apply; o Economic factors such as interest rates, income tax rates, regulatory and fiscal environments and operating conditions will change; o Future estimated income taxes do not take into account the effects of future exploration expenditures; and o Future development and site restoration costs will differ from those estimated. Future net revenues, development, production and restoration costs have been based upon the estimates referred to above. The following tables summarize the Company's future net cash flows relating to proved oil and natural gas reserves based on the standardized measure as prescribed in FAS 69:
2005 --------------------------------------------------------------------------------------------------------------------------- North North Offshore (millions of Canadian dollars) America Sea West Africa Total --------------------------------------------------------------------------------------------------------------------------- Future cash inflows $ 52,266 $ 19,961 $ 8,515 $ 80,742 Future production costs (17,310) (6,130) (1,803) (25,243) Future development and site restoration costs (3,916) (3,099) (1,032) (8,047) Future income taxes (10,272) (6,631) (2,092) (18,995) ---------------------------------------------------------------------------------------------------------------------------- Future net cash flows 20,768 4,101 3,588 28,457 10% annual discount for timing of future cash flows (7,793) (1,144) (1,068) (10,005) ---------------------------------------------------------------------------------------------------------------------------- Standardized measure of future net cash flows $ 12,975 $ 2,957 $ 2,520 $ 18,452 ============================================================================================================================ 2004 --------------------------------------------------------------------------------------------------------------------------- North North Offshore (millions of Canadian dollars) America Sea West Africa Total --------------------------------------------------------------------------------------------------------------------------- Future cash inflows $ 31,727 $ 15,526 $ 5,249 $ 52,502 Future production costs (10,995) (6,302) (1,137) (18,434) Future development and site restoration costs (2,944) (2,832) (631) (6,407) Future income taxes (6,438) (3,783) (1,242) (11,463) ---------------------------------------------------------------------------------------------------------------------------- Future net cash flows 11,350 2,609 2,239 16,198 10% annual discount for timing of future cash flows (4,385) (691) (634) (5,710) ---------------------------------------------------------------------------------------------------------------------------- Standardized measure of future net cash flows $ 6,965 $ 1,918 1,605 $ 10,488 ============================================================================================================================ 2003 --------------------------------------------------------------------------------------------------------------------------- North North Offshore (millions of Canadian dollars) America Sea West Africa Total --------------------------------------------------------------------------------------------------------------------------- Future cash inflows $ 32,720 $ 9,099 $ 3,192 $ 45,011 Future production costs (9,480) (3,015) (1,179) (13,674) Future development and site restoration costs (2,393) (1,749) (697) (4,839) Future income taxes (7,295) (2,801) - (10,096) ---------------------------------------------------------------------------------------------------------------------------- Future net cash flows 13,552 1,534 1,316 16,402 10% annual discount for timing of future cash flows (6,203) (336) (432) (6,971) ---------------------------------------------------------------------------------------------------------------------------- Standardized measure of future net cash flows $ 7,349 $ 1,198 $ 884 $ 9,431 ============================================================================================================================
The principal sources of change in the standardized measure of discounted future net cash flows are summarized in the following table:
(millions of Canadian dollars) 2005 2004 2003 -------------------------------------------------------------------------------------------------------------------------- Sales of oil and natural gas produced, net of production costs $ (5,785) $ (4,331) $ (3,582) Net changes in sales prices and production costs 11,056 (553) (2,750) Extensions, discoveries and improved recovery 3,596 2,120 1,360 Changes in estimated future development costs (971) (894) (346) Purchases of proved reserves in place 469 1,386 594 Sales of proved reserves in place (130) (20) (8) Revisions of previous reserve estimates 961 1,431 144 Accretion of discount 1,812 1,558 2,000 Changes in production timing and other 1,414 1,357 (1,411) Net change in income taxes (4,458) (997) 426 -------------------------------------------------------------------------------------------------------------------------- Net change 7,964 1,057 (3,573) Balance - beginning of year 10,488 9,431 13,004 ---------------------------------------------------------------------------------------------------------------------------- Balance - end of year $ 18,452 $ 10,488 $ 9,431 ==========================================================================================================================