EVALUATION OF PROSPECTIVE RESOURCES

UNCONVENTIONAL GAS VOLUMES

SPAIN

Prepared for

R2 ENERGY LTD.

June 1, 2014

(May 31, 2014)

Chapman Petroleum Engineering Ltd.

445, 708 - 11th Avenue S.W., Calgary, Alberta T2R 0E4 • Phone: (4031 266-4141 • Fax: (4031 266-4259 • www.chapeng,ab,ca

July 7, 2014

R2 Energy Ltd.

15567 Marine Drive

White Rock, British Columbia

V4B 1C9

Attention: Mr. Craig Steinke

Dear Sir:

Re:

 Evaluation of Prospective Resources — Unconventional Gas Volumes

Basque-Cantabrian, Central Ebro, Maestrazgo, NE Ebro and North Alamazon Basins, Spain

June 1, 2014

In accordance with your authorization, we have performed an assessment of the Prospective Resources on permits in the Basque-Cantabrian, Central Ebro, Maestrazgo and North Alamazon basins within Spain for R2 Energy Ltd. (the "Company"), in order to determine an estimate of recoverable gas volumes.

Our analysis has included a review of the available technical data including the geological and geophysical interpretation presented by the Company and information from relevant nearby wells or analogous reservoirs, and from published documents with regards to expected recovery factor.

In forming our opinion of these permits we have relied to some extent on the information presented by the Company, which, together with our independent analysis and judgment, was sufficient for us to confidently establish the nature of the petroleum initially in place.

All data gathered and calculations created in support of this report are stored permanently in our files and can be made available or presented on request. We reserve the right to make revisions to this report in light of additional information made available or which becomes known subsequent to the preparation of this report. Due to the risks involved in exploring for oil and gas reserves, our assessment of the project cannot be considered a guarantee that any wells drilled will be successful.

Prior to public disclosure of any information contained in this report, or our name as author, our written consent must be obtained, as to the information being disclosed and the manner in which it is presented. This report may not be reproduced, distributed or made available for use by any other party without our written consent and may not be reproduced for distribution at any time without the complete context of the report, unless otherwise reviewed and approved by us.

It has been a pleasure to perform this evaluation and the opportunity to have been of service is appreciated.

Yours very truly,
Chapman Petroleum Engineering Ltd.
[Original Signed By:]
Harold J. Ryan
Harold J. Ryan, P. Geol.,
Manager Geoscience

CERTIFICATE OF QUALIFICATION

I, HAROLD J. RYAN, P. Geol., Professional Geologist of the City of Calgary, Alberta, Canada, officing at Suite 445, 708 — 1 1 ^th Avenue S.W., hereby certify:

1.

THAT I am a registered Professional Geologist in the Province of Alberta, a Fellow of the Geological Association of Canada and a Fellow of the Geological Society of London.

2.

THAT I graduated from the University of Calgary with a Bachelor of Science degree in Geology in 1983.

3.

THAT I have been employed in the petroleum industry since graduation by various companies and have been directly involved in petroleum geology, petrophysics, operations, and evaluations during that time.

4.

THAT I have in excess of 15 years of experience in the conduct of evaluation and geological studies relating to oil and gas fields in Canada and internationally

5.

THAT I participated directly in the evaluation of these assets and properties and preparation of this report for R2 Energy Ltd., dated July 7, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

6.

THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of R2 Energy Ltd., its participants or any affiliate thereof.

7.

THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

8.

A personal field examination of these properties was considered to be unnecessary because the data available from the Company's records and public sources was satisfactory for our purposes.

[Original Signed By:]

Harold J. Ryan

Harold J. Ryan, P.Geol.
Manager Geoscience

CERTIFICATE OF QUALIFICATION

I, REBECCA J. HOWE, of the City of Calgary, Alberta, Canada, officing at Suite 445, 708 — 11^th Avenue S.W., hereby certify:

1.

THAT I am a registered Geologist-In-Training with the Association of Professional Engineers and Geoscientists of Alberta.

2

THAT I graduated from Brandon University, Manitoba with a Bachelor of Science degree in Geology in 2007.

3

THAT I participated directly in the evaluation of these assets and properties and preparation of this report for R2 Energy Ltd., dated July 7, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

4.

THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of R2 Energy Ltd., its participants or any affiliate thereof.

5.

THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

6

A personal field examination of these properties was considered to be unnecessary because the data available from the Company's records and public sources was satisfactory for our purposes.

[Original Signed By:]

Rebecca J. Howe

Rebecca J. Howe, Geol.I.T
Geologist

CERTIFICATE OF QUALIFICATION

I, WEI GUO WANG, P.Eng., CGA, Professional Engineer and Certified General Accountant of the City of Calgary, Alberta, Canada, office at Suite 445, 708 — 11 ^th Avenue S.W., hereby certify:

1.

THAT I am a Registered Professional Engineer in the Province of Alberta.

2.

THAT I am a Certified General Accountant in the Province of Alberta.

3.

THAT I graduated from the University of Calgary with a Master of Arts degree in Economics in 2005 and a Bachelor of Science degree in Chemical Engineering from Hefei University of Technology of China in 1985.

4.

THAT I have been employed in the petroleum industry since 2002.

5

THAT I participated directly in the evaluation of these assets and properties and preparation of this report for R2 Energy Ltd., dated July 7, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

6.

THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of R2 Energy Ltd., its participants or any affiliate thereof.

7.

THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

8.

A personal field examination of these properties was considered to be unnecessary because the data available from the Company's records and public sources was satisfactory for our purposes.

[Original Signed By:]

Wei Guo Wang

Wei Guo Wang, P.Eng., CGA, MA, MBA, B.Sc

Project Economist (Economics Coordinator)

EVALUATION OF PROSPECTIVE RESOURCES
UNCONVENTIONAL GAS VOLUMES

SPAIN

Prepared for

R2 ENERGY LTD.

June 1, 2014

(May 31, 2014)

TABLE OF CONTENTS

Scope of Report

Authorization

Purpose
Definitions

Orientation Map

Executive Summary

Table 1:

Prospect Synopsis

Table 2:

Summary of Prospective Resources

Discussion

SPAIN

Basque-Cantabrian Basin
Galileo Permit

Central Ebro Basin
Copernico Permit

Kepler Permit

Maestrazgo Basin

Platon Permit

Aristoteles Permit

Pitagoras Permit

Arquimedes Permit

North Alamazon Basin

Edison Permit

Appendix A

Recovery Factor Statistical Distribution

Glossary

SCOPE OF REPORT

Authorization

This report has been authorized by Mr. Craig Steinke on behalf of R2 Energy Ltd. The technical analysis of these properties has been performed during the months of October 2012 through January 2013 and has been updated during June 2014.

Purpose

The purpose of this report was to independently determine the volumes of Prospective Resources on certain permits in Spain.

Definitions

The following definitions, extracted from Section 5.2 of the Canadian Oil and Gas Evaluation Handbook, Volume 1 — Second Edition (COGEH-1) published by the Petroleum Society of CIM, and the Calgary chapter of the Society of Petroleum Evaluation Engineers (SPEE), as specified by Canadian Securities Regulations NI 51-101. These definitions relate to the subdivisions in the resources classification framework of Figure 1 which follows and use the primary nomenclature and concepts contained in the 2007 SPE-PRMS.

Total Petroleum Initially-In-Place (PIIP) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered (equivalent to "total resources").

Discovered Petroleum Initially-In-Place (equivalent to "discovered resources") is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially in place includes production, reserves, and contingent resources; the remainder is unrecoverable.

a)

Production

Production is the cumulative quantity of petroleum that has been recovered at a given date

b)

Reserves

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are further classified according to the level of certainty associated with the estimates and may be subclassified based on development and production status.

c)

Contingent Resources

Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.

d)

Unrecoverable

Unrecoverable is that portion of Discovered or Undiscovered PIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physic61/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.

Undiscovered Petroleum Initially In Place (equivalent to "undiscovered resources") is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources", the remainder as "unrecoverable".

a)

Prospective Resources

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of recovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity.

There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Figure 1 – Resources classification framework (SPE-PRMS, Figure 1.1).

EXECUTIVE SUMMARY

TABLE 1

PROSPECT SYNOPSIS

(a)

The Company holds a 100 percent working interest in numerous permits acquired from the Government of Spain,

(b)

The resources are located onshore in the northeast area of Spain,

(c)

The expected product type is natural gas from unconventional (shale) reservoirs,

(d)

The predominant risks with these resources would be to not find commercially productive reservoirs through existing technology as a result of the characteristics of these unconventional reservoirs,

(e)

There has been no attempt to establish monetary values for the resources. The before risk resource volumes estimated for each basin and reservoir are presented on Table 2, which follows.

This report was prepared by a "Qualified Reserves Evaluator and Auditor" who is independent of the Company.

Table 2

Summary of Petroleum Resources (Gas) Estimates

1 June 2014

Basin	Permit	Formation	R2 Energy Ltd. Gas Content (SCF/ton)	Bulk Density (g/cc)	Net Pay (ft)	Area (ac)	Recoverable gas (BCF)
Best Estimate
Basque- Cantabrian	Galileo	Jurassic	30	2.50	130	172,884	601
Central Ebro	Copernico	Devonian	50	2.50	300	158,666	2,275
	Copernico	Silurian	50	2.50	300	158,666	2,652
	Kepler	Devonian	50	2.50	300	158,666	2,282
	Kepler	Silurian	50	2.50	300	158,666	2,639
Maestrazgo	Aristoteles	Triassic	30	2.50	400	233,576	1,216
	Arquimedes	Jurassic	30	2.50	250	233,576	1,710
	Arquimedes	Permo-Stephanian	50	2.50	135	210,219	1,452
	Pitagoras	Jurassic	30	2.50	225	121,783	799
	Platon	Triassic	30	2.50	450	136,925	1,757
North Almazon	Edison	Carboniferous	50	2.50	200	57,120	623
	Edison	Jurassic	35	2.50	250	190,400	1,672
	Total Best Estimate						19,678
Low Estimate
Basque- Cantabrian	Galileo	Jurassic	20	2.60	80	153,675	284
Central Ebro	Copernico	Devonian	20	2.60	150	158,666	690
	Copernico	Silurian	20	2.60	100	158,666	642
	Kepler	Devonian	20	2.60	150	158,666	699
	Kepler	Silurian	20	2.60	100	158,666	626
Maestrazgo	Aristoteles	Triassic	20	2.60	300	104,707	632
	Arquimedes	Jurassic	20	2.60	200	233,576	908
	Arquimedes	Permo-Stephanian	20	2.60	120	186,861	562
	Pitagoras	Jurassic	20	2.60	175	121,783	426
	Platon	Triassic	20	2.60	350	136,925	938
North Almazon	Edison	Carboniferous	20	2.60	100	28,560	137
	Edison	Jurassic	20	2.60	125	190,400	585
	Total Low Estimate						7,129
High Estimate
Basque- Cantabrian	Galileo	Jurassic	50	2.40	165	192,094	1,078
Central Ebro	Copernico	Devonian	100	2.40	450	158,666	4,851
	Copernico	Silurian	100	2.40	600	158,666	6,286
	Kepler	Devonian	100	2.40	450	158,666	4,889
	Kepler	Silurian	100	2.40	600	158,666	6,300
Maestrazgo	Aristoteles	Triassic	50	2.40	500	104,777	2,014
	Arquimedes	Jurassic	50	2.40	300	233,576	2,780
	Arquimedes	Permo-Stephanian	100	2.40	150	233,576	2,610
	Pitagoras	Jurassic	50	2.40	275	121,783	1,304
	Platon	Triassic	50	2.40	525	136,925	2,841
North Almazon	Edison	Carboniferous	100	2.40	300	114,240	1,668
	Edison	Jurassic	50	2.40	500	190,400	3,341
	Total High Estimate						39,962

BASQUE-CANTABRIAN BASIN

SPAIN

INDEX

Discussion

Land

Geology

Resource Determination

Figure 1:

a)

Permit Location Map

b)

Land and Well Map

Table 1:

Schedule of Lands, Interests and Royalty Burdens

Figure 2:

a)

Geological Map — Spain

b)

Triassic-Jurassic Table of Formations — Basque-Cantabrian Basin

c)

Lower Jurassic Cross Section — Basque-Cantabrian Basin

d)

Composite Log — Well Espinosa CB-1

Table 2:

Summary of Resource Estimates

Monte Carlo Simulation Output Reports

a)

Galileo Permit - Jurassic

BASQUE-CANTABRIAN BASIN

SPAIN

DISCUSSION

Land

In 2012, the Company, through its wholly owned subsidiary, Montero Energy Corporation, acquired the Galileo Permit from the Government of Spain. The permit is in located within northeastern Spain as shown on the orientation map illustrated in Figure 1a. The Galileo Permit has an areal extent of 77,737.5 ha (192,094 ac) as shown on the land and well map illustrated in Figure 1b. The 10 km by 10 km grid placed on this map results in squares each 39 sq. mi. in size, slightly larger than a North American survey township (36 sq.mi.).

The term of the permit will be six years with the possibility of two three-year extensions. No royalties or ad valorum taxes on hydrocarbon production will be assessed by national, regional or local governments.

A detailed description of the lands, interests and royalty burdens is presented in Table 1.

Geology

The Galileo Permit is located within the Basque-Cantabrian Basin which constitutes the western extension of the Pyrenean folded belt as shown on the geological map of Spain illustrated in Figure 2a. It is a Mesozoic-Cenozoic basin with the Tertiary Duero and Ebro basins to the south and the Paleozoic Asturian massif to the west. The Galileo Permit is located approximately halfway between the onshore Ayoluengo Oil Field and the offshore Gaviota Gas Field, as shown on Figure 1 b.

During the Jurassic Era, the Basque-Cantabrian Basin was an intracratonic basin located in a subtropical epicontinental seaway with a depositional section up to 600 m in thickness. A Table of Formations chart of the Late Triassic and Jurassic section of the Basque-Cantabrian Basin is illustrated in Figure 2b. Two major depositional cycles are shown on the chart, a lower shallow marine carbonate ramp cycle and an upper deeper water hemipelagic ramp cycle. The manly members of the two upper formations of this cycle, the Castillo Pedrosa and Camino formations, contain black shale members as shown on the Table of Formations chart. This zone is also the source rock of the Ayoluengo Field located southwest of the Galileo permit.

A published cross-section of the Jurassic section over the Galileo Permit is illustrated in Figure 2c and shows the gas shale zone of interest consisting of these two formations which depositionally thin from south to north. The location of the cross section is shown on the Land and Well Map illustrated in Figure 1 b. The organic rich Castillo Pedrosa and Camino formations are also shown in the composite log of Well Espinosa CB-1 illustrated in Figure 2d. This well is located just to the south of the Galileo Permit and show a 105 m organic rich marly zone between the depths of 2795 and 2900 m with two reported mud gas shows.

Resource Determination

Resource determinations were done for the Galileo Permit in northeastern Spain for a Jurassic shale gas reservoir zone. Multiplying the average shale gas content (SCF/ton), shale density (g/cc), area (ac), average reservoir thickness (ft.) and recovery factor will deterministically calculate resource volumes. Best, low and high estimates were established for the Jurassic shale gas zone for the permit based on a Monte Carlo simulation using a reasonable range of values for gas content, shale density, reservoir thickness, areal extent and recovery factor. Regional published mapping of the Lower Jurassic interval suggest that this section may be eroded and not present in a small portion of the northwest corner of the Galileo Permit. For this reason, for the low estimate case, it was assumed the shale gas zone was present over 80% of the permit, for the best estimate case over 90% of the permit and for the high estimate case over 100% of the permit.

Typical gas content values reported for Cretaceous gas shale reservoirs in western North America are 30 SCF/ton. This value was used as the best estimate (P50) for the Jurassic gas shale zone in the Basque-Cantabrian Basin of Spain. For the low estimate (P10), a value of 20 SCF/ton was used as a minimum value for commercial shale gas reservoirs. For the high estimate (P90), a value of 50 SCF/ton was used which is typical for Devonian gas shale zones of the Appalachian Basin.

Bulk density values for gas shale zones typically range from a low estimate 2.6 g/cc to a high estimate of 2.4 g/cc. The high estimate implies a high total organic content (TOC). Organic content has a low density so that high volumes of organic content results in a low bulk density value for the shale.

The gross thickness of the Jurassic gas shale zone on the Galileo Permit ranges from 60 m in the northern portion to approximately 100 m in the southern portion based on well control. An average value of 75 m was used for the gas shale zone on the permit where present. A net thickness of 40 m (approx. 130 ft) was used in the best estimate case, 25 m (approx. 80 ft) for the low estimate case and 50 m (approx. 165 ft) for the high estimate case.

Recovery factor data implemented in the statistical analysis has been derived from published information, as presented in Appendix A at the end of the report.

A summary of the resource estimates for the Galileo Permit is presented in Table 2 and a graphical representation of the Monte Carlo

Table 1

Schedule of Lands, Interests and Royalty Burdens
1 June, 2014

R2 Energy Ltd.

Basque-Cantabrian Basin, Spain

					Appraised Interest		Royalty Burdens
Description		Rights Owned	Gross Acres	Working %		Royalty %	Basic %		Overriding %
Galileo Permit		[A[	192,094	100.0000		-	-	[1[	-
		Total	192,094
General Notes :	[1]	No royalties assessed by national or regional governments.
Rights Owned :	[A]	All P&NG

Table 2

Summary of Reource Estimates
1 June, 2014

Basque-Cantabrian Basin, Spain

Description		Gas Content (SCF/ton)	Bulk Density (g/cc)	Net Pay (ft)	Area (ac)	Recoverable Gas (BCF)	Reference
Best Estimate
Galileo Permit	Jurassic	30	2.50	130	172,884	601	Table 2a
	Total Best Estimate					601
Low Estimate
Galileo Permit	Jurassic	20	2.60	80	153,675	284	Table 2a
	Total Low Estimate					284
High Estimate
Galileo Permit	Jurassic	50	2.40	165	192,094	1,078	Table 2a
	Total High Estimate					1,078

CENTRAL EBRO BASIN

SPAIN

INDEX

Discussion

Land

Geology

Resource Determination

Figure 1:

a)

Permit Location Map

b)

Land and Well Map

Table 1:

Schedule of Lands, Interests and Royalty Burdens

Figure 2:

a)

Geological Map — Spain

b)

Silurian Stratigraphic Sections — Spain

c)

Silurian Stratigraphic Sections — Pyrenees Mountains

d)

Well Ballobar 1 — Silurian Section

e)

Devonian Outcrops — Spain

f)

Devonian Outcrop Sections — Iberian Ranges

g)

Well Ballobar 1 — Devonian Section

Table 2:

Summary of Resource Estimates

Monte Carlo Simulation Output Reports

a)

Copernico Permit - Devonian

b)

Copernico Permit — Silurian

c)

Kepler Permit — Devonian

d)

Kepler Permit - Silurian

CENTRAL EBRO BASIN

SPAIN

DISCUSSION

Land

In 2012, the Company, through its wholly owned subsidiary, Montero Energy Corporation, acquired the Copernico and Kepler permits from the Government of Spain. These contiguous permits are located within the Autonomous Community of Aragon as shown on the orientation map illustrated in Figure 1a. Each permit has an areal extent of 64,210 ha (158,666 ac) as shown on the land and well map illustrated in Figure 1 b. The 10 km by 10 km grid placed on this map results in squares each 39 sq. mi. in size, slightly larger than a North American survey township (36 sq.mi.).

The term of the permits is six years with the possibility of two three-year extensions. No royalties or ad valorum taxes on hydrocarbon production will be assessed by national, regional or local governments.

A detailed description of the lands, interests and royalty burdens is presented in Table 1

Geology

The Ebro Basin is a Cenozoic basin in northeastern Spain, triangular in shape, and located between the Iberian Ranges to the south, the Pyrenees Mountains to the north and the Catalonian Coastal Ranges to the east, as shown on the geological map of Spain illustrated in Figure 2a. The basin evolution is mainly linked to the development of the Pyrenean orogeny and represents the southern foreland basin of the Pyrenees Mountains.

As well as Cenozoic intermontane deposits, the basin is underlain by a Paleozoic and Mesozoic sedimentary section. Only one well in the basin has penetrated a significant Paleozoic sedimentary section, Ballobar 1, highlighted in Figure 1 a. In this well, the Cenozoic section is 3590 ft. in thickness, the Mesozoic section is 6850 ft. in thickness and the well penetrated 875 ft. of Paleozoic section consisting of a Devonian-Silurian interval before reached total depth within a Silurian shale interval.

This Devonian-Silurian section is considered by the Company to be the most prospective interval for potential shale gas production on these permits. A schematic illustration of Silurian stratigraphic sections located throughout Spain is illustrated in Figure 2b and shows that a black shale unit is present in all parts of Spain and comprises a significant portion of the overall Silurian sedimentary section. Detailed Silurian stratigraphic sections of outcrops within the Pyrenees Mountains just north of the Ebro Basin are illustrated in Figure 2c and show a black shale thickness of 450 ft. at the Camprodon outcrop. Well Ballobar 1 to the east of the Company permits penetrated a Silurian shale thickness of 875 ft., as shown on the well log illustrated in Figure 2d.

The Devonian section is also prospective for shale gas on the permits and a map of Devonian outcrops in Spain illustrated in Figure 2e shows the Ebro Basin to be surrounded by Devonian outcropping section. Detailed outcrop sections from the Iberian Ranges to the south of the Company lands are illustrated in Figure 2f. A Frasnian-Famennian black shale is described on both outcrop sections, though one is more siliceous and the other more calcareous. Well Ballobar 1 fully penetrated the Devonian section at that location which included a 990 ft. shale section at the top of the interval. This is illustrated on the well log shown in Figure 2g.

Resource Determination

Resource determinations were done for each of the Company's two permits in the Central Ebro Basin for two prospective shale gas reservoir zones, the Silurian and Devonian. Multiplying the average shale gas content (SCF/ton), shale density (g/cc), area (ac), average reservoir thickness (ft.) and recovery factor will deterministically calculate resource volumes. Best, low and high estimates were established for both zones in each of the two permits based on a Monte Carlo simulation using a reasonable range of values for gas content, shale density, reservoir thickness, areal extent and recovery factor. As both the Silurian and Devonian shale sections have a wide regional extent, it was assumed that both intervals completely underlain the two permits so that the area parameter was considered to be a constant.

Typical gas content values reported for Appalachian Basin Devonian shale is 50 SCF/ton for this much studied interval. This value was used as the best estimate (P50) for both Paleozoic shale intervals in Spain. For the low estimate (P10), a value of 20 SCF/ton was used as a minimum value for commercial shale gas reservoirs again for both reservoir zones. For the high estimate (P90), a value of 100 SCF/ton was used for both zones twice that of the best estimate but still a reasonable value for these types of Paleozoic shale gas intervals.

Bulk density values for both shale zones range from a low estimate 2.6 g/cc to a high estimate of 2.4 g/cc, typical values for Devonian gas shale. The high estimate implies a high total organic content (TOC). Organic content has a low density so that high volumes of organic content results in a low bulk density value for the shale.

For the Devonian shale interval, approximately 300 ft. of the Ballobar 1 well Devonian interval consists of silty shale that could constitute a shale gas reservoir. This is approximately 30% of the Devonian shale section in the well. This value was used for the best estimate with 15% or 150 ft. and 45% or 450 used for low and high estimates to provide a reasonable range of values.

The Ballobar 1 well did not fully penetrate the Silurian section but an outcrop of the organic rich Silurian Badenas Formation in the Iberian Ranges to the south has a 100 m silty shale section in a 900+ m shale interval. Based on this, a value of 300 ft. was also used a best estimate for the Silurian with a low estimate value of 100 ft., and a high estimate value of 600 ft. to provide a reasonable range taking into account the great thickness of the Silurian black shale section.

Recovery factor data implemented in the statistical analysis has been derived from published information, as presented in Appendix A at the end of the report.

A summary of resource estimates for the Company permits is presented in Table 2 and a graphical representation of the Monte Carlo simulation for each shale gas zone is presented in tables 2a to 2d.

Schedule of Lands, Interests and Royalty Burdens 1 June, 2014

R2 Energy Ltd.

Central Ebro Basin, Spain

					Appraised Interest		Royalty Burdens
Description		Rights Owned	Gross Acres	Working %		Royalty %	Basic %		Overriding %
Copernico Permit		[A]	158,666	100.0000		-	-	[1]	-
Kepler Permit		[A]	158,666	100.0000				[1]
		Total	317,332
General Notes :	[1]	No royalties assessed by national or regional governments
Rights Owned :	[A]	All P&NG.

Table 2

Summary of Resource Estimates

1 June, 2014

Central Ebro Basin, Spain

Description		Gas Content (SCF/ton)	Bulk Density (g/cc)	Net Pay (ft)	Area (ac)	Recoverable Gas (BCF)	Reference
Best Estimate
Copernico Permit	Devonian	50	2.50	300	158.666	2,275	Table 2a
Copernico Permit	Silurian	50	2.50	300	158.666	2,652	Table 2b
Kepler Permit	Devonian	50	2.50	300	158.666	2,282	Table 2c
Kepler Permit	Silurian	50	2.50	300	158,666	2,639	Table 2d
Total Best Estimate						9,848
Low Estimate
Copernico Permit	Devonian	20	2.60	150	158,666	690	Table 2a
Copernico Permit	Silurian	20	2.60	100	158,666	642	Table 2b
Kepler Permit	Devonian	20	2.60	150	158,666	699	Table 2c
Kepler Permit	Silurian	20	2.60	100	158,666	626	Table 2d
Total Low Estimate						2,657
High Estimate
Copernico Permit	Devonian	100	2 40	450	158,666	4,851	Table 2a
Copernico Permit	Silurian	100	2.40	600	158,666	6,286	Table 2b
Kepler Permit	Devonian	100	2.40	450	158,666	4,889	Table 2c
Kepler Permit	Silurian	100	2.40	600	158,666	6,300	Table 2d
Total High Estimate						22,326

MAESTRAZGO BASIN

SPAIN

INDEX

Discussion

Land

Geology

Resource Determination

Figure 1:

a)

Permit Location Map

b)

Land and Well Map

Table 1:

Schedule of Lands, Interests and Royalty Burdens

Figure 2:

a)

Geological Map — Spain

b)

Tectonic Map — Iberian Ranges

c)

Triassic Depocentres and High Areas — Eastern Spain

d)

Tectonic Zones Map — Maestrazgo Basin

e)

Geological Cross Section — Maestrazgo Basin

f)

Type Well Triassic Section — Well Mirambel 1, Platon Pernit

g)

Type Well Jurassic Section — Well Salsadella 1, Arquimedes Pernit

h)

Jurassic Section — Catalonian Coastal Ranges

i)

Type Well Permo-Stepanian Section — Well Maestrazgo 1, Arquimedes Pernit

j)

Core Description Permo-Stepanian Section — Well Maestrazgo 1, Arquimedes Pernit

Table 2:

Summary of Resource Estimates

Monte Carlo Simulation Output Reports

a)

Platon Permit – Triassic

b)

Aristoteles Permit — Triassic

c)

Pitagoras Permit — Jurassic

d)

Arquimedes Permit — Jurassic

e)

Arquimedes Permit — Pemo-Stephanian

MAESTRAZGO BASIN

SPAIN

DISCUSSION

Land

The Company, through its wholly owned subsidiary, Montero Energy Corporation, has acquired the Platon, Aristoteles, Pitagoras and Arquimedes permits located in the Maestrazgo Basin of eastern Spain. The Platon permit is located within the Autonomous Community of Aragon while the other three permits are located within the Autonomous Community of Valencia as shown on the orientation map illustrated in Figure 1a. The Platon Permit has an areal extent of 55,412 ha (136,925 ac), the Aristoteles Permit an areal extent of 42,374 ha (104,707 ac), the Pitagoras Permit an areal extent of 58,671 ha (144,979 ac), and the Arquimedes Permit an areal extent of 94,525 ha (233,576 ac) and are shown on the Land and Well Map illustrated in Figure 1 b. The 10 km by 10 km grid placed on this map results in squares each 39 sq. mi. in size, slightly larger than a North American survey township (36 sq.mi.).

The term of the permits will be six years with the possibility of two three-year extensions. No royalties or ad valorum taxes on hydrocarbon production will be assessed by national, regional or local governments.

A detailed description of the lands, interests and royalty burdens is presented in Table 1.

Geology

These four permits are located in the southern portion of the Iberian Ranges of central Spain, as shown on the Geological Map of Spain illustrated in Figure 2a. They cover much of the Maestrazgo Basin, as illustrated in the Tectonic Map of the Iberian Ranges illustrated in Figure 2b. The Maestrazgo Basin is a Mesozoic basin that commenced as a Triassic depocentre as illustrated in Figure 2c. and referred to as the Maestrat Depocentre. A major marine transgression occurred took place during the Jurassic resulting in carbonate deposition. Tertiary convergence brought about the inversion of the Iberian Ranges into an uplifted area as presently seen.

The structural setting of the Maestrazgo Basin is shown in the Tectonic Zones Map illustrated in Figure 2d. To the north of the Maestrazgo Basin is the Castelotte Fold Zone, to the south is the Ateca-Castellon Fault Zone and to the east is the Coastal Fault Zone. Just 22 km. offshore of the Arquimedes Permit is the now abandoned Amposta Oil Field which produced 56 million barrels of oil from 1973 to 1989 from a karsitic Lower Cretaceous limestone reservoir. Source rock for the field is considered to be a Jurassic marine marly unit. This field has recently been re-established as the Castor Underground Gas Storage Reservoir.

The major shale gas zones of interest on the permits are shown on the well cross section illustrated in Figure 2e. The line of the cross section from the Mirambell-1 well on the Platon Permit to the two Bobalar wells on the Aristoteles Permit is shown on the map illustrated in Figure 2d. Two zones of interest are highlighted. The lower zone is the Upper Triassic Upper Muschelkalk (M-3) Formation and the upper zone is a Jurassic marly marine unit.

A composite log showing the organic rich Upper Muschelkalk (M-3) Formation of well Mirambell-1 is illustrated in Figure 2f. It is a marly carbonate unit with a thickness of 137 m at this location and can be correlated to an outcrop section of marine clays, marls and mudstones at Desierto de las Palmas in the Ateca Castellon Fault Zone to the south of the permits and illustrated in Figure 2c.

The Jurassic organic rich shale zone of interest is shown in the composite log of well Salsadella-1 on the Arquimedes Permit illustrated in Figure 2g. This marly unit has a thickness of 114 m at this location but does become increasingly calcareous on the two westernmost permits. This unit correlates to the Middle Jurassic marly formation highlighted on the published Jurassic Section Chart of the Catalonian Coastal Ranges illustrated in Figure 2h.

A third deep Paleozoic shale gas section was evaluated on the easternmost Arquimedes Permit. Well Maestrazgo-1 penetrated an organic rich Permo-Stephanian section at the base of the well that is shown on the type log illustrated in Figure 2i. A core description from the well report for Maestrazgo-1 is shown in Figure 2j where black carbonaceous shale is described.

Resource Determination

Resource determinations were done for the two western permits (Platon and Aristoteles) for a Triassic shale gas reservoir zone and for the two eastern Permits (Pitagoras and Arquimedes) for a Jurassic shale gas reservoir zone. Additionally, a petroleum initially-in-place (gas) determination was also done for a deeper Permo-Stephanian zone on the easternmost Arquimedes Permit. Multiplying the average shale gas content (SCF/ton), shale density (g/cc), area (ac), average reservoir thickness (ft.) and recovery factor will deterministically calculate resource volumes. Best, low and high estimates were established for the shale gas zone(s) in each permit based on a Monte Carlo simulation using a reasonable range of values for gas content, shale density, reservoir thickness, areal extent and recovery factor.

Typical gas content values reported for Cretaceous gas shale reservoirs in western North America are 30 SCF/ton. This value was used as the best estimate (P50) for the Triassic and Jurassic gas shale zones in the Maestrazgo Basin of Spain. For the low estimate (P10), a value of 20 SCF/ton was used as a minimum value for commercial shale gas reservoirs. For the high estimate (P90), a value of 50 SCF/ton was used which is typical for Devonian gas shale zones of the Appalachian Basin. Higher values were used for the deeper Permo-Stephanian zone for the best estimate (50 SCF/Ton) and high estimate (100 SCF/Ton).

Bulk density values for gas shale zones typically range from a low estimate 2.6 g/cc to a high estimate of 2.4 g/cc. The high estimate implies a high total organic content (TOC). Organic content has a low density so that high volumes of organic content results in a low bulk density value for the shale.

The gross thickness of the Triassic gas shale zone on the westernmost Platon Permit averages approximately 600 ft. based on the two wells drilled on the permit. Applying a net/gross ratio ranging from 60% to 90%, results in net reservoir pay of 350 ft. for a low (P10) estimate, 450 ft. for a best (P50) estimate and 525 ft. for a high (P90) estimate. For the adjoining Aristotles Permit to the east, the average thickness of the Triassic gas shale zone is slightly thinner at 585 ft. Net reservoir pay on the Aristotles Permit was estimated to be 300 ft. for a low (P10) estimate, 400 ft. for a best (P50) estimate and 500 ft. for a high (P90) estimate. The Triassic gas shale zone is thinning to the east and as result was not evaluated on the two eastern permits.

The gross thickness of the Jurassic gas shale zone on the easternmost Arquimedes Permit averages approximately 360 ft. based on the two wells drilled on the permit. Applying a net/gross ratio ranging from 55% to 85%, results in net reservoir pay of 200 ft. for a low (P10) estimate, 250 ft. for a best (P50) estimate and 300 ft. for a high (P90) estimate. For the adjoining Pitagoras Permit to the west, the zone appears to becoming gradually more calcareous based on wells to the west. Net reservoir pay on the Pitagoras Permit was therefore estimated to be 175 ft. for a low (P10) estimate, 225 ft. for a best (P50) estimate and 275 ft. for a high (P90) estimate. This zone was not evaluated for the two westernmost pernits as it becomes more calcareous and less organic-rich.

For the Permo-Stephanian reservoir zone in well Maestrazgo 1 on the Arquimedes Permit, a probable organic-rich zone at least 135 ft. was penetrated at the base of the well. Since no wells have fully penetrated this zone, the net reservoir pay was varied by 15 ft. on the low and high side to provide an estimate of low and high estimate values.

Recovery factor data implemented in the statistical analysis has been derived from published information, as presented in Appendix A at the end of the report.

A summary of the resource estimates for the four permits is presented in Table 2 and a graphical representation of the Monte Carlo simulation for the shale gas zone

Table 1

Schedule of Lands, Interests and Royalty Burdens
1 June, 2014

R2 Energy Ltd.

Maestrazgo Basin, Spain

					Appraised Interest		Royalty Burdens
Description		Rights Owned	Gross Acres	Working %		Royalty %	Basic %		Overriding %
Platon Permit		[A]	136,925	100.0000		-	-	[1]	-
Aristoteles Permit		[A]	104,707	100.0000		-	-	[1]	-
Pitagoras Permit		[A]	144,979	100.0000		-	-	[1]	-
Arquimedes Permit		[A]	233,576	100.0000		-	-	[1]	-
		Total	620,187
General Notes :	[1]	No royalties assessed by national or regional governments.
Rights Owned :	[A]	All P&NG

Table 2

Summary of Resource Estimates
1 June, 2014

Maestrazgo Basin, Spain

Description		Gas Content (SCF/ton)	Bulk Density (g/cc)	Net Pay (ft)	Area (ac)	Recoverable Gas (BCF)	Reference
Best Estimate
Aristoteles Permit	Triassic	30	2.50	400	104,707	1,216	Table 2a
Arquimedes Permit	Jurassic	30	2.50	250	233,576	1,710	Table 2b
Arquimedes Permit	Permo-Stephanian	50	2.50	135	210,219	1,452	Table 2c
Pitagoras Permit	Jurassic	30	2.50	225	121,783	799	Table 2d
Platon Permit	Triassic	30	2.50	450	136,925	1,757	Table 2e
	Total Best Estimate					6,934
Low Estimate
Aristoteles Permit	Triassic	20	2.60	300	104,707	632	Table 2a
Arquimedes Permit	Jurassic	20	2.60	200	233,576	908	Table 2b
Arquimedes Permit	Permo-Stephanian	20	2.60	120	186,861	562	Table 2c
Pitagoras Permit	Jurassic	20	2.60	175	121,783	426	Table 2d
Platon Permit	Triassic	20	2.60	350	136,925	938	Table 2e
	Total Low Estimate					3,466
High Estimate
Aristoteles Permit	Triassic	50	2.40	500	104,707	2,014	Table 2a
Arquimedes Permit	Jurassic	50	2.40	300	233,576	2,780	Table 2b
Arquimedes Permit	Permo-Stephanian	100	2.40	150	233,576	2,810	Table 2c
Pitagoras Permit	Jurassic	50	2.40	275	121,783	1,304	Table 2d
Platon Permit	Triassic	50	2.40	525	136,925	2,841	Table 2e
	Total High Estimate					11,549

NORTH ALAMAZON BASIN

SPAIN

INDEX

Discussion

Land

Geology

Resource Determination

Figure 1:

a)

Permit Location Map

b)

Land and Well Map

Table 1:

Schedule of Lands, Interests and Royalty Burdens

Figure 2:

a)

Geological Map — Spain

b)

Carboniferous Outcrop Sections — Iberian Ranges

c)

Lithology Log — Well El Gredal 1

d)

Jurassic Stratigraphic Sections — Northern Iberian Ranges

e)

Lithology Log — Well Castelfrio 1

Table 2:

Summary of Resource Estimates

Monte Carlo Simulation Output Reports

a)

Edison Permit – Carboniferous

b)

Edison Permit — Jurassic

NORTH ALMAZON BASIN

SPAIN

DISCUSSION

Land

In 2012, the Company, through its wholly owned subsidiary, Montero Energy Corporation, acquired the Edison Permit. The permit is located within the Autonomous Community of Castile and Leon as shown on the orientation map illustrated in Figure 1 a. The permit has an areal extent of 77,052 ha (190,400 ac) as shown on the land and well map illustrated in Figure 1 b. The 10 km by 10 km grid placed on this map results in squares each 39 sq. mi. in size, slightly larger than a North American survey township (36 sq. mi.).

The term of the permits is six years with the possibility of two three-year extensions. No royalties or ad valorum taxes on hydrocarbon production will be assessed by national, regional or local governments.

A detailed description of the lands, interests and royalty burdens is presented in Table 1

Geology

The Edison permit is located on the northern edge of the Almazon Basin, a Tertiary Basin located within the Iberian Ranges of Central Spain, as shown on the Geological Map of Spain illustrated in Figure 2a. The Company has identified two potential shale gas zones in the Carboniferous and Jurassic section within the permit.

There are Carboniferous outcrops throughout the Iberian Ranges as shown on the outcrop map illustrated in Figure 2b. The target zone is the La Hoz Formation, a thick marine shale section interbedded with hemipelagic limestones and thin sandstones beds as shown in the Montalban outcrop section illustrated in Figure 2b. This formation represents sediments prograding northwards into a deep marine basin. At the base of Well El Gredal 1, located to the south of the permit, a fissile organic rich shale unit was penetrated and is interpreted to be Carboniferous, as shown in Figure 2c.

Stratigraphic columns of the Jurassic section of the Iberian Ranges are illustrated in Figure 2d. The potential shale reservoir zone in this interval is the Turmiel Formation, a widespread marly shale that was deposited on an open relatively deep platform. In well Castelfrio 1 located on the Edison Permit, a thick organic rich marly shale can be identified on the lithology log illustrated in Figure 2e. Through this interval, samples are described as black, carbonaceous and pyritic.

Resource Determination

Resource determination was done for the Edison permit in the North Alamazon Basin for two prospective shale gas reservoir zones, the Carboniferous and Jurassic. Multiplying the average shale gas content (SCF/ton), shale density (g/cc), area (ac), average reservoir thickness (ft.) and resource volumes will deterministically calculate petroleum initially-in-place (gas). Best, low and high estimates were established for both zones on the permit based on a Monte Carlo simulation using a reasonable range of values for gas content, shale density, reservoir thickness, areal extent and recovery factor.

The Jurassic organic rich shale section has a wide regional extent in the Iberian Ranges so it was assumed that this interval completely underlain the permits and that the area parameter was considered to be a constant for each permit. However, the Carboniferous shale section is missing from the Castelfrio-1 well located on the Edison Permit although present in the El Gredal-1 well to the south. This results in uncertainty as to how much of the Edison permit is underlain by the Carboniferous shale section. For the high estimate case of the Edison Permit, it was assumed that 60% of the permit had this interval, for the low estimate case, 15% was assumed and 30% for the best estimate case.

Typical gas content values reported for Appalachian Basin Devonian shale is 50 SCF/ton for this much studied interval. This value was used as the best estimate case (P50) for the Carboniferous shale interval. For the low estimate case (P10), a value of 20 SCF/ton was used as a minimum value and for the high estimate case (P90), a value of 100 SCF/ton was used, twice that of the best estimate case but still a reasonable value for these types of Paleozoic shale gas intervals.

In the case of the Jurassic shale, reported nearby outcrop TOC value in this zone is 1%. For this reason, gas content values were assumed in general to be lower than the Carboniferous section and 50 SCF/ton was used for the high estimate case. A value of 20 SCF/ton was used for the low estimate case with a midpoint value of 35 SCF/Ton for the best estimate case.

Bulk density values for both shale zones range from a low estimate 2.6 g/cc to a high estimate of 2.4 g/cc, typical values for Devonian gas shale. The high estimate implies a high total organic content (TOC). Organic content has a low density so that high volumes of organic content results in a low bulk density value for the shale.

For the thickness parameter of the Carboniferous shale interval, it is known that the organic rich La Hoz Formation has an outcrop thickness of 250 m at the Puig Moreno locality in the Iberian Ranges. To the south of the permit, well El Gredal has 80 m of silty organic shale at the base of the wellbore and did not fully penetrate this interval. For the best estimate case, a value of 200 ft. was used. For the low estimate case, a value of 100 ft. was used and for the high estimate case, a value 300 ft. was used as a reasonable range of values for this zone.

For the Jurassic zone, the organic rich zone has an 825 ft. gross section and 665 ft. net section in well Castelfrio-1 located on the Edison Permit as illustrated in Figure 2e. This same section has a reported outcrop thickness of 480 ft. of organic rich marl south of the Edison Permit. Because of the thickness of this zone, a value of 200 ft. was used for the best estimate case, a value of 100 ft. for the low estimate case and a value of 400 ft. for the high estimate case.

Recovery factor data implemented in the statistical analysis has been derived from published information, as presented in Appendix A at the end of the report.

A summary of resource estimates for the permits is presented in Table 2 and a graphical representation of the Monte Carlo simulation for each shale.

Table 1

Schedule of Lands, Interests and Royalty Burdens

1 June, 2014

R2 Energy Ltd.

North Almazon Basin, Spain

					Appraised Interest		Royalty Burdens
Description		Rights Owned	Gross Acres	Working %		Royalty %	Basic %		Overriding %
Edison Permit	[1]	[A]	190,400	100.0000		-	-	[2]	-
		Total	190,400
General Notes :	[1]	The Edison Permit is currently in the application process with the Government of Spain.
	[2]	No royalties assessed by national or regional governments,
Rights Owned :	[A]	All P&NG

Table 2

Summary of Resource Estimates
1 June, 2014

North Almazon Basin, Spain

Description		Gas Content (SCF/ton)	Bulk Density (g/cc)	Net Pay (ft)	Area (ac)	Recoverable Gas (BCF)	Reference
Best Estimate
Edison Permit	Carboniferous	50	2.50	200	57,120	623	Table 2a
Edison Permit	Jurassic	35	2.50	250	190,400	1,672	Table 2b
	Total Best Estimate					2,295
Low Estimate
Edison Permit	Carboniferous	20	2.60	100	28,560	137	Table 2a
Edison Permit	Jurassic	20	2.60	125	190,400	585	Table 2b
	Total Low Estimate					722
High Estimate
Edison Permit	Carboniferous	100	2.40	300	114,240	1.668	Table 2a
Edison Permit	Jurassic	50	2.40	500	190,400	3,341	Table 2b
	Total High Estimate					5,009

APPENDIX A

Conversion of the PIIP (gas) to a Prospective Resource (recoverable gas) has been accomplished through a statistical analysis incorporated into the Monte Carlo model utilized throughout the report.

Recovery Factor data for the statistical distribution has been extracted from a published study prepared by Advanced Resource International Inc. in April 2011 for the US Energy Information Administration.

The attached "Appendix A" extracted from that study presents the "Risked Gas-In-Place" and the "Technically Recoverable Resource" estimated for the majority of the known unconventional shale gas reservoirs around the world, outside the USA. The expected recovery factor from each formation has been derived from those relative values and the distribution of the results was input into the Monte Carlo Resource model.

GLOSSARY OF TERMS

(Abbreviations & Definitions)

General

BIT

-

Before Income Tax

AIT

-

After Income Tax

M$

-

Thousands of Dollars

Effective Date

-

The date for which the Present Value of the future cash flows and reserve categories are established

$US

-

United States Dollars

WTI

-

West Texas Intermediate — the common reference for crude oil used for oil price comparisons

ARTC

-

Alberta Royalty Tax Credit

GRP

-

Gas Reference Price

Interests and Royalties

BPO

-

Before Payout

APO

-

After Payout

APPO

-

After Project Payout

Payout

-

The point at which a participant's original capital investment is recovered from its net revenue

GORR

-

Gross Overriding Royalty — percentage of revenue on gross revenue earned (can be an interest or a burden)

NC

-

New Crown — crown royalty on petroleum and natural gas discovered after April 30, 1974

SS 1/150 (5%-15%) Oil

-

Sliding Scale Royalty — a varying gross overriding royalty based on monthly production. Percentage is calculated as 1-150^th of monthly production with a minimum percentage of 5% and a maximum of 15%

FH

-

Freehold Royalty

P&NG

-

Petroleum and Natural Gas

Twp

-

Township

Rge

-

Range

Sec

-

Section

Technical Data

psia

-

Pounds per square inch absolute

MSTB

-

Thousands of Stock Tank Barrels of oil (oil volume at 60 F and 14.65 psia)

MMscf

-

Millions of standard cubic feet of gas (gas volume at 60 F and 14.65 psia)

Bbls

-

Barrels

Mbbls

-

Thousands of barrels

MMBTU

-

Millions of British Thermal Units — heating value of natural gas

STB/d

-

Stock Tank Barrels of oil per day — oil production rate

Mscf/d

-

Thousands of standard cubic feet of gas per day — gas production rate

GOR (scf/STB)

-

Gas-Oil Ratio (standard cubic feet of solution gas per stock tank barrel of oil)

mKB

-

Metres Kelly Bushing — depth of well in relation to the Kelly Bushing which is located on the floor of the drilling rig. The Kelly Bushing is the usual reference for all depth measurements during drilling operations.

FOR

-

Enhanced Oil Recovery

GJ

-

Gigajoules

Marketable or Sales

-

Natural gas that meets specifications for its sale, whether it occurs naturally or results from the processing of raw natural gas. Field and plant fuel and losses to the point of the sale must be excluded from the marketable quantity. The heating value of marketable natural gas may vary considerably, depending on its composition; therefore, quantities are usually expressed not only in volumes but also in terms of energy content. Reserves are always reported as marketable quantities.

NGLs

-

Natural Gas Liquids — Those hydrocarbon components that can be recovered from natural gas as liquids, including but not limited to ethane, propane, butanes, pentanes plus, condensate, and small quantities of non-hydrocarbons.

Raw Gas

-

Natural gas as it is produced from the reservoir prior to processing. It is gaseous at the conditions under which its Volume is measured or estimated and may include varying amounts of heavier hydrocarbons (that may liquefy at atmospheric conditions) and water vapour; may also contain sulphur and other non-hydrocarbon compounds. Raw natural gas is generally not suitable for end use.

EUR

-

Estimated Ultimate Recovery