17.

SUPPLEMENTARY INFORMATION ON OIL AND GAS RESERVES (UNAUDITED)

The following supplemental information regarding the Company’s oil and gas activities is presented pursuant to the disclosure requirements promulgated by the U.S. Securities and Exchange Commission (“SEC”) and ASC 932, Extractive Activities - Oil and Gas, (“ASC 932”).

Users of this supplemental information should be aware that the process of estimating quantities of “proved” and “proved developed” oil reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for the reservoir. The data for a reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, revisions to existing reserve estimates may occur from time to time. Although every reasonable effort is made to ensure reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variances in available data for various reservoirs make these estimates generally less precise than other estimates included in the financial statement disclosures. Proved reserves represent estimated quantities of natural gas and crude oil that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions in effect when the estimates were made. Proved developed reserves are proved reserves expected to be recovered through wells and equipment in place and under operating methods used when the estimates were made.

Under current SEC standards, “Proved Reserves” are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

Under current SEC standards, the term “Reasonable Certainty” if deterministic methods are used, implies a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (“EUR”) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease. Reasonable certainty can be established using techniques that have been proved effective by actual production from projects in the same reservoir or an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty.

Under current SEC standards, “Reliable Technology” is a grouping of one or more technologies (including computational methods) that have been field tested and have demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

Estimated Oil and Gas Reserve Quantities of Proved Developed and Proved Undeveloped Reserves

The following table illustrates the Company’s estimated net proved reserves for the periods indicated, as estimated by third party reservoir engineers. The Company’s oil reserves are attributable solely to properties within Alberta, Canada. The following table discloses, in the aggregate, the Company’s estimated reserves on the Company’s Sawn Lake oil sands properties located in the Peace River oil sands area of Alberta, Canada, as of September 30, 2015, based on estimated constant prices and cost assumptions. As of September 30, 2015, the Company is reporting no reserves.

Oil (Bitumen)

Natural Gas

Total

Gross ⁽¹⁾ (Mbbl)

Net ⁽²⁾ (Mbbl)

Gross (Mmcf)

Net (Mmcf)

BOE (MBOE)

Proved developed and undeveloped reserves:

Beginning of year - as of September 30, 2014

571

530

–

571

Revisions of previous estimates

(545

)

(504

)

(545

)

Improved recovery

–

Purchases of minerals in place

–

Extensions and discoveries

–

Production

(26

)

(26

)

–

(26

)

Sales of minerals in place

–

End of year - as of September 30, 2015

–

Proved developed reserves:

as of September 30, 2014

571

530

–

571

as of September 30, 2015

–

⁽¹⁾Gross Reserves – are defined as the Company’s working interest reserves (operating or non-operating) before deduction of royalties.

⁽²⁾Net Reserves – are defined as the Company’s working interest reserves (operating or non-operating) after deduction of royalties.

As of September 30, 2015, the Company is reporting no reserves based on the following revisions of its previous year’s proved reserve estimates:

Revisions of previous estimates – are revisions that represent changes in previous estimates of proved reserves, either upward or downward, resulting from new information (except for an increase in proved acreage) normally obtained from development drilling and production history or resulting from a change in economic factors. The Company was not assigned any proved reserves on its properties; therefore the Company recorded a reduction in the Company’s reserves of approximately 545,000 barrels.

Improved recovery – are changes in reserve estimates resulting from application of improved recovery techniques. The Company did not report any additions under improved recovery of proved.

Purchases of minerals in place – The Company did not report any property acquisitions whereby the Company purchased any properties with proved reserves or any reserves.

Extensions and discoveries – are additions to proved reserves that result from (1) extension of the proved acreage of previously discovered reservoirs through additional drilling in periods subsequent to discovery and (2) discovery of new fields with proved reserves or of new reservoirs of proved reserves in old fields. The Company did not report any additions under extensions or discoveries of proved reserves or any reserves.

Production – are downward revisions associated with actual production. The Company’s first SAGD well pair began producing oil on September 16, 2014 and continued to produce throughout the year. The Company recorded a reduction in the Company’s reserves of approximately 26,000 barrels.

Sales of minerals in place – For the year ended September 30, 2015, the Company did not report any sale of its properties of which had proved reserves.

Standardized Measure of Discounted Future Net Cash Flows Related to Proved Oil and Gas Reserve Quantities

The following table discloses, in the aggregate, the Company’s estimated net present value of future cash flows attributable to the Company’s estimated oil reserves on the Company’s Sawn Lake oil sands properties located in the Peace River oil sands area of Alberta, Canada, as of September 30, 2015, based on estimated constant prices and cost assumptions. The future cash flow estimate set forth below are estimates only and the actual realized cash flow may be greater or less than those calculated and should not be considered as representative of the current value of the Company. As of September 30, 2015, the Company is reporting no proved reserves:

	As of		As of
In Thousands	September 30, 2015		September 30, 2014

Future cash inflows	$	–	$	31,062
Future Royalties		–		(2,456	)
Future Operating costs		–		(13,040	)
Future Development Costs		–		(8,586	)
Future Abandonment Costs		–		(161	)
Future income tax expenses		–		–
Future net cash flows	$	–	$	6,819
10% annual discount for estimated timing of cash flows		–		(4,919	)
Standardize measure of discounted future net cash flows	$	–	$	1,900

Changes in the Standardized Measure of Discounted Cash Flows Related to Proved Oil and Gas Reserve Quantities

The Company’s independent third party qualified reserves evaluator, DeGolyer and MacNaughton Canada Limited (“DeGolyer”), was engaged by the Company to independently evaluate the Company’s properties. DeGolyer was unable to assign SEC reserves as of September 30, 2015 to the Company’s properties, as a result of pricing and operational issues. Therefore, DeGolyer did not prepare an update to the Company’s previous reserves report entitled, “Appraisal Report as of September 30, 2014 on the Proved and Probable Reserves of the Sawn Lake Property owned by Deep Well Oil & Gas, Inc. in Canada SEC Case” dated January 9, 2015.