AMERICAS PETROGAS INC.
STATEMENT OF RESERVES DATA
AND OTHER OIL AND GAS INFORMATION
(Form 51-101F1)
Statement Date: April 28, 2016
Preparation Date: March 7, 2016
Effective Date: December 31, 2015
-1-
ABBREVIATIONS AND CONVERSION
In this document, the abbreviations set forth below have the following meanings:
Oil and Natural Gas Liquids
Bbl
Bbls
Mbbls
MMbbls
MSTB
Bbls/d
NGLs
STB
STB/d
barrel
barrels
thousand barrels
million barrels
1,000 stock tank barrels
barrels per day
natural gas liquids
stock tank barrels of oil
stock tank barrels of oil per day
Natural Gas
Mscf
MMscf
Mscf/d
MMscf/d
MMBTU
Bscf
GJ
thousand standard cubic feet
million standard cubic feet
thousand standard cubic feet per day
million standard cubic feet per day
million British Thermal Units
billion standard cubic feet
gigajoule
Other
BIT
AIT
BOE
BOE/d
m3
$M
WTI
Before Income Tax
After Income Tax
barrel of oil equivalent on the basis of 1 BOE to 6 Mscf of natural gas. BOEs may be
misleading, particularly if used in isolation. A BOE conversion ratio of 1 BOE for 6 Mscf is
based on an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.
barrel of oil equivalent per day
cubic metres
thousands of U.S. dollars, unless otherwise noted
West Texas Intermediate, the reference price paid in U.S. dollars at Cushing,
Oklahoma for crude oil of standard grade
MONETARY REFERENCES
All monetary references contained in this Statement of Reserves Data and Other Oil and Gas Information
are in United States dollars unless otherwise specified.
FORWARD LOOKING STATEMENTS
This Statement of Reserves Data and Other Oil and Gas Information contains forward-looking
statements. These statements relate to future events or Americas Petrogas Inc.’s ("API" or "Americas
Petrogas” or the “Company") future performance. All statements other than statements of historical fact
are forward-looking statements.
In some cases, forward-looking statements can be identified by
terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “continue”, or the negative of these terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. Undue reliance should not be placed
on these forward-looking statements, as there can be no assurance that the plans, intentions or
expectations upon which they are based will occur. By its nature, forward-looking information involves
numerous assumptions, known and unknown risks and uncertainties, both general and specific, that
contribute to the possibility that the predictions, forecasts, projections and other forward-looking
statements will not occur.
Although API believes that the expectations reflected in the forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to be correct. API cannot guarantee future
results, levels of activity, performance, or achievements. Moreover, API does not assume responsibility
for the accuracy and completeness of the forward-looking statements.
Statements relating to “reserves” or “resources” are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and assumptions, which the resources and
reserves described can be profitably produced in the future. All forward-looking statements contained in
-2-
this Statement of Reserves Data and Other Oil and Gas Information are expressly qualified by this
cautionary statement. API is not under any duty to update any of the forward-looking statements after
the date hereof to conform such statements to actual results or to changes in API’s expectations.
Part 1 – Date of Statement
This statement of reserves data and other oil and gas information is dated April 28, 2016. The effective
date is December 31, 2015. The preparation date is March 7, 2016.
Part 2 – Disclosure of Reserves Data
The following is a summary prepared in accordance with National Instrument 51-101 (“NI 51-101”) of the
oil and natural gas reserves and the value of future net revenue of Americas Petrogas as evaluated by
Chapman Petroleum Engineering Ltd., an independent engineering consulting firm located in Calgary,
Alberta, as at December 31, 2015, and dated March 7, 2016 (the "Chapman Report"). The reserves
information contained in the Chapman Report was prepared and is presented in accordance with the
requirements of NI 51-101.
In preparing the Chapman Report, Chapman obtained basic information from API, which included land
data, well information, geological information, reservoir studies, estimates of on-stream dates, contract
information, current hydrocarbon product prices, operating cost data, capital budget forecasts, financial
data and future operating plans. Other economic data required to conduct the evaluation and upon which
the Chapman Report is based, were obtained from Chapman’s non-confidential files.
The following tables, based on the Chapman Report, have been compiled by the Company and show the
estimated share of America Petrogas’ reserves and the net present value of estimated future net revenue
for these reserves, using forecast prices and costs as indicated. All evaluations of future revenue are
after the deduction of future income tax expenses, unless otherwise noted in the tables, royalties,
development costs, production costs and well abandonment costs but before consideration of
indirect costs such as administrative, overhead and other miscellaneous expenses. The
estimated future net revenue contained in the following tables do not necessarily represent the
fair market value of the Company's reserves. There is no assurance that the forecast price and
cost assumptions contained in the Chapman Report will be attained and variances could be
material. Other assumptions and qualifications relating to costs and other matters are included in
the Chapman Report. There are numerous uncertainties inherent in estimating quantities of
reserves and future cash flows attributed to such reserves. The recovery and reserves estimates
on the Company's properties described herein are estimates only. The actual reserves on the
Company's properties may be greater or less than those calculated.
In general, estimates of economically recoverable crude oil reserves and the future net cash flows
therefrom are based upon a number of variable factors and assumptions, such as historical production
from the properties, production rates, ultimate reserve recovery, timing and amount of capital
expenditures, marketability of crude oil, royalty rates, the assumed effects of regulation by governmental
agencies and future operating costs, all of which may vary materially from actual results. For those
reasons, among others, estimates of the economically recoverable crude oil reserves attributable to any
particular group of properties, classification of such reserves based on risk of recovery and estimates of
future net revenues associated with reserves may vary and such variations may be material. The actual
production, revenues, taxes and development and operating expenditures with respect to the reserves
may vary from the information presented herein and such variations could be material.
References to oil, gas, natural gas liquids, reserves (gross, net, proved, probable, possible,
developed, developed producing, developed non-producing, undeveloped), constant prices and
costs, forecast prices and costs, operating, costs, development costs, future net revenue and
future income tax expenses shall, unless expressly stated to be to the contrary, have the meaning
attributed to such terms as set out in National Instrument 51-101, Companion Policy 51-101CP and
all forms referenced therein.
-3-
The estimates of reserves and future net revenue for individual properties may not reflect the same
confidence level as estimates of reserves and future net revenue for all properties, due to the effects of
aggregation. In certain of the tables set forth below, the columns may not add due to rounding.
Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation.
A boe conversion ratio of 6 Mscf:1 Bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Summaries of reserves and net present value of future net revenues are presented on the basis of
forecast prices and costs, all as more particularly set out under the heading “Pricing Assumptions”. All of
America Petrogas’ oil and gas properties are located in Argentina.
SUMMARY OF OIL AND GAS RESERVES
BASED ON FORECAST PRICES AND COSTS
AS AT DECEMBER 31, 2015
Company Reserves(1)
Light and
Medium Oil
Gross
Net
MSTB
MSTB
Reserves Category
PROVED
Developed Producing(2)(6)
Developed Non-Producing(2)(7)
Undeveloped(2)(8)
TOTAL PROVED(2)
TOTAL PROBABLE(3)
TOTAL PROVED + PROBABLE(2)(3)
TOTAL POSSIBLE(4)
TOTAL PROVED + PROBABLE + POSSIBLE
Natural Gas(9)
Gross
Net
MMscf
MMscf
Heavy Oil
Gross
Net
MSTB
MSTB
Natural Gas Liquids
Gross
Net
Mbbl
Mbbl
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
656
1,312
1,968
1,491
3,459
0
505
1,010
1,515
1,148
2,663
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
5,103
8,562
3,929
6,592
0
0
0
0
SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE
BASED ON FORECAST PRICES AND COSTS
AS AT DECEMBER 31, 2015
Net Present Values of Future Net Revenue
Before Income Tax
After Income Tax
Discounted at
Discounted at
Reserves Category
PROVED
Developed Producing(2)(6)
Developed NonProducing(2)(7)
Undeveloped(2)(8)
TOTAL PROVED(2)
TOTAL PROBABLE(3)
TOTAL PROVED +
PROBABLE(2)(3)
TOTAL POSSIBLE(4
TOTAL PROVED +
PROBABLE + POSSIBLE
0%/yr
5%/yr.
10%/yr.
15%/yr.
20%/yr.
0%/yr
5%/yr.
10%/yr.
15%/yr.
20%/yr.
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
-
-
-
-
-
-
-
-
-
-
1,412
1,187
1,003
852
726
862
696
561
451
360
2,491
3,902
3,944
1,920
3,107
2,818
1,489
2,492
2,065
1,155
2,007
1,542
893
1,619
1,168
1,510
2,372
2,431
1,088
1,784
1,636
773
1,334
1,113
530
982
756
342
702
507
7,846
5,925
4,557
3,549
2,786
4,803
3,420
2,447
1,737
1,209
19,949
14,858
11,527
9,218
7,541
12,596
9,318
7,144
5,641
4,556
27,795
20,782
16,084
12,767
10,327
17,399
12,738
9,591
7,378
5,765
-4-
TOTAL FUTURE NET REVENUE
(UNDISCOUNTED)
BASED ON FORECAST PRICES AND COSTS
AS AT DECEMBER 31, 2015
Total Proved(2)
Total Proved Plus
Probable(2)(3)
Total Proved Plus
Probable Plus
Possible(4)
Revenue
($M)
Royalties
($M)
Operating
Costs
($M)
Development
Costs
($M)
Abandonment
and
Reclamation
Costs
($M)
Future
Net Revenue
Before
Income Taxes
($M)
Income Taxes
($M)
Future
Net
Revenue After
Income Taxes
($M)
11,807
2,716
3,077
2,025
87
3,902
(1,530)
2,372
20,754
4,773
4,444
3,555
135
7,846
(3,043)
4,803
51,369
11,815
6,704
4,779
277
27,795
(10,396)
17,399
FUTURE NET REVENUE BY PRODUCTION GROUP
BASED ON FORECAST PRICES AND COSTS
AS AT DECEMBER 31, 2015
Reserve Category
Total Proved
(2)
Total Proved Plus
Probable(2)(3)
Total Proved Plus Probable
Plus Possible(4)
Product Type
Light and Medium Oil (including solution gas and other
by-products)
Heavy Oil (including solution gas and other by-products)
Natural Gas (including by-products but not solution gas)
Total Proved
Light and Medium Oil (including solution gas and other
by-products)
Heavy Oil (including solution gas and other by-products)
Natural Gas (including by-products but not solution gas)
Total Proved Plus Probable
Light and Medium Oil (including solution gas and other
by-products)
Heavy Oil (including solution gas and other by-products)
Natural Gas (including by-products but not solution gas)
Total Proved Plus Probable Plus Possible
Future Net Revenue
Before Income Taxes
(Discounted at
10%/Year)
($M)
Unit Value @ 10%/yr
0
N/A
0
2,492
2,492
N/A
1.64
0
N/A
0
4,557
4,557
N/A
1.71
0
N/A
0
16,084
16,084
N/A
2.44
OIL AND GAS RESERVES AND NET PRESENT VALUES BY PRODUCTION GROUP
BASED ON FORECAST PRICES AND COSTS
AS AT DECEMBER 31, 2015
Reserves
Oil
Product Type by Reserve
Category
Assoc & Non-Assoc Gas
Proved
Developed Producing
Developed Non-Producing
Undeveloped
Total Proved
Probable
Proved Plus Probable
Possible
Proved + Probable + Possible
Gross
MSTB
Net
MSTB
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Gas(9)
Gross
Net
MMscf
MMscf
0
656
1,312
1,968
1,491
3,459
5,103
8,562
-5-
0
505
1,010
1,515
1,148
2,663
3,929
6,592
Gross
Mbbl
Net
Mbbl
Net Present
Value (BIT)
10%
M$
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,003
1,489
2,492
2,065
4,557
11,527
16,084
NGL
Unit Values
@ 10%/yr
N/A
1.99
1.47
1.64
1.80
1.71
2.93
2.44
Notes:
1. "Gross Reserves" are the Company's working interest (operating or non-operating) share before deducting of royalties and
without including any royalty interests of the Company. "Net Reserves" are the Company's working interest (operating or nonoperating) share after deduction of royalty obligations, plus the Company's royalty interests in reserves.
2. "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that
the actual remaining quantities recovered will exceed the estimated proved reserves.
3. "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely
that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable
reserves.
4. "Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely
that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible
reserves.
5. "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if
facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put
the reserves on production.
6. "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the
time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production,
and the date of resumption of production must be known with reasonable certainty.
7. "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on
production, but are shut in, and the date of resumption of production is unknown.
8. "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant
expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They
must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.
9. Includes associated, non-associated and solution gas where applicable.
Part 3 - Pricing Assumptions
The following information details the benchmark reference prices for the regions in which the Company
operated, as at December 31, 2015, reflected in the reserves data disclosed above under “Part 2 –
Disclosure of Reserves Data”.
Natural gas pricing in Argentina is government controlled. In all cases a constant forecast price of
$6.00/Mscf has been assumed, based on information provided by the Company regarding gas pricing in
this area.
During the year ended December 31, 2015, the Company’s weighted average prices received for oil this
fiscal year was Cdn$95.48/STB. The Company did not have any natural gas sales during the year ended
December 31, 2015.
The Company sold its main producing property in 2015. The Vaca Mahuida property is now the only
property where any reserves have been assigned. This property has only natural gas reserves attributed
to it.
Part 4 – Reconciliation of Changes in Reserves
The following table sets forth a reconciliation of the changes in the Company's gross proved, probable,
and possible reserves as at December 31, 2015 against such reserves as at December 31, 2014 based
on the forecast price and cost assumptions:
-6-
RECONCILIATION OF COMPANY GROSS
RESERVES BY PRINCIPAL PRODUCT TYPE
BASED ON FORECAST PRICES AND COSTS
Light and Medium Oil
Gross
Proved
(Mbbl)
At December31, 2014
2,606
Technical revisions
0
0
0
0
0
3,832
19,877
23,710
25,137
48,846
- -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(511)
822
310
533
844
- -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,355)
(4,071)
(6,425)
-
-
-
-
-
(1,353)
Discoveries
Dispositions
(4)
Economic Factors
Production(Sales)
At December 31, 2015
Notes:
(1)
(2)
(3)
(4)
Gross
Probable
(MMscf)
Gross
Proved
Gross
Plus
Proved
Probable
Plus
Gross
Plus
Probable Possible Possible
(MMscf) (MMscf) (MMscf)
16,421
-
4,071
Gross
Proved
Gross
Plus
Proved
Probable
Gross
Gross
Plus
Gross
Plus
Gross
Proved Probable Probable Possible Possible Proved
(Mbbl)
(Mbbl)
(Mbbl)
(Mbbl)
(Mbbl) (MMscf)
9,745
(3)
Acquisitions
Gross
Proved
Gross
Plus
Proved
Probable
Gross
Plus
Gross
Plus
Probable Probable Possible Possible
(Mbbl)
(Mbbl)
(Mbbl)
(Mbbl)
Associated and Non-Associated Gas
6,676
Extensions & Improved
Recovery(1)
(2)
Heavy Oil
- -
(9,745) (16,170)
(19,208) (20,561) (20,567) (41,128)
-
-
-
-
-
-
-
-
-
-
-
-
-
251
-
251
-
251
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,968
1,491
3,459
5,103
8,562
Extensions and improved recovery are reserves that have been attributed to the continued development of existing pools. Changes in
this category reflect changes to the model of future development wells.
Technical revisions are related to an updated understanding of the various reservoirs, and revisions to the production forecast models.
Discoveries are reserves attributed to new pools that were the result of drilling exploratory wells.
Dispositions relate to a reduction in the Company’s working interest. During the year ended December 31, 2015, the Company
relinquished its interest in two oil and gas blocks and disposed of its interest in a number of other oil and gas blocks to Tecpetrol
International S.A. and Tecpetrol Internacional S.L. (Unipersonal).
Part 5 – Additional Information Relating to Reserves Data
Undeveloped Reserves
The following table sets forth the Company’s volumes of proved undeveloped net reserves that were first
attributed for each of the Company’s product types for the most recent three financial years and in the
aggregate before that time:
Aggregate prior to 2013
2013
2014
2015
Light and Medium
Oil
(Mbbl)
686
627
850
(2,163)
Heavy Oil
(Mbbl)
0
0
0
0
Natural Gas
(MMscf)
494
775
(670)
713
Natural Gas
Liquids
(Mbbl)
0
0
0
0
The following table sets forth the Company’s volumes of probable undeveloped net reserves that were
first attributed for each of the Company’s product types for the most recent three financial years and in
the aggregate before that time:
Aggregate prior to 2013
2013
2014
2015
Light and Medium
Oil
(Mbbl)
1,466
(220)
2,617
(3,863)
Heavy Oil
(Mbbl)
0
0
0
0
-7-
Natural Gas
(MMscf)
40,118
300
(20,597)
(18,880)
Natural Gas
Liquids
(Mbbl)
0
0
0
0
The following discussion generally describes the basis on which the Company attributes Proved and
Probable Undeveloped reserves and its plans for developing those Undeveloped Reserves.
Proved Undeveloped natural gas Reserves are located in Vaca Mahuida, and have been assigned as
follows:

2 redrill locations at LGr.x-1 to exploit the Loma Montosa and Sierras Blancas zones independently
of the LGr.x-1 wellbore, which will produce the Centenario (all three zones are tested in this
wellbore).
Subject to receiving an exploitation concession from the government, the Company plans to perform testing
of two wells on Vaca Mahuida in order to evaluate whether to develop the proved undeveloped reserves, as
part of the Vaca Mahuida field development.
Probable Undeveloped natural gas reserves are located in Vaca Mahuida, and are assigned as follows:

One step out location on the LFe.x-1 structure.
Subject to receiving an exploitation concession from the government, the Company plans to perform testing
of two wells on Vaca Mahuida in order to evaluate whether to develop the probable undeveloped reserves,
as part of the Vaca Mahuida field development.
Significant Factors or Uncertainties
Significant economic factors and uncertainties that affect the Company’s reserves data include:
•
•
•
High operating costs in the Company’s operating environment;
Government controls over product prices; and
Increasing government royalties.
All of these factors have been accounted for in the engineering report, to the best degree possible, with
information available at the effective date.
Another significant uncertainty is whether the Company will obtain exploitation concessions from the
government.
The estimation of reserves requires significant judgment and decisions based on available geological,
geophysical, engineering and economic data. These estimates can change substantially as additional
information from ongoing development activities and production performance becomes available and as
economic and political conditions impact oil and gas prices and costs change. The Company’s estimates
are based on current production forecast, prices and economic conditions. The Company’s reserves are
evaluated by Chapman Petroleum Engineering Ltd., an independent engineering firm.
As circumstances change and additional data becomes available, reserve estimates also change. Based
on new information, reserves estimates are reviewed and revised, either upward or downward, as
warranted. Revisions are often required due to changes in well performance, prices, economic conditions
and governmental restrictions.
Although every reasonable effort has been made by the Company to ensure that reserves estimate are
accurate, revisions may arise as new information becomes available. Such revisions can be either
positive or negative. As new geological, production and economic data is incorporated into the process of
estimating reserves the accuracy of the reserve estimate improves. The reserve estimates of Americas
Petrogas’ reserves provided in this Statement of Reserves Data and Other Oil and Gas Information are
estimates only and there is no assurance or guarantee that the estimated reserves will be recovered.
Actual reserves may be greater or less than the estimates provided herein.
-8-
Future Development Costs
The following table shows the development costs anticipated in the next five years, which have been
deducted in the estimation of the future net revenues of the proved, proved plus probable, and proved
plus probable plus possible reserves.
Total Proved
Estimated Using
Forecast Prices
and Costs
(Undiscounted)
($M)
2,025
0
0
0
0
2,025
0
2,025
2016
2017
2018
2019
2020
Total for five years
Remainder
Total for all years
Total Proved
Plus Probable
Estimated
Using Forecast
Prices and
Costs
(Undiscounted)
($M)
2,025
1,530
0
0
0
3,555
0
3,555
The Company’s current cash position is sufficient to cover the above future development costs. The effect
of the costs of the expected funding would have no impact on the revenues or reserves currently being
reported.
Part 6 – Other Oil and Gas Information
Oil and Gas Properties and Wells
All of the Company’s concessions are located onshore in the Neuquén Basin of Argentina and are
distributed in the three Provinces of Neuquén, La Pampa and Rio Negro. The most important property in
terms of possible near-term future production is Vaca Mahuida.
In Argentina, general rules require that when an exploration period ends on a block that is under an
exploration permit, relinquishment of 50% of the block acreage is required unless commerciality is
declared and the exploitation concession is requested and subsequently granted. However, these general
rules are subject to modification through discussion with the appropriate government body.
The following table sets out information in respect of the Company’s Argentine oil and gas properties as
at December 31, 2015.
Concession
Approximate
Gross Acres
Approximate
Net Acres
Participating
Interest
Prospective for
Unconventional/
Conventional
Type of
Concession
Totoral(1)
Loma Ranqueles(1)
Huacalera(1)(2)
Rinconada Norte(1)(3)
Vaca Mahuida(4)
TOTAL
200,900
33,300
249,900
23,500
232,800
740,400
180,810
8,325
48,731
8,225
58,200
304,291
90%
25%
19.5%
35%
25%
Both
Both
Both
Conventional
Conventional
Exploration
Exploration
Exploration
Exploitation
Exploration
Notes:
(1)
(2)
(3)
(4)
Property with no attributed reserves.
The Company is in discussions to modify the commitments associated with the Huacalera block, including the due date
and work requirements. Discussions are ongoing but any modifications to the commitments are likely to include a partial
relinquishment of acreage.
Subsequent to December 31, 2015, the Company disposed of its interest in the Rinconada Norta block.
Subsequent to December 31, 2015, the Company increased interest in the Vaca Mahuida block to 50%.
-9-
The following table sets forth the number of wells in which the Company held a working interest as at
December 31, 2015:
Oil
Gross(1)
Net(2)
-
-
Vaca Mahuida Block
Producing
Non-producing
Natural Gas
Gross(1)
Net(2)
3
0.75
[1] Total number of wells in which the Company has a working interest.
[2] Total number of wells in which the Company has a working interest multiplied by the Company working interest in each well.
Vaca Mahuida block
The Vaca Mahuida block is 942 square kilometers or 232,800 acres gross.
Upon closing of the transaction involving the sale of Petrogas Argentina on August 28, 2015, the
Company retained its 25% interest in the Vaca Mahuida block. The Company acquired an additional 25%
working interest in the Vaca Mahuida block in April 2016 for $nil consideration, bringing the Company’s
working interest to a total of 50%. Also, as part of the acquisition of the additional working interest, the
Company acquired operatorship of the block from the previous operator.
In 2010, the Company, in conjunction with its partner at that time, drilled five exploration wells and applied
to the Rio Negro provincial government for an exploitation concession on the entire Vaca Mahuida block.
The application remains pending.
The wells on the Vaca Mahuida block are approximately 15 Km from a regional gas pipeline and
treatment plant.
Properties with No Attributed Reserves
The following table sets forth the gross and net acres of unproved properties held by Americas Petrogas
as at December 31, 2015.
Concession
Totoral
Loma Ranqueles
Huacalera
Rinconada Norte(3)
TOTAL
Notes:
(1)
(2)
(3)
UNPROVED PROPERTIES UNDEVELOPED LAND
(acres)
Gross(1)
Net(2)
200,900
180,810
33,300
8,325
249,900
48,731
23,500
8,225
507,600
246,091
“Gross Acres” are the total acres in which the Company has or had an interest.
“Net Acres” is the aggregate of the total acres in which the Company has or had an interest multiplied by the Company’s
working interest percentage held therein.
Subsequent to December 31, 2015, the Company disposed of its interest in the Rinconada Norte block.
The costs or work commitments associated with the Company’s non-producing properties are set out
below. The Company does not expect its rights to explore, develop and exploit any of its unproved
properties to expire in 2016.
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Totoral
No reserves have been assigned to the Totoral block. The Company has committed to drilling two
additional deep exploration wells on this block by September 2017 at an estimated cost of US$2.75
million each. The Company has a US$5.5 million performance bond for work commitments on Totoral.
The significant uncertainty on this block is the risk of finding commercially recoverable hydrocarbons. If
reserves were found, a new treatment plant would need to be built before significant production could
begin.
Loma Ranqueles
No reserves have been assigned to Loma Ranqueles. The Company and its joint venture partner have
committed to drilling an additional deep exploration well on this block by June 2017. The Company
estimates its share of costs for fulfilling the commitment obligations to be US$1.0 million. The Company
has a US$1.0 million performance bond for work commitments on Loma Ranqueles.
The significant uncertainty on Loma Ranqueles is the presence of commercial recoverable hydrocarbons
in the main zone of interest. If reserves were found, a new treatment plant would need to be built before
significant production could begin.
Huacalera
No reserves have been assigned to Huacalera.
The Company’s previous joint venturer on the block, Apache, had previously applied to the government
for a modification of the 2013 commitments on this block. However, the modification was not granted and
discussions are ongoing regarding the commitments. The Company believes that any amendments to the
commitments will involve relinquishment of some acreage. There are no immediate plans for this block at
this time.
The significant uncertainties on Huacalera include: the presence of commercial recoverable hydrocarbons
in the main zone of interest, the deliverability of hydrocarbons discovered, the type and quality of
hydrocarbons present, and the geological complexity of the block. If reserves were found, a new
treatment plant would need to be built before significant production could begin. As well, a pipeline would
need to be built to an estimated distance of 100 kilometers.
Significant Factors or Uncertainties Relevant to Properties with No Attributed Reserves
Other than as set out above, the Company does not anticipate any unusually high development costs or
operating costs, the need to build a major pipeline or other major facility before production of reserves
can begin, or contractual obligations to produce and sell a significant portion of production at prices
substantially below those which could be realized but for those contractual obligations.
Forward Contracts
Currently, the Company has no forward contracts related to future oil and gas pricing.
Tax Horizon
The Company is expecting to be taxable under all reserves forecasts presented in this report.
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Costs Incurred
The following table summarizes the capital expenditures made by the Company on oil and natural gas
properties for the year ended December 31, 2015.
Property Acquisition Costs
($M)
Proved Properties
Unproved Properties
-
-
Exploration Costs
($M)
Development Costs
($M)
Cdn$1,474
Cdn$1,311
Exploration and Development Activities
The Company did not drill or develop any additional reserves in the fiscal year.
Production Estimates
The following table sets forth the estimated production (working interest before royalties) from the
reserves of the Company for 2016 (12 months) associated with the future net revenue estimates reported
in the Chapman Report.
TOTAL PROVED RESERVES
AREA
Neuquen Basin, Argentina
Vaca Mahuida Block
Total for all areas
Light and Medium
Oil
(Mbbl)
Heavy Oil
(Mbbl)
Natural Gas
(MMscf)
Natural Gas
Liquids
(Mbbl)
0
0
0
0
0
0
0
0
TOTAL PROVED PLUS PROBABLE RESERVES
AREA
Neuquen Basin, Argentina
Vaca Mahuida Block
Total for all areas
Light and Medium
Oil
(Mbbl)
Heavy Oil
(Mbbl)
Natural Gas
(MMscf)
Natural Gas
Liquids
(Mbbl)
0
0
0
0
0
0
0
0
These values are gross to Company’s working interest before the deduction of royalties payable to
others.
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Production History
The following table sets forth certain information in respect of production, product prices received,
royalties, production costs and netbacks received by the Company for each quarter of its most recently
completed financial year:
Three Months
Ended March 31,
2015
Average Daily Production
Light and Medium Oil (Bbl/d)
Natural Gas (Mscf/d)
Average Net Prices Received
Light and Medium Oil ($/Bbl)
Natural Gas ($/Mscf)
Royalties
Light and Medium Oil ($/Bbl)
Natural Gas ($/Mscf)
Production Costs (Recovery)
Light and Medium Oil ($/Bbl)(1)(2)
Natural Gas ($/Mscf)
Netback Received
Light and Medium Oil ($/Bbl)
Natural Gas ($/Mscf)
Three Months
Ended June 30,
2015
Three Months
Ended September
30, 2015
Three Months
Ended December
31, 2015
1,379
-
980
-
401
-
-
Cdn$94.98
-
Cdn$93.75
-
Cdn$101.12
-
-
Cdn$15.57
-
Cdn$17.43
-
Cdn$19.58
-
-
Cdn$48.12
-
Cdn$47.93
-
Cdn$(518.94)
-
-
Cdn$31.29
Cdn$28.39
Cdn$600.48
-
Notes:
(1)
For the three months ended June 30, 2015, production costs are net of $4.97 per barrel of benefits from a Crude Oil Production Stimulus Program.
(2)
For the three months ended September 30, 2015, production costs are net of approximately $633.64 per barrel of Oil Plus benefits related to increasing production.
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