Ann: Exploration Well Testing Operations to Commence, page-6

2.1.3Project status and chance of commerciality

2.1.3.1Evaluators have the option to establish a more detailed resourcesclassification reporting system that can also provide the basis for portfoliomanagement by subdividing the chance of commerciality axis according to projectmaturity. Such sub-classes may be characterized qualitatively by the projectmaturity level descriptions and associated quantitative chance of reachingcommercial status and being placed on production.

2.1.3.2As a project moves to a higher level of commercial maturity in theclassification (see Figure 1.1 vertical axis), there will be anincreasing chance thatthe accumulation will be commercially developed and the project quantities moveto Reserves. For Contingent and Prospective Resources, this is furtherexpressed as a chance of commerciality, Pc, which incorporates the followingunderlying chance component(s):

A.The chance that the potential accumulation will result in the discovery of asignificant quantity of petroleum, which is called the “chanceof geologic discovery,”Pg.

B.Once discovered, the chance that the known accumulation will be commerciallydeveloped is called the “chanceof development,”Pd.

2.1.3.3There must be a high degree of certainty in the chance of commerciality, Pc,for Reserves to be assigned; for Contingent Resources, Pc = Pd; and forProspective Resources, Pc is the product of Pg and Pd.