Reserves and resources

res och res Zholda ENThe amounts may not add up due to roundings.

Zhoda Investments owns via wholly-owned subsidiary (Zhoda 2001 Corp.) 45 percent of Kashtan Petroleum, which is a license holder and operator of the Lelyaki field. The wholly-owned subsidiary Shelton Canada Corp owns a 50 percent stake in the offshore licenses via a Joint Investment Agreement with the license holder.

Amounts are reported in millions of barrels of oil equivalent. Reserves and resources refer to the amounts of oil and gas attributable to Zhoda Investments’ share in the fields where the company conducts joint operations via joint ventures and joint investment agreements. Calculations in the assessments have been made in accordance with SPE PRMSĀ  AGR TRACS has made the assessment for the offshore assets (2009). Trimble Engineering Associates has made the assessment for Lelyaki (2009).

Arkhangelskoye and Biryucha are offshore licenses in the Black Sea and Sea of Azov. Following the annexation of Crimea, the Board of Directors perceives an increased risk regarding future financial benefit from these licenses.

Resources have a lower probability of extraction than reserves.


Classification and definitions

Reserves

Proven reserves (P1)

Proven reserves (P1) means the estimated amount of petroleum which has a very high probability (greater than 90 percent) of being able to be recovered from proven accumulations in the current financial circumstances and under current operating conditions.

Probable reserves (P2)

Probable reserves are reserves that are likely to consist of recoverable oil and gas accumulations. Proven plus probable reserves (2P) must have more than 50 percent probability of being technically and financially recoverable in the current or future financial circumstances.

Possible reserves (P3)

Possible reserves are reserves for which analyses indicate that it is less likely that they will be able to be recovered. Proven plus probable plus possible reserves (3P) must have more than 10 percent probability of being technically and financially recoverable in the current or future financial circumstances.

Resources

Contingent resources

Contingent resources means the estimated recoverable volumes from known accumulations that have been proven through drilling but which do not yet fulfill the requirements for reserves.

Prospective resources

Prospective resources means the resources estimated to exist in prospect areas considered viable to drill, but which have not yet been proven by drilling.

Risked prospective resources

Risked prospective resources means the prospective resources estimated to exist based on geological and technical investigations, taking into account the probability of discoveries.

Resources can be divided in categories according to the degree of probability, they are associated with. L stands for low scenario, M for middle and H for high.

The definitions used above are based on the 2007 guidelines and classifications in the Petroleum Resources Management System (SPE PRMS 2007)