Future net revenues represent projected revenues from the sale of proved reserves net of
production and development costs (including operating expenses and production taxes). Such
calculations at December 31, 2013 are based on costs in effect at December 31, 2013 and the 12-month
unweighted arithmetic average of the first-day-of-the-month price for the fiscal year ended
December 31, 2013, adjusted for anticipated market premium, without giving effect to derivative
transactions, and are held constant throughout the life of the assets. There can be no assurance that
the proved reserves will be produced within the periods indicated or that prices and costs will remain
constant. See ‘‘Item 1A. Risk Factors—The present value of future net revenues from our proved
reserves will not necessarily be the same as the current market value of our estimated oil and natural
gas reserves.’’
Independent petroleum engineers
NSAI, our independent reserve engineers, was established in 1961. Over the past 50 years, NSAI
has provided services to the worldwide petroleum industry that include the issuance of reserves reports
and audits, acquisition and divestiture evaluations, simulation studies, exploration resources
assessments, equity determinations, and management and advisory services. NSAI professionals
subscribe to a code of professional conduct and NSAI is a Registered Engineering Firm in the State of
Texas.
For the years ended December 31, 2013, 2012 and 2011, we engaged NSAI to prepare independent
estimates of the extent and value of the proved reserves of certain of our oil and gas properties. These
reports were prepared at our request to estimate our reserves and related future net revenues and
PV-10 for the periods indicated therein. Our estimated reserves at December 31, 2013 and related
future net revenues and PV-10 at December 31, 2013 are taken from reports prepared by NSAI, in
accordance with petroleum engineering and evaluation principles which NSAI believes are commonly
used in the industry and definitions and current regulations established by the SEC. The December 31,
2013 reserve report was completed on January 15, 2014, and a copy is included as an exhibit to this
report.
In connection with the preparation of the December 31, 2013, 2012 and 2011 reserves reports,
NSAI prepared its own estimates of our proved reserves. In the process of the reserves evaluation,
NSAI did not independently verify the accuracy and completeness of information and data furnished by
us with respect to ownership interests, oil and gas production, well test data, historical costs of
operation and development, product prices or any agreements relating to current and future operations
of the fields and sales of production. However, if in the course of the examination something came to
the attention of NSAI which brought into question the validity or sufficiency of any such information or
data, NSAI did not rely on such information or data until it had satisfactorily resolved its questions
relating thereto or had independently verified such information or data. NSAI independently prepared
reserves estimates to conform to the guidelines of the SEC, including the criteria of ‘‘reasonable
certainty,’’ as it pertains to expectations about the recoverability of reserves in future years, under
existing economic and operating conditions, consistent with the definition in Rule 4-10(a)(2) of
Regulation S-X. NSAI issued a report on our proved reserves at December 31, 2013, based upon its
evaluation. NSAI’s primary economic assumptions in estimates included an ability to sell oil at a price
of $108.76/Bbl, a certain level of capital expenditures necessary to complete the Jubilee Field
development program and the exercise of GNPC’s back-in right on the Jubilee Field development. The
assumptions, data, methods and precedents were appropriate for the purpose served by these reports,
and NSAI used all methods and procedures as it considered necessary under the circumstances to
prepare the report.
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