HUNTER OIL CORP INTERESTShunteroil.com/reports/CGA 2017.pdf · 2018-09-03 · PDP reserves were...

EVALUATION SUMMARY

HUNTER OIL CORP. INTERESTS

VARIOUS OIL PROPERTIES IN NEW MEXICO

TOTAL PROVED, PROBABLE AND POSSIBLE RESERVES

AS OF DECEMBER 31, 2017

EVALUATION SUMMARY

HUNTER OIL CORP. INTERESTS

VARIOUS OIL PROPERTIES IN NEW MEXICO

TOTAL PROVED, PROBABLE AND POSSIBLE RESERVES

AS OF DECEMBER 31, 2017

CAWLEY, GILLESPIE & ASSOCIATES, INC. PETROLEUM CONSULTANTS

TEXAS REGISTERED ENGINEERING FIRM F-693

W. TODD BROOKER, P.E. KELLIE JORDAN DARIO F. NAVIA PRESIDENT ENGINEER RESERVOIR ENGINEER


13640 BRIARWICK DRIVE, SUITE 100 306 WEST SEVENTH STREET, SUITE 302 1000 LOUISIANA STREET, SUITE 1900 AUSTIN, TEXAS 78729-1107 FORT WORTH, TEXAS 76102-4987 HOUSTON, TEXAS 77002-5008 512-249-7000 817- 336-2461 713-651-9944 www.cgaus.com

February 15, 2018

Mr. Al H. Denson Hunter Oil Corp. 777 N. Eldridge Pkwy., Suite 150 Houston, TX 77079

Re: Evaluation Summary Hunter Oil Corp. Interests

Various Oil Properties in New Mexico Total Proved, Probable and Possible Reserves As of December 31, 2017 Dear Mr. Denson:

As requested, we are submitting our estimates of total proved, probable and possible reserves and forecasts of economics attributable to the Hunter Oil Corp. (“Hunter”) interests in Chaveroo and Milnesand oil fields based in New Mexico. The results of this evaluation are presented in the accompanying tabulations, with a composite summary presented below:

Proved Developed Proved Total Producing Undeveloped Proved Probable Possible

Net Reserves Oil - Mbbl 39.3 11,615.3 11,654.7 4,924.2 13,540.5 Gas - MMcf 0.0 5,192.9 5,192.9 2,131.1 6,166.1 Revenue Oil - M$ 2,358.6 796,491.1 798,849.7 340,685.0 941,235.8 Gas - M$ 0.0 18,504.9 18,504.9 7,664.0 22,317.5 Severance Taxes - M$ 167.2 57,940.5 58,107.7 24,763.1 68,505.6 Ad Valorem Taxes - M$ 117.9 40,749.8 40,867.7 17,417.4 48,177.7 Operating Expenses - M$ 1,301.5 51,346.0 52,647.5 10,032.0 20,415.3 Other Deductions - M$ 146.8 46,109.6 46,256.4 19,667.8 54,276.4 Investments - M$ 1,433.2 240,215.8 241,649.0 26,302.3 29,159.1

Net Operating Income - M$ -808.1 378,634.3 377,826.2 250,166.3 743,019.3 (BFIT)

Discounted @ 10% - M$ -148.5 216,057.7 215,909.2 156,130.3 457,693.6 (Present Worth)

Hunter Oil Corp. Interests February 15, 2018 Page 2

The discounted cash flow value shown above should not be construed to represent an estimate of the fair market value by Cawley, Gillespie & Associates, Inc. (“CG&A”) Presentation The report contains grand total Table I economics, Summary Plots and Table II summaries by reserve category. The reserve categories presented are: Total Proved (TP), Proved Developed Producing (PDP), Proved Undeveloped (PUD), Probable (PROB) and Possible (POSS). The Tables I present composite reserve estimates and economic forecasts for the particular reserve grouping noted. The Summary Plots present composite rate versus time history-forecast curves for the properties in the corresponding Table I. Following the summary economics and plots are Table II “oneline” summaries that present estimates of ultimate recovery, gross and net reserves, ownership, revenue, expenses, investments, net income and discounted cash flow for the individual properties that make up the Summary Table I.

For a more detailed description of the report layout, please refer to the Table of Contents following this letter. The data presented in each Table I is explained in page 1 of the Appendix. The methods employed in estimating reserves are described in page 2 of the Appendix. Hydrocarbon Pricing Hydrocarbon prices were based upon the following market forecast prices as determined at year-end 2017 in compliance with NI 51-101 guidelines:

WTI Cushing (OK) Henry Hub (LA) Crude Oil Price Natural Gas Price Year $/BBL $/MMBtu 2018 58.00 3.03 2019 60.17 3.17 2020 63.67 3.50 2021 67.33 3.69 2022 70.15 3.87 2023 72.98 4.03 2024 75.66 4.12 2025 78.01 4.20 Thereafter 2.0% 2.0% Cap None None These price forecasts are based upon information obtained from various sources, including industry publications, government agencies, oil refiners and natural gas marketers. The price forecasts presented here are based on a careful interpretation of the information and can be considered reasonable for the purposes of this report. Forecasting oil and gas prices has a high degree of uncertainty, and users of this price forecast should be aware of the inherent risks. The oil and gas prices were escalated at 2.0% annually beginning in 2025 for the life of the project. Oil and gas price differentials were applied based on field averages for Chaveroo at -$1.58/bbl and -$0.27/MMbtu, for Milnesand at -$1.46/bbl and -$0.27/MMbtu. These adjustments to oil and gas prices include basis differential, a -$3.64/bbl transportation fee escalated at 2.0% annually for the life of the project and/or crude quality corrections. Over the remaining life of the proved properties, the net prices received averaged $68.543/bbl and $3.56/Mcf in our report.


Expenses, Investments and Taxes Lease operating expenses (LOE) for each producing well were estimated from 2017 monthly lease operating statements. Chaveroo Field LOE was applied at $1,336 per producing well per month. Milnesand Field LOE was applied at $1,724 per producing well per month. For new horizontal drills in both fields, operating costs were applied starting at $10,000 per well per month for the first 12 months, then $5,000 per well per month for another 12 months and $2,500 thereafter for the life of the well. Expenses were escalated using a model starting with 72 months unescalated from the effective date, then at 2.0% annually for the life of the properties. Capital costs were escalated at 2.0% annually for the life of the properties. Capital costs for PUD drills, facility upgrades and abandonment were provided by Hunter. Infill drilling at Chaveroo Field was scheduled to cost $2,260,000 per 3200-foot horizontal drill (4), $2,300,000 per 4500-foot horizontal drill (46), $2,380,000 per 5500-foot horizontal drill (3), $2,470,000 per 7000-foot horizontal drill (11) and $8,000,000 for water-handling facility upgrades. Infill drilling at Milnesand Field was scheduled to cost $2,260,000 per 3200-foot horizontal drill (1), $2,300,000 per 4500-foot horizontal drill (14), $2,380,000 per 5500-foot horizontal drill (2), $2,470,000 per 7000-foot horizontal drill (10) and $4,000,000 for water-handling facility upgrades. Abandonment costs for Chaveroo and Milnesand field wells were applied at $20,000 per vertical well and $40,000 per horizontal well, as provided. Severance taxes were applied at New Mexico rates of 7.09% of oil revenue and 7.94% of gas revenue. Ad valorem taxes were applied at 5.00% of total revenue as per Hunter. Reserves and Development PDP reserves were forecast using production performance reserve estimation methods. No PDNP reserves were assigned for the Chaveroo and Milnesand fields. PUD, PROB and POSS reserves for each field were estimated using a blend of type curve analysis, material balance calculations, volumetric estimates and analogy forecasting techniques. For Chaveroo Field, Hunter has proposed a development plan of drilling 64 horizontal wells, enhancing water injection capabilities, and upgrading water-handling facilities. Drilling was scheduled to begin in 4th Qtr. of 2018, with five (5) horizontal drills coming online in 2018, eight (8) in 2019, thirteen (13) in 2020, twenty-one (21) in 2021, fifteen (15) in 2022 and two (2) in 2023. Water-handling facility upgrades were scheduled for 07/2018 as provided. As per Hunter, the Year-end 2017 drilling program has been updated to reflect the full field development of the MY2016 and YE2016 drilling programs. Gross proved reserves for the Chaveroo 64-well infill drilling program were estimated at 9,571 MBO, with an average of about 150 MBO per horizontal. In addition, 64 probable incremental cases, with an average of 47 MBO per horizontal, 7 drills, with an average of 95 MBO per horizontal and 2 drills, with an average of 111 MBO; 73 possible incremental cases, with an average of 140 MBO per horizontal and 11 drills, with an average of 124 MBO per horizontal, were created to account for additional expected reserves. The reserves were based on a type curve developed from the production data of Milnesand wells #141H and #522H and from analogous fields with infill horizontals, along with assessment of the remaining oil-in-place by section assuming a proved 6% recovery factor for four (4) horizontals per section.


Original oil in place (OOIP) for Chaveroo Field has been estimated by various sources over the years. Hunter contracted with NuTech in 2013 to prepare an updated petrophysical evaluation, including new geophysical maps and OOIP determinations. NuTech estimates an OOIP for Chaveroo Field of approximately 248 MMBO. Cumulative production of approximately 25 MMBO points to a current recovery factor of 10.1%, which is considered very low for San Andres 40-acre development and waterflooding. The 9.6 MMBO expected to be recovered via the 64-well infill horizontal drilling program points to a 3.8% incremental recovery of OOIP. For Milnesand Field, Hunter has proposed a development plan of drilling 27 horizontal wells, enhancing water injection capabilities and upgrading water-handling facilities. Drilling was scheduled to begin in 3rd Qtr. of 2018, with three (3) horizontal drills coming online in 2018, nine (9) in 2019, ten (10) in 2020, three (3) in 2021 and two (2) in 2023. Water-handling facility upgrades were scheduled for 07/2018 as provided. As per Hunter, the Year-end 2017 drilling program has been updated to reflect the full field development of the MY2016 and YE2016 drilling programs. Gross proved undeveloped reserves for the 27-well infill drilling program were estimated at 4,921 MBO, with an average of 182 MBO per horizontal. In addition, 27 probable incremental cases, with an average of 78 MBO per horizontal, 1 drill, with an average of 113 MBO per horizontal; 28 possible incremental cases, with an average of 187 MBO per horizontal, were created to account for additional expected reserves. The reserves were based on a type curve developed from the production data of Milnesand wells #141H and #522H and from analogous fields with infill horizontals, along with assessment of the remaining oil-in-place by section assuming a proved 6% recovery factor for four (4) horizontals per section. Original oil in place (OOIP) for Milnesand Field has been estimated by various sources over the years, with ranges from 70 MMBO to 130 MMBO. Hunter contracted with NuTech in 2013 to prepare an updated petrophysical evaluation, including new geophysical maps and OOIP determinations. NuTech estimates an OOIP for Milnesand Field of approximately 130 MMBO, with 99 MMBO in the Milnesand Unit and 31 MMBO for Horton Federal Unit. Cumulative production of approximately 12 MMBO points to a current recovery factor of 9.2%, which is considered very low for San Andres 40-acre development and waterflooding. The 4.9 MMBO expected to be recovered via the 27-well infill horizontal drilling program points to a very reasonable 3.8% incremental recovery of OOIP. Miscellaneous

An on-site field inspection of the properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities been examined, nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have been included in this evaluation.

The reserve classifications used herein conform to the standards set out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook"), prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society). The reserve classifications used herein also conform to the globally accepted SPE-PRMS petroleum guidelines, shown in brief form in pages 3 - 7 of the Appendix. The reserves and economics are predicated on regulatory agency classifications, rules, policies, laws, taxes and royalties in effect as noted herein. The possible effects of changes in legislation or other Federal or State restrictive actions have not been considered.


All reserve estimates represent our best judgment based on data available at the time of preparation,

and assumptions as to future economic and regulatory conditions. It should be realized that the reserves actually recovered, the revenue derived therefrom and the actual cost incurred could be more or less than the estimated amounts.

The reserve estimates were based on interpretations of factual data furnished by your office. Pricing differentials, expense data, tax values and ownership interests were derived from data supplied by you and were accepted as furnished. Additionally, historical well/lease/unit production was provided by you and was accepted as furnished.

To some extent information from public records has been used to check and/or supplement these

data. The basic engineering and geological data were subject to third party reservations and qualifications. Nothing has come to our attention, however, that would cause us to believe that we are not justified in relying on such data.

Cawley, Gillespie & Associates, Inc. is a Texas Registered Engineering Firm (F-693), made up of independent registered professional engineers and geologists that have provided petroleum consulting services to the oil and gas industry for over 50 years. This evaluation was supervised by W. Todd Brooker, President at Cawley, Gillespie & Associates, Inc. and a State of Texas Licensed Professional Engineer (License #83462). We do not own an interest in the properties or Hunter Oil Corp. and are not employed on a contingent basis. We have used all methods and procedures that we consider necessary under the circumstances to prepare this report. Our work-papers and related data utilized in the preparation of these estimates are available in our office. Yours very truly, CAWLEY, GILLESPIE & ASSOCIATES, INC. TEXAS REGISTERED ENGINEERING FIRM F-693 W. Todd Brooker, P. E. President

Note: Table I’s are Grand Total Summaries of Reserves and Economics. Table II’s are “One-Line” Summaries of Reserves and for wells/leases in corresponding Table I’s. Summary Plots are Grand Total Rate-Time History-Forecast Curves based on the corresponding Table I. i

TABLE OF CONTENTS

Hunter Oil Corp. Interests Proved, Probable and Possible Reserves

As of December 31, 2017 ___________________________________________________________________________________________________________________

REPORT LETTER TABLE OF CONTENTS

NATIONAL INSTRUMENT 51-101 TAB • Form 51-101F2 • Certificate of Qualification • Engagement Agreement • NI 51-101F1 Summary Tables • Discussion of Property Details

TOTAL PROVED TAB • Table I & Summary Plot – TP • Table I & Summary Plot – TP – Chaveroo Field • Table I & Summary Plot – TP – Milnesand Field

PROVED DEVELOPED PRODUCING TAB • Table I & Summary Plot – PDP • Table I & Summary Plot – PDP – Chaveroo Field • Table I & Summary Plot – PDP – Milnesand Field • Table II – PDP Oneliner (Sorted by Field and Lease Name) • Individual PDP Figures & Tables 1-59

PROVED UNDEVELOPED TAB • Table I & Summary Plot – PUD • Table I & Summary Plot – PUD – Chaveroo Field • Table I & Summary Plot – PUD – Milnesand Field • Table II – PUD Oneliner (Sorted by Field and Lease Name) • Individual PUD Figures & Tables 1-93

PROBABLE TAB • Table I & Summary Plot – PROB • Table I & Summary Plot – PROB – Chaveroo Field • Table I & Summary Plot – PROB – Milnesand Field • Table II – PROB Oneliner (Sorted by Field and Lease Name) • Individual PROB Figures & Tables 1-101

Note: Table I’s are Grand Total Summaries of Reserves and Economics. Table II’s are “One-Line” Summaries of Reserves and for wells/leases in corresponding Table I’s. Summary Plots are Grand Total Rate-Time History-Forecast Curves based on the corresponding Table I.

ii

TABLE OF CONTENTS (CONTINUED)

POSSIBLE TAB • Table I & Summary Plot – POSS • Table I & Summary Plot – POSS – Chaveroo Field • Table I & Summary Plot – POSS – Milnesand Field • Table II – POSS Oneliner (Sorted by Field and Lease Name) • Individual POSS Figures & Tables 1-112

APPENDIX TAB

• Page 1 – Explanatory Comments for Summary Tables • Page 2 – Methods Employed in the Estimation of Reserves • Pages 3-7 – SPE - PRMS Reserve Classifications, Definitions and Guidelines • Contingent Resources – Table I & Summary Plot



- Page 1 -

Form 51-101F2

Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor

Report on Reserves Data To the board of directors of Hunter Oil Corp. (“Hunter”): 1. We have evaluated Hunter’s reserves data as December 31, 2017. The reserves data consists of

estimates of total proved reserves plus probable and possible reserves and related future net revenue as of December 31, 2017 using forecast prices and costs.

2. The reserves data are the responsibility of Hunter’s management. Our responsibility is to express an

opinion on the reserves data based on our evaluation.

We carried out our evaluation in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook"), prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).

3. Those standards require that we plan and perform an evaluation to obtain reasonable assurance as to

whether the reserves data are free of material misstatement. An evaluation also includes assessing whether the reserves data are in accordance with principles and definitions presented in the COGE Handbook.

4. The following table sets forth the estimated future net revenue (before deduction of income taxes)

attributed to proved, probable and possible reserves, estimated using forecast prices and costs and calculated using a discount rate of 10 percent, included in the reserves data of Hunter evaluated by us as of December 31, 2017, and identifies the respective portions thereof that we have audited, evaluated and reviewed, and reported on to Hunter's management and Board of Directors:

Hunter Oil Corp. February 15, 2018

- Page 2 -

Independent Qualified Reserves

Evaluator or Auditor

Description and Preparation Date of Evaluation Report

Location of Reserves

(Country)

Net Present Value of Future Net Revenue

Before Income Taxes (10% Discount Rate)

Audited (M$)

Evaluated (M$)

Reviewed (M$)

Total (M$)

Cawley, Gillespie & Associates,

Inc.

Total Proved Reserves of Hunter Oil Corp. in

Various Oil Properties in New Mexico, As of December 31, 2017,

prepared February 2018

USA 215,909.21 215,909.21


Inc.

Total Probable Reserves of Hunter Oil Corp. in



USA 156,130.27 156,130.27


Inc.

Total Possible Reserves of Hunter Oil Corp. in



USA 457,693.62 457,693.62

Total Nil 829,733.1 Nil 829,733.1

5. In our opinion, the reserves data respectively evaluated by us have, in all material respects, been

determined and are in accordance with the COGE Handbook. 6. We have no responsibility to update our report referred to in paragraph 4 for events and

circumstances occurring after its preparation date. 7. Because the reserves data are based on judgments regarding future events, actual results will vary

and the variations may be material. However, any variations should be consistent with the fact that reserves are categorized according to the probability of their recovery.

Executed as to our report referred to above: Cawley, Gillespie & Associates, Inc. Austin, Texas February 15, 2018 _________________________ W. Todd Brooker, P.E. President



Certificate of Qualification W. Todd Brooker, P.E.

I, W. Todd Brooker, President at Cawley, Gillespie & Associates, Inc. (“CG&A”), 13640 Briarwick Drive, Suite 100, Austin, Texas 78729, USA, hereby certify: 1) I hold the following degree: a. Bachelor of Science in Petroleum Engineering (1989), University Of Texas at Austin 2) I am a registered professional: a. Professional Engineer (P.E.), State of Texas, U.S.A. (Serial Number 83462) b. Over 24 years experience in the evaluation of reserves and economics relating to oil and gas fields 3) I am a member of the following professional organizations: a. Society of Petroleum Engineers (SPE) b. Texas Board of Professional Engineers (TBPE) 4) I am a qualified reserves evaluator and reserves auditor as defined in National Instrument 51-101. 5) My contribution to the report entitled “Evaluation Summary of the Total Proved, Probable and Possible

Reserves of Hunter Oil Corp. Interests in Various Oil Properties in New Mexico As of December 31, 2017” is based on my engineering knowledge and the data provided to me by the Company, from public sources, and from the non-confidential files of CG&A.

6) I have no interest, direct or indirect, nor do I expect to receive any interest, direct or indirect, in the

properties described in the above-named report or in the securities of Hunter Oil Corp. or its affiliated companies.

7) A personal field inspection of the properties was not made; however, such an inspection was not

considered necessary in view of the information available from public information and records, the files of Hunter Oil Corp., and the appropriate provincial regulatory authorities.

Respectfully, W. Todd Brooker, P.E. President CAWLEY, GILLESPIE & ASSOCIATES, INC. Texas Registered Engineering Firm F-693

National Instrument 51-101

Effective December 31, 2017

Proved Developed Producing

Proved Developed Non-Producing

Proved Undeveloped Proved

Probable Additional

Proved Plus Probable

Possible Additional

Proved Plus Probable and

Possible

Light and Medium Oil MstbUltimate Remaining 50 0 14,492 14,542 6,152 20,693 16,848 37,541WI Before Royalty 50 0 14,492 14,542 6,152 20,693 16,848 37,541WI After Royalty 39 0 11,615 11,655 4,924 16,579 13,541 30,119Royalty Interest 0 0 0 0 0 0 0 0Total Net 39 0 11,615 11,655 4,924 16,579 13,541 30,119

Heavy Oil MstbUltimate Remaining 0 0 0 0 0 0 0 0WI Before Royalty 0 0 0 0 0 0 0 0WI After Royalty 0 0 0 0 0 0 0 0Royalty Interest 0 0 0 0 0 0 0 0Total Net 0 0 0 0 0 0 0 0

Total Oil MstbUltimate Remaining 50 0 14,492 14,542 6,152 20,693 16,848 37,541WI Before Royalty 50 0 14,492 14,542 6,152 20,693 16,848 37,541WI After Royalty 39 0 11,615 11,655 4,924 16,579 13,541 30,119Royalty Interest 0 0 0 0 0 0 0 0Total Net 39 0 11,615 11,655 4,924 16,579 13,541 30,119

Sales Gas MMcfUltimate Remaining 0 0 6,459 6,459 2,655 9,113 7,651 16,764WI Before Royalty 0 0 6,459 6,459 2,655 9,113 7,651 16,764WI After Royalty 0 0 5,193 5,193 2,131 7,324 6,166 13,490Royalty Interest 0 0 0 0 0 0 0 0Total Net 0 0 5,193 5,193 2,131 7,324 6,166 13,490

NGLs MstbUltimate Remaining 0 0 0 0 0 0 0 0WI Before Royalty 0 0 0 0 0 0 0 0WI After Royalty 0 0 0 0 0 0 0 0Royalty Interest 0 0 0 0 0 0 0 0Total Net 0 0 0 0 0 0 0 0

Sulphur MltUltimate Remaining 0 0 0 0 0 0 0 0WI Before Royalty 0 0 0 0 0 0 0 0WI After Royalty 0 0 0 0 0 0 0 0Royalty Interest 0 0 0 0 0 0 0 0Total Net 0 0 0 0 0 0 0 0

Mboe MboeUltimate Remaining 50 0 15,569 15,618 6,594 22,212 18,123 40,336WI Before Royalty 50 0 15,569 15,618 6,594 22,212 18,123 40,336WI After Royalty 39 0 12,481 12,520 5,279 17,800 14,568 32,368Royalty Interest 0 0 0 0 0 0 0 0Total Net 39 0 12,481 12,520 5,279 17,800 14,568 32,368

Net Present Values M$ Before Income TaxUndiscounted (808) 0 378,634 377,826 250,166 627,992 743,019 1,371,012Discounted at 5% (379) 0 284,529 284,150 195,812 479,962 577,221 1,057,184Discounted at 10% (149) 0 216,058 215,909 156,130 372,039 457,694 829,733Discounted at 15% (10) 0 165,571 165,561 126,471 292,032 369,025 661,057Discounted at 20% 78 0 127,871 127,949 103,838 231,786 301,675 533,461

Table 1 - Grand TotalHunter Oil Corp.

Detailed Economic Summary Report - Before TaxAs of December 31, 2017

Forecast Prices and Costs - US Dollars


Reserves

Reserve Category Gross Net Gross Net Gross Net Gross Net(Mbbl) (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl)

Proved Developed 49.7 39.4 0 0 0 0 0 0ProducingProved Developed 0.0 0.0 0 0 0 0 0 0Non-ProducingProved 14,492.1 11,654.7 0 0 6,458.7 5,192.9 0 0UndevelopedProbable 6,151.5 4,924.2 0 0 2,654.5 2,131.1 0 0

Possible 16,848.2 13,540.5 0 0 7,651.2 6,166.1 0 0

At the request of Hunter Oil Corp., proved plus probable and possible reserves were evaluated.

Reference Item 2.2(1) of Form 51-101F1

Light and Medium Oil Heavy Oil

Natural Gas (non-associated

& associated) Natural Gas Liquids

Forecast Prices and Costs - US Dollars

Table 2Hunter Oil Corp.

Summary of Oil and Gas ReservesAs of December 31, 2017


Net Present Values of Future Net Revenue

0 5 10 15 20(M$) (M$) (M$) (M$) (M$)

Proved Developed -808.1 -378.9 -148.5 -9.9 77.8ProducingProved Developed 0.0 0.0 0.0 0.0 0.0Non-ProducingProved 378,634.3 284,528.9 216,057.7 165,571.1 127,870.8UndevelopedTotal Proved 377,826.2 284,150.0 215,909.2 165,561.2 127,948.6

Probable 250,166.3 195,812.3 156,130.3 126,471.1 103,837.7

Possible 743,019.3 577,221.5 457,693.6 369,024.6 301,674.9

Total Proved , 1,371,011.8 1,057,183.7 829,733.1 661,056.9 533,461.2Probableand Possible

At the request of Hunter Oil Corp. , proved plus probable and possible reserves were evaluated.

There are no income taxes applied in the detailed cash flow tables presented in this reportbased on the reporting methods used in past years. However, Hunter Oil Corp. hasrepresented they may be subject to a 21% income tax rate based on Year-End 2017 values.

Notes: NPV of FNR include all resource income:* Sale of oil, gas, by-product Reserves* Processing third party reserves* Other income

Unit values are based on net revenue volumes

Reserve Category

Before Income Taxes (BFIT)Discounted at (%/Year)

Table 3aHunter Oil Corp.

Summary of Net Present Values ofFuture Net Revenue

As of December 31, 2017Forecast Prices and Costs - US Dollars


Net Present Values of Future Net Revenue

0 5 10 15 20(M$) (M$) (M$) (M$) (M$)

Proved Developed -769.0 -359.0 -139.1 -6.1 78.6ProducingProved Developed 0.0 0.0 0.0 0.0 0.0Non-ProducingProved 272,514.6 204,403.3 154,729.9 118,079.9 90,720.8UndevelopedTotal Proved 271,745.6 204,044.3 154,590.9 118,073.9 90,799.3

Probable 201,951.7 159,932.6 128,948.0 105,573.0 87,572.0

Possible 602,612.8 473,438.9 379,398.7 309,000.6 255,053.0

Total Proved , 1,076,310.1 837,415.8 662,937.6 532,647.5 433,424.4Probableand Possible

At the request of Hunter Oil Corp. , proved and probable and possible reserves were evaluated.

Notes: NPV of FNR include all resource income:* Sale of oil, gas, by-product Reserves* Processing third party reserves* Other incomeUnit values are based on net revenue volumes


After Income Taxes (AFIT)Discounted at (%/Year)

Reserve Category

Table 3bHunter Oil Corp.

Summary of Net Present Values ofFuture Net Revenue


FutureNet

Oper- Develop- Abandonment Prod- Ad Revenueating ment and uction Valorem After

Reserve Category Revenue Royalties Costs Costs Reclamation Costs Taxes Taxes TOTI(M$) (M$) (M$) (M$) (M$) (M$) (M$) (M$)

Proved Developed 2,359 0 1,448 1,433 167 118 -808ProducingProved 814,996 0 97,456 235,243 4,973 57,941 40,750 378,634UndevelopedProbable 348,349 0 29,700 25,597 705 24,763 17,417 250,166

Possible 963,553 0 74,692 28,121 1,038 68,506 48,178 743,019

At the request of Hunter Oil Corp., proved plus probable and possible reserves were evaluated.

Reference Item 2.2(3)(b) of Form 51-101F1


Total Future Net Revenue(Undiscounted)



WTI Cushing Henry Hub Inflation ExchangeOil Price Natural Gas Price Rate Rate

Year $US/BBL $US/MMBtu %/Yr $US/$Cdn

2018 58.00 3.030 2.0 0.7902019 60.17 3.170 2.0 0.7902020 63.67 3.500 2.0 0.7962021 67.33 3.690 2.0 0.8082022 70.15 3.870 2.0 0.8172023 72.98 4.030 2.0 0.8262024 75.66 4.120 2.0 0.8342025 78.01 4.200 2.0 0.840Thereafter esc 2.0% esc 2.0% 2.0 0.844Cap None None



Summary of Pricing andInflation Rate Assumptions


Category Gross Proved Gross ProbableGross Proved plus Probable Gross Possible

Gross Proved plus Probable plus Possible Gross Proved Gross Probable

Gross Proved plus Probable Gross Possible

Gross Proved plus Probable plus Possible

Mbbl Mbbl Mbbl Mbbl Mbbl MMcf MMcf MMcf MMcf MMcf

Beginning Gross Reserves, January 1, 2017 14,628.5 6,153.8 20,782.3 16,857.6 37,639.9 6,469.9 2,655.8 9,125.7 7,655.7 16,781.4

Acquisitions - - - - - - - - - -

Drilling Extensions (infill drilling) - - - - - - - - - -

Improved Recovery - - - - - - - - - -

Technical Revisions - - - - - - - - - -

Exploration Discoveries - - - - - - - - - -

Dispositions - - - - - - - - - -

Economic Factors (52.1) (2.3) (54.4) (9.4) (63.8) (11.2) (1.3) (12.5) (4.6) (17.1)

Production (34.6) 0.0 (34.6) 0.0 (34.6) 0.0 0.0 0.0 0.0 0.0

Ending Gross Reserves, December 31, 2017 14,541.8 6,151.5 20,693.3 16,848.2 37,541.5 6,458.7 2,654.5 9,113.2 7,651.2 16,764.3

Hunter Oil Corp.Table 6a

Only Light & Medium Oil and Natural Gas are sold by Hunter Oil Corp..

Light & Medium Oil Natural Gas

Forecast Prices and Costs - US DollarsAs of December 31, 2017

Total Proved plus Probable plus PossibleReconciliation Of Company Gross Reserves


Light & Medium Oil Natural Gas

Category Gross Proved Gross Proved

Mbbl MMcf

Beginning Gross Reserves, January 1, 2017 110.9 0.0

Acquisitions - -

Drilling Extensions (infill drilling) - -

Improved Recovery - -

Technical Revisions - -

Exploration Discoveries - -

Dispositions - -

Economic Factors (26.6) 0.0

Production (34.6) 0.0

Ending Gross Reserves, December 31, 2017 49.7 0.0

Only Light & Medium Oil and Natural Gas are sold by Hunter Oil Corp..

Table 6bHunter Oil Corp.

Reconciliation Of Company Gross ReservesProved Developed Producing


Northwest Shelf San Andres Platform Carbonate Play (after BEG & NMBGMR)

Asset Location

New Mexico Texas

llansfordText BoxChaveroo Field

llansfordText BoxMilnesand Field

llansfordLine

llansfordLine

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Discussion of Property Details

Below is a discussion of the evaluation of two key fields that Hunter Oil Corp. (Hunter) owns and operates. The reserves and economics presented here tie to the tables and figures provided following this letter and throughout this report.

It should be pointed out that while there is significant potential for incremental oil reserves in Chaveroo and Milnesand fields through either waterflooding or CO2 flooding, this report does not evaluate those resources. A pilot CO2 flood was conducted at the Milnesand Unit in August 2008. However, potential proved undeveloped (PUD), probable (PROB) or possible (POSS) reserves that could be assigned for secondary or tertiary recovery projects were not evaluated for Milnesand field in this report. Chaveroo Oil Field

The Chaveroo Field is located approximately ten miles northwest of Milnesand, New Mexico. It is located in Roosevelt and Chavez Counties, New Mexico. The Chaveroo Field was developed in 1965 and encompasses more than 22,000 acres where over 450 wells were drilled. The San Andres producing zone is at approximately 4200 feet depth with four distinct divisions, P1, P2, P3 and P4. The units are vertically separated by anhydrite or gypsum layers. In the Chaveroo Field, the P2 zone appears to have the best developed porosity (13% - 20%) and permeability (from 0.7 mD and greater) of all the zones.

Initially developed by “major” oil companies, the field has had many subsequent

owners which has been a hurdle to field wide unitization (for secondary waterflood). Hunter purchased a majority interest in the field in 2007 and holds approximately 12,000 gross acres with a working interest average of near 100% and a net revenue interest of approximately 82%. There are several tracts which have not been unitized and are held by their own production and there are four units on the Hunter acreage; these are the Chaveroo San Andres, Jennifer, Haley and Byron units.

The Chaveroo Field is situated along an east-west trend of San Andres production

which extends from Texas (Levelland and Slaughter Fields), westward into New Mexico (Bluitt, Milnesand, Chaveroo and Cato Fields). The San Andres along this trend is controlled by stratigraphic traps which formed as a result of replacement of dolomite porosity or pinchouts of porosity by anhydrite in updip and lateral positions.

A study by Nutech was commissioned in January of 2012 and completed on

August 23, 2012. 137 logs from across the Chaveroo Field were gathered and evaluated to determine original oil in place across the field. This analysis involved validating structure, individual intervals (P1, P2 and P3), interval isopachs, average permeability, average porosity, net pay, net permeability, net porosity and mean Vclay.

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The Company spent more than $300,000 on this study and the information compiled formed the foundation of the Company’s work plan for 2013 and beyond. NuTech’s study indicates OOIP of 248 MMBO; with a cumulative 25 MMBO produced, only 10% of OOIP, there is potentially considerable remaining recoverable reserves.

There were 36 wells producing in Chaveroo as of report date at an approximate

rate of 1,470 BOPM. These oil wells were assigned PDP reserves. The PDP reserves were estimated using decline curve analysis forecasting technique. The 36 producing wells were forecast to an EUR of 1,696.5 MBO. As of December 31, 2017, the cumulative oil production was estimated at 1,675.5 MBO, leaving the field with technically recoverable gross reserves of 20.9 MBO (16.7 MBO net to Hunter).

Future development in this field is planned to be horizontal infill development

utilizing from ½ mile to 1 ½ mile laterals. The PUD reserves for the entire field were estimated using a blend of type curve analysis, material balance calculations, volumetric estimates and analogy forecasting techniques. The 64 undeveloped horizontal well infill locations were forecast to an EUR of 9,571 MBO (7,772.8 MBO net to Hunter). Probable and Possible incremental reserves were assigned to the infill locations as well. Forecasts of remaining reserves and associated economics are included in the attached tables.

Hunter provided CG&A with operating statements for 2017. From these,

CG&A estimated fixed LOE at $1,336 per month for vertical producers. For horizontal drills, fixed LOE was estimated at $10,000 per well per month for the first 12 months, then $5,000 per well per month for another 12 months and $2,500 thereafter for the life of the well based on nearby analogs. CG&A also estimated an oil price deduction of -$1.58/bbl from historical WTI Cushing prices based on prices received. PDP wells and PUD drills were plugged and abandoned at an expense of U.S. $20,000 and $40,000 per well, respectively, at the end of each wells’ productive life, or at a time deemed appropriate for the wellbore. Facility upgrades for additional fluid handling due to PUD development was estimated at US $8,000,000 as provided.

The attached Table II oneliners and individual well Figures and Tables show the detailed estimates of reserves and economics for the wells in the Chaveroo Oil field. Milnesand Oil Field

The Milnesand Field is located two miles west of Milnesand, New Mexico and is composed of two geographical and revenue areas – Milnesand San Andres Unit and Horton-Federal Lease. This area has very similar geology to the Chaveroo Field and Hunter utilized NuTech to evaluate this oil field at the same time as Chaveroo was evaluated.

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The Milnesand Unit is a 4880-acre area permitted for water injection that is located in various sections of T8S R34E/35E in Roosevelt County, New Mexico. As of December 31, 2017, there were 23 oil wells producing at a total rate of about 1,276 BOPM, along with 16 water injectors all focused on the San Andres reservoir. The oil wells were assigned PDP reserves.

The PDP reserves for the Milnesand Unit were estimated using decline curve analysis forecasting technique. The 23 producing wells were forecast to an EUR of 2,683.8 MBO. As of December 31, 2017, the cumulative oil production was estimated at 2,655.0 MBO leaving field with technically recoverable gross reserves of 28.7 MBO (22.6 MBO net to Hunter). Forecasts of remaining reserves and associated economics are included in the attached tables.

The Milnesand Horton-Federal lease is an 1800-acre lease acquired in October

2008 as a southern extension to the Milnesand San Andres Unit property. These oil field properties produce from the San Andres reservoir and are located in sections 29, 30 and 31 of T8S R35E in Roosevelt County, New Mexico. Hunter provided CG&A with production data for six (6) oil wells producing at a combined rate of 204 BOPM and no gas. These wells were assigned PDP reserves.

The PDP reserves for the Horton Federal Lease were estimated using decline

curve analysis forecasting technique. The six producing wells were forecast to an EUR of 1,028.7 MBO. As of December 31, 2017, the cumulative oil production was estimated 1,024.1 MBO, leaving the six wells with technically recoverable gross reserves of 4.5 MBO (3.3 MBO net to Hunter). Forecasts of remaining reserves and associated economics are included in the attached tables, although the six Horton wells are non-commercial.

Hunter provided CG&A with operating statements for 2017. From these, CG&A

estimated fixed LOE at $1,724 per month for vertical and horizontal producers. For horizontal drills, fixed LOE was estimated at $10,000 per well per month for the first 12 months, then $5,000 per well per month for another 12 months and $2,500 thereafter for the life of the well based on nearby analogs. CG&A also estimated an oil price deduction of -$1.46/bbl from historical WTI Cushing prices based on prices received. PDP wells and PUD drills were plugged and abandoned at an expense of U.S. $20,000 and $40,000 per well, respectively, at the end of each wells productive life, or at a time deemed appropriate for the wellbore. Facility upgrades for additional fluid handling due to PUD development was estimated at US $4,000,000 as provided, which covers both the Horton-Federal Lease and the Milnesand San Andres Unit.

Future development in this field is planned to be horizontal infill development utilizing from ½ mile to 1 ½ mile laterals. The PUD reserves for the entire field were estimated using a blend of type curve analysis, material balance calculations, volumetric estimates and analogy forecasting techniques.

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The 27 proved undeveloped horizontal well infill locations for the entire field were forecast to an EUR of 4,921.0 MBO (3,842.6 MBO net to Hunter). Probable and possible incremental reserves were assigned to the infill locations as well. Forecasts of remaining reserves and associated economics are included in the attached tables.

The attached Table II oneliners and individual well Figures and Tables show the

detailed estimates of reserves and economics for the wells in the Milnesand San Andres Unit and the Horton-Federal Lease.

Cawley, Gillespie & Associates, Inc.

Table I - TPComposite Reserve Estimates and Economic Forecasts

Hunter Oil Corp. InterestsVarious Oil Properties in New Mexico

Total Proved ReservesAs of December 31, 2017

Forecast Pricing

CrudeOil $/STB

NaturalGas $/MMBTUYear

2018 58.00 3.032019 60.17 3.172020 63.67 3.502021 67.33 3.692022 70.15 3.872023 72.98 4.032024 75.66 4.122024 78.01 4.20

Thereafter 2.0% 2.0%Cap None None

THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT.TEXAS REGISTERED ENGINEERING FIRM F-693.

2/16/2018 16:57:5 PHD 2/16/2018 16:57:5 Summary

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price

Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL

12-2018 213.0 80.4 .0 171.908 65.099 .000 56.483 2.760 .000 12-2019 1,122.5 486.6 .0 903.381 392.670 .000 58.635 2.900 .000 12-2020 2,595.4 1,103.0 .0 2,081.218 887.294 .000 62.144 3.230 .000 12-2021 2,764.9 1,197.9 .0 2,201.148 957.717 .000 65.798 3.420 .000 12-2022 2,655.4 1,226.8 .0 2,135.371 989.530 .000 68.597 3.600 .000 12-2023 1,777.4 820.2 .0 1,426.055 659.753 .000 71.428 3.760 .000 12-2024 1,092.6 495.4 .0 875.929 398.223 .000 74.114 3.850 .000 12-2025 684.6 310.1 .0 548.574 249.139 .000 76.464 3.930 .000 12-2026 459.9 208.0 .0 368.453 167.103 .000 78.265 4.010 .000 12-2027 323.6 146.2 .0 259.213 117.415 .000 79.565 4.100 .000 12-2028 236.1 106.6 .0 189.081 85.595 .000 80.333 4.141 .000 12-2029 175.9 79.4 .0 140.864 63.772 .000 81.976 4.230 .000 12-2030 134.9 60.8 .0 108.042 48.880 .000 83.648 4.320 .000 12-2031 104.4 47.0 .0 83.628 37.771 .000 85.352 4.412 .000 12-2032 79.7 35.8 .0 63.900 28.820 .000 87.087 4.505 .000 12-2033 57.5 25.9 .0 46.141 20.868 .000 88.844 4.600 .000 12-2034 36.1 16.3 .0 29.030 13.175 .000 90.642 4.697 .000 12-2035 16.9 7.7 .0 13.809 6.322 .000 92.408 4.792 .000 12-2036 7.3 3.1 .0 5.962 2.546 .000 94.318 4.893 .000

S Tot 14,538.1 6,457.2 .0 11,651.705 5,191.691 .000 68.536 3.563 .000 After 3.7 1.4 .0 3.0 1.171 .000 96.854 5.030 .000 Total 14,541.8 6,458.7 .0 11,654.696 5,192.861 .000 68.543 3.564 .000Cum 4,330.6 5,215.4 .0Ult 18,872.3 11,674.0 .0

(11) (12) (13) (14) (15) (16) (17) (18) (19) (20)

Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6

Mo-Year M$ M$ M$ M$ M$ M$ M$ M$

12-2018 9,709.892 179.674 .000 0.000 0.000 9,889.566 702.697 494.478 6.841 12-2019 52,970.128 1,138.743 .000 0.000 0.000 54,108.871 3,845.998 2,705.444 5.131 12-2020 129,335.867 2,865.960 .000 0.000 0.000 132,201.827 9,397.470 6,610.091 5.171 12-2021 144,831.376 3,275.391 .000 0.000 0.000 148,106.766 10,528.611 7,405.338 5.548 12-2022 146,480.373 3,562.306 .000 0.000 0.000 150,042.679 10,668.306 7,502.134 5.977 12-2023 101,860.033 2,480.670 .000 0.000 0.000 104,340.703 7,418.842 5,217.035 6.424 12-2024 64,918.594 1,533.159 .000 0.000 0.000 66,451.753 4,724.461 3,322.588 7.158 12-2025 41,946.385 979.116 .000 0.000 0.000 42,925.501 3,051.740 2,146.275 8.764 12-2026 28,836.931 670.081 .000 0.000 0.000 29,507.013 2,097.743 1,475.351 11.259 12-2027 20,624.363 481.401 .000 0.000 0.000 21,105.764 1,500.491 1,055.288 14.620 12-2028 15,189.388 354.478 .000 0.000 0.000 15,543.866 1,105.073 777.193 18.857 12-2029 11,547.492 269.747 .000 0.000 0.000 11,817.239 840.135 590.862 24.233 12-2030 9,037.463 211.157 .000 0.000 0.000 9,248.620 657.522 462.431 30.857 12-2031 7,137.740 166.635 .000 0.000 0.000 7,304.375 519.297 365.219 38.477 12-2032 5,564.880 129.839 .000 0.000 0.000 5,694.720 404.859 284.736 46.433 12-2033 4,099.318 95.991 .000 0.000 0.000 4,195.310 298.263 209.765 54.511 12-2034 2,631.374 61.884 .000 0.000 0.000 2,693.258 191.478 134.663 61.002 12-2035 1,276.036 30.293 .000 0.000 0.000 1,306.329 92.876 65.316 64.914 12-2036 562.300 12.459 .000 0.000 0.000 574.759 40.856 28.738 68.666

S Tot 798,559.933 18,498.985 .000 0.000 0.000 817,058.918 58,086.719 40,852.946 7.883 After 289.730 5.888 .000 0.000 0.000 295.618 21.009 14.781 73.852 Total 798,849.663 18,504.872 .000 0.000 0.000 817,354.536 58,107.728 40,867.727 7.900

(21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)

Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10.0%

Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$

12-2018 624.433 36 36.0 0.000 0.000 625.744 20,030.000 -12,587.787 -12,587.787 -11,850.970 12-2019 1,616.531 45 45.0 0.000 0.000 3,354.073 53,437.780 -10,850.954 -23,438.741 -20,662.795 12-2020 3,645.117 62 62.0 0.000 0.000 7,881.689 60,301.584 44,365.876 20,927.135 14,321.132 12-2021 4,594.517 84 84.0 0.000 0.000 8,502.588 61,730.427 55,345.286 76,272.421 54,037.857 12-2022 5,335.629 95 95.0 0.000 0.000 8,413.475 30,134.630 87,988.506 164,260.927 110,115.566 12-2023 4,135.489 94 94.0 0.000 0.000 5,731.105 10,267.951 71,570.282 235,831.209 151,391.200 12-2024 3,154.350 91 91.0 0.000 0.000 3,590.634 90.093 51,569.628 287,400.836 178,403.620 12-2025 2,877.981 91 91.0 0.000 0.000 2,293.707 137.819 32,417.978 319,818.814 193,764.543 12-2026 2,890.457 91 91.0 0.000 0.000 1,571.394 46.866 21,425.202 341,244.017 202,951.109 12-2027 2,948.266 91 91.0 0.000 0.000 1,127.613 47.804 14,426.303 355,670.320 208,549.994 12-2028 2,995.535 91 91.0 0.000 0.000 838.979 121.875 9,705.210 365,375.530 211,958.409 12-2029 3,033.591 90 90.0 0.000 0.000 637.534 24.867 6,690.250 372,065.780 214,085.080 12-2030 3,086.405 90 90.0 0.000 0.000 498.763 177.528 4,365.970 376,431.749 215,341.810 12-2031 3,066.161 89 89.0 0.000 0.000 393.780 336.312 2,623.607 379,055.356 216,026.518 12-2032 2,883.197 84 84.0 0.000 0.000 306.905 527.765 1,287.257 380,342.613 216,331.513 12-2033 2,478.752 75 75.0 0.000 0.000 226.042 1,211.282 -228.795 380,113.817 216,287.292 12-2034 1,759.795 53 53.0 0.000 0.000 145.063 1,015.861 -553.602 379,560.215 216,183.945 12-2035 894.400 34 34.0 0.000 0.000 70.382 1,176.203 -992.848 378,567.367 216,009.404 12-2036 407.512 14 14.0 0.000 0.000 30.994 514.169 -447.510 378,119.857 215,939.512

S Tot 52,428.117 0.000 0.000 46,240.461 241,330.817 378,119.857 378,119.857 215,939.512 After 219.368 0.000 0.000 15.965 318.182 -293.686 377,826.171 215,909.214 Total 52,647.485 0.000 0.000 46,256.426 241,648.998 377,826.171 377,826.171 215,909.214

Percent Cum. Disc.______________________ 5.00 284,149.989 8.00 240,699.519 10.00 215,909.214 12.00 193,955.457 15.00 165,561.231 20.00 127,948.572 30.00 77,804.037 40.00 48,019.621 50.00 29,726.866______________________

12 Months in first year 32.997 Year Life (12/2050)

22

33

44

55

66

77

88

99

22

33

44

55

66

77

88

99

22

33

44

55

66

77

88

99

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

TIME (years)

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OIL (bbls/mo) ΔGAS (mcf/mo) ∇Wellcount •••

12/2017 Cumulatives

Oil - mbbls 4,330.6Gas - mmcf 5,215.4

32.99 Year Life (12/2050)_______________________Remaining Ultimate Reserves Recovery

14,541.8 6,458.7

18,872.3 11,674.0

__________________________________________________ As of 01/2018 ______________________________

Q D n D Q i ei ef ab Oil - bbls/moGas - mcf/mo

1,930. 30.9 1.46 100.0 51. 1,278. N.A. 0.00 100.0 17.

________________________________________________

Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow [email protected]% % mbbl/mmcf M$ M$ M$ M$ M$_________________________________________________________________________________________

11,654.696 798,849.663 58,107.728 98,903.912 377,826.171 215,909.214 5,192.861 18,504.872 40,867.727 241,648.998

_______________________________________________________________________________________________________________________________________________________________________________________________________________________

Summary Plot- TPHunter Oil Corp. Interests

Various Oil Properties in New MexicoTotal Proved Reserves Gross Production

First Production 00/ 0 First Data 01/1970 Last Data 10/2017WTB G:\cga8062\PHD\Final NI 51-101 YE17 Bfit \tp.out

SUMMARY♦ ⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status:

Cawley, Gillespie & Associates, Inc.02 / 16 / 2018 17 : 26 : 14 21 API:


Table I - TP - Chaveroo FieldComposite Reserve Estimates and Economic Forecasts

Hunter Oil Corp. InterestsVarious Oil Properties in Chaves and Roosevelt County, New Mexico


Forecast Pricing

CrudeOil $/STB


2018 58.00 3.032019 60.17 3.172020 63.67 3.502021 67.33 3.692022 70.15 3.872023 72.98 4.032024 75.66 4.122024 78.01 4.20



2/16/2018 16:43:58 PHD 2/16/2018 16:43:58 Summary

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)



12-2018 99.8 45.5 .0 81.374 37.183 .000 56.420 2.760 .000 12-2019 689.9 342.0 .0 561.388 278.337 .000 58.590 2.900 .000 12-2020 1,398.8 697.6 .0 1,139.151 568.176 .000 62.090 3.230 .000 12-2021 1,624.7 811.5 .0 1,318.700 658.630 .000 65.750 3.420 .000 12-2022 2,031.7 1,015.5 .0 1,652.172 825.808 .000 68.570 3.600 .000 12-2023 1,351.6 675.7 .0 1,094.879 547.344 .000 71.400 3.760 .000 12-2024 774.6 387.3 .0 627.546 313.773 .000 74.080 3.850 .000 12-2025 483.1 241.5 .0 391.398 195.699 .000 76.430 3.930 .000 12-2026 322.6 161.3 .0 261.428 130.714 .000 78.230 4.010 .000 12-2027 225.8 112.9 .0 183.015 91.508 .000 79.530 4.100 .000 12-2028 164.3 82.1 .0 133.171 66.586 .000 80.298 4.141 .000 12-2029 122.4 61.2 .0 99.238 49.619 .000 81.940 4.230 .000 12-2030 93.6 46.8 .0 75.910 37.955 .000 83.612 4.320 .000 12-2031 71.9 36.0 .0 58.362 29.181 .000 85.314 4.412 .000 12-2032 54.6 27.3 .0 44.337 22.168 .000 87.052 4.505 .000 12-2033 39.8 19.9 .0 32.376 16.188 .000 88.812 4.600 .000 12-2034 25.3 12.6 .0 20.655 10.327 .000 90.620 4.698 .000 12-2035 12.4 6.2 .0 10.169 5.084 .000 92.346 4.790 .000 12-2036 3.9 2.0 .0 3.245 1.623 .000 94.213 4.891 .000

S Tot 9,590.9 4,785.0 .0 7,788.514 3,885.903 .000 69.050 3.587 .000 After 1.1 .6 .0 1.0 .480 .000 96.867 5.034 .000 Total 9,592.0 4,785.5 .0 7,789.474 3,886.383 .000 69.053 3.587 .000Cum 1,675.5 2,611.9 .0Ult 11,267.6 7,397.4 .0

(11) (12) (13) (14) (15) (16) (17) (18) (19) (20)



12-2018 4,591.149 102.626 .000 0.000 0.000 4,693.775 333.661 234.689 6.249 12-2019 32,891.714 807.177 .000 0.000 0.000 33,698.892 2,396.112 1,684.945 4.910 12-2020 70,729.914 1,835.209 .000 0.000 0.000 72,565.122 5,160.466 3,628.256 5.037 12-2021 86,704.542 2,252.514 .000 0.000 0.000 88,957.057 6,326.202 4,447.853 5.412 12-2022 113,289.400 2,972.909 .000 0.000 0.000 116,262.309 8,268.267 5,813.115 6.011 12-2023 78,174.342 2,058.014 .000 0.000 0.000 80,232.355 5,705.967 4,011.618 6.465 12-2024 46,488.587 1,208.026 .000 0.000 0.000 47,696.613 3,391.958 2,384.831 7.006 12-2025 29,914.520 769.096 .000 0.000 0.000 30,683.616 2,182.006 1,534.181 8.572 12-2026 20,451.535 524.164 .000 0.000 0.000 20,975.698 1,491.632 1,048.785 11.115 12-2027 14,555.213 375.182 .000 0.000 0.000 14,930.395 1,061.754 746.520 14.474 12-2028 10,693.321 275.755 .000 0.000 0.000 10,969.076 780.051 548.454 18.756 12-2029 8,131.630 209.882 .000 0.000 0.000 8,341.512 593.197 417.076 24.244 12-2030 6,346.946 163.962 .000 0.000 0.000 6,510.908 463.017 325.545 30.924 12-2031 4,979.079 128.735 .000 0.000 0.000 5,107.814 363.238 255.391 38.423 12-2032 3,859.583 99.874 .000 0.000 0.000 3,959.457 281.574 197.973 46.216 12-2033 2,875.363 74.466 .000 0.000 0.000 2,949.829 209.776 147.491 54.548 12-2034 1,871.761 48.514 .000 0.000 0.000 1,920.275 136.560 96.014 61.453 12-2035 939.023 24.356 .000 0.000 0.000 963.379 68.511 48.169 67.254 12-2036 305.761 7.937 .000 0.000 0.000 313.697 22.309 15.685 70.447

S Tot 537,793.384 13,938.396 .000 0.000 0.000 551,731.780 39,236.260 27,586.589 7.954 After 92.934 2.415 .000 0.000 0.000 95.349 6.781 4.767 72.693 Total 537,886.318 13,940.811 .000 0.000 0.000 551,827.129 39,243.040 27,591.356 7.962

(21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)



12-2018 250.994 20 20.0 0.000 0.000 296.203 12,420.000 -8,841.772 -8,841.772 -8,222.577 12-2019 900.166 21 21.0 0.000 0.000 2,084.321 25,244.980 1,388.368 -7,453.403 -6,786.464 12-2020 1,901.371 34 34.0 0.000 0.000 4,314.030 33,365.628 24,195.371 16,741.968 12,243.911 12-2021 2,637.547 53 53.0 0.000 0.000 5,093.872 59,310.873 11,140.711 27,882.678 20,791.601 12-2022 4,249.170 65 65.0 0.000 0.000 6,509.643 30,048.035 61,374.078 89,256.756 59,855.800 12-2023 3,268.207 65 65.0 0.000 0.000 4,400.158 5,122.935 57,723.470 146,980.226 93,140.775 12-2024 2,190.450 64 64.0 0.000 0.000 2,572.455 90.093 37,066.826 184,047.052 112,557.211 12-2025 1,998.231 64 64.0 0.000 0.000 1,636.518 68.898 23,263.783 207,310.835 123,581.854 12-2026 2,032.892 64 64.0 0.000 0.000 1,114.950 .000 15,287.440 222,598.275 130,137.521 12-2027 2,073.549 64 64.0 0.000 0.000 796.142 .000 10,252.430 232,850.704 134,116.791 12-2028 2,115.020 64 64.0 0.000 0.000 590.899 24.356 6,910.296 239,761.000 136,543.692 12-2029 2,157.321 64 64.0 0.000 0.000 449.142 24.867 4,699.910 244,460.910 138,037.729 12-2030 2,192.610 64 64.0 0.000 0.000 350.430 126.799 3,052.507 247,513.417 138,916.690 12-2031 2,154.490 63 63.0 0.000 0.000 274.811 310.440 1,749.445 249,262.862 139,373.815 12-2032 2,006.869 58 58.0 0.000 0.000 212.945 369.428 890.668 250,153.530 139,585.182 12-2033 1,754.610 52 52.0 0.000 0.000 158.608 807.521 -128.177 250,025.353 139,562.005 12-2034 1,271.881 37 37.0 0.000 0.000 103.212 466.747 -154.139 249,871.215 139,533.658 12-2035 689.037 28 28.0 0.000 0.000 51.828 1,120.193 -1,014.359 248,856.856 139,355.382 12-2036 230.811 9 9.0 0.000 0.000 16.872 399.909 -371.889 248,484.967 139,296.908

S Tot 36,075.225 0.000 0.000 31,027.037 169,321.701 248,484.967 248,484.967 139,296.908 After 70.429 0.000 0.000 5.125 117.710 -109.463 248,375.504 139,281.791 Total 36,145.654 0.000 0.000 31,032.162 169,439.411 248,375.504 248,375.504 139,281.791

Percent Cum. Disc.______________________ 5.00 185,000.514 8.00 155,837.252 10.00 139,281.791 12.00 124,680.356 15.00 105,892.829 20.00 81,214.581 30.00 48,828.160 40.00 30,006.170 50.00 18,676.138______________________

12 Months in first year 32.997 Year Life (12/2050)

22

33

44

55

66

77

88

99

22

33

44

55

66

77

88

99

22

33

44

55

66

77

88

99

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

TIME (years)

ΔΔ

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OIL (bbls/mo) ΔGAS (mcf/mo) ∇Wellcount •••

12/2017 Cumulatives

Oil - mbbls 1,675.5Gas - mmcf 2,611.9

32.99 Year Life (12/2050)_______________________Remaining Ultimate Reserves Recovery 9,592.0 4,785.5

11,267.6 7,397.4

__________________________________________________ As of 01/2018 ______________________________

Q D n D Q i ei ef ab Oil - bbls/moGas - mcf/mo

909. N.A. N.A. 18.1 49. 3,723. N.A. 0.00 12.4 24.

________________________________________________

Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow [email protected]% % mbbl/mmcf M$ M$ M$ M$ M$_________________________________________________________________________________________

7,789.474 537,886.318 39,243.040 67,177.816 248,375.504 139,281.791 3,886.383 13,940.811 27,591.356 169,439.411

_______________________________________________________________________________________________________________________________________________________________________________________________________________________

Summary Plot- TP - Chaveroo FieldHunter Oil Corp. Interests

Various Oil Properties in Chaves and Roosevelt County, New MexicoTotal Proved Reserves Gross Production

First Production 00/ 0 First Data 01/1970 Last Data 10/2017WTB G:\cga8062\PHD\Final NI 51-101 YE17 Bfit \tpc.out

SUMMARY♦ ⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status:

Cawley, Gillespie & Associates, Inc.02 / 16 / 2018 17 : 26 : 26 21 API:


Table I - TP - Milnesand FieldComposite Reserve Estimates and Economic Forecasts

Hunter Oil Corp. InterestsVarious Oil Properties in Roosevelt County, New Mexico


Forecast Pricing

CrudeOil $/STB


2018 58.00 3.032019 60.17 3.172020 63.67 3.502021 67.33 3.692022 70.15 3.872023 72.98 4.032024 75.66 4.122024 78.01 4.20



2/16/2018 16:45:7 PHD 2/16/2018 16:45:7 Summary

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)



12-2018 113.2 34.8 .0 90.533 27.916 .000 56.540 2.760 .000 12-2019 432.6 144.6 .0 341.993 114.333 .000 58.710 2.900 .000 12-2020 1,196.6 405.3 .0 942.066 319.118 .000 62.210 3.230 .000 12-2021 1,140.2 386.5 .0 882.448 299.087 .000 65.870 3.420 .000 12-2022 623.7 211.3 .0 483.199 163.721 .000 68.690 3.600 .000 12-2023 425.8 144.5 .0 331.176 112.409 .000 71.520 3.760 .000 12-2024 318.0 108.1 .0 248.383 84.450 .000 74.200 3.850 .000 12-2025 201.5 68.5 .0 157.177 53.440 .000 76.550 3.930 .000 12-2026 137.3 46.7 .0 107.025 36.388 .000 78.350 4.010 .000 12-2027 97.8 33.3 .0 76.198 25.907 .000 79.650 4.100 .000 12-2028 71.8 24.4 .0 55.910 19.009 .000 80.416 4.141 .000 12-2029 53.5 18.2 .0 41.626 14.153 .000 82.062 4.230 .000 12-2030 41.3 14.0 .0 32.132 10.925 .000 83.734 4.320 .000 12-2031 32.4 11.0 .0 25.266 8.590 .000 85.439 4.412 .000 12-2032 25.1 8.5 .0 19.563 6.652 .000 87.168 4.505 .000 12-2033 17.7 6.0 .0 13.765 4.680 .000 88.918 4.599 .000 12-2034 10.8 3.7 .0 8.375 2.848 .000 90.696 4.695 .000 12-2035 4.5 1.5 .0 3.640 1.238 .000 92.581 4.797 .000 12-2036 3.4 1.2 .0 2.716 .924 .000 94.444 4.897 .000

S Tot 4,947.2 1,672.3 .0 3,863.191 1,305.787 .000 67.500 3.493 .000 After 2.5 .9 .0 2.0 .691 .000 96.848 5.027 .000 Total 4,949.7 1,673.1 .0 3,865.223 1,306.478 .000 67.516 3.493 .000Cum 2,655.0 2,603.5 .0Ult 7,604.8 4,276.6 .0

(11) (12) (13) (14) (15) (16) (17) (18) (19) (20)



12-2018 5,118.743 77.048 .000 0.000 0.000 5,195.791 369.037 259.790 7.385 12-2019 20,078.414 331.565 .000 0.000 0.000 20,409.979 1,449.886 1,020.499 5.501 12-2020 58,605.953 1,030.752 .000 0.000 0.000 59,636.705 4,237.004 2,981.835 5.337 12-2021 58,126.834 1,022.876 .000 0.000 0.000 59,149.710 4,202.409 2,957.485 5.755 12-2022 33,190.973 589.397 .000 0.000 0.000 33,780.370 2,400.038 1,689.019 5.858 12-2023 23,685.691 422.657 .000 0.000 0.000 24,108.348 1,712.874 1,205.417 6.282 12-2024 18,430.007 325.133 .000 0.000 0.000 18,755.140 1,332.503 937.757 7.552 12-2025 12,031.865 210.019 .000 0.000 0.000 12,241.884 869.735 612.094 9.254 12-2026 8,385.397 145.918 .000 0.000 0.000 8,531.314 606.110 426.566 11.619 12-2027 6,069.150 106.220 .000 0.000 0.000 6,175.369 438.737 308.768 14.981 12-2028 4,496.067 78.723 .000 0.000 0.000 4,574.790 325.022 228.739 19.103 12-2029 3,415.862 59.865 .000 0.000 0.000 3,475.727 246.938 173.786 24.205 12-2030 2,690.517 47.195 .000 0.000 0.000 2,737.712 194.505 136.886 30.694 12-2031 2,158.661 37.899 .000 0.000 0.000 2,196.560 156.058 109.828 38.605 12-2032 1,705.297 29.966 .000 0.000 0.000 1,735.262 123.285 86.763 46.938 12-2033 1,223.955 21.525 .000 0.000 0.000 1,245.480 88.488 62.274 54.423 12-2034 759.613 13.370 .000 0.000 0.000 772.983 54.918 38.649 59.861 12-2035 337.014 5.937 .000 0.000 0.000 342.950 24.366 17.148 58.213 12-2036 256.539 4.523 .000 0.000 0.000 261.062 18.548 13.053 66.484

S Tot 260,766.550 4,560.589 .000 0.000 0.000 265,327.138 18,850.459 13,266.357 7.735 After 196.796 3.473 .000 0.000 0.000 200.269 14.229 10.013 74.414 Total 260,963.346 4,564.061 .000 0.000 0.000 265,527.407 18,864.688 13,276.370 7.770

(21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)



12-2018 373.440 16 16.0 0.000 0.000 329.541 7,610.000 -3,746.015 -3,746.015 -3,628.393 12-2019 716.365 24 24.0 0.000 0.000 1,269.752 28,192.800 -12,239.322 -15,985.337 -13,876.332 12-2020 1,743.746 28 28.0 0.000 0.000 3,567.658 26,935.956 20,170.505 4,185.168 2,077.221 12-2021 1,956.970 31 31.0 0.000 0.000 3,408.717 2,419.554 44,204.575 48,389.743 33,24

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