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Baytex Energy Corp.

Contingent Resource Assessment

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We commissioned Sproule Associates Limited ("Sproule") to conduct an assessment of contingent resource effective November 30, 2010 on three of our oil resource plays: the Bluesky in the Seal area of Alberta, the Bakken/Three Forks in North Dakota, and the Viking in southeast Alberta and southwest Saskatchewan. This contingent resource assessment has now been updated by Sproule with an effective date of December 31, 2010. This update largely consisted of recognizing the conversion of 17 million barrels of oil and bitumen into proved reserves and 42 million barrels of oil and bitumen into proved plus probable reserves from contingent resources during 2010. Contingent resource represents the quantity of petroleum estimated to be potentially recoverable from known accumulations using established technology or technology under development, but which do not currently qualify as reserves or commercially recoverable due to one or more contingencies.  Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets.

For the total of these three plays, Sproule's estimate of contingent resource ranges from 528 million barrels of oil and bitumen in the "Low Estimate" (C1) to 1.02 billion barrels of oil and bitumen in the "High Estimate" (C3), with a "Best Estimate" (C2) of 668 million barrels of oil and bitumen.  Contingent resources are in addition to currently booked reserves. The table below summarizes Sproule's estimates of working interest reserves and contingent resource for the three plays by geographic area.

Sproule’s estimates of working interest reserves and contingent resource

 Proved plus Probable Reserves
As at Dec. 31, 2010(2)		Contingent Resources(3)
As at  May 1, 2011
(millions of barrels of oil and bitumen)(1)   Low(4) Best(5) High(6)
Bluesky – Seal, Alberta 83.7 478 583 846
Bakken/Three Forks – North Dakota, USA 19.5 59 138 254
Viking – Redwater, Alberta 3.9 6 12 23
Viking – Kerrobert/Whiteside, Saskatchewan 2.9 3 6 12
Total 110.1 546 739 1,135
  • (1) Under National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators ("NI 51-101"), naturally occurring hydrocarbons with a viscosity greater than 10,000 centipoise are classed as bitumen. The majority of the contingent resource at Seal that will be recovered by thermal processes has a viscosity greater than this value; therefore, this component of the contingent resource is classified as bitumen under NI 51-101.
  • (2) Proved plus probable reserve volumes are based on the report prepared by Sproule dated May 31, 2011 entitled "Evaluation of the P&NG Reserves of Baytex Energy Corp. (As of May 1, 2011)", which was prepared in accordance with NI 51-101.
  • (3) Sproule prepared the estimates of contingent resource shown for each property using deterministic principles and methods. Probabilistic aggregation of the low and high property estimates shown in the table might produce different total volumes than the arithmetic sums shown in the table.
  • (4) Contingent Resource Assessment for Saskatchewan Viking adjusted November 2011 to reflect sale of Dodsland Viking lands.
  • (5) Low estimate (C1) is considered to be a conservative estimate of the quantity of resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those resources at the low end of the estimate range have the highest degree of certainty - a 90% confidence level - that the actual quantities recovered will be equal or exceed the estimate.
  • (6) Best estimate (C2) is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will be equal or exceed the estimate.
  • (7) High estimate (C3) is considered to be an optimistic estimate of the quantity of resources that will actually be recovered. It is unlikely that the actual remaining quantities of resources recovered will meet or exceed the high estimate. Those resources at the high end of the estimate range have a lower degree of certainty - a 10% confidence level - that the actual quantities recovered will equal or exceed the estimate.

We did not commission Sproule to evaluate the contingent resources of our other oil resource plays, including the Viking and Cardium in central Alberta and the Slave Point in northern Alberta, or of our conventional oil and gas properties.

  

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