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The reserves data below is presented on a net basis (our share of working interest properties minus royalties payable to others, plus royalties receivable on our royalty lands).
Summary of Net Present Values of Future Net RevenueAs of December 31, 2012Forecast Prices and Costs ($000s) (1) Before Income Taxes, Discounted at (% per year) ------------------------------------------------- 0% 5% 10% 15% 20%----------------------------------------------------------------------------Proved Developed producing 730,246 537,722 431,272 364,055 317,704 Developed non-producing 4,259 2,773 1,986 1,517 1,211 Undeveloped 23,328 16,185 11,818 8,958 6,987----------------------------------------------------------------------------Total proved 757,833 556,679 445,076 374,529 325,902Probable 564,863 295,635 193,236 142,680 112,973----------------------------------------------------------------------------Total proved plus probable 1,322,696 852,314 638,312 517,209 438,875---------------------------------------------------------------------------- After Income Taxes, Discounted at (% per year) (2) -------------------------------------------------Reserves Category 0% 5% 10% 15% 20%----------------------------------------------------------------------------Proved Developed producing 616,012 453,317 363,687 307,156 268,186 Developed non-producing 3,194 2,060 1,458 1,099 865 Undeveloped 17,434 12,070 8,789 6,639 5,158----------------------------------------------------------------------------Total proved 636,639 467,447 373,934 314,894 274,210Probable 420,690 219,454 142,981 105,240 83,075----------------------------------------------------------------------------Total proved plus probable 1,057,329 686,902 516,915 420,134 357,284--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Based on the December 31, 2012 escalated oil and gas price forecasts by an independent qualified reserves evaluator. Future net revenue values do not represent fair market value. Reserve values do not include potential reserve additions that may occur as a result of future drilling on our royalty lands. Columns may not add due to rounding.(2) The after-tax net present value calculation reflects the tax burden on the properties on a standalone basis, utilizing our tax pools to the maximum depreciation rate as currently permitted. It does not consider the corporate-level tax situation, or tax planning. It does not provide an estimate of the value at the corporate level, which may be significantly different. See our financial statements and accompanying MD&A for additional tax information.Total Future Net Revenue (Undiscounted)As of December 31, 2012Forecast Prices and Costs ($000s) (1) Reserves Category ------------------------------ Proved Plus Proved Probable Reserves Reserves----------------------------------------------------------------------------Royalty income 660,266 1,136,234Revenue from working interest properties 269,358 506,074Royalty expense on working interest properties (40,759) (83,190)Operating costs (121,380) (214,202)Development costs (1,441) (12,560)Well abandonment and reclamation costs (8,212) (9,661)----------------------------------------------------------------------------Future net revenue before income taxes 757,833 1,322,696Future income taxes (2) (121,194) (265,367)----------------------------------------------------------------------------Future net revenue after income taxes (2) 636,639 1,057,329--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Future net revenue calculation includes future capital expenditures required to bring booked non-producing and undeveloped reserves on production. Future net revenue values do not represent fair market value. Reserve values do not include potential reserve additions that may occur as a result of future drilling on our royalty lands. Columns may not add due to rounding.(2) The after-tax net present value calculation reflects the tax burden on the properties on a standalone basis, utilizing our tax pools to the maximum depreciation rate as currently permitted. It does not consider the corporate-level tax situation, or tax planning. It does not provide an estimate of the value at the corporate level, which may be significantly different. See our financial statements and accompanying MD&A for additional tax information.Future Development Costs (Undiscounted) ($000s) Proved Plus ProbableForecast Prices and Costs (1) Proved Reserves Reserves----------------------------------------------------------------------------2013 773 5,5382014 519 6,5252015 29 1312016 29 1172017 30 119Remainder 61 130----------------------------------------------------------------------------Total 1,441 12,560--------------------------------------------------------------------------------------------------------------------------------------------------------(1) The source of funding for future development costs includes internally generated cash flow, debt or a combination of both. Disclosed reserves and future net revenue will not be materially affected by the costs of funding the future development expenditures. Columns may not add due to rounding.Reserve Life IndexAs of December 31, 2012 (1) Proved Proved Plus Producing Total Proved Probable----------------------------------------------------------------------------Net reserves (Mboe) 14,085 15,082 24,425Net production (Mboe) 2,518 2,546 2,878----------------------------------------------------------------------------Reserve life index (years) 5.6 5.9 8.5--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Reflects the theoretical production life of a property if the remaining reserves were produced out at current rates. The index is calculated by dividing the reserves in the selected reserve category at a certain date by the estimated production for the first year's production period (calculated by dividing the Trimble forecast of 2013 net production into the remaining net reserves).Reconciliation of Net Reserves (1)By Principal Product TypeForecast Prices and Costs (1) Light and Medium Oil Heavy Oil ------------------------------------------------------ Proved Proved Plus Plus Proved Probable Probable Proved Probable Probable (Mbbls) (Mbbls) (Mbbls) (Mbbls) (Mbbls) (Mbbls)----------------------------------------------------------------------------December 31, 2011 3,445 1,885 5,330 4,533 2,841 7,373 Extensions 569 426 995 324 199 523 Improved recovery - - - - - - Technical revisions 319 (178) 142 167 (74) 93 Discoveries - - - - - - Acquisitions 87 165 253 46 232 278 Dispositions - - - - - - Economic factors 16 3 19 5 - 5 Production (883) - (883) (897) - (897)----------------------------------------------------------------------------December 31, 2012 3,554 2,301 5,855 4,178 3,197 7,376---------------------------------------------------------------------------- Natural Gas Natural Gas Liquids ------------------------------------------------------ Proved Proved Plus Plus Proved Probable Probable Proved Probable Probable (MMcf) (MMcf) (MMcf) (Mbbls) (Mbbls) (Mbbls)----------------------------------------------------------------------------December 31, 2011 32,560 17,113 49,673 802 405 1,206 Extensions 810 523 1,333 42 27 69 Improved recovery - - - - - - Technical revisions 771 (1,677) (906) 42 (31) 11 Discoveries - - - - - - Acquisitions 11,765 4,263 16,028 206 75 281 Dispositions - - - - - - Economic factors (21) (10) (31) - - - Production (7,149) - (7,149) (198) - (198)----------------------------------------------------------------------------December 31, 2012 38,736 20,212 58,949 893 476 1,369---------------------------------------------------------------------------- Oil Equivalent --------------------------- Proved Plus Proved Probable Probable (Mboe) (Mboe) (Mboe)----------------------------------------------------------------------------December 31, 2011 14,206 7,982 22,189 Extensions 1,071 738 1,809 Improved recovery - - - Technical revisions 657 (562) 95 Discoveries - - - Acquisitions 2,300 1,183 3,483 Dispositions - - - Economic factors 17 1 19 Production (3,169) - (3,169)----------------------------------------------------------------------------December 31, 2012 15,082 9,343 24,425--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Net reserves are our share of working interest properties minus royalties payable to others, plus royalties receivable on our royalty lands. Numbers may not add due to rounding.Finding, Development and Acquisition (FD&A) Costs (1) Three-YearNet Proved Reserves 2012 2011 2010 Results----------------------------------------------------------------------------Finding and development expenditures ($000s) 36,746 25,649 18,054 80,449 Change in future development capital estimates ($000s) (934) 1,556 (59) 563 Net reserve additions by development (Mboe) 1,071 581 465 2,117Finding and development costs ($/boe) 33.45 46.81 38.67 38.27----------------------------------------------------------------------------Acquisition expenditures ($000s) 60,852 7,467 38,600 106,919 Net reserve additions by acquisition (Mboe) 2,300 103 857 3,260Acquisition costs ($/boe) 26.46 72.42 45.05 32.80----------------------------------------------------------------------------Total expenditures ($000s) 97,598 33,116 56,654 187,368 Change in future development capital estimates ($000s) (934) 1,556 (59) 563 Net reserve additions (Mboe) 3,371 684 1,322 5,377Finding, development and acquisition costs ($/boe) 28.68 50.67 42.81 34.95---------------------------------------------------------------------------- Three-YearNet Proved Plus Probable Reserves 2012 2011 2010 Results----------------------------------------------------------------------------Finding and development expenditures ($000s) 36,746 25,649 18,054 80,449 Change in future development capital estimates ($000s) 1,916 4,959 35 6,910 Net reserve additions by development (Mboe) 1,809 1,085 950 3,845Finding and development costs ($/boe) 21.37 28.20 19.04 22.72----------------------------------------------------------------------------Acquisition expenditures ($000s) 60,852 7,467 38,600 106,919 Net reserve additions by acquisition (Mboe) 3,483 207 1,352 5,042Acquisition costs ($/boe) 17.47 36.12 28.56 21.21----------------------------------------------------------------------------Total expenditures ($000s) 97,598 33,116 56,654 187,368 Change in future development capital estimates ($000s) 1,916 4,959 35 6,910 Net reserve additions (Mboe) 5,292 1,292 2,302 8,886Finding, development and acquisition costs ($/boe) 18.80 29.47 24.63 21.86--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Freehold did not incur any exploration expenditures in any of the applicable years. In calculating finding and development costs, NI 51- 101 requires that the exploration and development costs incurred in the year and the change in estimated future development costs be aggregated and then divided by the applicable reserve additions. The calculation specifically excludes the effects of acquisitions on both reserves and costs. We believe that by excluding the effects of acquisitions, the provisions of NI 51-101 do not fully reflect Freehold's ongoing reserve replacement costs. Because acquisitions can have a significant impact on annual reserve replacement costs, excluding these amounts could result in an inaccurate portrayal of Freehold's cost structure. Accordingly, we also provide costs that incorporate all acquisitions during the year. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.Recycle Statistics, Net Proved Plus Probable Reserves Three-Year($ per boe, except as noted) 2012 2011 2010 Results----------------------------------------------------------------------------Operating netback (1) (4) 45.09 51.65 44.08 46.81Finding, development and acquisition costs (2) (4) 18.80 29.47 24.63 21.86Recycle ratio (times) (3) 2.4 1.8 1.8 2.1--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Total revenue, less operating costs and royalty expenses.(2) Development expenditures, plus change in future capital, plus acquisition costs; divided by net reserves added through development and acquisition activities.(3) Operating netback divided by the average cost of acquiring and developing new reserves.(4) Operating netback is based on gross production, while development and acquisition costs are based on net reserves.Land HoldingsAs of December 31, 2012(gross acres) (1) Developed Undeveloped Total----------------------------------------------------------------------------Mineral title lands (2) 367,071 168,364 535,435Royalty assumption lands (3) 73,940 20,882 94,822----------------------------------------------------------------------------Total title lands (4) 441,011 189,246 630,257Gross overriding royalty (GORR) lands (5) 1,571,533 603,548 2,175,081----------------------------------------------------------------------------Total royalty lands 2,012,544 792,794 2,805,338Working interest properties 147,781 40,253 188,034----------------------------------------------------------------------------Total land holdings 2,160,325 833,047 2,993,372--------------------------------------------------------------------------------------------------------------------------------------------------------Land Holdings by Province
