JOE C. NEAL & ASSOCIATES

PETROLEUM ENGINEERING CONSULTANTS

214 W. Texas Ave. Suite 600

Midland, Texas 79701

E-Mail: info@joecneal.com

March 24, 2015

FieldPoint Petroleum Corporation

Attn:  Mr. Greg Thagard

P O Box 200685

Austin, TX  78720

Re:	Evaluation of Oil and Gas Reserves to the interest of FieldPoint Petroleum Corporation Effective January 1, 2015 based on SEC Guidelines

Mr. Thagard,

In accordance with your request, we have estimated the extent and value of domestic proved crude oil, condensate and gas reserves owned by FieldPoint Petroleum Corporation as of January 1, 2015.  The properties to which proved reserves are attributable are located in the states of New Mexico and Texas.  The estimated reserves are based on a detailed study of properties owned by FieldPoint Petroleum Corporation.  During this study, we consulted freely with the officers and employees of FieldPoint Petroleum Corporation and were given access to such records, geological and engineering reports, and other data as were desired for examination.  In preparation of this report, we have relied, without independent verification, upon information furnished by FieldPoint Petroleum Corporation with respect to property interest owned by it, production from such properties, current costs of operation, current prices for production agreements relating to current and future operation and various other information and data which were accepted as represented.  The results of our third party study, completed on February 3, 2015, are presented herein.  The properties reviewed by Joe C. Neal & Associates represent only properties in Chaves and Lea Counties, New Mexico and Andrews County, Texas of the total net proved reserves of FieldPoint Petroleum Corporation.

The summary below includes FieldPoint Petroleum Corporation Proved Reserves only.  It was not considered necessary to make a field examination of the physical condition and operation of the properties in which FieldPoint Petroleum Corporation owns an interest.

We estimate the Net Proved Reserves, Future Net Revenue, and the Present Value of Future Net Revenue from the properties of FieldPoint Petroleum Corporation as of January 1, 2015 to be as follows:

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The following table sets forth the changes in total Proved Reserves owned by FieldPoint Petroleum Corporation as of January 1, 2015.

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s (“SEC”) Regulations Part 210.4-10(a).  An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “Definitions of Oil and Gas Reserves” is included as an attachment to this report.  Reserves for the producing properties were determined by extrapolation of the production decline trends, where applicable, analogy with similar offset wells, by volumetric calculations using basic reservoir parameters such as porosity, water saturation, net pay thickness, and estimated areal extent of the reservoir, or by material balance calculations. Reserves for the Proved Developed Non-Producing and Proved Undeveloped properties were determined by volumetric calculations and/or by analogy with offset wells.

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.  Moreover, estimates of reserves may increase or decrease as a result of future operations, effects of regulation by governmental agencies or geopolitical risks.  As a result, the estimates of oil and gas reserves have an intrinsic uncertainty.  The reserves included in this report are therefore estimates only and should not be construed as being exact quantities.  They may or may not be actually recovered, and if recovered, the revenues therefrom and the actual costs related thereto could be more or less than the estimated amounts.

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The estimates of reserves presented herein were based upon a detailed study of the properties in which FieldPoint Petroleum Corporation owns an interest; however, we have not made any field examination of the properties.  No consideration was given in this report to potential environmental liabilities that may exist nor were any costs included for potential liability to restore and clean up damages, if any, caused by past operating practices.

To estimate economically recoverable oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates.  Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be demonstrated to be economically producible based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined as of the effective date of the report.  FieldPoint Petroleum Corporation has informed us that they have furnished us all of the accounts, records, geological and engineering data, and reports and other data required for this investigation.  In preparing our forecast of future production and income, we have relied upon data furnished by FieldPoint Petroleum Corporation with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, geological structural and isopach maps, well logs, core analyses, and pressure measurements.  Joe C. Neal & Associates reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data supplied by FieldPoint Petroleum Corporation.

The value estimated in this report is based on the assumptions that the properties are not negatively affected by the existence of hazardous substances or detrimental environmental conditions.  We are experts in the identification of hazardous substances or detrimental environmental conditions, but have not been asked to perform an environmental study.  It is possible that tests and inspections conducted by a qualified hazardous substance and environmental expert could reveal the existence of hazardous material and environmental conditions on or around the properties that would negatively affect the properties' value.

 Property identification, expense and revenue interests, actual product prices, and operating expenses were provided by FieldPoint Petroleum Corporation.  This data was not verified by inspection of internal records and files, nor was a physical inspection made of the properties.  Information regarding prices and the particular pricing categories under current governmental regulations was supplied by FieldPoint Petroleum Corporation.

Net oil and gas reserves are estimated quantities of crude oil, natural gas, and natural gas liquids attributed to the revenue interests of FieldPoint Petroleum Corporation.  Net income to the interests of FieldPoint Petroleum Corporation is the future net revenue after deduction of state and county taxes, operating expenses, and investments, if applicable.  The resulting net income is before federal income tax and does not consider any encumbrances against the properties, if such exist.  Minor variations in composite columns totals result from computer rounding.  Values of the estimated net proved reserves are expressed in terms of future net revenue and present value of future net revenue.  Future net revenues are calculated by deducting estimated operating expenses, capital costs, and severance and ad Valorem taxes from the future gross revenue.

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Present value of future net revenue is calculated by discounting the future net revenue at the rate of ten percent (10%) per annum compounded monthly over the expected period of realization.  The present value set forth in this report does not necessarily represent the fair market value of the evaluated interests.

A summary projection of the estimated future net revenue and present value of future net revenue as of January 1, 2015 is as follows:

The future net revenue set forth above reflects estimated capital expenditures in the amount of $64,958.00 necessary to develop those reserves classified as Proved Developed Producing and Proved Developed Non-Producing.  Proved Undeveloped net revenue reflects estimated capital costs of $3,158,825.00 to drill and complete those wells.

Estimated reserves and future net income amounts presented in this report, as of January 1, 2015, are related to hydrocarbon prices.  The hydrocarbon prices used in the preparation of this report are based on the average prices during the twelve (12) month period prior to the ending date of the period covered in this report (determined as unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements as required by the SEC regulations).  The benchmark price of $94.26 per barrel has been adjusted by lease for gravity, transportation fees and regional price differentials to an average of $90.08.  Gas prices per thousand cubic feet (MCF) are based on a benchmark price of $4.28 per MCF and have been adjusted by lease for BTU content, transportation fees and regional price differentials to an average of $5.47.  The oil and gas prices were held constant for the economic life of the properties as specified by the SEC.  Oil volumes shown herein are expressed in barrels, which are equivalent to forty-two (42) United States gallons.  Gas volumes are expressed at standard conditions of sixty degrees (60°) Fahrenheit and at the standard pressure base of the respective area in which the reserves are located.

Operating expenses including direct and indirect overhead expenses were supplied by FieldPoint Petroleum Corporation and were held constant for the life of the properties.  Severance and ad valorem taxes were deducted in the lease reserves and economics projections at the standard state rates.

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Joe C. Neal & Associates is an Independent Petroleum and Environmental Engineering Consulting Firm that has been providing Petroleum Consulting Services throughout the world for thirty nine (39) years.  Joe C. Neal & Associates does not have any financial interest, including stock ownership, in FieldPoint Petroleum Corporation.  Our fees were not contingent on the results of our evaluation.  Joe C. Neal & Associates has used all procedures and methods that it considered necessary to prepare this report.  The technical persons responsible for preparing the reserve estimates presented herein meet the requirements regarding qualification, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.

This report is solely for the information of and assistance to FieldPoint Petroleum Corporation for their use in SEC filings.  It is not to be used, circulated, quoted, or otherwise referred to for any purpose without the express written consent of the undersigned except as required by law.  Data utilized in this report will be maintained in our files and is available for your use.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein.  The proved reserves included herein were determined in conformance with the SEC Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.”  In our opinion, the proved reserves presented in this report comply with the definitions, guidelines and disclosure requirements as required by the SEC regulations.

It has been our privilege to serve you by preparing this evaluation.

 

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DEFINITIONS OF OIL AND GAS RESERVES

17 CFR § 210.4-10 Federal Register Dated December 31, 2008/Filed January 13, 2009

Developed oil and gas reserves

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Undeveloped oil and gas reserves

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

Proved oil and gas reserves 2

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible - from a given date forward from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

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(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including government entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-date-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

2 Joe C. Neal & Associates separates proved developed reserves into proved developed producing and proved developed nonproducing reserves. This is to identify proved developed producing reserves as those to be recovered from actively producing wells; proved developed nonproducing reserves as those to be recovered from wells or intervals within wells, which are completed but shut in waiting on equipment or pipeline connections, or wells where a relatively minor expenditure is required for recompletion to another zone.

 

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TABLE				Gross				Gross				Net				Net				Revenue				Oper				Sev				Ad Val				Net				Net				Net
NUMBER		Lease Name		OIL				GAS				OIL				GAS				to Int.				Expense				Tax				Tax				Investment				Income				Income
7		EAST LUSK 15 FEDERAL COM #01Y			103.129				205.101				37.416				74.413				3782.572				841.050				268.834				0.000				0.000				2672.688				1717.945
8		EAST LUSK 15 FEDERAL COM #02			68.953				97.982				25.017				35.549				2450.629				645.750				173.995				0.000				0.000				1630.884				1189.030
9		EAST LUSK 15 FEDERAL COM #03H			127.717				340.190				46.337				123.425				4857.144				919.800				345.590				0.000				0.000				3591.754				2265.163
10		JENNINGS FEDERAL #01			109.402				11.637				79.384				8.444				7106.861				1873.550				503.216				0.000				0.000				4730.093				2503.117
11		JENNINGS SWD			0.000				0.000				0.000				0.000				999.606				0.000				0.000				0.000				0.000				999.606				416.328
12		KORCZAK FEDERAL #01			107.930				72.804				11.872				8.008				1114.042				143.534				78.985				0.000				0.000				891.524				520.795
13		QUINOCO SULIMAR #01			58.643				0.000				50.140				0.000				4616.872				1113.600				326.875				0.000				0.000				3176.398				1441.431
6		TOTAL NM PROVED DEVELOPED PRODUCING			575.774				727.714				250.167				249.840				24927.726				5537.284				1697.494				0.000				0.000				17692.947				10053.809
15		ARROWHEAD			2.919				0.000				2.335				0.000				209.444				164.250				9.634				6.993				0.000				28.566				26.481
16		NORTH BLOCK 12 UNIT			80.718				0.000				69.141				0.000				6201.973				2669.161				285.291				207.084				0.000				3040.436				1913.333
17		STATE OF TEXAS -Z-			0.000				0.000				0.000				0.000				0.000				0.000				0.000				0.000				0.000				0.000				0.000
14		TOTAL TX PROVED DEVELOPED PRODUCING			83.636				0.000				71.476				0.000				6411.417				2833.411				294.925				214.077				0.000				3069.003				1939.814
3		TOTAL PROVED DEVELOPED PRODUCING			659.410				727.714				321.644				249.840				31339.142				8370.695				1992.420				214.077				0.000				20761.950				11993.622
19		PDNP KORCZAK FEDERAL #01			113.286				156.421				12.461				17.206				1217.933				47.314				86.467				0.000				5.169				1078.983				45.916
18		TOTAL NM PROVED DEVELOPED NON PRODUCING			113.286				156.421				12.461				17.206				1217.933				47.314				86.467				0.000				5.169				1078.983				45.916
21		PDNP ARROWHEAD #01			45.982				0.000				36.786				0.000				3314.745				896.500				152.478				110.679				50.000				2105.088				1594.373
22		PDNP N. BLK 12 #09 (D)			46.697				0.000				39.999				0.000				3587.942				926.087				165.045				119.801				9.790				2367.220				1840.593
20		TOTAL TX PROVED DEVELOPED NON PRODUCING			92.679				0.000				76.785				0.000				6902.687				1822.587				317.524				230.481				59.790				4472.308				3434.965
4		TOTAL PROVED DEVELOPED NON PRODUCING			205.965				156.421				89.246				17.206				8120.620				1869.901				403.991				230.481				64.958				5551.290				3480.881
24		PU E. LUSK 15 FED COM #04H			246.854				523.933				89.562				190.089				9120.279				1077.300				648.341				0.000				2818.025				4576.613				1998.394
25		PU KORCZAK FEDERAL #02			220.303				257.308				24.233				28.304				2339.990				169.775				166.062				0.000				340.800				1663.352				854.055
23		TOTAL NM PROVED UNDEVELOPED			467.157				781.241				113.795				218.393				11460.269				1247.075				814.403				0.000				3158.825				6239.964				2852.448
5		TOTAL PROVED UNDEVELOPED			467.157				781.241				113.795				218.393				11460.269				1247.075				814.403				0.000				3158.825				6239.964				2852.448
1		GRAND TOTAL ALL CATEGORIES			1332.532				1665.376				524.685				485.440				50920.031				11487.671				3210.813				444.558				3223.783				32553.204				18326.951

 

 

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