SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (Unaudited)

12 Months Ended

Jun. 30, 2012

Supplemental Oil And Gas Reserve Information [Text Block]

12. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (Unaudited)

Company Reserve Estimates. Our proved reserve information as of June 30, 2012 was estimated by Netherland, Sewell & Associates, Inc. (“NSAI”), independent petroleum engineers. In accordance with SEC guidelines, NSAI’s estimates of future net revenues from our properties, and the PV-10 and standardized measure thereof, were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average price for each product, calculated as the unweighted arithmetic average of the first-day-of-the-month price for the period July 1, 2011 through June 30, 2012, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations.

The technical persons at NSAI are responsible for preparing the reserves estimates presented herein and meets the requirements regarding qualifications, 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. Herold Ribsskog, our officer and director, acted as the liaison with the technical persons at NSAI.

Reserve Technologies. 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. If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. To achieve reasonable certainty, NSAI employed technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used in the estimation of our proved reserves include, but are not limited to, well logs, geologic maps and available down well and production data, seismic data, well test data.

Oil and Gas Reserve Information. The following reserve quantities and future net cash flow information for our proved reserves located in the State of Michigan in the United States have been estimated as of June 30, 2012. The determination of oil and gas reserves is based on estimates, which are highly complex and interpretive. The estimates are subject to continuing change as additional information becomes available.

The information required by Items 1204 to 1208 of Regulation S-K are provided as follows:

Reserve Category	Oil (BBLS)		Natural Gas (MCF)	Present Worth at 10%
Proved
Developed:
United States - Michigan		21,288	-	$	853,800
Undeveloped:
United States - Michigan		15,545	-	$	257,400

Total Proved – June 30, 2012		36,833	-	$	1,111,200

Reserved Quantity	Oil (BBLS)
Balance June 30, 2010		-
Purchases		38,003
Production		-
Balance, June 30, 2011		38,003
Purchases		-
Production		(1,170	)
Balance, June 30, 2012		36,833

On June 14, 2011, the Company acquired an estimated 38,003 bbls of proved undeveloped net oil and gas reserves in place in connection with the Company’s purchase of the Dansville Prospect. These properties are located in Ingham County, Michigan.

The standardized measure of discounted future net cash flows is provided using the 12-month unweighted arithmetic average and were held constant throughout the life of the properties. The oil price used as of June 30, 2012 was $92.25 per bbl of oil. Future production costs are based on year-end costs and include severance and ad valorem taxes. Each property that is leased by us is also charged with field-level overhead in the reserve calculation. The present value of future cash inflows is based on a 10% discount rate.

Standardized Measure of Future Net Cash Flows:

	June 30, 2012
Future cash flows	$	3,397,800
Future production and development costs		(1,656,300	)
Future income taxes		-
Future net cash flows before discount		1,741,500
10% discount to percent value		(630,300)
Standardized measure of discounted future net cash flows	$	1,111,200

Changes in the Standard Measure of Discounted Cash Flows:

	June 30, 2012
Standardized measure of discounted future net cash flows beginning of period	$	1,206,404
Purchases of reserves in place		-
Extension and discoveries, net of future production and development costs		-
Sales of oil and gas produced, net of production costs
Revisions of previous quantity estimates		(75,354	)
Net change in prices and production costs		-
Net change in income taxes		-
Changes in timing and other		-
Standardized measure of discounted future net cash flows end of period	$	1,131,050

Production. For the year ended June 30, 2012, we only had production from our interest in the Brown 2-12 well located in Ingham County, Michigan. The Company produced approximately 1,170 barrels on a net basis.

Drilling Activity. During the year ended June 30, 2012, we conducted drilling activity in certain oil areas and land leases located in Ingham County, Michigan, known as the Dansville Prospect, and seismic data relating to such areas and leases. One of the wells in the Dansville Prospect, the Brown 2-12, has been drilled and was put into production. The second well in the Dansville Prospect, Cremer 1-1, was plugged and abandoned. We also own a working interest in a three well developmental drilling project in Pottawatomie County, Oklahoma, known as the Magnolia Prospect. However, this prospect has been fully impaired for as June 30, 2012 due to lack of adequate production.

Delivery Commitments. We are not obligated to provide a fixed and determinable quantity of oil or gas in the near future under existing contracts or agreements in Michigan.

	Oil
	Gross	Net
United States -
Michigan	1	0.44
	1	0.44

Gross and Net Developed Acreage for year ended June 30, 2012:

Gross and Net Undeveloped Acreage for year ended June 30, 2012:

United States -

American Energy Development Corp. 10-K