CALGARY, Feb. 23, 2017 /CNW/ – Altura Energy Inc. (“Altura” or the “Company”) (TSX Venture: ATU) is pleased to announce the results of the independent evaluation of the Company’s oil and natural gas reserves (the “McDaniel Report”), effective December 31, 2016, as prepared by McDaniel and Associates Consultants Ltd. (“McDaniel”).
Altura’s audit of its 2016 annual financial statements is not yet complete and accordingly all financial amounts referred to in this news release are unaudited and represent management’s estimates. Readers are advised that these financial estimates are subject to audit and may be subject to change as a result.
Year End 2016 Reserves Highlights
- Proved developed producing (“PDP”) reserves increased by 153 percent from 434 mboe to 1,099 mboe. Total proved (“1P”) reserves increased by 151 percent from 725 mboe to 1,821 mboe. Total proved and probable (“2P”) reserves increased by 135 percent from 1,362 mboe to 3,195 mboe.
- Finding, development and acquisitions (“FD&A”) costs1 were $19.99 per boe for PDP, $17.76 per boe for 1P and $12.32 per boe for 2P reserves, including the changes in future development costs (“FDC”). This includes $4.2 million (24% of capital expenditures) to acquire undeveloped land where new reserves have yet to be recognized.
- Recycle ratio1 of 1.3 times for PDP, 1.4 times for 1P, and 2.1 times for 2P reserves based on 2016 FD&A costs and Altura’s estimated 2016 operating netback1 of $25.30 per boe. Using the Q4 2016 estimated operating netback of $30.02 per boe, the recycle ratio increases to 1.5 times for PDP, 1.7 times for 1P, and 2.4 times for 2P reserves.
- Replaced1 417 percent of annual production with new PDP reserves, 622 percent of annual production with new 1P reserves and 973 percent of annual production with new 2P reserves based on 2016 estimated production of 210 mboe.
2016 Independent Reserves Evaluation
The McDaniel Report was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 (“NI 51-101”). The reserve evaluation was based on McDaniel’s forecast pricing and foreign exchange rates at January 1, 2017. The Reserves Committee of the Board and the Board of Directors of Altura have reviewed and approved the evaluation prepared by McDaniel.
Unless noted otherwise, reserves included herein are stated on a company gross basis, which is the Company’s working interest before deduction of government royalties and excluding any other additional royalty interests. This news release contains several cautionary statements under the heading “Reader Advisory” and throughout the release. In addition to the information contained in this news release, more detailed reserves information will be included in Altura’s Annual Information Form for the year ended December 31, 2016, which will be filed on SEDAR by April 30, 2017.
2016 Activity
Altura’s activity in 2016 included drilling 7 (6.5 net) horizontal wells, including 3 (3.0 net) in the Eyehill area, 2 (1.5 net) in the Wildmere area, one (1.0 net) in the Leduc-Woodbend area, and one (1.0 net) in the Provost area. Estimated 2016 capital expenditures include:
($000)(1) |
|||
Geological and geophysical |
265 |
||
Land |
4,297 |
||
Drilling and completions |
5,978 |
||
Capitalized workovers |
565 |
||
Equipping and facilities |
2,172 |
||
Other |
249 |
||
Exploration and development capital expenditures |
13,526 |
||
Property acquisitions |
4,093 |
||
Property dispositions |
(125) |
||
Total capital expenditures, acquisitions and dispositions |
17,494 |
(1) Estimated and unaudited |
Company Gross Reserves as at December 31, 2016
The following table summarizes the Company’s gross reserve volumes at December 31, 2016 utilizing McDaniel’s forecast pricing and cost estimates outlined further below in this press release.
Company Gross Reserves(1)(2) |
||||||||
Category |
Light and |
Heavy Oil |
Conventional |
Natural (Mbbl) |
2016 Oil (Mboe) |
2015 Oil (Mboe) |
Percent |
|
Proved |
||||||||
Developed |
||||||||
Producing |
700.1 |
172.5 |
1,275.9 |
13.9 |
1,099.2 |
433.9 |
153% |
|
Undeveloped |
467.9 |
116.3 |
803.6 |
4.1 |
722.2 |
291.0 |
148% |
|
Total Proved(3) |
1,168.0 |
288.9 |
2,079.5 |
18.0 |
1,821.4 |
724.9 |
151% |
|
Total Probable |
823.4 |
343.4 |
1,144.1 |
16.3 |
1,373.8 |
637.5 |
115% |
|
Total Proved & |
||||||||
Probable(3) |
1,991.4 |
632.2 |
3,223.6 |
34.3 |
3,195.2 |
1,362.4 |
135% |
(1) Gross reserves are Company working interest reserves before royalty deductions. |
(2) Based on McDaniel’s January 1, 2017 forecast prices. |
(3) Numbers may not add due to rounding. |
Reconciliation of Company Gross Reserves for 2016(1)(2)
Total Proved Oil |
Total Probable Oil |
Total Proved & |
|
December 31, 2015 |
724.9 |
637.5 |
1,362.4 |
Extensions & Improved Recovery |
299.6 |
680.1 |
979.7 |
Technical Revisions |
305.2 |
(203) |
102.3 |
Discoveries |
78.2 |
43.3 |
121.5 |
Acquisitions & Dispositions |
623.4 |
216.0 |
839.4 |
Economic Factors |
– |
– |
– |
Production |
(210.0) |
– |
(210.0) |
December 31, 2016 |
1,821.4 |
1,373.8 |
3,195.2 |
(1) Gross reserves are Company working interest reserves before royalty deductions. |
(2) Numbers may not add due to rounding. |
Technical revisions for 1P and 2P reserve categories are positive due to well performance exceeding the previous year’s forecast.
Future Development Costs (“FDC”) and Well Schedule
The following is a summary of the estimated FDC and number of wells required to bring 1P and 2P undeveloped reserves on production.
Total Proved ($000) |
Total Proved Wells Gross (Net) |
Total Proved & ($000) |
Total Proved & Wells Gross (Net) |
|
2017 |
6,102 |
7 (6.2) |
7,252 |
8 (7.2) |
2018 |
3,030 |
3 (3.0) |
8,439 |
8 (7.5) |
2019 |
566 |
1 (0.6) |
1,132 |
2 (1.1) |
Total Undiscounted |
9,697 |
11 (9.7) |
16,822 |
18 (15.8) |
Total Discounted 10% |
8,916 |
15,240 |
(1) Numbers may not add due to rounding. |
(2) FDC as per the McDaniel Report and based on McDaniel’s January 1, 2017 forecast prices. |
The forecasted future net operating income for the next three years from the McDaniel Report based on the January 1, 2017 forecasted pricing is estimated to be $29.0 million for 1P reserves and $44.0 million for 2P reserves, which is sufficient to fund Altura’s FDC for the next three years.
Of the seven wells drilled in 2016, four gross (3.5 net) wells were recognized as future drilling locations in the 2015 year-end report with 2P reserves totalling 333.8 mboe (98.2 mboe per net well) and FDC of $3.5 million ($10.43/boe). The actual 2P reserve additions in the 2016 year-end report for the 3.5 net wells totalled 445 mboe (129.7 mboe per net well) at an actual cost of $3.0 million ($6.82/boe).
Altura’s 2017 capital budget is expected to be $17.0 million. Approximately 36 percent is allocated to drilling undeveloped reserves, 36 percent is allocated to drilling new prospects with no associated reserves, and 28 percent is allocated to infrastructure, land, seismic, abandonment, reclamation and other corporate costs. For details on Altura’s 2017 capital budget, see the Corporation’s November 10, 2016 news release.
Summary of Before Tax Net Present Value (“NPV”) of Future Net Revenue as at December 31, 2016
Benchmark oil and NGL prices used are adjusted for quality of oil or NGL produced and for transportation costs. The calculated NPVs are based on McDaniel’s forecast pricing and foreign exchange rates at January 1, 2017 as outlined in the price forecast table further below in this press release. The NPVs include a deduction for estimated future well abandonment and reclamation but do not include a provision for interest, debt service charges and general and administrative expenses. It should not be assumed that the NPV estimate represents the fair market value of the reserves.
|
||||||
Discount Rate |
||||||
Category |
Undiscounted |
5% |
10% |
15% |
20% |
|
Proved |
||||||
Developed Producing |
29,910 |
26,248 |
23,328 |
21,021 |
19,185 |
|
Undeveloped |
14,476 |
10,702 |
8,026 |
6,086 |
4,645 |
|
Total Proved |
44,386 |
36,951 |
31,353 |
27,108 |
23,830 |
|
Total Probable |
43,652 |
31,005 |
23,187 |
18,095 |
14,600 |
|
Total Proved & Probable |
88,038 |
67,955 |
54,540 |
45,203 |
38,430 |
(1) Based on McDaniel’s January 1, 2017 forecast prices. |
(2) Includes abandonment and reclamation costs. |
(3) Numbers may not add due to rounding. |
Company Net Asset Value
The Company’s net asset value as at December 31, 2016 and 2015 are detailed in the following table. This net asset value determination is a “point-in-time” measurement and does not take into account the possibility of Altura being able to recognize additional reserves through successful future capital investment in its existing properties beyond those included in the 2016 year-end reserve report and the 2015 year-end reserve report.
|
||||
2016 |
2015 |
|||
($000) |
($/Share) |
($000) |
($/Share) |
|
NPV of Future Net Revenue |
||||
Developed Producing(1)(2) |
23,328 |
0.20 |
8,199 |
0.08 |
Total Proved(1)(2) |
31,353 |
0.27 |
11,534 |
0.11 |
Total Proved & Probable(1)(2) |
54,540 |
0.47 |
20,994 |
0.19 |
2P Net Asset Value(3) |
||||
Total Proved & Probable(1)(2) |
54,540 |
0.47 |
20,994 |
0.19 |
Undeveloped acreage(4) |
7,544 |
0.07 |
2,353 |
0.02 |
Working capital surplus(5) |
8,455 |
0.07 |
22,129 |
0.20 |
Proceeds from stock options(6) |
1,744 |
0.02 |
1,333 |
0.01 |
Net asset value (diluted)(6) |
72,283 |
0.63 |
46,809 |
0.42 |
(1) |
Evaluated by McDaniel as at December 31, 2016 and December 31, 2015. Net present value of future net revenue does not represent the fair market value of the reserves. |
(2) |
Net present values are based on McDaniel’s January 1, 2017 price forecast and January 1, 2016 price forecast. |
(3) |
Net asset value does not have a standardized meaning. See “Oil and Gas Metrics” contained in this news release. |
(4) |
Undeveloped acreage has been valued internally by Altura at an average of $100 per acre over 75,441 net undeveloped acres at December 31, 2016 and 23,531 net undeveloped acres at December 31, 2015. |
(5) |
Working capital surplus as at December 31, 2016 (estimated and unaudited). |
(6) |
Diluted shares as at December 31, 2016 was 108.9 million basic common shares plus 5.6 million stock options that were in-the-money as at December 31, 2016. Diluted shares as at December 31, 2015 was 108.9 million basic common shares plus 4.0 million stock options that were in-the-money as at December 31, 2015. |
Performance Metrics(1)
Altura’s 2016 FD&A costs were $19.99 per boe for PDP reserves, $17.76 per boe for 1P reserves and $12.32 per boe for 2P reserves, including the change in FDC. This includes $4.2 million (24% of capital expenditures) to acquire undeveloped land where new reserves have yet to be recognized. The following table highlights Altura’s FD&A, recycle ratio, reserve replacement and reserve life index for 2016.
2016 |
||
Total capital expenditures, acquisitions and dispositions ($000) |
17,494 |
|
Change in FDC – Total Proved ($000) |
5,704 |
|
Change in FDC – Total Proved & Probable ($000) |
7,664 |
|
Q4 2016 production (boe/d) |
988 |
|
Q4 2016 Operating netback ($/boe)(2) |
30.02 |
|
2016 Operating netback ($/boe)(2) |
25.30 |
|
Proved Developed Producing |
||
FD&A costs ($/boe)(2) |
19.99 |
|
Recycle ratio(2) (Q4 2016 operating netback) |
1.5 |
|
Recycle ratio(2) (2016 operating netback) |
1.3 |
|
Reserve replacement(2) |
417% |
|
Reserve life index (“RLI”) (years)(2) |
3.0 |
|
Total Proved |
||
FD&A costs ($/boe)(2) |
17.76 |
|
Recycle ratio(2) (Q4 2016 operating netback) |
1.7 |
|
Recycle ratio(2) (2016 operating netback) |
1.4 |
|
Reserve replacement(2) |
622% |
|
RLI (years)(2) |
5.0 |
|
Total Proved & Probable |
||
FD&A costs ($/boe)(2) |
12.32 |
|
Recycle ratio(2) (Q4 2016 operating netback) |
2.4 |
|
Recycle ratio(2) (2016 operating netback) |
2.1 |
|
Reserve replacement(2) |
973% |
|
RLI (years)(2) |
8.8 |
(1) |
Financial and production information is per the Company’s 2016 preliminary unaudited financial statements and is therefore subject to audit. |
(2) |
“Operating netback”, “Finding, development & acquisitions costs” or “FD&A costs”, “Recycle ratio”, “Reserve replacement”, “Reserve life index” or “RLI” do not have standardized meanings. See “Oil and Gas Metrics” contained in this news release. |
Price Forecast
The reserve evaluation was based on McDaniel’s forecast pricing and foreign exchange rates at January 1, 2017 as outlined below.
WTI Crude Oil ($US/bbl) |
Western Canadian Select Crude Oil ($CAD/bbl) |
Alberta AECO Gas ($CAD/mmbtu) |
Foreign Exchange |
||
2017 |
55.00 |
53.70 |
3.40 |
0.750 |
|
2018 |
58.70 |
58.20 |
3.15 |
0.775 |
|
2019 |
62.40 |
61.90 |
3.30 |
0.800 |
|
2020 |
69.00 |
66.50 |
3.60 |
0.825 |
|
2021 |
75.80 |
71.00 |
3.90 |
0.850 |
|
2022 |
77.30 |
72.40 |
3.95 |
0.850 |
|
2023 |
78.80 |
73.80 |
4.10 |
0.850 |
|
2024 |
80.40 |
75.30 |
4.25 |
0.850 |
|
2025 |
82.00 |
76.80 |
4.30 |
0.850 |
|
2026
|
83.70 |
78.40 |
4.40 |
0.850 |
|
2027 |
85.30 |
79.90 |
4.50 |
0.850 |
|
2028 |
87.00 |
81.50 |
4.60 |
0.850 |
|
2029 |
88.80 |
83.10 |
4.65 |
0.850 |
|
2030 |
90.60 |
84.90 |
4.75 |
0.850 |
|
2031 |
92.40 |
86.50 |
4.85 |
0.850 |
|
thereafter |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
0.850 |
About Altura Energy Inc.
Altura Energy Inc. is a public oil and gas company active in the exploration and development of oil and natural gas in east central Alberta.