CALGARY, ALBERTA–(Marketwire – Mar 4, 2013) – Arsenal Energy Inc. (AEI.TO) (AEYIF)
AJM Deloitte has evaluated Arsenal”s reserves as at December 31, 2012 in accordance with National Instrument 51-101. Detailed reserve information will be included in Arsenal”s Annual Information Form for the year ended December 31, 2012 which will be filed on SEDAR at www.sedar.com on or before March 30, 2013. The summary information that follows has been derived from that evaluation.
- Year/year proved developed producing reserves increased by 2.3%
- Year/year proved plus probable reserves decreased by 5.2%. The decrease is due to a negative technical revision of recoverable reserves in the Bakken formation at Stanley and Lindahl from 550 Mboe/well to 475 Mboe/well.
- Oil and natural gas liquids at December 31, 2012 constitute 81% of proved plus probable reserves
- Arsenal”s P+P PV10 net asset value is $1.27/share.
- Based on the Q4 2012 production rate of approximately 3,925 boe/day, Arsenal has a reserve life of approximately 10.4 years on a proved plus probable basis.
- Excluding technical revisions, FD&A was $20.81 per boe in 2012.
|Summary of Oil and Natural Gas Reserves as at December 31, 2012|
|Oil and NGL”s||Natural Gas||Oil Equivalent|
|Gross (1||)||Net (2||)||Gross (1||)||Net (2||)||Gross (1||)||Net (2||)|
|Total Proved + Probable||11,984.3||9,899.8||17,491.7||15,071.0||14,899.5||12,411.8|
- “Gross” reserves means Arsenal”s interest before deduction of royalties
- “Net” reserves means Arsenal”s interest after deduction of royalties
|Summary of Net Present Value of Future Net Revenue as of December 31, 2012|
|Value Before Income Tax (1) (2)|
|Total Proved + Probable||444.7||320.1||245.9|
- AJM forecast prices at December 31, 2012
- Includes future development capital of $116.5 MM$ (undiscounted)
|2012 Reserve Reconciliation|
|December||Acquired /||Adds /||December|
|TP value (MM$)||166.1||+1.7||-37.5||4.5||134.8|
|P+P value (MM$)||296.4||+1.7||-37.5||-14.7||245.9|
Preliminary 2012 Yearend Results
Exit rate production for 2012 was approximately 4,100 boe per day with fourth quarter production averaging approximately 3,925 boe per day. Q4 2012 and full year 2012 cash flow from operations were approximately $9.0 million and $30.0 million respectively. Adjusting for one time transaction costs incurred in Q4 2012 of $1.0 million, Q4 2012 and full year 2012 cash flow would have been approximately $10.0 million and $31.0 million respectively. Capital investment in 2012 was approximately $42.7 million, before acquisitions and divestitures, and yearend 2012 bank debt is estimated at approximately $68.5 million including working capital. Arsenal anticipates releasing its audited yearend 2012 financial results on or about March 20, 2013.
As previously disclosed in its January 14, 2013 news release, Arsenal, together with its advisors, continues to analyze various alternatives by which excess cash flow from its US properties may be efficiently returned to its shareholders, which could include a corporate reorganization or other alternatives. However, there can be no assurance that any of these alternatives will be completed.
Arsenal has a reserves committee, comprised of independent board members that review the qualifications and appointment of the independent reserves evaluators. The committee also reviews the procedures for providing information to the evaluators. All booked reserves are based upon the annual evaluations by the independent qualified reserves evaluators conducted in accordance with the COGE (Canadian Oil and Gas Evaluation) Handbook and NI 51-101. The evaluations are conducted using all available geological and engineering data. The reserves committee has reviewed the reserves information and approved the reserve report.
Unaudited 2012 financial information: As Arsenal plans to announce its audited 2012 financial results on or about March 20, 2013, certain financial information for the year ended December 31, 2012 disclosure herein, or used in carious calculations herein, is based on unaudited information and has been utilized by Arsenal in this release to facilitate the discussion with respect to the performance of our capital program. Readers are advised that these financial estimates are subject to audit and may be subject to change as a result, and such changes could be material.
Information Regarding Disclosure on Oil and Gas Reserves and Operational Information
Arsenal”s oil and gas reserves statement for the year ended December 31, 2012, which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be contained within our Annual Information Form which will be available on our SEDAR profile at www.sedae.com on or before March 30, 2013. The recovery and reserve estimates contained herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In relation to the disclosure of estimates for individual properties, such estimates may not reflect the same confidence level as estimated reserves and future net revenue for all properties, due to the effects of aggregation. The Company”s belief that it will establish additional reserves over time with conversion of probable undeveloped reserves into proved reserves is a forward-looking statement and is based on certain assumptions and is subject to certain risks, as discussed below under the heading “Advisory”.
In relation to the disclosure of net asset value (“NAV”), the NAV table shows what is normally referred to as “produced-out” NAV calculation under which the current value of the Company”s reserves would be produced at forecast future prices and costs and do not necessarily represent a “going concern” value of the Company. The value is a snapshot in time and is based on various assumptions including commodity price forecasts and foreign exchange rates that very over time. It should not be assumed that the future net revenues estimated by AJM Deloitte represent the fair market value of the reserves, nor should it be assumed that Arsenal”s internally estimated value of its undeveloped land holdings represent the fair market value of the lands.
The information provided above includes references to discovered and undiscovered oil and natural gas resources. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resource.
Certain information regarding Arsenal Energy Inc. (the “Company”) contained in this press release, may constitute forward – looking statements under applicable securities laws. The forward‐looking statements are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices, the availability of labor and services, the geological nature of the formations targeted by the Company and the success of completion and recompletion activities. Although the Company believes that the expectations and assumptions on which the forward‐looking statements are based are reasonable, undue reliance should not be placed on the forward‐looking statements because the Company can give no assurance that they will prove to be correct. Since forward‐looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations, changes in the regulatory regime applicable to the Company and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in the Company”s Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. The forward‐looking statements contained in this presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward‐lo oking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
The recovery and reserve estimates contained herein are estimates only and there is no guarantee that the estimated reserves will be recovered.
This press release contains financial terms that are not considered measures under International Financial Reporting Standards (“IFRS”), which are considered to be generally accepted accounting principles (“GAAP” ), such as cash flow from operations and net debt. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. Specifically, cash flow from operations reflects cash generated from operating activities before changes in non-cash working capital. Management considers cash flow from operations important as it helps evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities and repay debt. Net debt includes bank debt outstanding plus accounts payable less accounts receivable and prepaid expense and is used to evaluate the Company”s financial leverage.
Natural gas volumes have been converted to barrels of oil equivalent (“boe”). Six thousand cubic feet (“mcf”) of natural gas is equal to one barrel based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
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Arsenal Energy Inc.
Tony van Winkoop
President and Chief Executive Officer
Arsenal Energy Inc.
J. Paul Lawrence
Vice President, Finance and CFO
Arsenal Energy Inc.
1900, 639 – 5th Avenue S.W.
Calgary, Alberta, T2P 0M9