CALGARY, Feb. 25, 2014 /CNW/ – SilverWillow Energy Corporation (“SilverWillow” or the “Corporation”) is pleased to announce an update to its estimate of Contingent Resources and Discovered Bitumen Initially-In-Place following an independent evaluation of the bitumen resources attributable to its oil sands property, the Audet Lands, located approximately 110 km northeast of Fort McMurray, Alberta.
Sproule Unconventional Limited (“Sproule”) prepared the independent evaluation of the bitumen resources for SilverWillow effective December 31, 2013. Sproule’s work on the Audet Lands included a review of the 2013 drilling program results, geological evaluation and a review of the work conducted by SilverWillow’s independent consultants with respect to caprock integrity and reservoir simulation, as well as preliminary engineering design and costing studies to determine the potential for production of bitumen using low pressure Steam Assisted Gravity Drainage (“SAGD”) methods.
Sproule has assigned a best estimate of Contingent Resources to the Audet Lands of 83.6 million barrels of recoverable bitumen in place amounting to an increase of 15.2 million barrels or 22% over the prior year’s best estimate of Contingent Resources of 68.4 million barrels following a review of the results from the 2013 drilling program. The estimate of Discovered Bitumen Initially-In-Place has decreased 2% from 1,845.9 million barrels to 1,803.8 million barrels.
SilverWillow Energy Corporation
Contingent Bitumen Resources1
as of December 31, 2013
1The term “contingent resources” is taken from the Canadian Oil and Gas Evaluation Handbook (“COGEH”) as published by the Society of Petroleum Evaluation Engineers (Calgary Chapter). The volumes listed in the chart above entitled, “Contingent Bitumen Resources” refer to potentially recoverable volumes of bitumen resources. The volumes of contingent bitumen resources in the above chart are presented in millions of barrels at stock tank conditions. There is no certainty that it will be commercially viable to produce any portion of the contingent bitumen resources.
SilverWillow has updated its investor presentation to reflect this announcement. The presentation is posted on SilverWillow’s website at www.swenergy.ca.
The preparation and disclosure of the reported resource estimates are the responsibility of SilverWillow’s management and require approval by the Corporation’s Reserves and HSE Committee and Board of Directors. Sproule’s responsibility is to express an opinion on the contingent bitumen resources based on the data provided by management. Sproule carried out the evaluation and review in accordance with standards established by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. These standards require that the contingent resources estimates be prepared in accordance with COGEH.
Discovered Petroleum Initially-In-Place (equivalent to Discovered Resources) is defined in COGEH as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable.
Contingent Resources are defined in COGEH as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as ”contingent resources” the estimated discovered recoverable quantities associated with a project in the early project stage.
With respect to the Contingent Resources associated with SilverWillow’s Audet Lands, the contingencies which prevent the classification of these resources as reserves are as follows: the need to verify the effectiveness of the McMurray Formation shales as caprock for steam containment during the SAGD operation; uncertainties regarding the regulatory requirements applicable to the development of the Audet project; the absence of regulatory approvals for future commercial development; the absence of a firm commercial development plan; and the uncertainty of funding approval for commercial developments.
Prior to commercial production from the Audet Lands, which is not expected prior to late 2017, and is subject in any event to the risks described in this section, SilverWillow will have limited financial resources and a limited source of income, principally in the form of asset sales and farm-outs. SilverWillow anticipates making substantial capital expenditures for the acquisition, exploration, evaluation, delineation, development of and production from any potential project related to its properties. There can be no assurance that debt or equity financing, a bank loan facility or cash generated by operations will be available or sufficient to meet these requirements or for other corporate purposes or, if debt or equity financing is available, that it will be on terms acceptable to SilverWillow.
The inability of SilverWillow to access sufficient capital for its operations could have a material adverse effect on SilverWillow’s business, financial condition, results of operations and prospects, could result in the delay or indefinite postponement of further exploration, evaluation and development of SilverWillow’s properties or the possible loss of its properties and could put at risk SilverWillow’s ability to operate as a going concern.
Capital requirements are subject to normal capital market risks, primarily the availability and cost of capital. The extent to which SilverWillow will need to access additional funding will be subject to normal capital market risks, primarily the availability and cost of capital.
Contingent Resources do not constitute and should not be confused with reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources on any of the above mentioned properties.
For further information including risk factors, please see SilverWillow’s Management Discussion and Analysis for the period ended September 30, 2013 which was filed on SEDAR at www.sedar.com and the Corporation’s website at www.swenergy.ca.
About SilverWillow Energy
SilverWillow Energy Corporation is a Calgary, Alberta based pre-production oil sands company with a portfolio of exploration leases in Canada’s Athabasca oil sands. To learn more, please visit www.swenergy.ca.
The forward-looking information set out in this news release, is based on certain expectations and assumptions regarding, among other things, the exploration and development of the Audet Project and the Audet Lands; the ability of the Corporation to obtain required regulatory approval for the development of the Audet Project; the ability of the Corporation to raise capital to fund the development of the project; the geography of the areas in which SilverWillow will be exploring; and the sufficiency of budgeted capital expenditures in carrying out planned activities. These expectations and assumptions are based on certain factors and events that are not within the control of SilverWillow and there is no assurance they will prove to be correct.
Forward-looking information is subject to known and unknown risks and uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied in such forward-looking information. Such risks, uncertainties and factors include, among others, the risk that new regulatory requirements may prevent the development of the Audet Project; the risk that, even if new regulatory requirements do not restrict the development of the Audet Project, regulatory approvals in respect of the Audet Project will not be received in the timeframe or on the terms expected or at all; risks relating to the early stage of development of SilverWillow and the Audet Project; and the general risks associated with exploring for, developing and producing bitumen. In addition, there are numerous uncertainties inherent in estimating bitumen, including many factors beyond the Corporation’s control, and no assurance can be given that the indicated level of bitumen or the recovery thereof will be realized. In general, estimates of bitumen are based upon a number of factors and assumptions made as of the date on which the resource estimates were determined, such as geological and engineering estimates, which have inherent uncertainties. Additional risks relating to the business and operations of SilverWillow are set forth in the Corporation’s TSX Venture Exchange Listing Application and in its most recent Management’s Discussion and Analysis, which are filed under the Corporation’s profile on SEDAR at www.sedar.com.
SilverWillow undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward looking information.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
SOURCE SilverWillow Energy Corporation
For further information:
please contact Howard J. Lutley, President and Chief Executive Officer, at (403) 538-7030