CALGARY, AB–(Marketwired – February 23, 2015) – Kicking Horse Energy Inc. (“Kicking Horse” or the “Company“) (TSX VENTURE: KCK) reports that independent reserves evaluations effective December 31, 2014 have been completed by the Company’s reserves evaluators in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101“) and in accordance with the Canadian Oil and Gas Evaluation Handbook. GLJ Petroleum Consultants Ltd. (“GLJ“) evaluated the Company’s properties in New Brunswick (the “GLJ Report“), while McDaniel and Associates Consultants Ltd. (“McDaniel“) evaluated the Company’s Montney Formation assets at East Kakwa, Alberta (the “McDaniel Report“).
The information in this press release respecting the Company’s reserves associated with its Montney Formation properties at East Kakwa, Alberta reflects the Company’s 75% working interest in that asset resulting from the merger of Contact Exploration Inc. and Donnycreek Energy Inc. in December 2014.
Highlights of the Company’s reserves evaluations include (all reserve volumes are reported on a Company gross reserves basis):
- Total Company proved and probable reserves of 29,557 MBOE (58% oil and natural gas liquids (“NGL’s“)).
- Total Company net present value for proved and probable reserves is $489.4 MM before tax using forecast prices and costs, discounted at 10%.
- Total Company proved reserves of 17,763 MBOE (56% oil and NGL’s).
- Total Company net present value of proved reserves is $283.5 MM before tax using forecast prices and costs, discounted at 10%.
Both the McDaniel Report and the GLJ Report used McDaniel’s January 1, 2015 price forecast.
Alberta – McDaniel Report Highlights
The McDaniel Report assigns reserves to approximately 13.5 gross sections (out of 20.75 total gross sections) of the East Kakwa property. Reserves have been assigned within the asset at between 4 and 5 horizontal wells per section. Minor producing properties in Alberta outside of East Kakwa account for less than one half of one percent of the Alberta reserves assigned by McDaniel.
Highlights of the McDaniel Report include:
- Proved plus probable reserves of 27,801 MBOE consisting of 74,769 Mmcf natural gas and 15,339 MBOE liquids.
- The net present value of the Company’s Alberta total proved and probable reserves is $455.1 MM before tax using forecast prices and costs, discounted at 10%.
- Proved reserves of 17,342 MBOE consisting of 46,741 Mmcf natural gas and 9,552 MBOE liquids.
- The net present value of the Company’s Alberta proved reserves is $277.0 MM before tax using forecast prices and costs, discounted at 10%.
New Brunswick – GLJ Report Highlights
The Company’s Stoney Creek and Hopewell properties within the GLJ Report were negatively impacted by the frac moratorium recently announced in New Brunswick, as project development will be delayed as a result.
Total proved and probable reserves decreased to 1,756 MBOE with a net present value of future net revenue before income taxes discounted at 10% of $34.4 MM. Total proved reserves decreased to 421 MBOE with a net present value of future net revenue before income taxes discounted at 10% of $6.5 MM. The Company’s Stoney Creek oil reserves account for 100% of all proved reserves and 99% of all total proved and probable reserves in the Province of New Brunswick.
The following table summarizes the Company’s gross reserves in both Alberta and New Brunswick, by category and the net present value of the future net revenue before income taxes, discounted at 10%. The reserves and net present value data set forth below is based upon the GLJ Report and the McDaniel Report, each dated effective December 31, 2014, which have been consolidated into one report by McDaniel and adjusted to apply certain of McDaniel’s assumptions and methodologies and pricing forecast and cost assumptions.
|Summary of Gross Oil and Gas Reserves and Net Present Value of Future Net Revenue|
|Before Income Taxes as of December 31, 2014 – Forecast Prices and Costs|
|NPV 10%||NPV 10%|
|Total Proved Plus Probable||1,833||74,769||15,262||29,557||489,433||16.56|
|(1)||May not add due to rounding.|
About Kicking Horse Energy Inc.
Kicking Horse Energy Inc. is a public oil and gas company which is focused on the development of Alberta’s liquids-rich Montney Formation tight gas play. For more information, please see the Company’s website: www.kickinghorseenergy.com
Information Regarding Disclosure on Oil and Gas Reserves Information
ADVISORY ON USE OF “BOEs”: “BOEs” may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil or NGL’s as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
ADVISORY ON FORWARD-LOOKING STATEMENTS: This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words “expect”, “continue”, “estimate”, “may”, “will”, “should”, “believe”, “plans”, “cautions” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this press release contains statements concerning the volumes and net present values of the Company’s reserves. Statements relating to “reserves” are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Kicking Horse which have been used to develop such statements and information but which may prove to be incorrect. Although Kicking Horse believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Kicking Horse 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. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company’s exploration and development activities respecting the Company’s Alberta and New Brunswick assets will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; the ultimate size and scope of any hydrocarbon-bearing formations at the Company’s Alberta and New Brunswick assets; that Kicking Horse’s efforts to raise additional capital will be successful; that Kicking Horse will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Kicking Horse’s reserve volumes and those volumes reported by GLJ and McDaniel in the GLJ Report and the McDaniel Report, respectively; the general stability of the economic and political environment in which Kicking Horse operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Kicking Horse to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Kicking Horse operates; and the ability of Kicking Horse to successfully market its oil and natural gas products.
Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company’s products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Kicking Horse or by third party operators of Kicking Horse’s properties, increased debt levels or debt service requirements; inaccurate estimation of Kicking Horse’s oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Kicking Horse’s public disclosure documents. The reader is cautioned not to place undue reliance on this forward-looking information. The forward-looking statements contained in this press release are made as of the date hereof and Kicking Horse undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Oil and Gas Advisory
The reserves information contained in this press release has been prepared in accordance with NI 51-101 and represents only a portion of the disclosure required under NI 51-101. Complete NI 51-101 reserves disclosure will be included in the Company’s filings for the year ended December 31, 2014 required in accordance with NI 51-101, which are expected to be filed in late April 2015. Listed below are cautionary statements applicable to our reserves information:
- There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. The Company’s actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.
- Individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation.
- This press release contains estimates of the net present value of our future net revenue from our reserves. Such amounts do not represent the fair market value of our reserves.
- Reserves included herein are stated on a Company gross reserves basis. Company Gross reserves are defined as the working interest share of reserves prior to the deduction of interest owned by others (burdens). “Company gross reserves” is not a term defined by NI 51-101 and as such the estimates of Company gross reserves herein may not be comparable to estimates of “gross” reserves prepared in accordance with NI 51-101 or to other issuers’ estimates of “Company gross” reserves.
- The recovery and reserve estimates of our reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.
|Certain Defined Terms|
|bbl – barrel||mcf – thousand cubic feet|
|BOE – barrels of oil equivalent||Mmcf – million cubic feet|
|MBOE – thousand barrels of oil equivalent||MM – one million|
|Mbbls – thousand barrels|
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