CALGARY, ALBERTA–(Marketwired – Feb. 1, 2016) – Arsenal Energy Inc. (“Arsenal” or the “Corporation”) (TSX:AEI)(OTCQX:AEYIF) is pleased to provide the highlights of its year end reserves report and to provide a corporate update. Arsenal’s proved plus probable finding development and acquisition costs for 2015 were $12.22 per boe and based, on the current production rate, Arsenal has a reserve life of approximately 13.3 years on a proved plus probable basis.
In preparing the Company’s reserves, Deloitte LLP (Deloitte”) has evaluated Arsenal’s reserves as at December 31, 2015 in accordance with National Instrument 51-101. For light oil, Deloitte is using a price forecast of US $42.00 WTI, US $47.50 WTI and US $55.00 WTI for 2016, 2017 and 2018 respectively and for AECO natural gas, Deloitte is using Cdn. $2.45 per mcf, Cdn. $2.80 per mcf and Cdn. 3.00 per mcf in 2016, 2017 and 2018, respectively. Additionally, Deloitte assumed a Canadian/ US dollar exchange rate of $0.74, 0.77 and 0.80 in 2016, 2017 and 2018 respectively.
Detailed reserve information will be included in Arsenal’s Annual Information Form for the year ended December 31, 2015 which will be filed on SEDAR at www.sedar.com on or before March 31, 2016. The summary information that follows has been derived from Deloitte’s evaluation.
- Proved develop producing reserve replacement totaled 124% of 2015 production.
- Year over year:
- proved developed producing reserves increased by 5.6%
- proved reserves increased by 16.3%
- proved plus probable reserves increased by 4.2%.
- Oil and natural gas liquids at December 31, 2015 constitute 81% of proved developed producing reserves and 80% of proved plus probable reserves
- Based on the current production rate of approximately 3,250 boe/d, Arsenal has a reserve life of approximately 13.3 years on a proved plus probable basis.
- Arsenal’s finding and development cost was approximately $11.69 per boe based on proved reserve additions and $12.22 per boe based on proved plus probable reserve additions.
Despite using lower price forecasts than were used in the December 31, 2014 reserves report, which resulted in some earlier booked reserves being eliminated as being uneconomic in the current price environment, Arsenal nonetheless replaced its proved developed reserves by 124% and despite the lower price deck, marginally increased the dollar value of its P+P reserves.
|Summary of Oil and Natural Gas Reserves as at December 31, 2015|
|Oil and NGL’s||Natural Gas||Oil Equivalent|
|Gross (1)||Net (2)||Gross (1)||Net (2)||Gross (1)||Net (2)|
|Total Proved Plus Probable||12,734.6||10,537.9||18,521.3||16,172.8||15,821.5||13,233.4|
|(1)||“Gross” reserves means Arsenal’s interest before deduction of royalties|
|(2)||“Net” reserves means Arsenal’s interest after deduction of royalties|
|Summary of Net Present Value of Future Net Revenue as of December 31, 2015 ($ Thousands based on Deloitte December 31, 2015 price forecast)|
|Total Proved Plus Probable||473,965.5||282,456.0||188,081.5|
|2015 Reserve Reconciliation|
|December 31||Acquired||Technical||Economic||December 31|
|Total Proved (Mboe)||8,549||(44||)||(1,353||)||929||2,590||(728||)||9,943|
|Total Proved Value (MM$)||103.5||(1.9||)||(21.7||)||26.5||31.4||(31.4||)||106.4|
|Total Proved Plus Probable (Mboe)||15,182||(111||)||(1,353||)||842||1,820||(558||)||15,822|
|Total Proved Plus Probable Value (MM$)||201.7||(1.9||)||(21.7||)||10.0||24.2||(24.2||)||188.1|
Arsenal has a reserves committee, comprised of independent Board members, that reviews 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.
The Company is entering into processes to market some or all of its US properties as well as various non-core properties in Canada. The goal is to reposition the Company’s balance sheet and pursue growth opportunities at the Company’s Princess property by substantially reducing or eliminating the Company’s indebtedness.
Premium assets like Arsenal’s North Dakota properties often attract valuations substantially in excess of asset transactions in Canada. As demonstrated by Arsenal’s 2015 finding and development costs, the capital efficiencies of Arsenal’s Princess property offer very attractive economics relative to most plays in the Western Canadian Sedimentary Basin. A sale of the US properties, if achieved, will reposition the Company’s balance sheet and allow the Company to pursue growth in the opportunity base at Princess at a time when costs are generally expected to be very low.
In light of the current crude oil commodity price environment, Capex in 2016 is expected to be limited to tie-ins and exploration to grow the Princess opportunity base. The Company will continue its efforts at reductions to operating and overhead costs with any repositioning of the asset base.
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