CALGARY, ALBERTA–(Marketwired – March 14, 2016) – Striker Exploration Corp. (“Striker” or the “Company”) (TSX VENTURE:SKX) is pleased to provide a summary of its 2015 year-end reserves evaluation.
The highlights and reserves summary below sets forth Striker’s gross reserves as at December 31, 2015, as evaluated by GLJ Petroleum Consultants Ltd. (“GLJ”) in an independent report (the “GLJ Report”). The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”) and the reserve definitions contained in NI 51-101. Additional reserve information as required under NI 51-101 will be included in the Company’s annual information form which will be filed on SEDAR on or before April 29, 2016.
HIGHLIGHTS(1)
Note:
(1) Financial information is based on the Company’s preliminary estimate of 2015 year-end results and is therefore subject to change.
2015 INDEPENDENT RESERVES EVALUATION
GLJ conducted an independent reserves evaluation effective December 31, 2015, which was prepared in accordance with definitions, standards and procedures contained in the COGE Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). GLJ evaluated 100% of the Company’s reserves and has done so since the Company’s inception (including all predecessor companies). The reserves evaluation was based on GLJ forecast pricing and foreign exchange rates at January 1, 2016 as outlined herein.
Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without the inclusion of any royalty interest) unless otherwise noted.
RESERVES SUMMARY
Summary of Gross Oil and Gas Reserves as of December 31, 2015(1), (2), (3), (4)
Oil | Total Natural Gas |
Natural Gas Liquids |
Barrels of Oil Equivalent |
|
Gross | Gross | Gross | Gross | |
(Mbbl) | (MMcf) | (Mbbl) | (Mboe) | |
Proved | ||||
Developed Producing | 2,291 | 8,967 | 434 | 4,220 |
Developed Non-Producing | 46 | 358 | 13 | 118 |
Undeveloped | 1,436 | 2,446 | 260 | 2,104 |
Total Proved | 3,773 | 11,771 | 707 | 6,443 |
Probable | 2,905 | 7,567 | 463 | 4,629 |
Total Proved plus Probable | 6,679 | 19,338 | 1,170 | 11,072 |
Net Present Value Before Income Taxes Discounted at (% per Year) (M$)
0% | 5% | 10% | 15% | 20% | |
Proved | |||||
Developed Producing | 95,585 | 73,257 | 59,728 | 50,699 | 44,250 |
Developed Non-Producing | 1,485 | 1,269 | 1,069 | 904 | 772 |
Undeveloped | 37,515 | 26,582 | 18,818 | 13,494 | 9,800 |
Total Proved | 134,585 | 101,108 | 79,615 | 65,098 | 54,823 |
Probable | 116,524 | 64,664 | 39,790 | 26,315 | 18,299 |
Total Proved plus Probable | 251,108 | 165,772 | 119,406 | 91,414 | 73,122 |
Notes:
(1) | The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding. |
(2) | Gross reserves means the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Striker before deductions of royalties payable to others and without including any royalty interests owned by Striker. |
(3) | Based on GLJ’s January 1, 2016 escalated price forecast. See “Summary of Pricing and Inflation Rate Assumptions”. |
(4) | The net present value of future net revenue attributable to the Company’s reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment and reclamation costs for only those wells assigned reserves by GLJ. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company’s reserves estimated by GLJ represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company’s oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. |
NET ASSET VALUE(1)
NPV5 (M$) |
$/share(2) | NPV10 (M$) |
$/share(2) | |||||
Proved | ||||||||
Developed Producing | 73,257 | 2.27 | 59,728 | 1.85 | ||||
Developed Non-Producing | 1,269 | 0.04 | 1,069 | 0.03 | ||||
Undeveloped | 26,582 | 0.82 | 18,818 | 0.59 | ||||
Total Proved | 101,108 | 3.13 | 79,615 | 2.47 | ||||
Probable | 64,664 | 2.01 | 39,790 | 1.23 | ||||
Total Proved plus Probable | 165,772 | 5.14 | 119,406 | 3.70 | ||||
Net Debt(3) | (8,100 | ) | (0.25 | ) | (8,100 | ) | (0.25 | ) |
Net Asset Value | 157,672 | 4.89 | 111,306 | 3.45 |
Notes:
(1) | All Net Asset Values cited above or in the highlights above are the resulting NPV per reserves category per basic share less net debt of $8.1 million or $0.25/share. |
(2) | Basic shares outstanding of 32.24 million. All dilutive instruments currently out of the money. |
(3) | Financial information is based on the Company’s preliminary estimate of 2015 year-end results and is therefore subject to change. |
Summary of Pricing and Inflation Rate Assumptions – Forecast Prices and Costs
The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs. Crude oil and natural gas benchmark reference pricing, inflation and exchange rates utilized by GLJ as at January 1, 2016 were as follows:
Year | Exchange Rate (CAD/USD) |
WTI Cushing Oklahoma 40 API (USD/bbl) |
Canadian Light Sweet 40 API (CAD/bbl) |
Canadian Medium 29 API (CAD/bbl) |
Natural Gas AECO (CAD/mmbtu) |
|
2016 | 0.725 | 44.00 | 55.86 | 50.80 | 2.76 | |
2017 | 0.750 | 52.00 | 64.00 | 59.52 | 3.27 | |
2018 | 0.775 | 58.00 | 68.39 | 63.60 | 3.45 | |
2019 | 0.800 | 64.00 | 73.75 | 68.59 | 3.63 | |
2020 | 0.825 | 70.00 | 78.79 | 73.27 | 3.81 | |
2021 | 0.850 | 75.00 | 82.35 | 76.59 | 3.90 | |
2022 | 0.850 | 80.00 | 88.24 | 82.06 | 4.10 | |
2023 | 0.850 | 85.00 | 94.12 | 87.53 | 4.30 | |
2024 | 0.850 | 87.88 | 96.48 | 89.73 | 4.50 | |
2025 | 0.850 | 89.63 | 98.41 | 91.52 | 4.60 | |
2026+ | 0.850 | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr |
Reconciliation of Company Gross Reserves By Principle Product Type(1), (2)
The following table sets forth the reconciliation of the Company’s reserves at Forecast Prices and Costs:
Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||
Factors | Gross Proved (Mbbl) | Gross Probable (Mbbl) | Gross Proved + Probable (Mbbl) | Gross Proved (Mbbl) |
Gross Probable (Mbbl) |
Gross Proved + Probable (Mbbl) |
Gross Proved (Mbbl) |
Gross Probable (Mbbl) |
Gross Proved + Probable (Mbbl) |
|||||||||
December 31, 2014 | 3,524 | 2,082 | 5,607 | 54 | 36 | 90 | 324 | 209 | 532 | |||||||||
Discoveries | – | – | – | – | – | – | – | – | – | |||||||||
Extensions/Infill Drilling | 803 | 756 | 1,560 | – | – | – | 228 | 220 | 449 | |||||||||
Improved Recovery | 38 | 14 | 52 | – | – | – | 7 | 3 | 10 | |||||||||
Technical Revisions | (6 | ) | (239 | ) | (246 | ) | (23 | ) | (6 | ) | (28 | ) | 21 | (17 | ) | 4 | ||
Acquisitions | 476 | 147 | 623 | – | – | – | 231 | 67 | 299 | |||||||||
Dispositions | (66 | ) | (16 | ) | (82 | ) | – | – | – | (10 | ) | (15 | ) | (25 | ) | |||
Economic Factors | (447 | ) | 131 | (316 | ) | (28 | ) | – | (28 | ) | (27 | ) | (5 | ) | (32 | ) | ||
Production | (549 | ) | – | (549 | ) | (3 | ) | – | (3 | ) | (68 | ) | – | (68 | ) | |||
December 31, 2015 | 3,772 | 2,875 | 6,648 | 1 | 30 | 31 | 707 | 463 | 1,170 |
Total Natural Gas | Barrels of Oil Equivalent | |||||||||||
Factors | Gross Proved (Mmcf) |
Gross Probable (Mmcf) |
Gross Proved + Probable (Mmcf) |
Gross Proved (Mmcf) |
Gross Probable (Mmcf) |
Gross Proved + Probable (Mmcf) |
||||||
December 31, 2014 | 14,979 | 7,322 | 22,301 | 6,398 | 3,547 | 9,946 | ||||||
Discoveries | – | – | – | – | – | – | ||||||
Extensions/Infill Drilling | 1,598 | 1,543 | 3,141 | 1,298 | 1,234 | 2,532 | ||||||
Improved Recovery | 51 | 22 | 73 | 54 | 21 | 75 | ||||||
Technical Revisions | (1,044 | ) | (669 | ) | (1,713 | ) | (182 | ) | (373 | ) | (555 | ) |
Acquisitions | 1,684 | 489 | 2,173 | 988 | 296 | 1,284 | ||||||
Dispositions | (1,769 | ) | (854 | ) | (2,623 | ) | (371 | ) | (174 | ) | (544 | ) |
Economic Factors | (1,477 | ) | (286 | ) | (1,763 | ) | (748 | ) | 78 | (670 | ) | |
Production | (2,251 | ) | – | (2,251 | ) | (995 | ) | – | (995 | ) | ||
December 31, 2015 | 11,771 | 7,567 | 19,338 | 6,443 | 4,629 | 11,072 |
Notes:
(1) | The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding. |
(2) | Total Natural Gas includes associated, non-associated and coal bed methane gas. |
Future Development Costs
The following table sets forth development costs deducted in the estimation of Striker’s future net revenue attributable to the reserve categories noted below:
Forecast Prices and Costs (M$) | |||
Year | Proved Reserves | Proved plus Probable | |
2016 | 2,043 | 4,083 | |
2017 | 9,273 | 16,557 | |
2018 | 10,519 | 16,588 | |
2019 | 9,880 | 19,750 | |
2020 | 4,330 | 16,658 | |
Thereafter | – | 169 | |
Total Undiscounted | 36,045 | 73,805 | |
Total Discounted at 10% | 28,172 | 56,368 |
The future development costs are estimates of capital expenditures required in the future for Striker to convert proved undeveloped reserves and probable reserves to proved developed producing reserves. The undiscounted future development costs are $36.0 million for proved reserves and $73.8 million for proved plus probable reserves (in each case based on forecast prices and costs).
Finding, Development & Acquisition Costs(1), (2), (3), (4), (5), (6)
FD&A Costs (M$) | |||
Proved Producing Reserves | 2015 | 2014 | Two Year Average |
Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
Total change in FDC | – | – | – |
Total FD&A capital including change in FDC | 26,612 | 122,460 | 149,072 |
Total Reserve additions, including revisions (Mboe) | 1,126 | 4,426 | 5,552 |
FD&A costs, including FDC ($/boe) | 23.63 | 27.67 | 26.85 |
Recycle Ratio | 0.7 | 0.8 | |
FD&A Costs (M$) | |||
Total Proved Reserves | 2015 | 2014 | Two Year Average |
Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
Total change in FDC | 1,795 | 31,711 | 33,506 |
Total FD&A capital including change in FDC | 28,407 | 154,171 | 182,578 |
Total Reserve additions, including revisions (Mboe) | 1,915 | 6,038 | 7,953 |
FD&A costs, including FDC ($/boe) | 14.83 | 25.53 | 22.96 |
Recycle Ratio | 1.1 | 0.8 | |
FD&A Costs (M$) | |||
Proved plus Probable Reserves | 2015 | 2014 | Two Year Average |
Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
Total change in FDC | 19,179 | 49,486 | 68,665 |
Total FD&A capital including change in FDC | 45,791 | 171,946 | 217,737 |
Total Reserve additions, including revisions (Mboe) | 3,261 | 9,338 | 12,599 |
FD&A costs, including FDC ($/boe) | 14.04 | 18.41 | 17.28 |
Recycle Ratio | 1.2 | 1.1 |
Notes:
(1) | Financial information is based on estimates and is unaudited. |
(2) | While NI 51-101 requires that the effects of acquisitions and dispositions be excluded from the calculation of finding and development costs, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company’s ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company’s cost structure. Finding and development costs excluding acquisitions and dispositions have been presented below. |
(3) | The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. |
(4) | As Striker commenced operations with the recapitalization of Elkwater Resources Ltd. in July 2014, only two year average costs are available. |
(5) | The acquisitions include the announced purchase price of acquisitions rather than the amounts allocated to property, plant and equipment and exploration and evaluation assets for accounting purposes. Capital expenditures include costs of land and seismic, but exclude capitalized general and administration costs. |
(6) | Recycle Ratio is calculated by dividing the operating netback per boe by the FD&A for that period. |
REVIEW OF STRATEGIC ALTERNATIVES
The Company’s Board of Directors has determined that it is timely, prudent and in the best interests of shareholders to initiate a formal process to explore strategic alternatives with a view to enhancing shareholder value. Such strategic alternatives may include, but are not limited to, a corporate sale, merger or other business combination, the sale of all or a material portion of Striker’s assets, a reorganization, recapitalization or restructuring of Striker or any combination of the foregoing.
FirstEnergy Capital Corp. has been retained by Striker to act as its exclusive financial advisor in connection with this comprehensive review and analysis of strategic alternatives.
It is the Company’s intention not to disclose developments with respect to the strategic review process until the board of directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. Striker cautions that there are no assurances or guarantees that the process will result in a transaction and that, if a transaction is undertaken, no assurances or guarantees may be given with respect to the type, terms or timing of such a transaction.
Striker will continue to focus on its near and long term business plan, centered around the development and de-risking of its existing Belly River acreage at Wilson Creek and Thorsby. Striker has maintained a strong balance sheet and enviable financial position during the current period of low commodity prices, and intends to continue to do so. Striker has approximately $8.0 million in net debt and more than $30.0 million of undrawn credit capacity. Year to date production has averaged 2,459 boepd based upon field estimates.
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