CALGARY, AB – Prairie Storm Resources Corp. (TSXV: PSEC) (“Prairie Storm” or the “Company”) is pleased to announce the results of its 2020 year-end reserves evaluation and to provide an update on corporate governance matters.
RESERVES INFORMATION
The Company retained independent reserve evaluators, Sproule Associates Limited (“Sproule”) to evaluate the Company’s petroleum and natural gas reserves as of December 31, 2020. Reserves information contained herein, which is effective as of December 31, 2020, is extracted from the evaluation report prepared by Sproule, dated March 11, 2021 (the “Reserve Report”). The Reserve Report was prepared in accordance with definitions, standards and procedures contained within Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).
Additional reserve information as required under NI 51-101 will be included in Prairie Storm’s Statement of Reserves Data and Other Oil and Gas Information (“Form 51-101F1”), which will be filed with Canadian securities regulatory authorities and made available on the Company’s SEDAR profile at www.sedar.com.
Proved Developed Producing Reserves
· Company gross reserve volumes of 4.9 MMboe
· NPV10 Before Tax of $37.6 million
Proved (“1P“) Reserves
· Company gross reserve volumes of 21.3 MMboe
· NPV10 Before Tax of $109.7 million
· 1P reserves represent 79% of total 2P reserve volumes
Proved plus Probable (“2P“) Reserves
· Company gross reserve volumes of 26.8 MMboe
· NPV10 Before Tax of $173.1 million
· Light and medium crude oil and natural gas liquids account for 58% of 2P reserve volumes
Pricing Assumptions
Sproule’s independent evaluation was based on the average of the published price forecasts for McDaniel & Associates Consultants Ltd., GLJ Petroleum Consultants Ltd., and Sproule (the “Consultant Average Price Forecast”) at December 31, 2020, with the following table detailing pricing and foreign exchange rate assumptions.
Consultant Average Price Forecast December 31, 2020 |
|||||
WTI Crude Oil |
Edmonton Light |
AECO Spot Price |
Operating and |
Exchange Rate |
|
2021 |
47.17 |
55.76 |
2.78 |
0.0 |
0.77 |
2022 |
50.17 |
59.89 |
2.70 |
1.3 |
0.77 |
2023 |
53.17 |
63.48 |
2.61 |
2.0 |
0.76 |
2024 |
54.97 |
65.76 |
2.65 |
2.0 |
0.76 |
2025 |
56.07 |
67.13 |
2.70 |
2.0 |
0.76 |
Summary of Oil and Gas Reserves
The following table sets out the Company’s reserves as at December 31, 2020, on a forecast pricing and cost, gross and net basis.
Light & Medium Oil |
Conventional Natural Gas |
Natural Gas |
Total |
|||||
Gross |
Net |
Gross |
Net |
Gross |
Net |
Gross |
Net |
|
Reserves Category |
(Mbbls) |
(Mbbls) |
(MMcf) |
(MMcf) |
(Mbbls) |
(Mbbls) |
(Mboe) |
(Mboe) |
Proved |
||||||||
Proved Developed Producing |
1,494 |
1,378 |
13,339 |
12,370 |
1,184 |
1,021 |
4,901 |
4,460 |
Proved Undeveloped |
6,786 |
6,233 |
40,869 |
38,331 |
2,814 |
2,560 |
16,412 |
15,182 |
Total Proved |
8,281 |
7,611 |
54,209 |
50,701 |
3,998 |
3,581 |
21,314 |
19,642 |
Total Probable |
2,295 |
2,008 |
13,507 |
12,633 |
985 |
847 |
5,531 |
4,960 |
Total Proved + Probable |
10,576 |
9,619 |
67,714 |
63,335 |
4,983 |
4,427 |
26,845 |
24,602 |
Net Present Value of Future Net Revenue (1)(2)(3)
The following table sets out the net present value of future net revenue of the Company’s reserves as at December 31, 2020 on a before tax basis, using various discount rates on a forecast pricing.
Before Tax |
Before |
|||||
NPV |
0% |
5% |
10% |
15% |
20% |
10% ($/boe) |
Reserves Category |
M$Cdn |
M$Cdn |
M$Cdn |
M$Cdn |
M$Cdn |
|
Proved |
||||||
Proved Developed Producing |
26,572 |
41,010 |
37,592 |
33,226 |
29,596 |
8.43 |
Proved Undeveloped |
214,175 |
123,009 |
72,074 |
42,390 |
24,155 |
4.75 |
Total Proved |
240,747 |
164,019 |
109,666 |
75,617 |
53,751 |
5.58 |
Total Probable |
143,698 |
90,267 |
63,416 |
48,143 |
38,446 |
12.78 |
Total Proved + Probable |
384,444 |
254,286 |
173,083 |
123,760 |
92,197 |
7.04 |
(1) Estimates of future net revenue, whether discounted or not, do not represent fair market value. |
(2) Future net revenue is after deduction of estimated ADR costs. |
(3) Unit values are based on net reserves. Net reserves means the Company’s working interest reserves after deduction of royalties, plus its royalty interest in reserves, if any. |
Future Development Capital Costs
The following table is Sproule’s estimated future development costs required to bring total proved and total proved plus probable reserves on production.
Year |
Proved |
Proved + Probable |
2021 |
17,432 |
17,432 |
2022 |
37,575 |
37,575 |
2023 |
45,398 |
45,724 |
2024 |
51,336 |
51,336 |
2025 |
54,736 |
62,919 |
Total Undiscounted |
206,476 |
214,986 |
Total Discounted at 10% |
157,971 |
163,567 |
Total Future Net Revenue (Undiscounted) (1)(2)
The following table provides a breakdown of the various components of total future net revenue on an undiscounted basis for the Company’s proved reserves and proved plus probable reserves, calculated as at December 31, 2020.
Reserves |
Revenue |
Royalties |
Operating |
Development |
Abandonment |
Future |
Income |
Future Net |
Total Proved |
893,566 |
60,522 |
318,482 |
206,475 |
67,340 |
240,747 |
50,198 |
190,548 |
Total Proved + Probable |
1,154,056 |
87,624 |
396,918 |
214,986 |
70,084 |
384,444 |
83,063 |
301,382 |
(1) Estimates of future net revenue, whether discounted or not, do not represent fair market value. |
(2) Future net revenue is after deduction of estimated ADR costs. |
CORPORATE GOVERNANCE UPDATES
On December 16, 2020, the Company, through a wholly-owned subsidiary, completed an amalgamation with Prairie Storm Energy Corp (“Prairie Energy”) resulting in a reverse takeover (“RTO”) of the Company by the former shareholders of Prairie Energy.
Subsequent to the RTO, the Company undertook a review of various governance and compensation policies as a result of its transition to an operating public entity. Based on this review, the Company established, or redefined the following governance committees: Audit Committee; Reserves Committee; Corporate Governance, Compensation & Nominating Committee; and Environment, Health and Safety Committee. Charters for these committees were adopted and ratified by the board of directors of the Company.
The Company also updated its stock option plan, which will be put forth for ratification at the Company’s upcoming Annual General and Special Meeting of Shareholders. In addition, to reflect the change in corporate structure resulting from the RTO, the Company entered into new executive employment agreements with its executive officers, whose previous executive employment agreements were entered into with Prairie Energy. There is no change to the salaries or benefits provided to the executives under the new agreements as compared to the prior agreements, however potential severance entitlements based on a change of control were eliminated. The new executive employment agreements also incorporate non-competition and non-solicitation covenants, which were previously provided for in separate agreements between Prairie Energy and the executive.
The Company announces that its Annual General and Special Meeting of Shareholders will be held at Suite 2000, 350 – 7th Avenue SW, Calgary, Alberta, on Thursday, June 10, 2021, at 10:00 am Mountain Daylight Time.
The record date for the meeting is May 6, 2021. The Notice of Meeting, the accompanying Management Proxy Circular and related meeting materials will be mailed and made available during May 2021 under the Company’s profile on SEDAR at www.sedar.com.
The Company encourages you to vote your shares by proxy in advance of the meeting, via mail, telephone or on the internet. In conducting the meeting on June 10, 2021, the Company intends to follow the guidelines for physical distancing prescribed by the Public Health Agency of Canada to minimize the spread of the novel coronavirus disease (COVID-19), as such guidelines are applicable as at the date of the meeting.
About Prairie Storm Resources Corp.
Prairie Storm is a Canadian oil company focused on sustainable growth of its high netback, low decline oil assets through waterflood enhanced recovery methods and exploitation of the bioturbated Cardium formation. Prairie Storm has no debt and a positive working capital position. The shares of the Company trade on the TSX Venture Exchange under the symbol “PSEC”.