CALGARY, Alberta – Prairie Provident Resources Inc. (“Prairie Provident”, “PPR” or the “Company”) is pleased to announce the results of our independent 2021 year-end reserves evaluation conducted by Sproule Associates Limited (“Sproule”) with an effective date of December 31, 2021 (the “Sproule Report”).
MESSAGE TO SHAREHOLDERS
Tony Berthelet, President & Chief Executive Officer commented: “The 2021 year-end updated reserves evaluation confirms the underlying value of PPR’s assets. With a 13-year reserve life index on a 1P basis, the assets have the potential to deliver meaningful long-term shareholder value. Recognition of Improved Recovery in the Evi and Michichi assets underscores the execution of the Company’s waterflood development strategy, and while we are in the early stages of waterflood in Michichi, the early recognition of waterflood response is extremely encouraging. Reserve additions in the Princess field highlight the continued value creation from our Princess Glauconite and Ellerslie inventory. 2022 will see the Company continue to expand waterflood operations in Michichi and Evi and focus on inventory development in all areas.”
2021 RESERVES HIGHLIGHTS
- At year-end 2021, reserves totaled 9.3 MMboe, 20.2 MMboe, and 29.6 MMboe for proved developed producing (PDP) reserves, total proved (1P) reserves, and total proved plus probable (2P) reserves, respectively, an improvement of 14%, 11% and 6% from 2020.
- Higher price forecasts resulted in reserves additions of 1.1 MMboe, 1.8 MMboe and 1.8 MMboe for PDP, 1P and 2P, respectively.
- Year-end 2021 estimated net present values of future net revenue before tax discounted at 10% for PDP, 1P and 2P reserves totaled $106.2 million, $237.7 million and $414.2 million, respectively, an improvement of 49%, 55% and 47% from 2020.
- Replaced 109% and 97% of 2021 production with reserves additions and technical revisions, on a 1P and 2P basis, respectively.
- Significant PDP, 1P and 2P reserves were added through 2021 exploration and development activities in Princess, totaling 1.2 MMboe, 1.3 MMboe and 1.7 MMboe, respectively, this includes category changes, and extensions.
- Including technical revisions, overall PDP, 1P and 2P finding & development (“F&D”)(1) costs for 2021 were $9.53/boe, $12.59/boe and $7.34/boe, respectively.
- Additional waterflood reserves were recognized in Evi and Michichi, resulting in positive reserves adds of 0.4 MMboe and 0.5 MMboe for 1P and 2P, respectively.
- Improved well performance resulted in positive technical revisions, which were offset through undeveloped location removals as a result of mineral expiries. This resulted in overall positive 1P technical revisions of 0.2 MMboe and negative 2P technical revisions of 0.8 MMboe.
- Reserve life index(1) of 5.9 years, 13.0 years and 19.0 years, based on 2021 annual production(2) on a PDP, 1P and 2P basis, respectively.
Notes:
(1) “Finding & Development Costs”, and “Reserve Life Index” do not have standardized meanings. See “Cautionary Statements – Disclosure of Oil and Gas Reserves Data and Operational Information”, “Cautionary Statements – Finding and Development Costs” and “Cautionary Statements – Reserve Life Index” below.
(2) All 2021 financial information is unaudited. See ”Cautionary Statements”.
Reserves Summary
The following presentation summarizes certain information contained in the Sproule Report, which was prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”). Sproule evaluated 100% of the Company’s reserves. The Sproule Report is based on forecast prices and costs and applies Sproule’s forecast escalated commodity price deck and foreign exchange rate and inflation rate assumptions as at December 31, 2021. Estimated future net revenue is stated without any provisions for interest costs, other debt service charges or general and administrative expenses, and after the deduction of royalties, estimated operating costs, estimated abandonment and reclamation costs and estimated future development costs.
Additional information regarding the Company’s reserves data and other oil and gas information will be included in the Company’s Annual Information Form for the year ended December 31, 2021 (the “AIF”), which will be filed under the Company’s issuer profile on SEDAR at www.sedar.com on or before March 31, 2022.
See also the “Cautionary Statements” below for further explanations and discussion.
Summary of Corporate Reserves(1)(2)(5)
The following table is a summary of the Company’s estimated reserves as at December 31, 2021, as evaluated in the Sproule Report.
Reserves Category | Light and Medium Oil | Heavy Oil | Conventional Natural Gas(3) (other than Solution Gas) | Conventional Natural Gas (Solution Gas) | Natural Gas Liquids | Barrels of Oil Equivalent(4) |
(Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mboe) | |
Proved | ||||||
Developed Producing | 5,466 | 474 | 9,512 | 8,672 | 284 | 9,254 |
Developed Non-Producing | 1,640 | — | 235 | 452 | 16 | 1,770 |
Undeveloped | 6,221 | 304 | — | 14,371 | 232 | 9,152 |
Total Proved | 13,327 | 778 | 9,747 | 23,495 | 531 | 20,176 |
Probable | 6,053 | 511 | 2,342 | 13,488 | 246 | 9,448 |
Total Proved plus Probable | 19,379 | 1,289 | 12,089 | 36,983 | 777 | 29,624 |
Notes:
(1) Reserves are presented on a “company gross” basis, which is defined as Prairie Provident’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of the Company.
(2) Based on Sproule’s December 31, 2021 forecast prices and costs. Sproule’s commodity price forecasts as of December 31, 2021, which were used in the Sproule Report, can be found at www.sproule.com/price-forecast/.
(3) Including both non-associated gas and associated gas but excluding solution gas (gas dissolved in crude oil).
(4) Oil equivalent amounts have been calculated using a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil. See “Cautionary Statements – Barrels of oil equivalent” below.
(5) Columns may not add due to rounding of individual items.
Net Present Values of Future Net Revenue Before Income Taxes Discounted at (%/year) (1)(2)(3)(4)(5)
The following table is a summary of the estimated net present values of future net revenue (before income taxes) associated with Prairie Provident’s reserves as at December 31, 2021, discounted at the indicated percentage rates per year, as evaluated in the Sproule Report.
Reserves Category | 0% | 5% | 10% | 15% | 20% | |||||
(MM$) | (MM$) | (MM$) | (MM$) | (MM$) | ||||||
Proved | ||||||||||
Developed Producing | (17.8 | ) | 92.9 | 106.2 | 102.1 | 95.0 | ||||
Developed Non-Producing | 65.4 | 32.6 | 17.6 | 9.6 | 4.9 | |||||
Undeveloped | 207.0 | 152.4 | 114.0 | 86.5 | 66.5 | |||||
Total Proved | 254.5 | 277.9 | 237.7 | 198.2 | 166.4 | |||||
Probable | 313.4 | 227.1 | 176.5 | 143.5 | 120.5 | |||||
Total Proved plus Probable | 568.0 | 505.1 | 414.2 | 341.6 | 286.8 | |||||
Notes:
(1) Based on Sproule’s December 31, 2021 forecast prices and costs. Sproule’s commodity price forecasts as of December 31, 2021, which were used in the Sproule Report, can be found at www.sproule.com/price-forecast/.
(2) Estimated future net revenues are stated without any provision for interest costs, other debt service charges or general and administrative expenses, and after deduction of royalties, estimated operating costs, estimated abandonment and reclamation costs and estimated future development costs.
(3) Estimated future net revenue, whether discounted or not, does not represent fair market value.
(4) Net present values of future net revenue after income taxes are estimated to approximate the before income tax values based on the estimated future revenues, available tax pools and future deductible expenses.
(5) Columns may not add due to rounding of individual items.
Reconciliation of Company Gross Reserves Based on Forecast Prices and Costs(2)(3)
Mboe | ||||||
FACTORS | Proved | Probable | Proved plus Probable |
|||
December 31, 2020 | 18,261 | 9,641 | 27,902 | |||
Acquisitions | 3 | 0 | 3 | |||
Dispositions | (20 | ) | (8 | ) | (28 | ) |
Drilling (Extensions and Improved Recovery(1)) | 1,485 | 857 | 2,342 | |||
Discoveries | — | — | — | |||
Technical Revisions | 210 | (1,051 | ) | (841 | ) | |
Pricing (Economic Factors) | 1,793 | 8 | 1,801 | |||
Production | (1,556 | ) | — | (1,556 | ) | |
December 31, 2021 | 20,176 | 9,448 | 29,624 |
Notes:
(1) Reserves additions attributed to Infill Drilling, Improved Recovery and Extensions are combined and reported as “Extensions and Improved Recovery”.
(2) Columns may not add due to rounding.
(3) Company Gross Reserves exclude royalty volumes.
Capital Efficiencies(2)(3)
The following table sets out our calculation of finding and development (F&D) costs for 2021. See also “Cautionary Statements – Disclosure of Oil and Gas Reserves Data and Operational Information” and “Cautionary Statements – Finding & Development Costs” below.
Finding and Development Costs | Proved Developed Producing |
Total Proved | Total Proved plus Probable |
|
Exploration and development capital(1) (MM$) | 14.7 | 14.7 | 14.7 | |
Change in FDC(2) (MM$) | — | 6.6 | (3.7 | ) |
Total F&D costs, including change in FDC (MM$) | 14.7 | 21.3 | 11.0 | |
Total reserves additions, including technical revisions (Mboe) | 1,543 | 1,695 | 1,502 | |
F&D costs, including change in FDC ($/boe) | 9.52 | 12.59 | 7.34 |
Notes:
(1) Exploration and development capital (unaudited) related to: land acquisition and retention; drilling; completions; tangible well site; tie-ins; and facilities.
(2) “FDC” refers to estimated future developments costs (FDC) required to bring 1P and 2P undeveloped and non-producing reserves to production, as reflected in the Sproule Report, based on Sproule’s December 31, 2021 forecast prices and costs. FDC have been deducted in Sproule’s estimation of future net revenue associated with such reserves.
(3) Columns may not add due to rounding.