Calgary, Alberta – Leucrotta Exploration Inc. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its 2021 year-end reserves as independently evaluated by GLJ Ltd. (“GLJ”) effective December 31, 2021 (the “GLJ Report”), in accordance with National Instrument 51-101 (“NI 51-101”) and the Canadian Oil and Gas Evaluation (“COGE”) Handbook. All dollar figures are Canadian dollars unless otherwise noted.
Introduction
During 2021, Leucrotta made the strategic decision to sell its Doe property for gross proceeds of $30.0 million, raise additional equity capital for gross proceeds of $34.4 million and start the PAD development of its Mica Project. Based on successful results of its first PAD and the significant delineation already completed, Leucrotta was able to deliver strong year over year reserve growth despite the sale of Doe that had 10.7 million boe (86% undeveloped) of Proved plus Probable reserves booked to the property.
The GLJ Report incorporates Leucrotta’s initial move to 2,400 metre lateral lengths and increased frac intensity used on the Mica Test PAD. The report includes 14 producing wells and 26 undeveloped locations in the Lower Montney that only cover less than 10% of Leucrotta’s large contiguous land base that is greater than 250 sections of Montney rights. These minimal reserve bookings leave material upside for Leucrotta to potentially book additional reserves in the future.
Leucrotta has also delineated and proven the Upper and Basal Montney productive on its land base including 2 wells in each zone but has only booked 4 Upper locations and no Basal locations leaving reserve upside of greater than 99% of its land base for these zones. The presence of stacked zones on the property will materially reduce the environmental footprint per well and enhance economics.
Leucrotta has estimated approximately 18 billion barrels of Original Oil in Place (“OOIP”) and 17 trillion cubic feet of Original Gas in Place (“OGIP”) over its land base. Leucrotta’s business plan is to continue to develop the property, establish the ultimate reserve recoveries and move the established recoverable resource from land to its Proved plus Probable reserve base and eventually to its Producing reserve base. With regard to this, Leucrotta has made significant strides in 2021 as noted below.
Reserve Highlights
Leucrotta is pleased to report material reserve and value increases notwithstanding the sale of the Doe property that had 10.7 million boe booked as noted above:
Reserves Summary
Leucrotta’s December 31, 2021 reserves as prepared by GLJ effective December 31, 2021 and based on the GLJ (2022-01) future price forecast are as follows (1,4):
Working Interest Reserves (2) | Tight Oil (Mbbl) | Shale Natural Gas (Mmcf) |
NGLs (Mbbl) |
Total Oil Equivalent (Mboe) (3) |
Proved | ||||
Producing | 1,325 | 36,439 | 276 | 7,674 |
Developed non-producing | 123 | 5,796 | 77 | 1,166 |
Undeveloped | 2,115 | 52,339 | 1,422 | 12,260 |
Total proved | 3,563 | 94,574 | 1,774 | 21,100 |
Probable | 4,474 | 135,953 | 2,418 | 29,550 |
Total proved & probable | 8,037 | 230,527 | 4,192 | 50,650 |
Notes:
Reserves Values
The estimated future net revenues before taxes associated with Leucrotta’s reserves effective December 31, 2021 and based on the GLJ (2022-01) future price forecast are summarized in the following table (1,2,3,4):
Discount factor per year | |||||
($000s) | 0% | 5% | 10% | 15% | 20% |
Proved | |||||
Producing | 165,688 | 132,580 | 111,185 | 96,547 | 85,991 |
Developed Non-producing | 22,615 | 17,422 | 14,212 | 12,086 | 10,585 |
Undeveloped | 145,131 | 79,348 | 42,394 | 19,974 | 5,487 |
Total proved | 333,433 | 229,350 | 167,791 | 128,607 | 102,063 |
Probable | 595,344 | 346,832 | 226,069 | 158,652 | 116,869 |
Total proved & probable | 928,777 | 576,182 | 393,860 | 287,260 | 218,932 |
Notes:
Price Forecast
The GLJ (2022-01) price forecast is as follows:
Year | WTI Oil @ Cushing ($US / Bbl) |
Edmonton Light Oil ($Cdn / Bbl) |
AECO Natural Gas ($Cdn / Mmbtu) |
Chicago Natural Gas ($US / Mmbtu) |
Foreign Exchange (US$/Cdn$) |
2022 | 73.00 | 87.97 | 3.40 | 3.65 | 0.790 |
2023 | 69.01 | 81.89 | 3.10 | 3.35 | 0.790 |
2024 | 67.24 | 79.32 | 3.15 | 3.00 | 0.790 |
2025 | 68.58 | 80.91 | 3.21 | 3.06 | 0.790 |
2026 | 69.96 | 82.53 | 3.28 | 3.13 | 0.790 |
2027 | 71.35 | 84.18 | 3.34 | 3.19 | 0.790 |
2028 | 72.78 | 85.86 | 3.41 | 3.26 | 0.790 |
2029 | 74.24 | 87.58 | 3.48 | 3.33 | 0.790 |
2030 | 75.72 | 89.32 | 3.55 | 3.40 | 0.790 |
2031 | 77.24 | 91.11 | 3.62 | 3.47 | 0.790 |
Escalate thereafter (1) |
2.0% per year | 2.0% per year | 2.0% per year | 2.0% per year |
Note:
Net Asset Value (“NAV”)
Leucrotta’s NAV as at December 31, 2021 and based on the GLJ (2022-01) future price forecast is as follows:
($000s, except per share amounts) | ||||
Pre-tax net present value (“NPV”) of proved & probable reserves discounted at 10% | 393,860 | |||
Undeveloped land (1) | 104,000 | |||
Working capital | 30,315 | |||
Net asset value | 528,175 | |||
Shares outstanding (basic) | 247,822 | |||
Net asset value per share | $ 2.13 |
Note:
Reserve Life Index (“RLI”)
Leucrotta’s RLI presented below is based on estimated Q4 2021 average production of 3,290 boe per day.
Reserve Category | RLI |
Proved plus Probable Reserves | 41.8 |
Proved Reserves | 17.4 |
Reserves Reconciliation
The following summary reconciliation of Leucrotta’s working interest reserves compares changes in the Company’s reserves as at December 31, 2021 to the reserves as at December 31, 2020 based on the based on the GLJ (2022-01) future price forecast (1,2):
Total Proved | Tight Oil | Shale Natural Gas | NGLs | Total Oil Equivalent | ||||||||||
(Mbbl) | (Mmcf) | (Mbbl) | (Mboe) (3) | |||||||||||
Opening balance | 1,268 | 71,352 | 1,632 | 14,791 | ||||||||||
Extensions and improved recovery | 984 | 16,966 | 271 | 4,083 | ||||||||||
Technical revisions | 1,476 | 28,584 | 662 | 6,902 | ||||||||||
Dispositions | – | (18,847 | ) | (755 | ) | (3,896 | ) | |||||||
Economic factors | 8 | 682 | 10 | 131 | ||||||||||
Production | (173 | ) | (4,162 | ) | (45 | ) | (912 | ) | ||||||
Closing balance | 3,563 | 94,574 | 1,774 | 21,100 | ||||||||||
Proved plus Probable | Tight Oil | Shale Natural Gas | NGLs | Total Oil Equivalent | ||||||||||
(Mbbl) | (Mmcf) | (Mbbl) | (Mboe) (3) | |||||||||||
Opening balance | 4,418 | 206,360 | 4,752 | 43,563 | ||||||||||
Extensions and improved recovery | 366 | 6,046 | 90 | 1,464 | ||||||||||
Technical revisions | 3,362 | 71,062 | 1,459 | 16,664 | ||||||||||
Dispositions | – | (51,572 | ) | (2,113 | ) | (10,708 | ) | |||||||
Economic factors | 63 | 2,794 | 49 | 578 | ||||||||||
Production | (173 | ) | (4,162 | ) | (45 | ) | (912 | ) | ||||||
Closing balance | 8,037 | 230,527 | 4,192 | 50,650 |
Notes:
Finding and Development Costs (“F&D”) and Finding, Development and Acquisition Costs (“FD&A”)
Leucrotta has presented FD&A and F&D costs below:
2021 | 2020 | 3 Year Cumulative | ||||||||||||||||||
Proved & | Proved & | Proved & | ||||||||||||||||||
($000’s, except where noted) | Proved | Probable | Proved | Probable | Proved | Probable | ||||||||||||||
F&D costs (excluding net acquisitions/dispositions) | ||||||||||||||||||||
Exploration and development expenditures | 38,251 | 38,251 | 12,601 | 12,601 | 63,409 | 63,409 | ||||||||||||||
Change in FDC(1) | 48,599 | 20,112 | (44,713 | ) | (97,021 | ) | (10,629 | ) | (82,113 | ) | ||||||||||
F&D costs excluding net acquisitions/dispositions (Including FDC) | 86,850 | 58,363 | (32,112 | ) | (84,420 | ) | 52,780 | (18,704 | ) | |||||||||||
FD&A costs (including net acquisitions/dispositions) | ||||||||||||||||||||
Exploration and development expenditures | 38,251 | 38,251 | 12,601 | 12,601 | 63,409 | 63,409 | ||||||||||||||
Net acquisitions (dispositions) | (28,584 | ) | (28,584 | ) | (7,091 | ) | (7,091 | ) | (38,002 | ) | (38,002 | ) | ||||||||
FD&A costs including net acquisitions/dispositions | 9,667 | 9,667 | 5,510 | 5,510 | 25,407 | 25,407 | ||||||||||||||
Change in FDC | 48,599 | 20,112 | (44,713 | ) | (97,021 | ) | (10,629 | ) | (82,113 | ) | ||||||||||
FD&A costs including net acquisitions/dispositions (Including FDC) | 58,266 | 29,779 | (39,203 | ) | (91,511 | ) | 14,778 | (56,706 | ) | |||||||||||
Reserve Additions (Mboe) (2) | ||||||||||||||||||||
Exploration and development | 11,117 | 18,707 | (5,236 | ) | (16,337 | ) | 7,350 | 5,388 | ||||||||||||
Net acquisitions/dispositions | (3,896 | ) | (10,708 | ) | – | – | (3,896 | ) | (10,708 | ) | ||||||||||
Total Reserve Additions | 7,221 | 7,999 | (5,236 | ) | (16,337 | ) | 3,454 | (5,320 | ) | |||||||||||
F&D costs excluding net acquisitions/dispositions ($/boe) | ||||||||||||||||||||
Excluding FDC | 3.44 | 2.04 | (2.41 | ) | (0.77 | ) | 8.63 | 11.77 | ||||||||||||
Including FDC | 7.81 | 3.12 | 6.13 | 5.17 | 7.18 | (3.47 | ) | |||||||||||||
FD&A costs ($/boe) | ||||||||||||||||||||
Excluding FDC | 1.34 | 1.21 | (1.05 | ) | (0.34 | ) | 7.36 | (4.78 | ) | |||||||||||
Including FDC | 8.07 | 3.72 | 7.49 | 5.60 | 4.28 | 10.66 |
Notes:
Capital Expenditures
Capital allocation by category is as follows:
($000s) | 2021 | 2020 | ||||||
Property acquisition | 608 | – | ||||||
Undeveloped land | 808 | 1,115 | ||||||
Property and equipment dispositions | (30,000 | ) | (8,206 | ) | ||||
Sub-total acquisitions/dispositions | (28,584 | ) | (7,091 | ) | ||||
Drilling and completion | 33,085 | 5,828 | ||||||
Facilities and related infrastructure | 4,577 | 6,630 | ||||||
Geological, geophysical and other | 589 | 143 | ||||||
Sub-total capital expenditures | 38,251 | 12,601 | ||||||
Total all-in capital | 9,667 | 5,510 |
For Leucrotta’s full NI 51-101 disclosure related to its 2021 year-end reserves please refer to the Company’s AIF to be filed on SEDAR at www.sedar.com on or before April 30, 2022.