Please note that unless otherwise stated, amounts are in Canadian dollars and volumes and financial amounts are net to Andora.
Andora holds interests in 27 sections (24.25 net sections) of heavy oilsands leases in Sawn Lake, within the central Alberta Peace River Oil Sands region. Andora is focused on developing the bitumen resources at Sawn Lake using SAGD development. Contingent resources have been assigned to the Sawn Lake Central and Sawn Lake South where Andora is the operator.
A SAGD demonstration project at the Sawn Lake Central block commenced in 2013 and consisted of one SAGD wellpair drilled to a depth of 650 meters and a horizontal length of 780 meters and a SAGD facility for steam generation, water handling and bitumen treating. Steam injection commenced in May 2014 and produced bitumen from September 2014 to February 2016. The demonstration project reached a steady state production level in February 2016 of 620 BOPD with an instantaneous steam-oil ratio (“ISOR”) of 2.1. The demonstration project successfully captured the key data associated with the objectives of the demonstration project and operations were suspended at the end of February 2016. The demonstration project proved that the SAGD process works in the Bluesky formation at Sawn Lake, established characteristics of ramp up through stabilization of SAGD performance, indicated the productive capability, ISOR, and provided critical information required for well and facility design associated with future commercial development. Production results to date are not necessarily indicative of long-term performance or of ultimate recovery and the Sawn Lake demonstration project has not yet proven that it is commercially viable.
The development plan for Sawn Lake Central and Sawn Lake South is for development in stages with five standardized “battery scale” SAGD facilities where growth is primarily funded by net operating income generated by the project. After tax cash flow in the Sproule evaluation is Andora’s share of revenue less royalty burden, operating expenses, abandonments, capital expenditures and income tax. The first phase of commercial expansion of the demonstration project SAGD facility to 2,990 BOPD is done in two stages with reactivation of the existing facility and wellpair, installation and testing of Andora’s PWB and drilling of an additional four wellpairs. Regulatory approval was received in December 2017 for commercial expansion of the existing Sawn Lake Central demonstration project to 3200 BOPD using Andora’s PWB. Further stages of development include expansion to 5000 BOPD of the first SAGD battery and then an additional four SAGD batteries which are located in the best parts of the reservoir. The timing of individual batteries is dependent on regulatory approval and after-tax cash flow from existing operations for funding of new investment. Volume estimates are on a 100% working interest basis.
It is recognized that stable crude oil prices, and specifically Western Canada Select benchmark prices, will have a significant impact on project economics and financing, and on decisions regarding the timing and extent of future development.
Andora Sawn Lake, Alberta Interests at March 31, 2022 |
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Gross |
Working |
Unrisked Best Estimate |
|
Central Block (Andora operated) |
11 |
75 % |
214.3 |
South Block (Andora operated) |
16 |
100 % |
77.7 |
27 |
292.0 |
Summary of Contingent Bitumen Resources as of March 31, 2022 as provided by Sproule |
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Marketable Resources – Company Gross (million barrels) |
Andora |
Pan Orient |
Risked (evaluation assigned an 85% chance of development) |
||
Contingent – Low Estimate “1C” |
221.3 |
158.9 |
Contingent – Best Estimate “2C” |
248.2 |
178.2 |
Contingent – High Estimate “3C” |
291.3 |
209.1 |
Unrisked |
||
Contingent – Low Estimate “1C” |
260.3 |
186.9 |
Contingent – Best Estimate “2C” |
292.0 |
209.6 |
Contingent – High Estimate “3C” |
342.7 |
246.1 |
Sawn Lake Oil Sands Project |
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Summary of Net Present Values as of March 31, 2022 |
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Contingent Resources as provided by Sproule |
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Andora 100% (Cdn$ million) |
||||||
Net Present Values Before Tax (Risked) |
0 % |
5 % |
10 % |
15 % |
20 % |
|
Contingent – Low Estimate “1C” |
4,871 |
1,219 |
417 |
174 |
81 |
|
Contingent – Best Estimate “2C” |
6,247 |
1,518 |
521 |
223 |
109 |
|
Contingent – High Estimate “3C” |
8,770 |
1,907 |
619 |
259 |
126 |
|
Net Present Values After Tax (Risked) |
0 % |
5 % |
10 % |
15 % |
20 % |
|
Contingent – Low Estimate “1C” |
3,726 |
927 |
312 |
127 |
56 |
|
Contingent – Best Estimate “2C” |
4,788 |
1,157 |
392 |
165 |
78 |
|
Contingent – High Estimate “3C” |
6,732 |
1,457 |
469 |
193 |
92 |
|
Net Present Values Before Tax (Unrisked) |
0 % |
5 % |
10 % |
15 % |
20 % |
|
Contingent – Low Estimate “1C” |
5,727 |
1,432 |
490 |
204 |
95 |
|
Contingent – Best Estimate “2C” |
7,346 |
1,784 |
612 |
261 |
127 |
|
Contingent – High Estimate “3C” |
10,315 |
2,241 |
727 |
304 |
148 |
|
Net Present Values After Tax (Unrisked) |
0 % |
5 % |
10 % |
15 % |
20 % |
|
Contingent – Low Estimate “1C” |
4,379 |
1,087 |
365 |
147 |
65 |
|
Contingent – Best Estimate “2C” |
5,628 |
1,358 |
459 |
192 |
91 |
|
Contingent – High Estimate “3C” |
7,916 |
1,711 |
549 |
226 |
107 |
|
1 |
For risked resources and values, the evaluation assigned an 85% chance of development for Sawn Lake. |
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2 |
Resources assessed at forecast crude oil reference prices and costs. |
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3 |
Bitumen production is forecast to commence in 2023. |
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4 |
The reference prices for heavy oil per barrel (Western Canada Select “WCS” 20.5 API in Canadian dollars) |
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5 |
Bitumen revenue per barrel for these resources is $23.31 less than the associated WCS reference price in |
|||||
6 |
The reference prices for natural gas (AECO-C Spot price per MMBTU in Canadian dollars) are $4.29 for |
|||||
7 |
Future development costs (including inflation of 0% per annum for 2023 and 2% per annum thereafter) for |
|||||
▪ Unrisked Low Estimate – CDN$3,444 million with the drilling of 358 gross well pairs and building facilities |
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▪ Unrisked Best Estimate – CDN$3,567 million with the drilling of 358 gross well pairs and building facilities |
||||||
▪ Unrisked High Estimate – CDN$3,765 million with the drilling of 358 gross well pairs and building facilities |
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8 |
The values disclosed may not represent fair market value. |
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9 |
There is uncertainty that it will be commercially viable to produce any portion of the resources. |
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Sawn Lake Oil Sands Project |
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Summary of Net Present Values as of March 31, 2022 |
|||||||
Contingent Resources as provided by Sproule |
|||||||
Pan Orient 71.8% Interest in Andora (Cdn$ million) |
|||||||
Net Present Values Before Tax (Risked) |
0 % |
5 % |
10 % |
15 % |
20 % |
||
Contingent – Low Estimate “1C” |
3,497 |
875 |
300 |
125 |
58 |
||
Contingent – Best Estimate “2C” |
4,485 |
1,090 |
374 |
160 |
78 |
||
Contingent – High Estimate “3C” |
6,297 |
1,369 |
445 |
186 |
90 |
||
Net Present Values After Tax (Risked) |
0 % |
5 % |
10 % |
15 % |
20 % |
||
Contingent – Low Estimate “1C” |
2,675 |
665 |
224 |
91 |
40 |
||
Contingent – Best Estimate “2C” |
3,438 |
830 |
282 |
118 |
56 |
||
Contingent – High Estimate “3C” |
4,834 |
1,046 |
337 |
139 |
66 |
||
Net Present Values Before Tax (Unrisked) |
0 % |
5 % |
10 % |
15 % |
20 % |
||
Contingent – Low Estimate “1C” |
4,112 |
1,029 |
352 |
146 |
68 |
||
Contingent – Best Estimate “2C” |
5,275 |
1,281 |
439 |
188 |
91 |
||
Contingent – High Estimate “3C” |
7,406 |
1,609 |
522 |
218 |
106 |
||
Net Present Values After Tax (Unrisked) |
0 % |
5 % |
10 % |
15 % |
20 % |
||
Contingent – Low Estimate “1C” |
3,144 |
780 |
262 |
106 |
47 |
||
Contingent – Best Estimate “2C” |
4,041 |
975 |
330 |
138 |
65 |
||
Contingent – High Estimate “3C” |
5,683 |
1,229 |
394 |
162 |
77 |
||
1 |
Results represent Pan Orient’s 71.8% interest in Andora. |
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2 |
For risked resources and values, the evaluation assigned an 85% chance of development for Sawn Lake. |
||||||
3 |
Resources assessed at forecast crude oil reference prices and costs. |
||||||
4 |
Bitumen production is forecast to commence in 2023. |
||||||
5 |
The reference prices for heavy oil per barrel (Western Canada Select “WCS” 20.5 API in Canadian dollars) |
||||||
6 |
Bitumen revenue per barrel for these resources is $23.31 less than the associated WCS reference price |
||||||
7 |
The reference prices for natural gas (AECO-C Spot price per MMBTU in Canadian dollars) are $4.29 for 2023, |
||||||
8 |
Future development costs (including inflation of 0% per annum for 2023 and 2% per annum thereafter) for |
||||||
▪Unrisked Low Estimate – CDN$2,472 million with the drilling of 358 gross well pairs and building facilities |
|||||||
▪Unrisked Best Estimate – CDN$2,561 million with the drilling of 358 gross well pairs and building facilities |
|||||||
▪ Unrisked High Estimate – CDN$2,703 million with the drilling of 358 gross well pairs and building facilities |
|||||||
9 |
The values disclosed may not represent fair market value. |
||||||
10 |
There is uncertainty that it will be commercially viable to produce any portion of the resources. |
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