2022 Reserve Report Highlights:
- Proved developed producing (“PDP“) reserves increased 66% to 39.8 MMboe, with a corresponding increase of 169% in NPV@10% to $485 million from $180.1 million in 2021. The PDP reserve life index increased to 8.3 years from 7.8 years and the liquids weighting increased to 56% from 43% at year-end 2021. The year-over-year increase in reserve life demonstrated Journey’s ability to grow its base production while maintaining or reducing its corporate decline rate.
- Proved reserves increased 53% to 50.8 MMboe, with a corresponding increase of 136% in NPV@10% to $604.9 million.
- Proved plus probable, developed, producing (“PPDP“) reserves increased 65% to 51.2 MMboe, with a corresponding increase of 154% in NPV@10% to $581.1 million. The PPDP reserve life index increased to 10.5 years from 9.9 years.
- Proved plus probable reserves increased 48% to 81.0 MMboe, with a corresponding increase of 106% in NPV@10% to $894.9 million. These values are exclusive of the value of Journey’s growing power business.
- The net present value (discounted at 10%) of Journey’s power business climbed to $34.7 million. This includes the producing Countess power project and the Gilby power project that is under construction. However, this does not include Journey’s planned purchase of the 16.5 MW power plant in the second quarter of 2023.
- Realized attractive F&D and FD&A recycle ratios of 2.2 and 3.0 respectively for proven reserves; and 2.6 and 3.5 respectively for proven plus probable reserves.
- Realized attractive F&D and FD&A recycle ratios of 2.6 and 3.4 respectively for proved, developed, producing reserves.
- Reported PDP reserve addition F&D costs per BOE of $9.56 for 2022 and $7.73 over the past 3 years.
- In 2022, Journey’s PDP reserve additions replaced 544% of the annual production.
- The $276 million of total future development cost (FDC) in Journey’s reserve report generates $303 million in future net present value at 10%. The development wedge generates returns of over 95% with a finding and development cost of approximately $9.50/boe, a cost consistent with Journey’s historical averages.
Unaudited Financial Information
The preliminary 2022 financial information contained in this press release is not a comprehensive statement of the financial results for the fourth quarter and year ended December 31, 2022. Journey’s actual results may differ materially from these estimates due to the currently ongoing finalization of our financial statements. The Company’s audited financial results for the year ended December 31, 2022, are expected to be released on March 8, 2023.
COMPANY GROSS WORKING INTEREST OIL AND GAS RESERVES AND NET PRESENT VALUES
The following table provides summary information presented in the GLJ Petroleum Consultants Limited (“GLJ“) independent reserves assessment and evaluation effective December 31, 2022, (the “GLJ Report“). GLJ evaluated 100% of Journey’s crude oil, natural gas liquids and natural gas reserves. The evaluation of all of its oil and gas properties was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101“).
The 2022 GLJ reserve report includes the abandonment and reclamation liability associated with all active and inactive wells, facilities, pipelines and gathering systems as recommended in the COGE Handbook.
Detailed reserve information will be presented in the Company’s upcoming Statement of Reserves Data and Other Oil and Gas Information section of the Company’s Annual Information Form scheduled to be filed on SEDAR on or before March 31, 2023.
Company Gross Reserves
Based on Three Consultants Average Price and Costs as at December 31, 2022
Light/Med. |
Tight Oil |
Heavy Oil |
Solution |
Residue |
Shale |
Coal |
NGLs |
Total(2) |
|
Reserves Category |
(Mbbl) |
(Mbbl) |
(Mbbl) |
(MMcf) |
(MMcf) |
(MMcf) |
(MMcf) |
(Mbbl) |
(Mboe) |
Proved |
|||||||||
Producing |
7,369 |
129 |
10,431 |
30,144 |
59,682 |
443 |
15,642 |
4,250 |
39,831 |
Developed non-producing |
187 |
– |
5 |
451 |
2,470 |
– |
106 |
138 |
835 |
Undeveloped |
2,790 |
– |
2,578 |
9,145 |
13,393 |
– |
– |
1,023 |
10,148 |
Total proved |
10,346 |
129 |
13,014 |
39,740 |
75,545 |
443 |
15,747 |
5,411 |
50,813 |
Probable |
7,190 |
32 |
5,350 |
40,762 |
30,141 |
120 |
6,683 |
4,636 |
30,159 |
Total proved plus probable |
17,536 |
161 |
18,364 |
80,502 |
105,686 |
563 |
22,430 |
10,047 |
80,972 |
Included in Above |
|||||||||
Proved plus probable |
9,752 |
161 |
12,877 |
39,760 |
75,895 |
563 |
22,291 |
5,330 |
51,205 |
Notes: |
|
(1) |
Company Gross Reserves consist of Journey’s working interest (operated and non-operated) share of reserves before deduction of royalties payable and without including royalties receivable by the Company. |
(2) |
In the case of natural gas volumes, boes are derived by converting natural gas to oil using the ratio of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf:1 bbl). |
(3) |
Total values may not add due to rounding. |
Net Present Values of Future Net Revenue (Based on Three Consultants Average Forecast Prices and Costs)
Before Tax Net Present Value(1) |
|||||
Reserves category |
0 % |
5 % |
10 % |
15 % |
20 % |
Proved |
|||||
Producing |
499,344 |
559,118 |
484,602 |
417,169 |
365,656 |
Developed non-producing |
18,132 |
13,282 |
10,268 |
8,258 |
6,842 |
Undeveloped |
257,535 |
163,278 |
110,021 |
77,330 |
55,872 |
Total proved |
775,010 |
735,678 |
604,891 |
502,757 |
428,369 |
Probable |
807,066 |
449,487 |
290,037 |
203,760 |
151,187 |
Total proved plus probable |
1,582,076 |
1,185,164 |
894,929 |
706,518 |
579,556 |
Included in Above |
|||||
Proved plus probable producing |
811,538 |
716,948 |
581,113 |
483,521 |
414,878 |
Notes: |
|
(1) |
The net present values presented in the above table do not include any value associated with Journey’s power business. |
(2) |
Forecast pricing used is the average of the published price forecasts for GLJ Petroleum Consultants Ltd., Sproule Associates Ltd. and McDaniel & Associates Ltd. as at December 31, 2022. |
3) |
It should not be assumed that the net present values of future net revenues estimated by GLJ represent fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material. |
(4) |
Total values may not add due to rounding. |
The forecast prices and foreign exchange rates used in the GLJ Report are as follows:
WTI Cushing Oklahoma ($US/bbl) |
Edmonton 40 API |
WCS Crude |
Alberta AECO-spot ($CDN/Mmbtu) |
NYMEX |
Foreign Exchange ($US/$CDN) |
|
2023 |
80.33 |
103.77 |
76.54 |
4.23 |
4.74 |
0.7450 |
2024 |
78.50 |
97.74 |
77.75 |
4.40 |
4.50 |
0.7650 |
2025 |
76.95 |
95.27 |
77.54 |
4.21 |
4.31 |
0.7683 |
2026 |
77.61 |
95.58 |
80.07 |
4.27 |
4.40 |
0.7717 |
2027 |
79.16 |
97.07 |
81.89 |
4.34 |
4.49 |
0.7750 |
2028 |
80.75 |
99.01 |
84.02 |
4.43 |
4.58 |
0.7750 |
2029 |
82.36 |
100.99 |
85.73 |
4.51 |
4.67 |
0.7750 |
2030 |
84.01 |
103.01 |
87.44 |
4.60 |
4.76 |
0.7750 |
2031 |
85.69 |
105.07 |
89.20 |
4.69 |
4.86 |
0.7750 |
2032 |
87.40 |
106.69 |
91.11 |
4.79 |
4.95 |
0.7750 |
2033 |
89.15 |
108.83 |
92.93 |
4.89 |
5.05 |
0.7750 |
2034 |
90.93 |
111.00 |
94.79 |
4.98 |
5.15 |
0.7750 |
2035 |
92.75 |
113.22 |
96.68 |
5.08 |
5.26 |
0.7750 |
2036 |
94.60 |
115.49 |
98.62 |
5.18 |
5.36 |
0.7750 |
2037 |
96.50 |
117.80 |
100.59 |
5.29 |
5.47 |
0.7750 |
Thereafter |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
Reserves Reconciliation
The following table sets out the reconciliation of Journey’s total gross reserves based on forecast prices and costs by principal product type as at December 31, 2022 relative to December 31, 2021.
Proved |
Probable |
TPP1 |
|
December 31, 2021 |
33,204 |
21,583 |
54,788 |
Discoveries |
– |
– |
– |
Extensions |
573 |
3,239 |
3,812 |
Infill Drilling |
– |
– |
– |
Improved Recovery |
12 |
29 |
40 |
Technical Revisions |
1,938 |
(1,106) |
832 |
Acquisitions |
17,542 |
6,260 |
23,802 |
Dispositions |
– |
– |
– |
Economic Factors |
1,113 |
154 |
1,267 |
Production |
(3,569) |
– |
(3,569) |
December 21, 2022 |
50,813 |
30,159 |
80,972 |
Note: |
|
1 |
TPP means total proved plus probable reserves. |
FINDING, DEVELOPMENT AND ACQUISITION COSTS
Journey’s finding and development (“F&D“) and finding, development and acquisition (“FD&A“) costs for 2022, 2021 and the three-year average are presented in the tables below. The capital costs used in the calculations are those costs related to: land acquisition and retention, seismic, drilling, completions, tangible well site, tie-ins, and facilities, plus the change in estimated future development costs (“FDC“) as per the independent evaluator’s reserve report. Net acquisition costs are the cash outlays in respect of acquisitions; minus the proceeds from the disposition of properties during the year. Due to the timing of capital costs and the subjectivity in the estimation of future costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated FDC’s generally will not necessarily reflect total FDC’s related to reserve additions for that year. The reserves used in this calculation are working interest reserve additions, including technical revisions and changes due to economic factors. The 2022 and the three-year average capital expenditures are currently unaudited as the 2022 financial results are in the process of being finalized. However, see the reconciliation of the capital expenditures below which are as of the date of this press release.
Proved Finding, Development & Acquisition Costs |
2022 |
2021 |
3 Year |
Capital expenditures (including A&D) ($000’s) |
178,029 |
10,712 |
190,005 |
Change in future capital ($000’s) |
44,714 |
7,465 |
12,378 |
Total capital for FD&A (000’s) |
22,743 |
18,177 |
202,838 |
Reserve additions, including A&D (Mboe) |
21,178 |
6,923 |
26,930 |
Proved FD&A costs – including changes in future capital ($/boe) |
10.52 |
2.63 |
7.52 |
Proved FD&A costs – excluding changes in future capital ($/boe) |
8.41 |
1.55 |
7.06 |
Recycle ratio(1) |
|||
Including changes in future capital |
3.0 |
7.2 |
2.6 |
Proved plus Probable Finding, Development & Acquisition Costs |
2022 |
2021 |
3 Year |
Capital expenditures (including A&D) ($000’s) |
178,029 |
10,712 |
190,005 |
Change in future capital ($000’s) |
90,257 |
14,806 |
37,307 |
Total capital for FD&A ($000’s) |
268,286 |
25,518 |
227,312 |
Reserve additions, including A&D (Mboe) |
29,753 |
7,698 |
32,966 |
Proved FD&A costs – including changes in future capital ($/boe) |
9.02 |
3.31 |
6.90 |
Proved FD&A costs – excluding changes in future capital ($/boe) |
5.98 |
1.39 |
5.76 |
Recycle ratio(1) |
|||
Including changes in future capital |
3.5 |
5.7 |
2.9 |
Proved Finding & Development Costs |
2022 |
2021 |
3 Year |
Capital expenditures (excluding A&D) ($000’s) |
41,576 |
2,990 |
45,867 |
Change in future capital ($000’s) |
11,433 |
6,969 |
(21,399) |
Total capital for F&D ($000’s) |
53,009 |
9,959 |
24,468 |
Reserve additions, excluding A&D (Mboe) |
3,636 |
4,736 |
7,201 |
Proved F&D costs – including changes in future capital ($/boe) |
14.58 |
2.10 |
3.40 |
Proved F&D costs – excluding changes in future capital ($/boe) |
11.43 |
0.63 |
6.37 |
Recycle ratio(1) |
|||
Including changes in future capital |
2.2 |
9.0 |
5.9 |
Proved plus Probable Finding & Development Costs |
2022 |
2021 |
3 Year |
Capital expenditures (excluding A&D) ($000’s) |
41,576 |
2,990 |
45,867 |
Change in future capital ($000’s) |
31,654 |
14,210 |
(21,892) |
Total capital for F&D ($000’s) |
73,230 |
17,200 |
23,975 |
Reserve additions, excluding A&D (Mboe) |
5,951 |
5,054 |
6,520 |
Proved F&D costs – including changes in future capital ($/boe) |
12.31 |
3.40 |
3.68 |
Proved F&D costs – excluding changes in future capital ($/boe) |
6.99 |
0.59 |
7.03 |
Recycle ratio(1) |
|||
Including changes in future capital |
2.6 |
5.6 |
5.4 |
Notes: |
|
(1) |
Recycle ratio is calculated as the operating netback per boe divided by F&D or FD&A costs per boe as applicable. The operating netbacks used in the respective years are as follows: 2022 (unaudited) – $31.88/boe; 2021 – $18.89/boe and the three-year average is $19.90/boe (see full reconciliation in the “Advisories” section). |
(2) |
Future Development Costs have been adjusted for the effects of reserves categorized as acquisitions and dispositions. |
FUTURE DEVELOPMENT COSTS
The following table provides the breakdown of future development costs deducted in the estimation of the future net revenue attributable to the proved and proved plus probable reserve categories noted below:
($000’s) |
Proved |
Proved plus |
2023 |
22,767 |
33,404 |
2024 |
51,287 |
81,929 |
2025 |
29,426 |
84,839 |
2026 |
27,926 |
58,334 |
2027 |
2,700 |
23,464 |
Remaining |
8,225 |
11,045 |
Total (undiscounted) |
142,331 |
293,015 |
RESERVE LIFE INDEX
The Company’s reserve life index (“RLI“) is calculated by taking the Company Gross Reserves from the GLJ Report and dividing them by the projected 2023 production as estimated in the GLJ Report.
Company Gross |
2022 Company |
RLI |
|
Reserves Category |
(Mboe) |
(Mboe) |
(Years) |
Proved, developed, producing |
39,831 |
4,774 |
8.3 |
Total proved |
50,813 |
5,034 |
10.1 |
Proved plus probable producing |
51,205 |
4,898 |
10.5 |
Proved plus probable |
80,972 |
5,450 |
14.9 |
NET ASSET VALUE
The following table provides a calculation of Journey’s estimated net asset value (“NAV“) and net asset value per share (“NAVPS“) as at December 31, 2022 based on the estimated future net revenues associated with Journey’s reserves as presented in the GLJ Report. NAV does not include any provision for Journey’s undeveloped land or seismic database, both of which increased materially in 2022, through our A&D program. However, NAV in the table below includes the value of Journey’s Countess Power Project (“CPP“) and future value of Journey’s Gilby Power Project (“GPP“) based upon an economic run completed by GLJ and using their pricing assumptions.
Net Asset Value ($000’s) |
Net Asset Value ($/share) |
|||||
Category |
2022 |
2021 |
% |
2022 |
2021 |
% |
PDP plus CPP (developed) |
392,085 |
136,784 |
187 |
6.77 |
2.85 |
138 |
TP plus CPP (developed + undeveloped) |
540,829 |
215,082 |
151 |
9.34 |
4.48 |
109 |
P+P DP plus CPP (developed) |
488,596 |
185,434 |
163 |
8.44 |
3.86 |
119 |
TPP plus CPP (developed + undeveloped) |
830,867 |
393,470 |
111 |
14.35 |
8.19 |
75 |
Notes: |
|
(1) |
Aggregate NAV is calculated by taking the future net revenues per the GLJ report, on a before tax basis, discounted at 10% and subtracting net debt at December 31, 2022 of approximately $98,767 thousand (unaudited); (December 31, 2021 – $57,021 thousand). The 2022 NAV has been adjusted to include the value of power generation at Countess and Gilby. Countess was commissioned on September 29, 2020 (10% NPV: $6,250 thousand). Gilby power generation is expected to start power generation in the first quarter of 2024 (10% NPV: $28,455 thousand) as evaluated by GLJ effective January 1, 2023 |
(2) |
Year-end NAVPS is calculated by taking the NAV and dividing it by the basic shares outstanding as at December 31, 2022 of 57,882 thousand shares (December 31, 2021 – 48,060 thousand). All share counts have been rounded to the nearest 1,000 shares. |
This is the second time in as many years where Journey’s capital program has produced significant growth in NAVPS. In aggregate Journey has increased its producing net asset value per share by over 100% on an annualized basis over the past two years. Journey has achieved this milestone while continuing to reduce ARO relative to PDP, while improving corporate sustainability.