CALGARY, Feb. 16, 2016 /CNW/ – Connacher Oil and Gas Limited (CLC – TSX; “Connacher” or the “Company”) announces its year-end reserves as of December 31, 2015, as evaluated by GLJ Petroleum Consultants Ltd. (“GLJ”), independent qualified reserves evaluators.
Proved producing reserves decreased by 12.4 million barrels to 7.8 million barrels. Estimated proved (“1P”) bitumen reserves totaled approximately 214 million barrels, a decrease of three per cent over year-end 2014 volumes. The ten per cent present value (“10% PV”) of 1P bitumen reserves is approximately $840 million as compared to $868 million in 2014.
Proved and probable (“2P”) reserve volumes were approximately 436 million barrels of bitumen, down one per cent from a year earlier. The 10% PV of these 2P bitumen reserves increased by 7 per cent to approximately $1.544 billion, due to the lower long term netback bitumen prices forecast by GLJ, offset by lower operating expense and well drilling costs which are 10 per cent lower than in 2014.
Connacher’s first SAGD project at Great Divide, Pod One, has been producing bitumen since late 2007, with commercial production commencing March 1, 2008. Algar commenced producing bitumen in August 2010 and commerciality was achieved October 1, 2010. Production from Great Divide since startup through December 31, 2015 has totaled approximately 31.7 million barrels of bitumen. Such amounts have been deducted from earlier estimates of proved reserves prior to the calculation of reserves as at December 31, 2015.
Unless otherwise stated, reserves refer to reserves of bitumen. Future net revenue is calculated after the deduction of forecast royalties, operating expenses, estimated future capital expenditures and well abandonment costs, but before corporate overhead or other indirect costs, including interest and income taxes, from forecast revenue. Certain amounts cited herein have been rounded for presentation purposes. The GLJ December 31, 2015 report (“Year-End 2015 Report”) was prepared utilizing the GLJ January 1, 2016 price forecast, effective December 31, 2015. Readers are referred to the notes to the Summary Tables included in this press release for details regarding the price forecast used by GLJ. Earlier reports were prepared using the price forecasts then being applied by GLJ. Future net revenues disclosed herein do not represent fair market value. Also, estimations of reserves and future net revenue discussed in this press release constitute forward looking information. See “Forward Looking Information and Reserves Advisory” below.
The Year-End 2015 Report was prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and in accordance with National Instrument 51-101 (“NI 51-101”). Comparisons provided herein with respect to Connacher’s bitumen reserves and for 10% PV for December 31, 2014 are to estimates contained in the report, prepared by GLJ, with an effective date of December 31, 2014 (“Year-End 2014 Report”).
Furthermore, additional information regarding Connacher’s reserves and resources, including the Company’s interest in the resources and the risks and the level of uncertainty associated with the recovery of the resources, can be found in the Company’s annual information form (“AIF”) dated March 24, 2015. This AIF can be accessed at www.sedar.com. The Company will be filing an updated AIF later this year and prior to March 31, 2016, once it has completed the audit of its financial and operating results for the year-ended December 31, 2015 and has released them to the public.
Detailed information included in the Year-End 2015 Report regarding Connacher’s bitumen reserves and associated present values are set forth in the tables below, including a comparison of year-end 2015 results to year-end 2014 results.
Summary Tables
Set out below is a summary of the bitumen reserves and the value of future net revenue of the Corporation as at December 31, 2015 as evaluated by GLJ in the Year-End 2015 Report. The pricing used in the forecast price evaluations is set forth in the notes to the tables.
BITUMEN RESERVE VOLUMES |
|||||
Bitumen |
|||||
Gross(1) |
Net(1) |
||||
(Mbbl) |
(Mbbl) |
||||
Proved Reserves |
|||||
Producing(2)(5) |
7,783 |
7,518 |
|||
Developed Non-Producing(2)(6) |
– |
– |
|||
Undeveloped(2)(7) |
206,791 |
180,657 |
|||
Total Proved(2) |
214,687 |
192,035 |
|||
Total Probable(3) |
221,061 |
179,510 |
|||
Total Proved Plus Probable(2)(3) |
435,748 |
367,797 |
NET PRESENT VALUE SUMMARY |
|||||||||||
Net Present Value of Future Net Revenue Before Income Taxes Discounted %/Year ($MM) |
|||||||||||
0% |
5% |
10% |
15% |
20% |
|||||||
Proved Reserves |
|||||||||||
Producing(2) |
-35 |
-18 |
-11 |
-8 |
-7 |
||||||
Developed Non-Producing(2)(4) |
2.2 |
2.1 |
2.0 |
1.9 |
1.8 |
||||||
Undeveloped(2)(5) |
4,048 |
1,769 |
850 |
426 |
208 |
||||||
Total Proved(2) |
4,013 |
1,752 |
840 |
420 |
203 |
||||||
Total Probable(3) |
5,552 |
1,756 |
704 |
340 |
189 |
||||||
Total Proved Plus Probable(2)(3) |
9,566 |
3,507 |
1,544 |
760 |
392 |
Figures in tables may not add due to rounding. |
Notes: |
|
(1) |
“Gross Reserves” are the Corporation’s working interest (operating or non-operating) share before deducting royalties and without including any royalty interests of the Corporation. “Net Reserves” are the Corporation’s working interest (operating or non-operating) share after deduction of royalty obligations, plus the Corporation’s royalty interests in reserves. |
(2) |
“Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. |
(3) |
“Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. |
(4) |
“Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. |
(5) |
“Undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. |
(6) |
Pricing assumptions in the Year-End 2015 Report were as follows: US$/CDN$ exchange rates were 0.725 for 2016 and 0.75 in the Year-End 2015 Report. The following is the price forecast for the Year-End 2015 Report: |
BOC |
WTI |
WCS@ |
NRBP |
||||||||||
Exchange |
Constant |
||||||||||||
Inflation |
Rate |
2016 $ |
Current |
Current |
|||||||||
Year |
% |
USD/CAD |
USD/bbl |
USD/bbl |
CAD/bbl |
CAD/bbl |
|||||||
2016 |
2.0 |
0.725 |
44.00 |
44.00 |
42.26 |
12.96 |
|||||||
2017 |
2.0 |
0.750 |
50.98 |
52.00 |
51.20 |
28.23 |
|||||||
2018 |
2.0 |
0.775 |
55.75 |
58.00 |
55.39 |
32.32 |
|||||||
2019 |
2.0 |
0.800 |
60.31 |
64.00 |
60.84 |
40.33 |
|||||||
2020 |
2.0 |
0.825 |
64.67 |
70.00 |
66.18 |
48.26 |
|||||||
2021 |
2.0 |
0.850 |
67.93 |
75.00 |
70.00 |
52.08 |
|||||||
2022 |
2.0 |
0.850 |
71.04 |
80.00 |
75.88 |
57.79 |
|||||||
2023 |
2.0 |
0.850 |
74.00 |
85.00 |
81.41 |
62.99 |
|||||||
2024 |
2.0 |
0.850 |
75.00 |
87.88 |
84.90 |
66.89 |
|||||||
2025 |
2.0 |
0.850 |
75.00 |
89.63 |
86.60 |
68.43 |
Comparison of Reserves 2014/2015
BITUMEN GROSS RESERVES (Mbbls) |
||||||
31-Dec-14 |
31-Dec-15 |
|||||
Proved Producing |
20,173 |
7,783 |
||||
Total Proved Reserves (1P) |
219,293 |
214,687 |
||||
Probable |
221,739 |
221,061 |
||||
Proved and Probable Reserves (2P) |
441,032 |
435,748 |
10% PRESENT VALUE OF FUTURE NET REVENUE OF BITUMEN |
|||||
31-Dec-14 |
31-Dec-15 |
||||
$MM |
$MM |
||||
Proved Producing |
118 |
-11 |
|||
Total Proved Reserves (1P) |
868 |
840 |
|||
Probable |
580 |
704 |
|||
Proved and Probable Reserves (2P) |
1,448 |
1,544 |