CALGARY, AB / ACCESSWIRE / March 14, 2019 / Point Loma Resources Ltd. (TSX VENTURE: PLX) (the "Corporation" or "Point Loma") is pleased to report the results of its 2018 year-end reserves as evaluated by McDaniel and Associates Ltd. ("McDaniel") and provide an update on operations.
Highlights:
- Proved producing reserves increased 35 percent year over year.
- Total proved plus probable ("2P") reserves of 5,284 mboe and proved ("1P") reserves of 2,967 mboe for the Corporation, an increase of 19 percent and decrease of 15 percent, respectively, since 2017 year-end.
- Discounted at 10 percent estimated 2P reserve value of $38.4 million and 1P reserve value of $21.3 million for the Corporation, an increase of 25 percent and decrease of 3 percent, respectively, since 2017 year-end.
- Notably, total proved plus probable oil reserves increased 92 percent and proved oil reserves increased 64 percent year over year largely due to the Rex oil discovery drilled and completed in late 2018.
- The Wizard Lake Rex oil pool was assigned total proven plus probable reserves of 525 mbbl oil and proved reserves of 308 mbbl oil net to the Corporation.
- Wizard Lake oil production is anticipated to commence in Q2-2019 once all regulatory approvals have been received and construction of facilities is completed.
SUMMARY OF CORPORATE RESERVES (1,2,4)
The following table is a summary of the estimated reserves as at December 31, 2018, based on the McDaniel report.
|
Reserve Category |
Light and Medium Oil |
Heavy Oil |
Conventional Natural Gas |
Natural Gas Liquids |
Barrels of Oil Equivalent (3) |
|
|
|
(mbbl) |
(mbbl) |
(mmcf) |
(mbbl) |
(mboe) |
|
|
Proved |
|
|
|
|
|
|
|
Producing |
313.7 |
8.7 |
8746 |
136 |
1916 |
|
|
Non-Producing |
4.2 |
77.0 |
326 |
9 |
144 |
|
|
Undeveloped |
423.2 |
231.0 |
1354 |
26 |
906 |
|
|
Total proved |
741.1 |
316.7 |
10426 |
172 |
2967 |
|
|
Probable |
458.5 |
233.8 |
8849 |
149 |
2316 |
|
|
Total proved plus probable |
1199.7 |
550.5 |
19275 |
321 |
5284 |
|
|
|
|
|
|
|
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Notes: |
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(1) Reserves are presented on a "company gross" basis, which is defined as Point Loma's working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of the Corporation. |
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(2) Based on McDaniel's December 31, 2018 forecast prices and costs. The forecast of commodity prices used in the McDaniel report can be found at www.mcdan.com. See also 'Price Forecast' below. |
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(3) 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. |
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(4) Columns may not add due to rounding of individual items. |
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Net Present Values of Future Net Revenue Before Income Taxes Discounted at (%/year) (1)(2)(3)(4)
The following table is a summary of the estimated net present values of future net revenue (before income taxes) associated with Point Loma's reserves as at December 31, 2018.
|
Reserve Category |
0% |
5% |
10% |
15% |
20% |
|
|
(MM$) |
(MM$) |
(MM$) |
(MM$) |
(MM$) |
|
Proved |
|
|
|
|
|
|
Producing |
19.3 |
15.4 |
12.7 |
10.7 |
9.2 |
|
Non-Producing |
2.6 |
2.2 |
2.0 |
1.8 |
1.6 |
|
Undeveloped |
13.2 |
9.3 |
6.6 |
4.6 |
3.1 |
|
Total proved |
35.0 |
27.0 |
21.0 |
17.1 |
13.9 |
|
Probable |
35.4 |
23.9 |
17.1 |
12.8 |
9.9 |
|
Total proved plus probable |
70.4 |
51.0 |
38.4 |
29.9 |
23.8 |
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|
|
|
|
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Notes: |
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(1) Based on McDaniel's December 31, 2018 forecast prices and costs. The forecast of commodity prices used in the McDaniel report can be found at www.mcdan.com/priceforecast. See also 'Price Forecast' below. |
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(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, operating costs, estimated well abandonment and reclamation costs and estimated future development costs. |
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(3) Estimated future net revenue, whether discounted or not, may not represent fair market value. |
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(4) Columns may not add due to rounding of individual items. |
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Price Forecast
The following table summarizes McDaniel's commodity price forecast and foreign exchange rate and inflation rate (1) assumptions as at December 31, 2018, as applied in the McDaniel report.
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|
|
|
|
|
|
|
Year |
Exchange Rate |
WTI Crude Oil |
Edmonton Light Crude Oil |
Edmonton Butane |
Natural Gas Alberta AECO Spot |
|
|
$US/$Cdn |
$US/bbl |
$Cdn/bbl |
$Cdn/bbl |
$Cdn/MMBtu |
|
2019 |
0.750 |
56.50 |
63.30 |
19.60 |
1.85 |
|
2020 |
0.775 |
63.80 |
74.30 |
35.40 |
2.20 |
|
2021 |
0.800 |
67.60 |
78.50 |
43.10 |
2.55 |
|
2022 |
0.800 |
71.60 |
83.40 |
51.90 |
3.05 |
|
2023 |
0.800 |
73.10 |
85.10 |
56.10 |
3.20 |
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Note: |
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(1) Inflation rate is accounted for at 2% per year. |
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Future Development Costs ("FDC")
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The following table provides a summary of the estimated FDC required to bring Point Loma's 1P and 2P undeveloped reserves to production, which have been deducted in the estimation of future net revenue attributable to such reserves. |
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Future Development Costs ($millions) |
Total Proved |
Total Proved plus Probable |
|
|
|
|
|
2019 |
13.0 |
14.6 |
|
2020 |
4.0 |
9.1 |
|
2021 |
0.0 |
0.8 |
|
2022 |
0.0 |
0.0 |
|
2023 |
0.0 |
0.0 |
|
Remainder |
0.0 |
0.0 |
|
Total FDC undiscounted |
17.0 |
24.5 |
|
|
|
|
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Note: |
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(1) FDC as per McDaniel report, based on McDaniel's December 31, 2018 forecast prices and costs. |
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Reserves
Point Loma's 2018 year-end reserves evaluation was prepared by the Corporation's independent qualified reserves evaluator in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
Additional information regarding the Corporation's reserve data and other oil and gas information will be included in the Corporation's Annual Information Form ("AIF") for the year ended December 31, 2018, which will be filed under the Corporation's profile at www.sedar.com.
See also cautionary statements below for further explanations and discussions.
Wizard Lake Update (70% WI)
Point Loma is expected to commence construction of production facilities at its recently drilled and tested Rex oil discovery well in Q2-2019 and commence production thereafter subject to receipt of regulatory approvals. The 16-17-48-27W4 well tested at rates in excess of 300 bpd of oil with increasing oil cuts through the end of the testing period which has led to substantial reserve bookings for the pool net to Point Loma. Also of note, after the flow test actual oil sales were 55 percent above measured amounts, the timing of the additional volumes recovered during the test cannot be determined but this is positive additional recovery.
In addition to proved plus probable non-producing reserves of 150 mbbl (105 mbbl working interest) the Corporation received three additional proven undeveloped and one additional probable location booked to the pool. In total the net proven and probable reserves booked were 525 mbbl of oil with a net present value at 10 percent of $8.8 million.
This represents a key discovery for Point Loma and will increase the oil production weighting for the Corporation significantly. At tested rates this would represent a shift of oil and ngl weighting to approximately 40-45 percent. Follow-up drilling can further move the production split to a higher oil weighting.
About Point Loma
Point Loma is a public oil and gas exploration and development company focused on horizontally exploiting conventional oil and gas reservoirs in west central Alberta. Point Loma's business plan is to utilize its experience to drill, develop and acquire accretive assets with potential for horizontal multi-stage frac technology and exploit opportunities for secondary recovery. For more information and a current corporate presentation please visit Point Loma's website at www.pointloma.ca or Point Loma's profile on the System for Electronic Document Analysis and Retrieval website at www.sedar.com.
For further information, please contact:
Terry Meek
President and CEO
Telephone: (403) 705-5051 ext. 444
[email protected]
Thomas Love
Interim CFO
Telephone: (403) 705-5051 ext. 443
[email protected]
A Note Regarding Forward-Looking Information
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws, including without limitation, statements pertaining to the anticipated timing of production from the Corporation’s Wizard Lake well and the anticipated increase in oil and ngl production weighting for the Corporation. Statements relating to "reserves" are also deemed to forward-looking statements, as they involve the implied assessment based on certain estimates and assumptions, that the reserves can be profitably produced in the future.
The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. Although Point Loma believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Point Loma cannot give assurance that they will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the inability of Point Loma to bring additional production on stream or in the anticipated quantities disclosed herein; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations, actual production from the acquired assets may be greater or less than estimates. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on Point Loma’s future operations and such information may not be appropriate for other purposes.
The forward-looking statements and information contained in this press release are made as of the date hereof and Point Loma does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Oil and Gas Information
"BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
SOURCE: Point Loma Resources Ltd.