Petrolifera increases oil, NGL reserves by 43%
2008-02-25 14:52 ET - News Release
Mr. Richard Gusella reports
PETROLIFERA PETROLEUM REPORTS INCREASED RESERVES AND PRE-TAX PRESENT VALUE FOR YEAR ENDED DECEMBER 31, 2007; PROVED CRUDE OIL AND NATURAL GAS LIQUIDS RESERVES UP 43 PERCENT AFTER RECORD PRODUCTION IN 2007
Petrolifera Petroleum Ltd. has released estimates of the company's 1P (proved), 2P (proved and probable) and 3P (proved, probable and possible) reserves, as prepared by GLJ Petroleum Consultants of Calgary, Alta., in a report with an effective date of Dec. 31, 2007, and has confirmed the significant positive impact of 2007 drilling activity and the installation of new production facilities, including a water flood, at its Puesto Morales Norte field in the Neuquen basin, Argentina.
The GLJ report and the estimates provided herein were prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101. Comparisons provided herein with respect to Petrolifera's reserves are to estimates contained in a report prepared by GLJ with an effective date of Dec. 31, 2006. The GLJ 2007 report was prepared using the GLJ Jan. 1, 2008, price forecast, effective Dec. 31, 2007, and adjusted to Petrolifera's asset mix and specific pricing circumstances in Argentina. In the GLJ 2007 report, future net revenue is calculated after deduction of forecast royalties, operating expenses, capital expenditures and well abandonment costs but before corporate overhead or other indirect costs, including interest and income taxes. The present value of future net revenue is calculated by GLJ using various discount rates. This release will provide undiscounted future net revenue and the 10-per-cent present value thereof.
All references to barrels of oil equivalent are calculated on the basis of six thousand cubic feet to one barrel. Readers are cautioned that the conversion used in calculating barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Furthermore, boe may be misleading if used in isolation. Future net revenues disclosed herein do not represent fair market value.
Reserve volumes and values
The GLJ 2007 report estimated that Petrolifera's 1P crude oil and natural gas liquid (NGL) reserves increased 43 per cent to 15.1 million barrels as at Dec. 31, 2007, compared with 10.5 million barrels at Dec. 31, 2006. The increase reflects exploratory success and technical revisions primarily arising from the company's capital spending and drilling program during the year. The increase occurred after record production of 2.9 million barrels of crude oil during the year. On a 1P basis, the company's reserve replacement ratio for crude oil and NGL was 2.6 times. The reserve replacement ratio percentage was calculated by dividing the sum of production volumes for the year and changes to estimated reserves volumes during the year by the production volumes.
Petrolifera's 1P natural gas reserves increased 14 per cent to 16.3 billion cubic feet after the production of 800 million cubic feet and technical revisions, including provision for flared natural gas volumes, with a reserve replacement ratio of 3.5 times, calculated as indicated above.
Despite the substantial movement of probable reserves to the 1P category, Petrolifera's 2P crude oil and NGL reserves increased 10 per cent to 21.5 million barrels, reflecting exploratory success. At Dec. 31, 2007, 2P crude oil and NGL reserves were 21.5 million barrels compared with 19.5 million barrels last year. On a 2P basis, the company's reserve replacement ratio for crude oil and NGL was 1.7 times, calculated as indicated above.
On an equivalent basis, Petrolifera's 1P reserves totalled 17.8 million boe in 2007 compared with 12.9 million boe in 2006, for an increase of 38 per cent. These reserves were forecast to generate $456-million of future net revenue, with a 10-per-cent present value of $314-million, after deduction of $18.6-million of future capital and $2.2-million of well abandonment costs. The 10-per-cent present value for the 2007 1P estimates represents a 27-per-cent increase over 2006. Reserve replacement for 1P on a boe basis was 2.6 times.
On an equivalent basis, Petrolifera's 2P reserves total 25.6 million boe in 2007 compared with 24.3 million boe in 2006 for an increase of 5 per cent, after production of three million boe. GLJ estimates these reserves will generate $662-million of future net revenue, with a 10-per-cent present value of $452-million after deduction of $34.4-million of future capital expenditures and $2.8-million for future well abandonment costs. The 10-per-cent present value for the 2007 2P estimates represents only a 1-per-cent increase over 2006, due primarily to changes in Argentine pricing and taxation policies during 2007. Reserve replacement for 2P on a boe basis was 1.4 times. The company's calculated reserve life index, calculated by dividing remaining 2P reserves at Dec. 31, 2007, by 2007 total boe production, was 8.5 years.
Petrolifera also commissioned GLJ to provide an estimate of possible reserves, which were last estimated effective Dec. 31, 2005, by another independent reserve evaluator. GLJ estimates the company's 3P crude oil and NGL reserves to be 33.5 million barrels, with natural gas reserves estimated at 33.5 billion cubic feet and equivalent reserves estimated at 39 million boe. These reserves are estimated to generate $1-billion of future net revenue with a 10-per-cent present value of $656-million, after deduction of $72.9-million of future capital expenditures and $3.6-million for future well abandonment costs.
It should be noted that the estimate of Petrolifera's 3P reserves at 39.0 million boe is after the production of approximately 5.3 million boe in 2006 and 2007. This is the first updated estimate of possible reserves since 2005. The volume of possible reserves underscores the recognition of the development potential for both crude oil and natural gas, of the lands reviewed in the GLJ 2007 report, which however did not include a review of the company's undeveloped exploratory concessions at Vaca Mahuida, Puesto Guevara, Puesto Morales Este and Gobernador Ayalla II, all in Argentina, nor of Petrolifera's holdings in Colombia and Peru.
CRUDE OIL, NGL AND NATURAL GAS RESERVES (1)(2)(3)(4)
Oil and NGL (mbbl) Natural gas (mmcf)
Reserve Dec. 31, Dec. 31, Dec. 31, Dec. 31,
category 2007 2006 2007 2006
Proved (1P) 15,068 10,522 16,281 14,256
Probable 6,452 9,012 7,992 14,544
------- ------- -------- -------
Proved plus
probable (2P) 21,520 19,534 24,273 28,800
Possible 11,940 n/a 9,187 n/a
======= ======= ======== =======
Proved plus
probable plus
possible (3P) 33,460 n/a 33,460 n/a
Notes:
(1) Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable.
There is at least a 90-per-cent probability that the actual
remaining quantities recovered will equal
or exceed the estimated proved reserves.
(2) 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.
(3) Possible reserves are those additional reserves that
are less certain to be recovered than probable reserves.
There is at least a 10-per-cen probability that the
quantities actually recovered will be equal to or
exceed the sum of proved plus probable plus possible
reserves.
(4) Volumes, future net revenue and present value of
future net revenue do not include undeveloped land values
in Argentina, Colombia or Peru.
BOEs (mboe)
Reserve Dec. 31, Dec. 31,
category 2007 2006
Proved (1P) 17,782 12,898
Probable 7,783 11,436
------- -------
Proved plus
probable (2P) 25,566 24,334
Possible 13,471 n/a
======= =======
Proved plus
probable plus
possible (3P) 39,037 n/a
BEFORE TAX PRESENT VALUE OF FUTURE NET REVENUE (1)(2)(3)(4)
(in thousands of dollars)
Before-tax present value at Dec. 31, 2007
Reserve category Undiscounted Discounted at 10 per cent
Proved (1P) $456,309 $314,273
Probable 205,818 137,780
--------- ---------
Proved plus probable (2P) $662,127 $452,053
Possible 368,947 203,641
========= =========
Proved plus probable
plus possible (3P) $1,031,074 $655,694
Notes:
(1) Proved reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. There is at least a 90-per-cent
probability that the actual remaining quantities recovered will equal
or exceed the estimated proved reserves.
(2) 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.
(3) Possible reserves are those additional reserves that are less certain
to be recovered than probable reserves. There is at least a 10-per-cent
probability that the quantities actually recovered will be equal to or
exceed the sum of proved plus probable plus possible reserves.
(4) Volumes, future net revenue and present value of future net revenue do
not include undeveloped land values in Argentina, Colombia or Peru.
We seek Safe Harbor. |
