Birchcliff Energy (BIR-T) to acquire Gordondale assets for $625M
June 22, '16 - NR
Birchcliff Energy Ltd. has entered into an asset sale agreement with EnCana (ECA-T) to purchase 100 per cent of the vendor's interests in the Gordondale area, which is within Birchcliff's primary focus area of Pouce Coupe/Gordondale, for cash consideration of $625-million, subject to closing adjustments. The assets include high-working-interest, operated production and a large contiguous land base, which fits between Birchcliff's existing Pouce Coupe and Gordondale properties.
The acquisition will be partially financed through a $530.0-million bought deal equity financing co-led by National Bank Financial Inc. (NBF), Cormark Securities Inc., GMP Securities LP and Scotia Capital Inc. and a concurrent $18.75-million non-brokered private placement subscribed for by Seymour Schulich (or entities controlled by him), for aggregate gross proceeds of $548.75-million, details of which are provided below under the heading The financings.
The acquisition
Overview
The acquisition is transformational for Birchcliff and will create a stronger intermediate Montney/Doig growth company that will be producing approximately 65,000 barrels of oil equivalent per day (23 per cent oil and natural gas liquids) upon closing of the acquisition. The assets have a low-decline, operated, high-working-interest production base, and include a suite of low-risk oil and liquids-rich Montney/Doig development drilling locations across multiple intervals. Existing infrastructure will provide for future low-cost growth. In addition, the financings will have the effect of delevering the corporation's balance sheet.
The assets are primarily located in the Gordondale area of Alberta, approximately 100 kilometres northwest of Grande Prairie. The assets are located within Birchcliff's Montney/Doig natural gas resource play in the Peace River Arch area of Alberta, which, in the opinion of management, is one of the most prolific natural gas resource plays in North America. Forecast production from the assets for the first half of 2016 is approximately 26,000 boe per day (41 per cent oil and NGLs). The assets include high-working-interest, operated production and a large contiguous land base, which fits between Birchcliff's existing Pouce Coupe and Gordondale properties. As a result, the acquisition is a significant expansion to the corporation's core area and is consistent with its strategy to continue to develop and expand its Montney/Doig natural gas resource play.
The acquisition has an effective date of Jan. 1, 2016, and closing is expected to occur on or about July 28, 2016, subject to usual closing conditions and regulatory approvals. The acquisition will be financed by the aggregate net proceeds of the financings and the corporation's credit facilities.
As Birchcliff does not currently own the assets, the information contained herein in respect of the assets has been summarized from publicly available information and information obtained by the corporation in connection with its due diligence investigation and the McDaniel & Associates Ltd. report (as defined below).
National Bank Financial and Cormark acted as financial advisers to Birchcliff with respect to the acquisition.
Strategic rationale and benefits
The acquisition further strengthens Birchcliff's business model and creates one of the largest concentrations of high-quality, low-cost production in the area. The assets have an inventory of oil- and liquids-weighted drilling locations that complement Birchcliff's existing Montney/Doig inventory and will provide Birchcliff with an opportunity to drill oil wells and liquids-rich Montney/Doig natural gas wells in a similar area to where Birchcliff's management and technical team have a proven record to efficiently integrate, optimize and increase the assets being acquired. In addition, the financings provide an opportunity to strengthen the corporation's balance sheet. In summary, with the completion of the financings and the acquisition, Birchcliff has positioned itself to be a stronger intermediate Montney/Doig producer with significant financial flexibility.
The highlights of the acquisition and the anticipated benefits of and potential upside associated with the acquisition and the financings include, but are not limited to, the following:
Consolidates a sizable and contiguous land base within Birchcliff's existing Gordondale/Pouce Coupe area on the Montney/Doig natural gas resource play:
The assets include a contiguous land position of 91,833 gross (54,206 net) acres of lands, of which 46,233 gross (40,920 net) acres (72.3 gross (64.0 net sections)) are core Montney lands with a high average working interest of 89 per cent.
The assets include 74,873 gross (42,862 net) acres of developed lands and 16,960 gross (11,344 net) acres of undeveloped lands, with an average working interest of 57 per cent in developed lands and 67 per cent in undeveloped lands.
Drilling buffers on lands bordering Birchcliff lands will be eliminated, allowing for optimal well development planning and reservoir drainage from the lands.
Birchcliff will have an extensive Montney/Doig land position of over 263,151 gross (251,950 net) acres, including 145,106 gross (140,695 net) acres of undeveloped land.
Birchcliff will have a dominant contiguous land position in its main area of focus.
Significantly increases production and ability to generate funds flow:
The assets have a predictable low base production decline rate of approximately 20 per cent, which is in line with Birchcliff's current corporate base production decline rate and which supports the corporation's ability to increase funds flow and production.
Forecast average production from the assets for the first half of 2016 is 26,000 boe per day (59 per cent natural gas, 15 per cent light crude oil and 26 per cent NGLs).
As a result of the acquisition, the corporation has increased its annual average production guidance for 2016 from 40,000 to 41,000 boe per day to 49,000 to 51,000 boe per day, increasing Birchcliff's current production by approximately 25 per cent.
After closing, Birchcliff expects to have tax pools of approximately $2-billion.
After completion of the acquisition, the corporation intends to adopt a continuing hedging strategy.
Delevers the corporation's balance sheet:
The financings will significantly delever the corporation's balance sheet with pro forma total debt at Dec. 31, 2016, estimated to be $675-million, assuming completion of the financings and the acquisition.
Increases Birchcliff's oil and NGLs weighting:
As at March 31, 2016, Birchcliff's commodity mix was approximately 88 per cent natural gas, 8 per cent light oil and 4 per cent NGLs.
After giving effect to the acquisition, Birchcliff's expected commodity mix will be approximately 77 per cent natural gas, 10 per cent light oil and 13 per cent NGLs.
Depending on the prevailing commodity price environment, Birchcliff will be able to invest in its most economic natural-gas-weighted or oil-and-liquids-weighted Montney/Doig drilling locations to maximize funds flow and rates of return.
Strategic infrastructure:
The assets include owned and operated light oil batteries, compressor stations, and an extensive network of field-gathering infrastructure, which was built for future growth and provides numerous operational synergies. By using existing underutilized infrastructure and well sites, Birchcliff expects it can grow production while minimizing infrastructure capital.
The assets include the following infrastructure:
Two light oil batteries with a combined handling capacity of approximately 20,000 barrels per day of oil (100-per-cent working interest);
A non-operated working interest of approximately 10 per cent in the gas plant located in the Progress area, which has a processing capacity of 135 million cubic feet per day and in which the corporation has an existing non-operated working interest of approximately 3 per cent;
An extensive network of sour-gas-gathering and compression systems with capacity of approximately 65 million cubic feet per day (100-per-cent working interest).
Natural gas from the assets is primarily processed at AltaGas's deep-cut sour-gas-processing facility at Gordondale, which has a processing capacity of 135 million cubic feet per day and is currently processing approximately 100 million cubic feet per day. The AltaGas Gordondale plant is located approximately 10 kilometres to the northeast of Birchcliff's 100-per-cent-owned and operated natural gas plant in the Pouce Coupe South area.
The acquisition provides secured long-term third party processing, transportation and sale agreements, including firm transportation capacity on Pembina's pipeline system and access to firm fractionation capacity at Pembina's fractionation facilities at Redwater, AB
Low-base-decline production:
The assets have a low-base production decline rate of approximately 20 per cent, which is in line with Birchcliff's current corporate base production decline rate. Limited new wells have been brought on production in recent years, with the last wells drilled in 2014.
Significantly increases Birchcliff's reserves:
The corporation engaged McDaniel & Associates to prepare an independent reserves evaluation of the assets dated June 14, 2016, with an effective date of March 31, 2016.
Based on the McDaniel report, the acquisition adds material reserves as follows:
Proven developed producing reserves of 54,027,000 barrels of oil equivalent, an increase of 53 per cent;
Proven reserves of 105,661,000 boe, an increase of 30 per cent;
Proven plus probable reserves of 191,133,000 boe, an increase of 33 per
After closing, Birchcliff will have proven plus probable reserves 764.0 million boe
High-quality development opportunities
There are 993 gross (929.0 net) potential future drilling locations on the assets.
The acquisition provides the corporation with access to significant opportunities on properties that have not been fully developed.
Key characteristics and acquisition metrics
The acquisition has the following key characteristics:
Purchase price: $625-million (1)
First-half 2016 forecast production: 26,000 boe per day (41 per cent oil and NGLs) (1)
Base production decline: approximately 20 per cent
Proven reserves (2): 105,661,000 boe (12 per cent light crude oil and medium crude oil, 27 per cent NGLs, 60 per cent shale gas, and 1 per cent conventional natural gas)
Proven net present value, discounted at 10 per cent (2) (3): $636-million
Proven plus probable reserves (2): 191,133,000 boe (13 per cent light crude oil and medium crude oil, 26 per cent NGLs, 60 per cent shale gas, and 1 per cent conventional natural gas)
Proven plus probable NPV10 (2) (3): $1.13-billion
Proven plus probable reserve life index (4): 20 years
Land (net) acres: 91,833 gross (54,206 net) acres
Notes:
(1) Effective date of Jan. 1, 2016, subject to closing adjustments and non-material rights of first refusal that may be exercised.
(2) Reserves estimates contained herein in respect of the assets are based on the independent evaluation contained in the McDaniel report, which used McDaniel's forecast prices as at April 1, 2016.
(3) The before-tax net present value is based on a 10-per-cent discount rate and the McDaniel price forecast. Estimated values of future net revenues do not represent the fair market value of the reserves.
(4) The key characteristics are based on the forecast average production for the first half of 2016 of 26,000 boe per day.
The acquisition metrics (1) for the acquisition are as follows:
Production: $24,038 per boe per day
Proven reserves: $5.92 per boe
Proven plus probable reserves: $3.27 per boe
Notes:
(1) The metrics are based on a purchase price of $625-million. The purchase price is subject to closing adjustments and non-material rights of first refusal that may be exercised. The metrics are based upon estimated production of 26,000 boe per day.
Increased 2016 guidance
The acquisition demonstrates Birchcliff's ability to acquire high-quality oil and liquids-rich natural gas assets during this period of low commodity prices. As a result, the acquisition is expected to provide increased funds flow and production-per-share accretion and enhances Birchcliff's long-term sustainability.
The attached guidance for 2016 table contains the corporation's increased guidance for 2016, after giving effect to the acquisition and the financings.
Key Characteristics and Acquisition Metrics
The Acquisition has the following key characteristics:
| Purchase price | | $625 million(1) | | 2016 First Half Forecast Production | | 26,000 boe/d (41% oil and NGLs)(1) | | Base production decline | | Approximately 20% | | Proved reserves(2) | | 105,661 Mboe (12% light crude oil and medium crude oil, 27% NGLs, 60% shale gas and 1% conventional natural gas) | | Proved NPV10(2)(3) | | $636 million | | Proved plus probable reserves(2) | | 191,133 Mboe (13% light crude oil and medium crude oil, 26% NGLs, 60% shale gas and 1% conventional natural gas) | | Proved plus probable NPV10(2)(3) | | $1,130 million | | Proved plus probable RLI(4) | | 20 years | | Land (net) acres | | 91,833 gross (54,206 net) acres |
Notes:
Effective date of January 1, 2016, subject to closing adjustments and non-material rights of first refusal that may be exercised. Reserves estimates contained herein in respect of the Assets are based on the independent evaluation contained in the McDaniel Report which used McDaniel's forecast prices as at April 1, 2016 (the "McDaniel Price Forecast"). Please see "Advisories - Oil and Gas Advisories" in this press release. Before tax net present value based on a 10% discount rate and the McDaniel Price Forecast. Estimated values of future net revenues do not represent the fair market value of the reserves. Please see "Advisories - Oil and Gas Advisories" in this press release. Based on forecast average production for the first half of 2016 of 26,000 boe/d. Please see "Advisories - Oil and Gas Advisories" in this press release. The acquisition metrics(1) for the Acquisition are as follows:
| Production | | $24,038/boe/d | | Proved reserves(2) | | $5.92/boe | | Proved plus probable reserves(2) | | $3.27/boe |
Notes:
Based on a purchase price of $625 million. The purchase price is subject to closing adjustments and non-material rights of first refusal that may be exercised. Based upon estimated production of 26,000 boe/d. Please see "Advisories - Oil and Gas Advisories" in this press release. INCREASED 2016 GUIDANCE
The Acquisition demonstrates Birchcliff's ability to acquire high quality oil and liquids rich natural gas assets during this period of low commodity prices. As a result, the Acquisition is expected to provide increased funds flow and production per share accretion and enhances Birchcliff's long-term sustainability.
The following is the Corporation's increased guidance for 2016, after giving effect to the Acquisition and the Financings:
| 2016 Guidance | | Pre-Acquisition | | Post-Acquisition | | %Change | | Average production (boe/d)(1) | | 40,000 - 41,000 boe/d | | 49,000 - 51,000 boe/d | | 25% | | | % oil and NGLs | | 11% | | 17% | | 53% | | Pro forma common shares (basic)(2) | | 152,307,539 | | 252,827,539 | | 66% | | Net capital expenditures (MM)(3)(4) | | $103.5 | | $140.0 | | 35% | | Total debt at December 31, 2016 (MM)(2)(3)(4) | | $656 | | $675 | | 2.8% |
Notes:
Forecast average production from the Assets for the first half of 2016 is approximately 26,000 boe/d. The impact on 2016 is based on an estimated closing date of July 28, 2016 and therefore 2016 numbers do not represent full year 2016 average production. After giving effect to the exercise of the Over-Allotment Option (as defined below) and based on the issuance of 100.5 million Subscription Receipts pursuant to the Financings. After taking into account proceeds in the amount of $19.0 million received by the Corporation from a disposition completed in the Progress area on April 28, 2016. Forecast capital expenditures assume Birchcliff achieves its 2016 production targets. The Corporation's 2016 capital expenditure program assumes an annual average WTI price of US$45.00 per barrel of oil (revised from US$43.00 as announced on May 11, 2016), an AECO price of CDN$1.90 per GJ of natural gas and an exchange rate of CDN$/US$ of 1.29 (revised from 1.40) during 2016. Assuming an annual average WTI price of US$45.00 per bbl of oil and an AECO price of CDN$1.90 per GJ of natural gas during 2016. Total debt is a non-GAAP measure. Please see "Advisories - Non-GAAP Measures" in this press release. 2017 OPERATING NETBACK FORECAST FOR THE ASSETS
| GORDONDALE ACQUISITION | | | | 2017 Forecast Operating Netback | | OPERATING - Avg. Daily Production | | | | Oil (bbl/d) | | 6,426 | | Gas (mmcf/d) | | 90 | | NGL (bbl/d) | | 6,714 | | Total Sales (boe/d) | | 28,197 | | | Oil and NGL % | | 47% | | Total BOE | | 10,291,791 | | Field Operating Cash Flow ($mm) | | $151.3 | | Netback and Cost ($/boe) | | | | | Oil Sales ($/bbl) | | $61.06 | | | Gas Sales ($/mcf) | | $2.87 | | | NGL Sales ($/bbl) | | $18.60 | | | Total Sales | | $27.53 | | | | | | | | Royalty Revenue | | -
| | | Total Revenue | | $27.53 | | | Royalty Expense | | $3.88 | | | Production Expense | | $7.30 | | | Transportation & Marketing | | $1.66 | | Operating Netback | | $14.70 | | Capital Expenditures ($mm) | | $87.9 |
| | | Assumptions: | | 1) Production volumes assume 17 Montney/Doig horizontal oil wells come onstream in 2017 and that Birchcliff's wells continue to produce as expected and there are no unexpected production or transportation interruptions of significance | | 2) Oil and NGL price offsets/differentials are based on 2015 actual amounts. | | 3) NGL transportation and marketing costs are offset against realized sales prices for NGLs. | | 4) Production expense is based on 2015 actual amounts. | | 5) Transportation and marketing expense is based on 2015 actual amounts. | | 6) Operating Netback does not include G&A and Interest | | 7) Assumes 2017 commodity prices average as follows: natural gas at AECO = CAD $2.60/GJ; WTI = USD $52.00/Bbl; | | 8) USD/CAD Exchange = $1.28 | | 9) Operating netback does not have any standard meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. Operating netback equals total petroleum and natural gas sales less royalties and operating costs and transportation and marketing costs calculated on a boe basis. Birchcliff considers operating netback as an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices. | | |
CREDIT FACILITIES
The Corporation currently has in place extendible revolving credit facilities in the aggregate principal amount of $750 million (the "Credit Facilities"), which are comprised of: (i) an extendible revolving syndicated term credit facility of $710 million; and (ii) an extendible revolving working capital facility of $40 million.
Pursuant to the terms of the agreement governing the Credit Facilities, in the event the Corporation acquires reserves, it may request that the bank syndicate adjust the borrowing base limit under the Credit Facilities. Birchcliff expects that following the completion of the Acquisition, its bank syndicate will agree to an increase to the borrowing base under the Credit Facilities based on the proved developed producing reserves being acquired pursuant to the Acquisition.
THE FINANCINGS
In connection with the Acquisition, Birchcliff is also pleased to announce that it has entered into an agreement with a syndicate of underwriters (the "Underwriters"), co-led by NBF, Cormark, GMP Securities L.P. and Scotia Capital Inc., pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 84,800,000 subscription receipts of the Corporation ("Subscription Receipts") at a price of $6.25 per Subscription Receipt for aggregate gross proceeds of $530.0 million (the "Bought Deal Financing"). Concurrent with the Bought Deal Financing, Mr. Seymour Schulich has committed that he (or entities controlled by him) will purchase 3,000,000 Subscription Receipts at a price of $6.25 per Subscription Receipt for aggregate gross proceeds of $18.75 million pursuant to a non-brokered private placement (the "Private Placement", and together with the Bought Deal Financing, the "Financings"). In addition, it is expected that certain directors, officers and employees of the Corporation and their families will participate in the Bought Deal Financing. The gross proceeds from the Financings will be held in escrow pending completion of the Acquisition, as described in further detail below.
In addition, the Corporation has granted to the Underwriters an option (the "Over-allotment Option") to purchase up to an additional 12,720,000 Subscription Receipts at a price of $6.25 per Subscription Receipt, exercisable from time to time, in whole or in part, at any time prior to the earlier of: (a) 30 days following the Closing Date; and (b) the Termination Time (as defined below), to cover over-allotments, if any, and for market stabilization purposes. If the Over-allotment Option is fully exercised, gross proceeds from the Bought Deal Financing will be approximately $609.5 million.
The Subscription Receipts to be issued pursuant to the Bought Deal Financing will be distributed by way of short form prospectus in all provinces of Canada, in the United States via Rule 144A to Qualified Institutional Buyers only under the U.S. Securities Act of 1933, and on a private placement basis in the United Kingdom and certain other jurisdictions as may be agreed to by Birchcliff.
The gross proceeds from the sale of the Subscription Receipts (the "Escrowed Funds") will be held in escrow pending delivery by the Corporation to NBF of a certificate to the effect that (i) all material conditions (other than the payment of the purchase price) necessary to complete the Acquisition have been satisfied or waived, (ii) the concurrent Private Placement has been completed, and (iii) the Corporation has received all necessary regulatory and certain other approvals regarding the Financings and the Acquisition (the "Escrow Condition"). Upon satisfaction of the Escrow Condition, the Escrowed Funds and the interest earned thereon, less the fees payable to the Underwriters, will be released to the Corporation to complete the Acquisition. On the closing of the Acquisition, each holder of Subscription Receipts will receive one common share of the Corporation (an "Underlying Share") for each Subscription Receipt held, without payment of additional consideration or further action on the part of the holder. The portion of the Escrowed Funds released to the Corporation will be used to pay a portion of the purchase price for the Assets. The balance of the purchase price for the Assets will be funded by drawing on the credit facilities.
If: (a) the Escrow Condition is not satisfied by 5:00 p.m. (Calgary time) on September 30, 2016, or such later date within 15 days of September 30, 2016 as NBF may elect; (b) the Acquisition Agreement is terminated; or (c) the Corporation has advised the Underwriters or announced to the public that it does not intend to proceed with the Acquisition (in each case, the earliest of such dates being the "Termination Time"), holders of Subscription Receipts shall receive an amount equal to the full subscription price attributable to the Subscription Receipts and their pro rata entitlement to the interest accrued on such amount.
Completion of the Financings is subject to certain conditions including the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange. The Bought Deal Financing and the Private Placement are expected to close concurrently on or about July 13, 2016.
This press release is not an offer of the Subscription Receipts or Underlying Shares for sale in the United States. The Subscription Receipts and Underlying Shares have not been and will not be registered under the U.S. Securities Act, or any state securities laws. Subscription Receipts and Underlying Shares may not be offered or sold in the United States absent registration or an exemption from registration. The Subscription Receipts and Underlying Shares will not be publicly offered in the United States.
Oil and Gas Advisories
Reserves Estimates
The reserves information contained herein in respect of the Assets is based upon the McDaniel Report with an effective date of March 31, 2016. The reserves information contained herein in respect of Birchcliff's reserves is based upon the reserves estimation and economic evaluation prepared by Deloitte LLP, Birchcliff's independent qualified reserves evaluator, with an effective date of December 31, 2015 (the "Deloitte Report").
There are numerous uncertainties inherent in estimating the quantities of reserves and the future net revenues attributed to those reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserves estimates of the reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein and variances could be material.
Certain pro forma information of the Corporation's reserves after giving effect to the Acquisition has been presented herein, including under the heading "The Acquisition - Select Pro Forma Attributes". Since the estimates of the Corporation's reserves and the estimates of the reserves associated with the Assets were estimated as at different dates, they have been generated based on different assumptions in respect of commodity pricing among other metrics. As a result, the presentation of the Corporation's reserves on a consolidated pro forma basis for the Acquisition would not reflect the actual combined estimate of the Corporation's reserves and those of the Assets at December 31, 2015 and should not necessarily be viewed as predictive of the Corporation's reserves and future production once the Acquisition is completed.
Production Forecast
The production forecast for the Assets for the first half of 2016 is based upon actual production for the period from January 1, 2016 to April 30, 2016 and the field production estimates for the months of May and June, 2016.
Boe Conversions
Boe amounts have been calculated using the conversion ratio of 6 Mcf of natural gas to 1 bbl of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 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. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, using a conversion on a 6:1 basis may be misleading as an indication of value.
Gross Volumes
Unless otherwise indicated, all reserves estimates contained herein are on a "gross" basis, meaning the total working interest share before the deduction of any royalties and without including any royalty interests.
Future Net Revenue
This press release contains estimates of the net present value of the future net revenue from the reserves to be acquired. Such amounts do not represent the fair market value of such reserves.
Reserves for Portions of Properties
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties due to the effects of aggregation.
Drilling Locations
This press release discloses potential future drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are proposed drilling locations identified in the McDaniel Report that have proved and/or probable reserves, as applicable, attributed to them in the McDaniel Report. Unbooked locations are internal estimates based on prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal technical analysis review. Unbooked locations have been identified by management based on evaluation of applicable geologic, seismic, engineering, production and reserves information. Unbooked locations do not have proved or probable reserves attributed to them in the McDaniel Report. Of the 929.0 net future potential drilling locations identified within the Assets to be acquired, 51.0 net are proved locations, 109.0 net are proved plus probable locations and 820.0 net are unbooked locations.
Birchcliff's ability to drill and develop these locations and the drilling locations on which Birchcliff actually drills wells depends on a number of uncertainties and factors, including, but not limited to, the availability of capital, equipment and personnel, oil and natural gas prices, capital and operating costs, inclement weather, seasonal restrictions, drilling results, additional geological, geophysical and reservoir information that is obtained, production rate recovery, gathering system and transportation constraints, net price received for commodities produced, regulatory approvals and regulatory changes. As a result of these uncertainties, there can be no assurance that the potential future drilling locations Birchcliff has identified will ever be drilled or if Birchcliff will be able to produce oil, NGLs or natural gas from these or any other potential drilling locations. As such, Birchcliff's actual drilling activities may materially differ from those presently identified, which could adversely affect Birchcliff's business. While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, some of the other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional proved or probable reserves, resources or production.
Oil and Gas Metrics
This press release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Corporation's performance; however, such measures are not reliable indicators of the Corporation's future performance and future performance may not compare to its performance in previous periods and therefore such metrics should not be unduly relied upon.
Reserve life index in this press release is calculated by dividing estimated reserves by expected production.
About Birchcliff:
Birchcliff is a Calgary, Alberta based intermediate oil and gas Corporation with operations concentrated within its one core area, the Peace River Arch of Alberta. Birchcliff's Common Shares and Cumulative Redeemable Preferred Shares, Series A and Series C are listed for trading on the Toronto Stock Exchange under the symbols "BIR", "BIR.PR.A" and "BIR.PR.C", respectively.
Birchcliff Energy Ltd.
Jeff Tonken
President and Chief Executive Officer
Birchcliff Energy Ltd.
Bruno Geremia
Vice-President and Chief Financial Officer
Birchcliff Energy Ltd.
Jim Surbey
Vice-President, Corporate Development
(403) 261-6424
(403) 261-6401
info@birchcliffenergy.com
www.birchcliffenergy.com |
