OT - AOF selling at 1/4 of 2P NPV - Arrow Energy Ltd. announces 2007 year-end reserves
21:50 EDT Tuesday, April 22, 2008
TSX-V: AOF
CALGARY, April 22 /CNW/ - Arrow Energy Ltd. ("Arrow" or the "Company") (TSX.V: AOF) is pleased to provide its 2007 year end reserves information as evaluated by Sproule Associates Limited ("Sproule"), the independent reserves evaluator for all of Arrow's oil and natural gas properties. Sproule prepared the report (the "Arrow Sproule Report") in accordance with National Instrument 51-101 ("NI 51-101") effective December 31, 2007. As Arrow plans to announce its audited 2007 financial statements on or about April 28, 2008 certain financial statements have been made herein to facilitate discussion of its 2007 capital program. Readers are advised that these financial estimates are subject to audit and may be revised as necessary. The results described below incorporate the reserves from the company's recent Gift Lake area acquisition, which had an effective date of October 1, 2007 and closing date of April 1, 2008.
2007 Highlights:
- Company interest total proved reserves increased 305% to 956,700 boe.
- Company interest total proved plus probable reserves increased 201%
to 1,399,900 boe.
- Drilled 6 wells (net 1.74) resulting in 4 gas wells (net 1.36) and
2 oil wells (net 0.38) for an overall success rate of 100%.
- Spent $9.4 mm in acquiring and developing oil and gas properties in
Alberta resulting in the addition of 1,020 Mboe proved plus probable
reserves.
- Acquisition and Development costs including future development costs
("FDC"), of $9.23 per boe of proved plus probable reserves resulting
in a recycle ratio of 2.91 times.
- The before tax net present value (10% discount rate) of Arrow's
proven plus probable reserves grew to $28.8 million, a 253% increase
over year end 2006.
The efficiency of Arrow's 2007 capital program is summarized as follows:
Including Future Development Costs ("FDC")(2) 2007
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FD&A Costs - Proved ($/boe)(1) $11.70
FD&A Costs - Proven Plus Probable ($/boe)(1) $9.23
Operating Netback ($/boe) $26.85
Recycle Ratio Proved 2.30
Proved Plus Probable 2.91
Reserves Replacement Ratio(3)
Proved 8.62
Proved plus Probable 11.19
(1) FDC discounted at 10%
(2) Includes Capitalized G&A of $130,929
(3) Reserves change during the year before deduction of production,
divided by production during the year.
Arrow 2007 Reserve Information
Sproule prepared the Arrow Report in accordance with NI 51-101. This report evaluated 100 percent of Arrow's oil, natural gas and natural gas liquids reserves at December 31, 2007. The tables below disclose in the aggregate, Arrow's gross and net proved and proved plus probable reserves and before tax net present value ("NPV") of future net revenue attributable to such reserves as estimated in the Arrow Sproule Report. These estimates were calculated using forecast prices and costs.
"Forecast prices and costs" means future prices and costs used by Sproule in the Arrow Report that are generally accepted as being a reasonable outlook of the future, or, fixed or currently determinable future prices or costs to which the Company is bound.
"Company Interest" reserves represent those reserves, which are the Company's working interest (operating or non operating) share before deduction of royalties and including any royalty interests of the Company.
"Total Net" reserves represent those reserves that are referred to as "Net" reserves by the CSA in NI 51-101, which are the Company's working interest (operating or non operating) share after deduction of royalty obligations plus the Company's royalty interests in reserves.
The before tax net present value of future net revenue attributable to Arrow's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by Sproule. It should not be assumed that the undiscounted or discounted before tax net present value of future net revenue attributable to Arrow's reserves estimated by Sproule represent the fair market value of those reserves. 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 effects of aggregations. The recovery and reserve estimates of Arrow's oil, natural gas and NGL 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.
Summary of Reserves and Values/Effective December 31, 2007
The above summary of reserves and values was based on the following price and cost assumptions:
Summary of Pricing and Inflation Rate Assumptions (Forecast Prices and
Costs) Sproule (December 31, 2007)
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OIL
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Edmonton Cromer Natural Pentanes
WTI@ Par Medium Gas(1) Plus Butanes
Cushing price 29.3 AECO F.O.B. F.O.B.
Okla- 40 Deg. Deg. Gas Field Field Infla- Exchange
homa API API Prices Gate Gate tion Rate(3)
($US/ ($Cdn/ ($Cdn/ ($Cdn/ ($Cdn/ ($Cdn/ Rate(2) ($US/
Year bbl) bbl) bbl) MMbtu) bbl) bbl) (%/Yr) $Cdn)
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2008 89.61 88.17 75.83 6.51 90.30 65.72 2.0 1.000
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2009 86.01 84.54 72.71 7.22 86.58 63.01 2.0 1.000
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2010 84.65 83.16 71.52 7.69 85.17 61.98 2.0 1.000
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2011 82.77 81.26 69.89 7.70 83.23 60.57 2.0 1.000
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2012 82.26 80.73 69.43 7.61 82.68 60.17 2.0 1.000
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Thereafter at various escalation rates
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Notes:
(1) This summary identifies benchmark reference pricing schedules that
might apply to a reporting issuer.
(2) Inflation rates for forecasting prices and costs.
(3) Exchange rates used to generate the benchmark reference prices in
this table.
Summary of Reserves and Values/Effective December 31, 2007
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Total
Proved
Proved Total Total plus
Producing Proved Probable Probable
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Light/Medium
Oil (bbls)
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Company Interest 563,900 570,500 229,400 799,900
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Total Net 489,600 496,000 179,900 675,900
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Natural Gas (mmcf)
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Company Interest 1,077 2,278 1,258 3,536
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Total Net 873 1,841 1,019 2,860
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Natural Gas Liquids
(Mbbl)
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Company Interest 6.5 6.5 4.1 10.6
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Total Net 3.9 3.9 2.5 6.5
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Oil Equivalent (Mboe)
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Company Interest 750.0 956.7 443.1 1,399.8
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Total Net 638.9 806.8 352.1 1,158.9
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Before Tax Net Present Value ($M)
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Discounted @
0% 34,105 37,735 18,769 56,504
5% 22,611 25,317 12,373 37,691
10% 17,659 19,725 9,102 28,828
15% 14,873 16,477 7,097 23,574
Arrow Energy Ltd. is a Calgary-based junior resource company engaged in the exploration, development and production of natural gas and oil primarily in the Gift Lake, Peavine/Dawson, Westlock, and Redwater/Jeffrey areas of Alberta.
BOE conversion: In this news release, Arrow applies the widely used conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
%SEDAR: 00017135E
For further information: Investor Relations Contacts: Chris Tesarski, President & CEO, Richard Edgar, Executive Chairman, Phone: (403) 237-9996, Toll-free: 1-866-528-9996, Email: investor.relations@arrow-energy.com, Web site: www.arrow-energy.com
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