Edge Resources (EDE-V) announces major increase in year-end reserves and provides an operational update.
May 8, '14 - NR
Edge Resources is very pleased to have finalized its year-end NI 51-101 reserve report*, which has resulted in a large increase to its year-end reserves. The Company also provides an operational update. Year End Reserves
The value of Edge’s Proved + Probable (“P+P”) reserves increased by 44% to $129.0 million ($0.79/share), effective March 31 2014 from $89.4 million, one year earlier. The majority of growth came in the form of Proved reserve value (72% year-on-year growth) versus Probable reserve value (22% year-on-year growth).
The Company’s total Proved Developed Producing (“PDP”) reserve value grew by 75% to $34.2 million, contributing to Total Proved (“TP”) reserve value of $69.2 million, representing approximately $0.42/share.
P+P reserves increased to 7.6 million boe, half of which (3.7 million boe) were generated from the Company’s core asset, Eye Hill, Saskatchewan. Specifically in Eye Hill, the value of PDP reserves grew by 145%, TP reserve value grew by 100% and total P+P Reserve value grew by 47%.
The reserve replacement ratio (reserves added/reserves produced during the year) was 458%.
The Company has established a consistent track record of adding reserves at an exceptionally low-cost. During the 12 month period ending March 31, 2014 the Company’s total Finding, Developing and Acquisition (“FD&A”) costs were $3.8 million(1). Thus, Edge’s FD&A cost of adding Proved reserves was $3.89 per boe and the FD&A cost for additional P+P reserves was $2.86 per boe. The table below provides a comparison of the Company’s historical cost of reserve additions, year-end P+P reserve values and reserve replacement ratios:
| Year Ended | FD&A Cost per Proved BOE ($) | FD&A Cost per P+P BOE ($) | P+P NPV10 ($)* | Reserve Replacement Ratio | | March 31, 2014(1) | $3.89 | $2.86 | $129.0 million | 458% | | March 31, 2013 | $9.14 | $2.69 | $89.4 million | 749% | | March 31, 2012 | $21.87 | $10.24 | $65.1 million | 667% | | March 31, 2011 | $10.16 | $6.06 | $46.5 million | 3,725% | | March 31, 2010 | $5.29 | $2.08 | $16.5 million | n/a |
(1) Financial information is from Edge’s preliminary unaudited financial statements for the year ended March 31, 2014 and is subject to change. FD&A costs for all years excludes Future Development Capital (“FDC”).
Brad Nichol, President and CEO of Edge commented, “Edge’s long-term strategic focus on conventional, shallow, low-cost, repeatable reservoirs continues to deliver shareholder value with reserve growth exceeding even our high expectations this year. What’s more, in preparation for our reserve report, we only requested six additional drilling locations in Eye Hill East (less than 1/10th of what we believe we have to drill there), resulting in a large but very conservative value of reserves.”
Operational Update
Wellhead production averaged over 700 boepd in March, provided revenue of $1.2 million, which allowed the Company to break the monthly revenue record previously set in February 2014. As a result, cash flow in March also significantly exceeded February’s number.
Due primarily to additional production from the new CHOPS ("Cold Heavy Oil Production with Sand") oil wells, average production, revenue and cash flow for the quarter ended March 31 2014 is expected to be significantly higher than the previous quarter. With production levels having held steady in April, the trend is expected to continue into the Company’s first quarter, which ends June 30, 2014.
Nichol commented, “As I stated last month, we are on track for another excellent quarter. As predicted, we beat our record-setting February million dollar month with an even bigger March and we expect April’s figures, when finalized, to maintain this level.” Speaking of the ongoing geoscience and engineering preparations for the upcoming 2014 drilling program, Nichol continued, “Our geological and geophysical teams continue to add more locations to our large drilling inventory in Eye Hill, most of which are not included in the reserve report. We are eager to exploit this inventory in 2014 and with the continued improvements in cash flow, we currently expect to fund future drilling activities utilizing existing cash reserves.”
Additional information may also be available at www.edgeres.com or www.sedar.com or contact:
Brad Nichol - President & CEO
Phone: +1 (403) 767 9905
OR
Ward Kondas
Email: wkondas@edgeres.com
Phone +1 (778) 918-8384
About Edge Resources Inc.
Edge Resources is focused on developing its heavy oil properties within a balanced portfolio of oil and natural gas assets from properties in Alberta and Saskatchewan, Canada. Management has consistently focused on:
- Shallow, vertical, conventional programs with reduced capital, operational and geological risks
- Very high or 100% working interests and fully operated assets
- Pools and horizons with exceptionally high reserves in place
The management team’s very high drilling success rate is based on the safe, efficient deployment of capital and a proven ability to efficiently execute in shallow formations, which gives Edge Resources a sustainable, low-cost, competitive advantage.
* The Company’s most recent NI 51-101 reserve report is effective March 31, 2014, and reserve values are based on pre-tax net asset value using AJM Deloitte’s March 31, 2014 forecast pricing, discounted at 10%. Reserve values do not include abandonment liabilities, which are included at the corporate level. For comparative purposes, March 31, 2014 year end P+P reserve value, including abandonment liabilities, is CDN$127.0 million (compared to CDN$129.0 million when abandonment liabilities are excluded). The reserve report was prepared under Canadian National Instrument 51-101: Standards of Disclosure for Oil and Gas Activities.
In accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), the Company's oil, natural gas and natural gas liquids ("NGL") reserves were evaluated by an independent engineering firm, AJM Deloitte as at March 31, 2014. Gross reserves included in this release are Edge’s working interest reserves before royalty burdens. Complete NI 51-101 reserves disclosure will be included in Edge’s annual NI 51-101 filings which will be filed prior to July 31, 2014 and made available at www.sedar.com. The Company's aggregate proved and probable reserves are reported in barrels of oil equivalent (boe). Boe may be misleading, particularly if used in isolation. A boe conversion ratio for natural gas of 6 Mcf: 1 boe has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily 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.
The term “bopd” means “barrels of oil per day.” The term “boepd” means “barrels of oil equivalent per day.”
Unaudited Financial Information
Certain financial and operating information included in this press release for the year ended March 31, 2014, such as capital expenditures, production, F&D costs and FD&A costs are based on unaudited financial results, and are subject to the same limitations as discussed under "Forward-Looking Information". These estimated amounts may change upon the completion of audited financial statements for the year-ended March 31, 2014 and changes could be material. |
