CALGARY, March 5, 2020 /CNW/ - Altura Energy Inc.
("Altura" or the "Company") (TSX-V: ATU) is pleased to announce an
operational update and the results of the independent evaluation of
the Company's oil and natural gas reserves (the "McDaniel Report"),
effective December 31, 2019, as
prepared by McDaniel and Associates Consultants Ltd.
("McDaniel").
Altura's audit of its 2019 annual financial statements is not
yet complete and accordingly all financial amounts referred to in
this news release are unaudited and represent management's
estimates. Readers are advised that these financial estimates
are subject to audit and may be subject to change as a result.
OPERATIONAL UPDATE
2019 production averaged 1,742 Boe per day (70% oil and
liquids), consistent with guidance of 1,700 to 1,800 Boe per day
and representing a 49 percent increase from average 2018 production
on an absolute and per share basis. Fourth quarter 2019
production averaged 1,561 Boe per day (64% oil and liquids).
Fourth quarter 2019 production was affected by natural declines as
no new wells were brought on production in the quarter and by the
disposition of a seven percent working interest of production, as
announced on December 4,
2019.
In 2019, Altura invested approximately $12.8
million in capital projects. The Company drilled
three gross (3.0 net) and completed two gross (2.0 net) wells in
the Leduc-Woodbend area, invested in an electrification project and
a solution gas compressor at Leduc-Woodbend, as well as changed its
artificial lift system on 11 wells to improve run-time efficiencies
and reduce operating and capital workover events.
Altura evaluated a new potential oil play targeting medium to
light oil in the Entice area of Alberta, south of Strathmore. The
Corporation has acquired 89 gross (83 net) sections of land in the
area which has year-round access. Vertical well data,
combined with extensive 3D seismic coverage in the area, provided a
means to identify and map the hydrocarbon accumulation. In
June 2019, Altura drilled a vertical
exploratory stratigraphic well to obtain additional geological
data.
In December 2019, Altura announced
it had entered into a definitive agreement for the asset sale of a
12.5% working interest (the "Asset Disposition") in the Company's
production, wells, lands and facilities for $7.0 million in two transactions. The first
transaction closed on December 4,
2019, whereby Altura divested a seven percent working
interest for $3.1 million.
Proceeds from the first transaction were directed to the Company's
exploratory prospect at Entice in 2020.
Based on the geological data obtained from the vertical
exploration well, Altura drilled and completed a horizontal well
(93% working interest) targeting the Pekisko Formation in January
2020. The well was successfully drilled and cased to a
vertical depth of 1,775 meters with a horizontal length of 2,004
meters and subsequently completed with 45 frac stages placing
approximately 13 tonnes of sand per stage. Production testing
operations are ongoing and expected to continue through March as
Altura evaluates the well.
At Leduc-Woodbend, Altura completed a horizontal oil well (93%
working interest) in January 2020
that was drilled in the third quarter of 2019. The well
was equipped for production and brought on stream on February 8, 2020. Additionally, Altura
drilled a horizontal oil well (93% working interest) and expects to
complete it in the second quarter of 2020.
2019 YEAR-END RESERVE HIGHLIGHTS
- Net of the seven percent Asset Disposition, Altura's proved
developed producing ("PDP") reserves increased two percent from
1,725 MBoe at December 31, 2018 to
1,755 MBoe. Total proved ("1P") reserves increased one percent from
6,270 MBoe at December 31, 2018 to
6,347 MBoe. Total proved plus probable ("2P") reserves increased 10
percent from 10,126 MBoe at December 31,
2018 to 11,150 MBoe.
- Finding, development and acquisition ("FD&A")
costs1 were $14.61 per Boe
for PDP reserves.
- Recycle ratio1 of 1.7 times for PDP reserves based
on the 2019 FD&A costs and Altura's estimated 2019 operating
netback1 of $24.95 per
Boe.
- Replaced1 105 percent of annual production with new PDP
reserves, 112 percent of annual production with new 1P reserves and
261 percent of annual production with new 2P reserves, based on
2019 production of 1,742 Boe per day.
- 2P reserves at Leduc-Woodbend are booked on 18 net sections of
land which is only 27 percent of Altura's lands in the area.
- The forecast cost of all of Altura's future abandonment,
decommissioning and reclamation obligations ("ADR") is $1.8 million (discounted at 10%), which
represents only 6.6% of the total $27.2
million of future net revenue of PDP reserves (before tax,
discounted at 10%), excluding ADR.
2019 INDEPENDENT RESERVES EVALUATION
The McDaniel Report was prepared in accordance with the
definitions, standards and procedures contained in the Canadian Oil
and Gas Evaluation Handbook and National Instrument 51-101 ("NI
51-101"). The reserves evaluation was based on the average of
the published price forecasts for McDaniel, GLJ Petroleum
Consultants Ltd., and Sproule Associates Ltd. (the "Consultant
Average Price Forecast") at January
1, 2020. The Reserves Committee of the Board and the
Board of Directors of Altura have reviewed and approved the
evaluation prepared by McDaniel.
Unless noted otherwise, reserves included herein are stated on a
company gross basis, which is the Company's working interest before
deduction of government royalties and excluding any other
additional royalty interests. This news release contains several
cautionary statements under the heading "Reader Advisory" and
throughout the release. In addition to the information contained in
this news release, more detailed reserves information will be
included in Altura's Annual Information Form for the year ended
December 31, 2019, which will be
filed on SEDAR by April 30, 2020.
Commencing in 2019, McDaniel began to include additional ADR in
the Company's reserves, resulting in a decrease of values compared
to 2018. The Company previously reported certain Asset Restoration
Obligations ("ARO") separately from those contained in the
Company's December 31, 2018 evaluation in the Annual
Information Form. This substantial change to the prior years'
practices, which were consistent with the reporting of many other
companies in the industry, was based on new Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook") guidelines that
recommend the inclusion of ADR costs associated with the Company's
assets in the reserve report. This change incorporates costs for
active and inactive wells, including producing wells, suspended
wells, service wells, gathering systems, facilities, and surface
land reclamation for all of Altura's assets. McDaniel's evaluation
of Altura's NPV10 BT at December 31, 2019 (estimated
before tax net present value of future net revenues associated with
the Company's reserves, discounted at 10%) for ADR related to PDP,
1P and 2P reserves was $1.8 million, $2.2 million,
and $2.2 million, respectively, reflecting an increase
of $1.4 million, $1.2 million, and $1.4
million compared to the ADR measures at year-end 2018.
Company Gross Reserves as at December
31, 2019
The following table summarizes the Company's gross reserve
volumes at December 31, 2019
utilizing the Consultant Average Price Forecast and cost estimates
outlined further below in this press release.
|
|
|
Company Gross
Reserves(1)(2)
|
Category
|
Light &
Medium
Oil (Mbbl)
|
Heavy
Oil
(Mbbl)
|
Conventional
Natural Gas
(MMcf)
|
Natural
Gas
Liquids
("NGLs")
(Mbbl)
|
2019 Oil
Equivalent (MBoe)
|
2018 Oil
Equivalent (MBoe)
|
2019/
2018
Percent
Change
|
Proved
|
|
|
|
|
|
|
|
Developed
Producing
|
161.2
|
777.3
|
4,270.2
|
104.3
|
1,754.5
|
1,724.6
|
2%
|
Developed Non-
Producing
|
-
|
102.3
|
307.8
|
7.4
|
161.0
|
140.8
|
14%
|
Undeveloped
|
-
|
2,815.4
|
8,473.9
|
203.4
|
4,431.1
|
4,404.2
|
1%
|
Total
Proved(3)
|
161.2
|
3,695.0
|
13,052.0
|
315.1
|
6,346.5
|
6,269.7
|
1%
|
Total
Probable
|
164.3
|
2,336.6
|
12,109.9
|
284.7
|
4,803.9
|
3,856.0
|
25%
|
Total Proved
+
|
|
|
|
|
|
|
|
Probable(3)
|
325.4
|
6,031.6
|
25,161.9
|
599.7
|
11,150.4
|
10,125.7
|
10%
|
(1)
|
Gross reserves are
Company working interest reserves before royalty
deductions.
|
(2)
|
Based on the January
1, 2020 Consultant Average Price Forecast.
|
(3)
|
Numbers may not add
due to rounding.
|
Reconciliation of Company Gross Reserves for
2019(1)(2)
|
|
|
|
|
|
|
Light &
Medium Oil
(Mbbl)
|
Heavy Oil
(Mbbl)
|
Conventional
Natural Gas
(MMcf)
|
Natural Gas
Liquids
(Mbbl)
|
Oil Equivalent
(MBoe)
|
Total
Proved
|
|
|
|
|
|
December 31,
2018
|
213.4
|
4,227.2
|
9,507.0
|
244.6
|
6,269.7
|
Extensions
|
-
|
204.5
|
615.7
|
14.8
|
321.9
|
Technical
Revisions
|
(2.0)
|
(101.5)
|
4,669.5
|
103.3
|
778.1
|
Acquisitions
|
-
|
-
|
-
|
-
|
-
|
Dispositions
|
(12.0)
|
(261.5)
|
(592.3)
|
(15.4)
|
(387.7)
|
Economic
Factors
|
-
|
-
|
-
|
-
|
-
|
Production
|
(38.2)
|
(373.7)
|
(1,147.9)
|
(32.1)
|
(635.5)
|
December 31,
2019
|
161.2
|
3,695.0
|
13,052.0
|
315.1
|
6,346.5
|
Total Proved +
Probable
|
|
|
|
|
|
December 31,
2018
|
276.2
|
6,817.6
|
15,771.8
|
403.2
|
10,125.7
|
Extensions
|
111.0
|
521.4
|
2,251.0
|
47.4
|
1,055.1
|
Technical
Revisions
|
(7.3)
|
(493.3)
|
9,300.3
|
207.3
|
1,256.8
|
Acquisitions
|
-
|
-
|
-
|
-
|
-
|
Dispositions
|
(16.3)
|
(440.4)
|
(1,013.3)
|
(26.1)
|
(651.7)
|
Economic
Factors
|
-
|
-
|
-
|
-
|
-
|
Production
|
(38.2)
|
(373.7)
|
(1,147.9)
|
(32.1)
|
(635.5)
|
December 31,
2019
|
325.4
|
6,031.6
|
25,161.9
|
599.7
|
11,150.4
|
(1)
|
Gross reserves are
Company working interest reserves before royalty
deductions.
|
(2)
|
Numbers may
not add due to rounding.
|
Technical revisions for heavy oil, natural gas and NGLs, in both
the 1P and 2P reserves categories, are due to changes in the
Leduc-Woodbend production forecast based on higher natural gas
production in 2019 than previous year's
forecast.
Future Development Costs ("FDC") and Well Schedule
The following is a summary of the estimated FDC and number of
wells required to bring 1P and 2P undeveloped reserves on
production. Changes in forecast FDC occur annually as a
result of drilling activities, acquisition and disposition
activities, and changes in capital cost estimates based on
improvements in well design and performance, as well as changes in
service costs. FDC for 1P undeveloped reserves decreased
by $11.7 million and FDC for 2P undeveloped reserves decreased
by $6.7 million compared to year-end 2018. The decreases in
FDC were driven by the Asset Disposition in 2019 and lower expected
capital cost estimates at Leduc-Woodbend.
|
|
|
|
|
|
Total Proved
FDC(1)(2)
($000)
|
Total
Proved
Wells(2)
Gross
(Net)
|
Total Proved +
Probable FDC(1)(2)
($000)
|
Total Proved +
Probable Wells(2)
Gross
(Net)
|
|
|
|
|
|
2020
|
9,798
|
4
(3.6)
|
12,816
|
4
(3.6)
|
2021
|
20,768
|
10
(8.7)
|
20,768
|
10
(8.7)
|
2022
|
23,385
|
12
(9.4)
|
23,385
|
12
(9.4)
|
2023
|
9,717
|
6
(3.9)
|
19,009
|
10
(7.6)
|
2024
|
-
|
-
|
12,843
|
6
(5.0)
|
Total
Undiscounted
|
63,668
|
32 (25.6)
|
88,820
|
42 (34.3)
|
(1)
|
Numbers may not add
due to rounding.
|
(2)
|
FDC and well counts
as per the McDaniel Report and based on the January 1, 2020
Consultant Average Price Forecast.
|
The forecasted future net operating income for the next four
years from the McDaniel Report based on the January 1, 2020 Consultant Average Price Forecast
is estimated to be $98.7 million for
1P reserves and $116.2 million for 2P
reserves, which is sufficient to fund Altura's FDC.
Summary of Before Tax Net Present Value ("NPV") of Future Net
Revenue as at December 31,
2019
Benchmark oil and NGL prices used are adjusted for quality of
oil or NGL produced and for transportation costs. The calculated
NPVs are based on the Consultant Average Pricing Forecast at
January 1, 2020 as outlined in the
price forecast table further below in this press release. The
NPVs include ADR but do not include a provision for interest, debt
service charges and general and administrative expenses. It should
not be assumed that the NPV estimate represents the fair market
value of the reserves.
|
|
|
Before Tax Net
Present Value ($000) (1)(2)(3)
|
|
Discount
Rate
|
Category
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Proved
|
|
|
|
|
|
Developed
Producing
|
28,097
|
27,322
|
25,403
|
23,420
|
21,643
|
Developed
Non-Producing
|
2,657
|
2,272
|
1,964
|
1,716
|
1,515
|
Undeveloped
|
61,043
|
44,583
|
32,854
|
24,412
|
18,232
|
Total
Proved
|
91,797
|
74,177
|
60,220
|
49,548
|
41,390
|
Total
Probable
|
92,600
|
61,413
|
42,656
|
30,834
|
23,027
|
Total Proved +
Probable
|
184,396
|
135,590
|
102,876
|
80,381
|
64,417
|
(1)
|
Based on the January
1, 2020 Consultant Average Price Forecast.
|
(2)
|
Numbers may not add
due to rounding.
|
Summary of Undeveloped Locations Converted to Producing
Wells
The following table shows the Company's past performance in
converting future undeveloped locations into producing wells at a
better cost than was forecast.
|
|
|
|
|
|
|
|
|
Reserve
Year
|
Total
Gross
Wells
Drilled
|
Booked
Gross
Locations
Converted
|
Booked/
Total
Drills
%
|
Forecast
Outcome(2)
|
Forecast
Cost per
Unit(2)
$/boe
|
Actual
Outcome(3)
|
Actual Cost
per Unit(3)
$/Boe
|
Actual/
Forecast Cost
per Unit
% Change
|
MBoe
|
Capex(1) ($000)
|
MBoe
|
Capex(1)
($000)
|
2016
|
7
|
4
|
57%
|
357
|
3,460
|
9.68
|
445
|
2,976
|
6.69
|
-31%
|
2017
|
8
|
4
|
50%
|
403
|
4,100
|
10.18
|
394
|
4,446
|
11.28
|
11%
|
2018
|
10
|
4
|
40%
|
659
|
9,350
|
14.19
|
721
|
9,360
|
12.97
|
-9%
|
2019
|
4
|
3
|
75%
|
573
|
6,983
|
12.19
|
654
|
7,405
|
11.32
|
-7%
|
Total
|
29
|
15
|
52%
|
1,992
|
23,893
|
11.99
|
2,215
|
24,187
|
10.92
|
-9%
|
(1)
|
Capex includes
drilling, completion, and equipping expenses.
|
(2)
|
Forecast outcome
represents what was included for future drilling locations in each
year's reserve evaluation on a 2P basis.
|
(3)
|
Actual outcome
represents the actual cost and actual 2P reserves recognized for
the wells drilled during that year.
|
In 2019 Altura drilled four gross wells. Of these four
wells, three were originally booked in the year end 2018 evaluation
totalling 573 MBoe of Proved Undeveloped + Probable Additional
reserves for a forecast capital investment of $7.0 million ($12.19/Boe). The actual capital spent on
these three wells was $7.4 million
resulting in Proved Developed Producing + Probable Additional
reserves of 654 MBoe ($11.32/Boe).
Company Net Asset Value
The Company's net asset value as at December 31, 2019 and 2018 are detailed in the
following table. This net asset value determination is a
"point-in-time" measurement and does not take into account the
possibility of Altura recognizing additional reserves through
successful future capital investment in its existing properties
beyond those included in the 2019 year-end reserve report and the
2018 year-end reserve report.
|
|
|
|
Before Tax NPV @ 10%
Discount Rate
|
|
|
2019
|
2018
|
|
|
($000)
|
($/Share(7))
|
($000)
|
($/Share(7))
|
Per Share
% Change
|
NPV of Future Net
Revenue
|
|
|
|
|
|
Developed
Producing(1)(2)(3)
|
25,403
|
0.23
|
32,202
|
0.31
|
(26%)
|
Total
Proved(1)(2)(3)
|
60,220
|
0.55
|
68,108
|
0.64
|
(14%)
|
Total Proved +
Probable(1)(2)(3)
|
102,876
|
0.94
|
115,178
|
1.06
|
(11%)
|
|
|
|
|
|
|
Net Asset
Value(4)
|
|
|
|
|
|
Total Proved +
Probable(1)(2)(3)
|
102,876
|
0.94
|
115,178
|
1.06
|
(11%)
|
Undeveloped
acreage(5)
|
5,727
|
0.05
|
6,210
|
0.06
|
-
|
Net
debt(6)
|
(563)
|
(0.01)
|
(4,820)
|
(0.04)
|
(75%)
|
Net asset
value(7)
|
108,040
|
0.98
|
116,568
|
1.07
|
(7%)
|
(1)
|
Evaluated by McDaniel
as at December 31, 2019 and December 31, 2018. Net present value of
future net revenue does not represent the fair market value of the
reserves.
|
(2)
|
Net present values
are based on the January 1, 2020 Consultant Average Price Forecast
and the January 1, 2019 Consultant Average Price
Forecast.
|
(3)
|
Includes the net
present value of the Company's estimated decommissioning
obligations. Approximately $1.4 million of incremental
decommissioning obligation costs were deducted from the amount
included in the 2018 present value of reserves as evaluated by
McDaniel as at December 31, 2018 to allow a direct comparison to
2019 with full ADR.
|
(4)
|
Net asset value does
not have a standardized meaning. See "Oil and Gas
Metrics" contained in this news release.
|
(5)
|
For 2019, undeveloped
acreage was internally valued by management. For 2018,
undeveloped acreage value was determined from independent land
valuation reports by Seaton-Jordan & Associates Ltd. as at
December 31, 2018. Fair market values were determined in accordance
with NI 51-101 5.9(1)(e).
|
(6)
|
Net debt as at
December 31, 2019 is estimated and unaudited. Net debt does
not have a standardized meaning. See "Oil and Gas
Metrics" contained in this news release.
|
(7)
|
As at December 31,
2019 and 2018, Altura had 108.9 million basic common shares
outstanding.
|
Performance Metrics(1)
The following table highlights Altura's FD&A, recycle ratio,
reserve replacement and reserve life index for 2019, 2018 and
2017.
|
|
|
|
|
|
2019
|
2018
|
2017
|
Three
Year
|
Capital expenditures,
acquisitions and dispositions(2) ($000)
|
9,728
|
9,647
|
21,187
|
40,563
|
Change in FDC – Total
Proved ($000)
|
(11,658)
|
49,520
|
16,109
|
53,971
|
Change in FDC – Total
Proved + Probable ($000)
|
(6,650)
|
55,320
|
23,329
|
71,998
|
Q4 production
(Boe/d)
|
1,561
|
1,412
|
1,202
|
|
Operating netback
($/Boe)(3)
|
24.95
|
24.54
|
27.49
|
25.66
|
|
|
|
|
|
Proved Developed
Producing
|
|
|
|
|
FD&A costs
($/Boe)(3)
|
14.61
|
17.30
|
23.36
|
19.04
|
Recycle
ratio(3)
|
1.7
|
1.4
|
1.2
|
1.3
|
Reserve
replacement(3)
|
105%
|
130%
|
220%
|
|
Reserve life index
("RLI") (years)(3)
|
3.1
|
3.3
|
3.6
|
|
|
|
|
|
|
Total
Proved
|
|
|
|
|
FD&A costs
($/Boe)(3)
|
(2.71)
|
16.48
|
21.97
|
15.75
|
Recycle
ratio(3)
|
(9.2)
|
1.5
|
1.3
|
1.6
|
Reserve
replacement(3)
|
112%
|
839%
|
412%
|
|
Reserve life index
("RLI") (years)(3)
|
11.0
|
12.1
|
7.0
|
|
|
|
|
|
|
Total Proved +
Probable
|
|
|
|
|
FD&A costs
($/Boe)(3)
|
1.85
|
12.53
|
17.21
|
11.94
|
Recycle
ratio(3)
|
13.5
|
2.0
|
1.6
|
2.1
|
Reserve
replacement(3)
|
261%
|
1,212%
|
628%
|
|
Reserve life index
("RLI") (years)(3)
|
19.4
|
19.5
|
12.1
|
|
(1)
|
Financial and
production information is per the Company's 2019 preliminary
unaudited financial statements and is therefore subject to
audit.
|
(2)
|
Capital expenditures
excludes office furniture and computer and office
equipment.
|
(3)
|
"Operating netback",
"Finding, development & acquisitions costs" or "FD&A
costs", "Recycle ratio", "Reserve replacement", and "Reserve life
index" or "RLI" do not have standardized meanings. See
"Oil and Gas Metrics" contained in this news
release.
|
Price Forecast
The McDaniel Report was based on the Consultant Average Price
Forecast at January 1, 2020 as
outlined below.
|
|
|
|
|
|
WTI
Crude Oil
($US/bbl)
|
Western Canadian
Select
Crude Oil
($CAD/bbl)
|
Alberta
AECO
Gas
($CAD/mmbtu)
|
Foreign
Exchange ($US/$CAD)
|
2020
|
61.00
|
57.57
|
2.04
|
0.760
|
2021
|
63.75
|
62.35
|
2.32
|
0.770
|
2022
|
66.18
|
64.33
|
2.62
|
0.785
|
2023
|
67.91
|
66.23
|
2.71
|
0.785
|
2024
|
69.48
|
67.97
|
2.81
|
0.785
|
2025
|
71.07
|
69.72
|
2.89
|
0.785
|
2026
|
72.68
|
71.49
|
2.96
|
0.785
|
2027
|
74.24
|
73.20
|
3.03
|
0.785
|
2028
|
75.73
|
74.80
|
3.09
|
0.785
|
2029
|
77.24
|
76.43
|
3.16
|
0.785
|
2030
|
78.79
|
77.96
|
3.23
|
0.785
|
2031
|
80.36
|
79.52
|
3.29
|
0.785
|
2032
|
81.97
|
81.11
|
3.36
|
0.785
|
2033
|
83.61
|
82.73
|
3.43
|
0.785
|
2034
|
85.28
|
84.39
|
3.49
|
0.785
|
thereafter
|
+2.0%/yr
|
+2.0%/yr
|
+2.0%/yr
|
0.785
|
ABOUT ALTURA ENERGY INC.
Altura is a junior oil and gas exploration, development and
production company with operations in central Alberta. Altura
predominantly produces from the Rex reservoir in the Upper
Mannville group and is focused on delivering per share growth and
attractive shareholder returns through a combination of organic
growth and strategic acquisitions.
An updated corporate presentation is available on Altura's
website at www.alturaenergy.ca.
READER ADVISORIES
Forward‐looking Information and
Statements
This press release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "budget",
"forecast", "continue", "estimate", "objective", "ongoing", "may",
"will", "project", "should", "believe", "plans", "intends",
"strategy" and similar expressions are intended to identify
forward-looking information or statements. In particular, but
without limiting the foregoing, this press release contains
forward-looking information and statements pertaining to:
- expected completion date for the Leduc-Woodbend well drilled in
2020;
- expected production testing operations to continue through
March;
- timing of filing the Company's year-end results and annual
information form; and
- timing of the second transaction of the Asset Disposition.
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future.
The forward-looking information and statements contained in this
press release reflect several material factors and expectations and
assumptions of Altura including, without limitation:
- the continued performance of Altura's oil and gas properties in
a manner consistent with its past experiences
- that Altura will continue to conduct its operations in a manner
consistent with past operations;
- the general continuance of current industry conditions;
- the continuance of existing (and in certain circumstances, the
implementation of proposed) tax, royalty and regulatory
regimes;
- the accuracy of the estimates of Altura's reserves and resource
volumes;
- certain commodity price and other cost assumptions;
- the continued availability of oilfield services; and
- the continued availability of adequate debt and equity
financing and cash flow from operations to fund its planned
expenditures.
Altura believes the material factors, expectations and
assumptions reflected in the forward-looking information and
statements are reasonable but no assurance can be given that these
factors, expectations and assumptions will prove to be correct. To
the extent that any forward-looking information contained herein
may be considered future oriented financial information or a
financial outlook, such information has been included to provide
readers with an understanding of management's assumptions used for
budgeted and developing future plans and readers are cautioned that
the information may not be appropriate for other purposes.
The forward-looking information and statements included in this
press release report are not guarantees of future performance and
should not be unduly relied upon. Such information and
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information or statements including, without limitation:
- changes in commodity prices;
- changes in the demand for or supply of Altura's products;
- unanticipated operating results or production declines;
- changes in tax or environmental laws, royalty rates or other
regulatory matters;
- changes in development plans of Altura or by third party
operators of Altura's properties,
- increased debt levels or debt service requirements;
- inaccurate estimation of Altura's oil and gas reserve and
resource volumes;
- limited, unfavorable or a lack of access to capital
markets;
- increased costs;
- a lack of adequate insurance coverage;
- the impact of competitors; and
- certain other risks detailed from time to time in Altura's
public documents.
The forward-looking information and statements contained in this
press release speak only as of the date of this press release, and
Altura does not assume any obligation to publicly update or revise
them to reflect new events or circumstances, except as may be
required pursuant to applicable laws.
Oil and Gas Advisories
Reserves
McDaniel & Associates Consultants Ltd. is the Corporation's
independent "qualified reserve evaluator" as defined in National
Instrument 51-101. The McDaniel Report has an effective date
of December 31, 2019 and a
preparation date of March 4, 2020 and
was prepared in accordance with the definitions, standards and
procedures contained in the Canadian Oil and Gas Evaluation
Handbook and NI 51-101. The reserve evaluation was based on
the average of the published price forecasts for McDaniel, GLJ
Petroleum Consultants Ltd., and Sproule Associates Ltd. at
January 1, 2020. The Reserves
Committee of the Board and the Board of Directors of Altura have
reviewed and approved the evaluation prepared by McDaniel.
All reserve references in this press release are "company share
reserves". Company share reserves are the Company's total working
interest reserves before the deduction of any royalties and
including any royalty interests of the Company.
It should not be assumed that the present value of estimated
future net revenue presented in the tables above represents the
fair market value of the reserves. There is no assurance that the
forecast prices and costs assumptions will be attained and
variances could be material. The recovery and reserve estimates of
Altura's crude oil, natural gas liquids and natural gas reserves
provided herein are estimates only and there is no guarantee that
the estimated reserves will be recovered. Actual crude oil, natural
gas and natural gas liquids reserves may be greater than or less
than the estimates provided herein.
All future net revenues are estimated using forecast prices,
arising from the anticipated development and production of our
reserves, net of the associated royalties, operating costs,
development costs, and abandonment and reclamation costs and are
stated prior to provision for interest and general and
administrative expenses. Future net revenues have been presented on
a before tax basis. Estimated values of future net revenue
disclosed herein do not represent fair market value.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("Boe") may be misleading,
particularly if used in isolation. Per Boe amounts have been calculated by using
the conversion ratio of six thousand cubic feet (6 mcf) of natural
gas to one barrel (1 bbl) of crude oil. The Boe conversion
ratio of 6 mcf to 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. Given that
the value ratio based on the current price of crude oil as compared
to natural gas is significantly different from the energy
equivalent of 6:1, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
Oil and Gas Metrics
This news release contains metrics commonly used in the oil and
natural gas industry. Each of these metrics is determined by Altura
as set out below. These metrics are "finding, development and
acquisition costs", "recycle ratio", "reserve replacement",
"reserve life index", "operating netbacks" and "net asset value".
These metrics do not have standardized meanings and may not
be comparable to similar measures presented by other companies.
As such, they should not be used to make comparisons.
Management uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare Altura's performance over time, however, such measures
are not reliable indicators of Altura's future performance and
future performance may not compare to the performance in previous
periods.
- "Finding, development and acquisition costs" or "FD&A
costs" are calculated by dividing the sum of the total capital
expenditures for the year inclusive of the net acquisition costs
and disposition proceeds (in dollars) by the change in reserves
within the applicable reserves category inclusive of changes due to
acquisitions and dispositions (in Boe). FD&A costs, including
FDC, includes all capital expenditures in the year inclusive of the
net acquisition costs and disposition proceeds as well as the
change in FDC required to bring the reserves within the specified
reserves category on production.
FD&A costs take into account reserves revisions and capital
revisions during the year. The aggregate of the costs incurred in
the financial year and changes during that year in estimated FDC
may not reflect total FD&A costs related to reserves additions
for that year. FD&A costs have been presented in this news
release because acquisitions and dispositions can have a
significant impact on Altura's ongoing reserves replacement costs
and excluding these amounts could result in an inaccurate portrayal
of its cost structure. Management uses FD&A as measures of its
ability to execute its capital programs (and success in doing so)
and of its asset quality.
- "Recycle ratio" or is calculated by dividing the operating
netback (in dollars per Boe) by the FD&A costs (in dollars per
Boe) for the year. Altura uses recycle ratio as an indicator of
profitability of its oil and gas activities.
- "Reserve replacement" is calculated by dividing the annual
change in reserves before production (in Boe) in the referenced
category by Altura's annual production (in Boe). Management uses
this measure to determine the relative change of its reserves base
over a period of time.
- "Reserve life index" or "RLI" is calculated by dividing the
reserves (in Boe) in the referenced category by the fourth quarter
production volumes (in Boe). Management uses this measure to
determine how long the booked reserves will last at current
production rates if no further reserves were added.
- "Operating netback" is a non-GAAP measure and does not have a
standardized meaning under IFRS. Altura calculates operating
netback on a per Boe basis as petroleum and natural gas sales less
royalties, operating and transportation costs. Management feels
that operating netback is a key industry benchmark and a measure of
performance for Altura that provides investors with information
that is commonly used by other crude oil and natural gas producers.
The measurement on a per Boe basis assists management and investors
with evaluating operating performance on a comparable basis.
- "Net asset value" is calculated by taking the 2P future net
revenues per the McDaniel Report, on a before tax basis, discounted
at 10% and adding undeveloped land value and subtracting net debt.
Management uses this to measure the relative change in net asset
value over a period of time.
- "Net debt" is a non-GAAP measure and does not have a
standardized meaning under IFRS. Management views net debt as a key
industry benchmark and a measure to assess the Company's financial
position and liquidity. Refer to the heading entitled "Non-GAAP
Measures" contained within the "Advisories" section of Altura's
MD&A.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
______________________
|
1
|
"Operating netback",
"Finding, development & acquisitions costs" or "FD&A
costs", "Recycle ratio", and "Reserve replacement" do not have
standardized meanings. See "Oil and Gas Metrics"
contained in this news release.
|
SOURCE Altura Energy Inc.