/NOT FOR DISTRIBUTION IN THE UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY,
Feb. 25, 2014 /CNW/ - Palliser Oil
& Gas Corporation ("Palliser" or the
"Company") (TSXV: PXL) would like to provide
information on its oil and gas reserves as of December 31, 2013 and an operations and corporate
update.
Highlights of Palliser's Year End 2013
Reserves are as follows:
- Generated one and four year average total proved plus probable
finding, development and acquisition ("FD&A") costs of
$24.90 and $22.45 respectively per boe including changes in
future development capital ("FDC"); and
- Increased corporate proved and probable reserves by 19 percent
from 7,921 Mboe at December 31, 2012
to 9,410 Mboe at December 31, 2013,
replacing 274% of the Company's 2013 production.
Reserves Summary
Palliser's reserves have been independently
evaluated by the Corporation's independent reserve engineering
firm, Sproule Unconventional Limited ("Sproule"). The
reserves were evaluated in accordance with National Instrument
51-101 Standards of Disclosure for Oil and Gas Activities ("NI
51-101") and the Canadian Oil and Gas Evaluation Handbook
(""COGEH"") reserves definitions.
Reserves and Net Present Value (Forecast
Prices and Costs)
The following tables summarize Palliser's
remaining gross interest reserve volumes along with the value of
future net revenue utilizing Sproule's forecast pricing and cost
estimates as at December 31,
2013.
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
Oil & NGL |
Gas |
BOE |
|
Gross |
Net |
Gross |
Net |
Gross |
Net |
December 31, 2013 |
Mbbls |
Mbbls |
MMcf |
MMcf |
Mboe |
Mboe |
Proved |
|
|
|
|
|
|
|
Producing |
1,746 |
1,382 |
468 |
446 |
1,834 |
1,466 |
|
Non-producing |
1,149 |
887 |
- |
- |
1,149 |
887 |
|
Undeveloped |
2,058 |
2,064 |
- |
- |
2,508 |
2,064 |
Total proved |
5,402 |
4,332 |
468 |
446 |
5,491 |
4,416 |
|
Probable |
3,903 |
3,070 |
97 |
92 |
3,919 |
3,085 |
Total proved plus probable |
9,306 |
7,402 |
565 |
539 |
9,410 |
7,502 |
|
|
|
|
|
Net present value of future net revenue |
|
|
|
|
Present value
($000's)(1) |
discounted
at rate of |
December 31, 2013 |
0% |
5% |
10% |
Proved |
|
|
|
|
Producing |
$45,378 |
$41,735 |
$38,786 |
|
Non-producing |
30,390 |
22,019 |
16,537 |
|
Undeveloped |
46,891 |
38,313 |
31,595 |
Total proved |
122,659 |
102,066 |
86,918 |
Probable |
101,539 |
80,870 |
66,343 |
Total proved plus probable |
$224,198 |
$182,936 |
$153,261 |
(1) |
Values shown are calculated on a before tax basis |
Pricing Assumptions
The following benchmark prices, inflation rates and exchange
rates were used by Sproule for the forecast price and cost
evaluation effective December 31,
2013.
|
|
|
|
|
|
|
|
|
WTI |
WCS 20.5 API |
Exchange |
AECO Spot |
Rate |
Year |
|
US $/bbl |
CDN $/bbl |
Rate |
Cdn $/MMbtu |
% / year |
|
|
|
|
|
|
|
2014 |
|
94.65 |
77.81 |
0.94 |
4.00 |
1.5% |
2015 |
|
88.37 |
75.02 |
0.94 |
3.99 |
1.5% |
2016 |
|
84.25 |
75.29 |
0.94 |
4.00 |
1.5% |
2017 |
|
95.52 |
85.36 |
0.94 |
4.93 |
1.5% |
2018 |
|
96.96 |
86.64 |
0.94 |
5.01 |
1.5% |
2019 |
|
98.41 |
87.94 |
0.94 |
5.09 |
1.5% |
2020 |
|
99.89 |
89.26 |
0.94 |
5.18 |
1.5% |
2021 |
|
101.38 |
90.60 |
0.94 |
5.26 |
1.5% |
2022 |
|
102.91 |
91.96 |
0.94 |
5.35 |
1.5% |
2023 |
|
104.45 |
93.34 |
0.94 |
5.43 |
1.5% |
2024+ |
|
+1.5%/year |
+1.5%/year |
0.94 |
+1.5%/year |
+1.5%/year |
Crude oil price is WTI at Cushing,
Oklahoma, natural gas is the AECO spot price
Reserves Reconciliation
The following table is a reconciliation of Palliser's gross
interest reserves at December 31,
2013 and December 31, 2012
using Sproule's forecast pricing and cost estimates as at
December 31, 2013 and December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
Heavy Oil (Mbbl) (3) |
Natural Gas( MMcf) |
BOE (Mboe) |
Reserves |
Proved |
Probable |
Total |
Proved |
Probable |
Total |
Proved |
Probable |
Total |
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
5,460 |
2,310 |
7,771 |
712 |
187 |
898 |
5,579 |
2,342 |
7,921 |
Additions (1) |
1,438 |
1,995 |
3,433 |
0 |
0 |
0 |
1,438 |
1,995 |
3,433 |
Revisions(2) |
(644) |
(402) |
(1,046) |
(172) |
(90) |
(262) |
(674) |
(418) |
(1,092) |
Acquistions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
6,254 |
3,903 |
10,158 |
540 |
97 |
636 |
6,343 |
3,919 |
10,262 |
Production |
(841) |
- |
(841) |
(72) |
- |
(72) |
(853) |
- |
(853) |
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
5,412 |
3,903 |
9,316 |
468 |
97 |
565 |
5,491 |
3,919 |
9,410 |
(1) |
Additions include discoveries, extensions, infill drilling and
improved recovery |
(2) |
Technical revisions include technical revisions and economic
factors |
(3) |
Heavy Oil also includes a very small component of light/medium
oil and natural gas liquids |
Finding, Development and Acquisition Costs
The following table summarizes Palliser's
finding, development and acquisition costs for the years ended
December 31, 2013, 2012, 2011 and
2010 including future development costs.
|
|
|
|
|
|
|
|
|
2013 |
2012 |
2011 |
2010 |
2010 - 2014 |
Proved |
|
|
|
|
|
|
Capital expenditures |
$ 24,991 |
$ 42,449 |
$ 44,042 |
$ 13,596 |
$ 125,077 |
FDC - opening balance (1) |
$ 36,690 |
$ 9,954 |
$ 9,165 |
$ 4,048 |
$ 4,048 |
FDC - closing balance |
$ 47,939 |
$ 36,690 |
$ 9,954 |
$ 9,165 |
$ 47,939 |
FDC - change |
|
$ 11,249 |
$ 26,736 |
$ 789 |
$ 5,117 |
$ 43,891 |
Capital expenditures |
|
|
|
|
|
including FDC change |
$ 36,240 |
$ 69,185 |
$ 44,831 |
$ 18,713 |
$ 168,968 |
|
|
|
|
|
|
|
Reserves additions |
765 |
4,594 |
912 |
882 |
7,153 |
|
|
|
|
|
|
|
FD&A (before FDC) |
$ 32.67 |
$ 9.24 |
$ 48.29 |
$ 15.41 |
$ 17.49 |
FD&A (after FDC) |
$ 47.37 |
$ 15.06 |
$ 49.16 |
$ 21.22 |
$ 23.62 |
|
|
|
|
|
|
|
Proved plus probable |
|
|
|
|
|
Capital expenditures |
$ 24,991 |
$ 42,449 |
$ 44,042 |
$ 13,596 |
$ 125,077 |
FDC - opening balance |
$ 40,728 |
$ 22,793 |
$ 15,965 |
$ 7,441 |
$ 7,441 |
FDC - closing balance |
$ 74,059 |
$ 40,728 |
$ 22,793 |
$ 15,965 |
$ 74,059 |
FDC - change |
|
$ 33,331 |
$ 17,935 |
$ 6,828 |
$ 8,524 |
$ 66,618 |
Capital expenditures |
|
|
|
|
|
including FDC change |
$ 58,322 |
$ 60,384 |
$ 50,870 |
$ 22,120 |
$ 191,695 |
|
|
|
|
|
|
|
Reserves additions |
2,342 |
4,782 |
1,413 |
1,813 |
8,537 |
|
|
|
|
|
|
|
FD&A (before FDC) |
$ 10.67 |
$ 8.88 |
$ 31.17 |
$ 7.50 |
$ 14.65 |
FD&A (after FDC) |
$ 24.90 |
$ 12.63 |
$ 36.00 |
$ 12.20 |
$ 22.45 |
|
|
|
|
|
|
|
Operating netback |
$ 20.36 |
$ 28.69 |
$ 18.03 |
$ 22.03 |
$ 22.77 |
Recycle ratio (before FDC) |
1.9 |
3.2 |
0.6 |
2.9 |
1.6 |
Recycle ratio (after FDC) |
0.8 |
2.3 |
0.5 |
1.8 |
1.0 |
(1) |
Future capital expenditures required to convert proved
non-producing and probable reserves into proved producing |
Undeveloped Land
The following table summarizes Palliser's
undeveloped land holdings and the fair value of those landholdings,
as at December 31, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
2012 |
Acres |
|
|
|
|
Gross |
Net |
Gross |
Net |
|
|
|
|
|
|
|
|
|
Alberta |
|
|
|
|
35,984 |
28,109 |
53,231 |
45,264 |
Saskatchewan |
|
|
|
20,232 |
20,031 |
19,090 |
18,880 |
Total |
|
|
|
|
56,216 |
48,140 |
72,321 |
64,144 |
Average working interest |
|
|
|
86% |
|
89% |
Net Asset Value
|
|
|
|
|
Reserve value ($000) |
|
2013 |
2012 |
Proved + probable (1) |
|
$153,261 |
$126,820 |
|
Add: land value(2) |
|
11,090 |
10,860 |
|
Seismic(2) |
|
1,350 |
1,350 |
|
Working capital (net debt)
(3) |
|
(47,365) |
(37,345) |
Net asset value |
|
$118,336 |
$101,685 |
Year end shares outstanding (000's) |
|
63,916 |
58,916 |
Net asset value per share - basic |
|
$1.85 |
$1.73 |
Fully diluted shares outstanding |
|
64,754 |
64,432 |
Net asset value per share - fully diluted |
|
$1.83 |
$1.66 |
(1) |
Present value discount 10% before taxes. |
(2) |
Valuation is based on management's estimation of fair market
value. Land value assumes $300 per acre for undeveloped heavy
oil acreage with no booked reserves and $100 per acre for natural
gas acreage with no booked reserves. |
(3) |
Working capital (net debt) for 2013 is unaudited and subject to
change, Working capital (net debt) is a non-IFRS measure
representing the total bank loan, accounts payable and accrued
liabilities, less accounts receivable, deposits and prepaid
expenses. |
Reserve Life Index ("RLI")
The reserve life index has been calculated based
on year end reserves divided by fourth quarter 2013 average
production of 2,040 boe per day.
|
|
|
|
Proved |
Proved plus
probable |
Total Company interest reserves (Mboe) |
5,491 |
9,410 |
Fourth quarter 2013 production average (boe/d) |
2,040 |
2,040 |
RLI based on fourth quarter 2013 production average
(years) |
7.4 |
12.6 |
Operations Update
Palliser achieved production of 2,037 boe/d (99%
oil weighting) during the fourth quarter of 2013. The capital
program for 2013 amounted to $25.0
million and the Company exited 2013 with net debt of
$47.4 million (production and
financial amounts are unaudited and subject to change).
Production in the first quarter of 2014 is
forecasted to average 1,800 to 1,900 boe/d. Capital
expenditures in the first quarter are forecast to be limited to
approximately $2 million, and funds
flow from operating activities will be negatively impacted by an
increase in propane costs, resulting in increased operating costs
and lower operating netbacks. The Company is forecasting net
debt of approximately $49 million at
the end of the first quarter.
Corporate Update
The Company's producing base, inventory of over
160 heavy oil locations, 9 salt water disposal facilities, in
combination with the capacity to ship up to 75% of our product by
rail, provides a platform for significant future growth.
Given Palliser's current financial position, the
Company is examining any and all avenues to further improve the
interests of shareholders. Options being examined include
joint ventures, corporate combinations, asset sales and financing
options.
The Company also announces that Allan Carswell, President, COO, and a director
of the Company, has left his positions with Palliser on mutually
agreed upon terms. The Board of Directors wishes Mr. Carswell
success in his future endeavors and thanks him for his
contributions to the Company.
Kevin Gibson will
be assuming the responsibilities as President of the Company in
addition to his current role as CEO.
Palliser is a Calgary-based
emerging junior oil and gas company currently focused on heavy oil
production in the greater Lloydminster area of both Alberta and Saskatchewan. For further information
regarding Palliser Oil & Gas Corporation, the reader is invited
to visit the Company's website at www.palliserogc.com.
Forward-Looking Statements
Certain statements contained herein
constitute forward-looking statements or information (collectively
"forward-looking statements") within the meaning of
applicable securities legislation, including, but not limited to
management's assessment of future plans and operations, including:
commodity focus; drilling plans and potential locations; expected
production levels; development plans; reserves growth; production
and operating sales and expenses; reservoir characteristics; the
results of applying certain operational development techniques;
certain economic factors; and capital expenditures.
Forward-looking statements are typically identified by words such
as "anticipate", "estimate", "expect", "forecast", "may", "will",
"project" and similar words suggesting future events or performance
or may be identified by reference to a future date. In addition,
statements relating to oil and gas reserves and resources are
deemed to be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves or resources described, as the case may be, exist in the
quantities predicted or estimated and can be profitably produced in
the future. With respect to forward-looking statements
herein, Palliser has made assumptions regarding, among other
things; future capital expenditure levels; future oil and natural
gas prices; "differentials" between West Texas Intermediate and
Western Canadian Select benchmark pricing; future oil and natural
gas production levels; future water disposal capacity; future
exchange rates and interest rates; ability to obtain equipment and
services in a timely manner to carry out development activities;
ability to market oil and natural gas successfully to current and
new customers; the impact of increasing competition; the ability to
obtain financing on acceptable terms; and the ability to add
production and reserves through development and exploitation
activities. Although Palliser believes that the expectations
reflected in the forward-looking statements contained herein, and
the assumptions on which such forward-looking statements are made,
are reasonable, there can be no assurance that such expectations
will prove to be correct. Readers are cautioned not to place undue
reliance on forward-looking statements included herein, as there
can be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous risks and
uncertainties that contribute to the possibility that the
forward-looking statements will not occur, which may cause
Palliser's actual performance and financial results in future
periods to differ materially from any estimates or
projections. Additional information on these and other
factors that could affect Palliser's results are included in
reports on file with Canadian securities regulatory authorities,
including the Company's Annual Information Form, and may be
accessed through the SEDAR website at www.sedar.com.
The forward-looking statements contained
herein speak only as of the date hereof. Except as expressly
required by applicable securities laws, Palliser does not undertake
any obligation to, nor does it intend to, publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. The forward-looking
statements contained herein are expressly qualified by this
cautionary statement. In addition, readers are cautioned that
historical results are not necessarily indicative of future
performance.
Production volumes are commonly expressed on
a barrel of equivalent ("BOE") basis whereby natural gas volumes
are converted at a ratio of six thousand cubic feet to one barrel
of oil. The intention is to convert oil and natural gas
measurement units into one basis for improved analysis of results
and comparisons with other industry participants. The term BOE may
be misleading, particularly if used in isolation. The
conversion ratio is based on an energy equivalent method and does
not represent an economic value equivalency at the
wellhead.
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 Press release.
SOURCE Palliser Oil & Gas Corporation