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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Strategic Oil And Gas Ltd | TSXV:SOG | TSX Venture | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.02 | 0.015 | 0.03 | 0 | 01:00:00 |
CALGARY, ALBERTA--(Marketwired - Feb 28, 2014) - Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (TSX-VENTURE:SOG) is pleased to announce its year-end reserves and provide an update on its first quarter drilling program. Strategic achieved a 54 percent increase in proved and probable reserves, for a 480 percent reserve replacement ratio. The Company's latest Muskeg Stack well, 16-34, was flowing at a rate of 596 BOED (89 percent oil) on the final day of the 11 day flow back period.
HIGHLIGHTS
RESERVES
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, McDaniel and Associates Consultants Ltd. ("McDaniel") as at December 31, 2013. Gross reserves included in this release are Strategic's working interest reserves before royalty burdens. Complete NI 51-101 reserves disclosure will be included in Strategic's annual NI 51-101 filings which will be filed prior to March 31, 2014. 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.
Strategic's reserves at December 31, 2013 are summarized below.
Gross Reserves(1) | Light and Medium Crude Oil (Mbbl) | Heavy Oil (Mbbl) | Natural Gas (MMcf) | Natural Gas Liquids (Mbbl) | Oil Equivalent (Mboe) |
Proved Producing | 2,991 | 104 | 10,118 | 63 | 4,845 |
Proved Non-Producing | 112 | 0 | 3,360 | 0 | 672 |
Proved Undeveloped | 879 | 0 | 1,787 | 0 | 1,177 |
Total Proved | 3,982 | 104 | 15,265 | 63 | 6,694 |
Total Probable | 3,935 | 39 | 11,979 | 50 | 6,021 |
Total Proved and Probable | 7,918 | 143 | 27,244 | 113 | 12,715 |
(1) Gross reserves are the Company's total working interest share before the deduction of any royalties and without including any royalty interests of the Company. The December 31, 2013 reserves report has been prepared in accordance with the definitions, procedures and standards contained in the Canadian Oil and Gas Evaluation Handbook and NI 51‐101 - Standards of Disclosure for Oil and Gas Activities. |
Approximately 74 percent of the Company's total reserves are located in the Steen River core area. Proved and probable producing reserves represent 52 percent of total proved and probable reserves, as compared to 55 percent at December 31, 2012.
Proved and probable third party reserve bookings for Muskeg Stack wells are below the Company's type curve generated from internal reservoir engineering estimates. This is typical at the early stages of an emerging resource play. The Company anticipates the difference between these estimates will narrow in future years as additional wells are drilled and more extensive production data becomes available.
McDaniel estimates the FDC required to convert undeveloped and non-producing reserves to producing reserves at $97.5 million. This includes 23 Muskeg Stack and 3 Keg River proven and probable undeveloped locations, of which 9 Muskeg Stack and 2 Keg River are booked as proven undeveloped locations. These wells are anticipated to be drilled over the next 2 years. The total booked locations represent less than 10 percent of the Muskeg Stack inventory identified on Company's land holdings in the Steen River area.
A reconciliation of the Company's reserves at December 31, 2013 to the previous year-end is as follows.
Thousand Barrels of Oil Equivalent (Mboe) | Proved | Probable | Proved and Probable | |||
Opening Balance December 31, 2012 | 4,017 | 4,167 | 8,184 | |||
Discoveries and Extensions | 800 | 2,967 | 3,768 | |||
Technical Revisions | 1,429 | (1,695 | ) | (267 | ) | |
Acquisitions | 1,641 | 617 | 2,258 | |||
Economic Factors | 0 | (35 | ) | (35 | ) | |
Production(1) | (1,194 | ) | 0 | (1,194 | ) | |
Closing Balance December 31, 2013 | 6,694 | 6,021 | 12,715 |
(1) Financial information is from Strategic's preliminary unaudited consolidated financial statements for the year ended December 31, 2013, and is subject to change. See Unaudited Financial Information in this press release. |
Strategic's light and medium oil, natural gas and NGL reserves were evaluated by McDaniel using McDaniel's product price forecasts effective January 1, 2014 prior to provision for financial risk management contracts, income taxes, interest, debt service charges and general and administrative expenses. The following table summarizes the net present value from recognized reserves at December 31, 2013, assuming various discount rates, and incorporating future development costs and abandonment liabilities. It should not be assumed that the discounted future net revenues estimated by McDaniel represent the fair market value of the Company's assets or future production from the assets.
Summary of Before Tax Net Present Value of Future Net Revenue (Forecast Pricing) (1)(2) | ||||
Discounted at | ||||
($ thousands) | Undiscounted | 5% | 10% | 15% |
Proved Producing | 101,375 | 89,658 | 80,685 | 73,652 |
Proved Non-Producing | 7,659 | 5,956 | 4,711 | 3,787 |
Proved Undeveloped | 21,486 | 15,718 | 11,442 | 8,200 |
Total Proved | 130,519 | 111,332 | 96,838 | 85,638 |
Total Probable | 161,174 | 113,126 | 83,248 | 63,540 |
Total Proved and Probable | 291,693 | 224,458 | 180,086 | 149,179 |
(1) Based on McDaniel's January 1, 2014 escalated price forecast. |
(2) Tables may not add due to rounding. 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 Strategic'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. |
Strategic incurred capital expenditures of $129 million in 2013, of which $78 million was spent on drilling, completions and recompletions, $34 million on facilities, pipelines and tie ins, $7 million was spent on land and seismic and $10 million was spent on acquisitions. The following table summarizes Strategic's finding and development ("F&D") costs as well as FD&A costs, both before and after the inclusion of changes in FDC.
2013 F&D and FD&A costs | ||||
($ thousands (unaudited), except as noted) | Proved | Proved & Probable | Proved Excluding Infrastructure | Proved & Probable Excluding Infrastructure |
F&D Costs, Excluding FDC | ||||
Exploration and Development Expenditures(1) | 118,497 | 118,497 | 93,645 | 93,645 |
Reserve Additions, Including Revisions - MBoe | 2,229 | 3,466 | 2,229 | 3,466 |
F&D Costs - $/Boe | 53.16 | 34.19 | 42.01 | 27.02 |
F&D Costs, Including FDC | ||||
Exploration and Development Expenditures(1) | 118,497 | 118,497 | 93,645 | 93,645 |
Total Change in FDC | 34,569 | 47,396 | 34,569 | 47,396 |
Total F&D Capital, Including Change in FDC | 153,066 | 165,893 | 128,214 | 141,041 |
Reserve Additions, Including Revisions - MBoe | 2,229 | 3,466 | 2,229 | 3,466 |
F&D Costs- $/Boe | 68.67 | 47.87 | 57.52 | 40.69 |
FD&A Costs, Excluding FDC | ||||
Exploration and Development Capital Expenditures(1) | 118,497 | 118,497 | 93,645 | 93,645 |
Net Acquisitions | 10,098 | 10,098 | 10,098 | 10,098 |
FD&A Capital Expenditures, Including Net Acquisitions | 128,595 | 128,595 | 103,743 | 103,743 |
Reserve Additions, Including Net Acquisitions - MBoe | 3,870 | 5,724 | 3,870 | 5,724 |
FD&A Costs - $/Boe | 33.23 | 22.47 | 26.80 | 18.12 |
FD&A Costs, Including FDC | ||||
FD&A Capital Expenditures, Including Net Acquisitions(1) | 128,595 | 128,595 | 103,743 | 103,743 |
Total Change in FDC | 34,569 | 47,396 | 34,569 | 47,396 |
Total FD&A Capital, Including Change in FDC | 163,164 | 175,991 | 138,312 | 151,139 |
Reserve Additions, Including Net Acquisitions - MBoe | 3,870 | 5,724 | 3,870 | 5,724 |
FD&A Costs, Including FDC - $/Boe | 42.16 | 30.75 | 35.74 | 26.40 |
(1) Financial information is from Strategic's preliminary unaudited consolidated financial statements for the year ended December 31, 2013 and is subject to change. See Unaudited Financial Information in this press release. |
OPERATIONAL UPDATE
Strategic has had continued drilling success with its first quarter Muskeg stack horizontal focused drilling program, with two of the four planned horizontal Muskeg Stack wells now tied-in and on stream.
Strategic is also pleased to report its Bistcho oil pipeline project is proceeding on time and on budget. The Company expects first oil to flow in the sales line early in the second quarter of 2014. This project is paramount in terms of the Company's strategy to reduce operating and transportation costs by limiting trucking costs and enhancing the profitability of each barrel processed at Marlowe. The plant turnaround at Bistcho is ongoing and the plant is expected to be online next week.
Mr. Gurpreet Sawhney President & CEO of Strategic, states, "Everything is coming together - the team, the facility, the oil sales pipeline and the Muskeg Stack drilling. Strategic has made significant strides and improved its drilling and completion techniques to maximize well performance while managing costs in a new resource play. With over 300 Muskeg Stack locations in our inventory, coupled with high netback light oil production at Steen and a dedicated team, I believe we are continuing to build Strategic into a 'Premier Northern Operator'.
ABOUT STRATEGIC
Strategic is a junior oil and gas company committed to growth by exploiting its light oil assets in Canada. Strategic's common shares trade on the TSX Venture Exchange under the symbol SOG.
ADDITIONAL INFORMATION
Additional information is also available at www.sogoil.com and at www.sedar.com.
Unaudited Financial Information
Certain financial and operating information included in this press release for the year ended December 31, 2013, 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 December 31, 2013 and changes could be material.
Forward-Looking Statements
This news release includes certain information, with management's assessment of Strategic's future plans and operations, and contains forward-looking statements which may include some or all of the following: (i) anticipated production rates; (ii) expected results of capital programs; (iii) expected timelines for production optimization; (iv) net debt levels; (v) anticipated operating costs; and (vi) expected capital projects and associated spending; which are provided to allow investors to better understand the Company's business. By their nature, forward-looking statements are subject to numerous risks and uncertainties; some of which are beyond Strategic's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, changes in environmental tax and royalty legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, and other risks and uncertainties described under the heading 'Risk Factors' and elsewhere in the Company's Annual Information Form for the year ended December 31, 2012 and other documents filed with Canadian provincial securities authorities and are available to the public at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The principal assumptions Strategic has made includes security of land interests; drilling cost stability; finance and debt markets continuing to be receptive to financing the Company, the ability of the Company to monetize non-core assets and industry standard rates of geologic and operational success. Actual results could differ materially from those expressed in, or implied by, these forward-looking statements. Strategic disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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.
Strategic Oil & Gas Ltd.Gurpreet SawhneyMBA, MSc., PEng.President and CEO403.767.9122403.767.2949Strategic Oil & Gas Ltd.Michael A. ZukVP, Business Development403.781.2989403.767.9122
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