Mr. John Jeffrey reports
SATURN OIL & GAS INC. ANNOUNCES 2018 YEAR-END RESERVES AND 492% INCREASE IN PROVED DEVELOPED PRODUCING RESERVES
Saturn Oil & Gas Inc. has provided results of its independent 2018 year-end reserves evaluation conducted by Ryder Scott Company LP, with an effective date of Dec. 31, 2018.
Throughout 2018, Saturn continued to execute its aggressive growth strategy focused within the prolific and highly economic Viking play in Saskatchewan. Its 2018 capital expenditures program totalled $20.7-million and was directed to the acquisition of 26.3 net sections of land and the drilling and completion of 18 (17 net) Viking light oil wells, including 15 extended reach horizontal (ERH) wells. The success of this program is demonstrated by the significant growth in its reserves base year over year and strong capital efficiencies, which has set the stage for continued expansion and value creation through 2019 and beyond.
Reserves highlights
Through 2018, Saturn achieved record growth in reserves at the fastest pace in the company's history. Following are key reserves highlights as at Dec. 31, 2018, across various reserves categories.
Proved developed producing:
-
492-per-cent increase over 2017 to 557,100 barrels;
- 320-per-cent increase on a per-share (basic) basis;
- 853-per-cent growth in net present value discounted at 10 per cent (before tax) (NPV10) over 2017;
- Replaced 497 per cent of 2018 annual production;
- Achieved finding, development and acquisition costs of $44.78 per barrel, including change in future development capital (FDC);
- Generated a recycle ratio of 0.94 times based on 2018 average operating netbacks of $42.18 per barrel.
Total proved:
-
323-per-cent increase over 2017 to 2,190,600 barrels;
- 200-per-cent increase on a per-share (basic) basis;
- 769-per-cent growth in NPV10 before tax over 2017;
- Replaced 1,795 per cent of 2018 annual production;
- Achieved finding, development and acquisition cost of $21.17 per barrel, including change in FDC;
- Generated a recycle ratio of 1.99 times based on 2018 average operating netbacks.
Total proved plus probable:
-
467-per-cent increase over 2017 to 4,554,900 barrels;
- 302-per-cent increase on a per-share (basic) basis;
- 768-per-cent growth in NPV10 before tax over 2017;
- Replaced 4,025 per cent of 2018 annual production;
- Achieved finding, development and acquisition cost of $20.56 per barrel, including change in FDC;
- Generated a recycle ratio of 2.05 times based on 2018 average operating netbacks.
"I am extremely proud of our achievements in 2018, delivering an unprecedented year of reserves growth across all categories," stated John Jeffrey, chairman and chief executive officer. "These results highlight the depth of our high-value, light oil Viking portfolio in Saskatchewan where we continue to expand our presence. With a strong balance sheet and excellent capital and operating efficiencies to support our inventory of development opportunities, Saturn is in a strong position to continue creating value for our shareholders in 2019 and beyond."
Reserves summary
Year-end 2018 reserves were evaluated by independent reserves evaluator Ryder Scott in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities). A reserves committee, comprising a majority of independent board members, reviews the qualifications and appointment of the independent reserves evaluator and reviews the procedures for providing information to the evaluators. The reserves evaluation was based on Ryder Scott forecast pricing and foreign exchange rates. Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without inclusion of any royalty interests) unless noted otherwise. Additional reserves information will be included in Saturn's NI 51-101 forms regarding statement of reserves data and other oil and gas information which will be filed on SEDAR on or before April 30, 2019.
The attached tables outline Saturn's reserves as at Dec. 31, 2018. No provision for interest, risk management contracts, debt service charges, and general and administrative expenses have been made and it should not be assumed that the net present values of the reserves estimated by Ryder Scott represents the fair market value of the reserves.
SUMMARY OF CORPORATE RESERVES
Reserves category Light and Heavy Natural gas Conventional Barrels of Liquids
medium oil oil liquids natural gas oil equivalent Ratio
(bbl) (bbl) (bbl) (Mcf) (bbl) (%)
Proved
Developed producing 557,080 -- -- -- 557,080 100
Developed non-producing -- 63,598 -- -- 63,598 100
Undeveloped 1,285,293 284,632 -- -- 1,569,925 100
Total proved 1,842,373 348,231 -- -- 2,190,603 100
Probable 1,989,976 374,393 -- -- 2,364,369 100
Total proved plus probable 3,832,348 722,624 -- -- 4,554,972 100
RECONCILIATION OF RESERVES
Factors Total proved Total probable Total proved plus probable
(bbl) (bbl) (bbl)
As of Dec. 31, 2017 517,800 285,700 803,500
Acquisitions 1,568,430 1,854,600 3,423030
Dispositions -- -- --
Drilling (extensions and improved recovery) 487,000 355,300 842,300
Discoveries -- -- --
Technical revisions (330,678) (132,531) (463,209)
Pricing (economic factors) 2,300 1,300 3,600
Production (54,249) 0 (54,249)
As of Dec. 31, 2018 2,190,603 2,364,369 4,554,972
NET PRESENT VALUE OF FUTURE REVENUES BEFORE INCOME TAXES
Reserves category 0% 5% 10% 15% 20%
(000) (000) (000) (000) (000)
Proved
Developed producing $31,354 $25,038 $21,039 $18,353 $16,440
Developed non-producing 2,231 1,810 1,516 1,307 1,152
Undeveloped 52,767 35,637 24,793 17,598 12,576
Total proved 86,352 62,485 47,348 37,258 30,169
Probable 103,925 65,381 44,021 31,118 22,727
Total proved plus probable 190,276 127,866 91,369 68,376 52,896
FUTURE DEVELOPMENT CAPITAL
Future development costs (000) Total Total proved
proved plus probable
2019 $24,500 $31,475
2020 10,361 34,652
2021 549 10,992
2022 -- --
Remainder -- --
Total future development costs undiscounted 35,410 77,119
NET ASSET VALUE
Proved developed Total Total proved
producing proved plus probable
NPV10 before tax (000) $21,039 $47,348 $91,369
Estimated long-term debt, less cash
collateralized letters of credit (unaudited) (000) (9,603) (9,603) (9,603)
Net asset value (000) 11,436 37,745 81,766
Basic shares outstanding (000) 227,963 227,963 227,963
Estimated net asset value per share 0.05 0.17 0.36
PRICE FORECAST
Year Exchange rate WTI at Cushing Canadian Light Sweet 40 degree API Western Canada Select 20.5 degree API
($Cdn/$U.S.) ($U.S./bbl) ($Cdn/bbl) ($Cdn/bbl)
2019 $0.740 $55.50 $68.24 $52.77
2020 0.776 63.00 74.72 58.84
2021 0.779 66.00 78.29 62.17
2022 0.783 70.00 82.99 66.58
2023 0.785 72.00 85.33 68.77
About Saturn Oil & Gas Inc.
Saturn Oil is a public energy company focused on the acquisition and development of undervalued, low-risk assets. Saturn is driven to build a strong portfolio of cash flowing assets with strategic land positions. Derisked assets and calculated execution will allow Saturn to achieve growth in reserves and production through retained earnings. Saturn's portfolio will become its key to growth and provide long-term stability to shareholders.
We seek Safe Harbor.
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