Mr. Gordon Reese reports
INVICTA REPORTS 78% INCREASE IN OIL RESERVES IN 2012
Invicta Energy Corp. has released the results of its
independent reserve evaluation prepared by Fekete Associates Inc.
in accordance with National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities and dated effective Dec. 31, 2012, evaluating the
company's crude oil, natural gas liquids and natural gas reserves. The report is primarily based on 34 gross (20 net)
producing light oil wells at Kindersley, Sask., and 92 gross (50
net) proved undeveloped Kindersley locations. Invicta has drilled seven gross (3.6 net) of the proved undeveloped locations so far in 2013.
Light oil accounts for more than 96 per cent of Invicta's oil and gas revenues.
Information regarding Invicta's reserves is summarized as follows -- Dec. 31, 2012, as compared with Dec. 31, 2011:
- Proved reserves -- 107-per-cent increase in light oil reserves to 2,403 mstb:
-
60-per-cent increase in light oil and associated gas reserves to 3,091,000 barrels of oil equivalent;
-
52-per-cent increase in PV10 before tax of $67.6-million;
-
Light oil reserve life index of 10.5 years (1);
-
4-per-cent reduction in light oil finding costs to $33.84 per barrel (2)(3);
-
Light oil recycle ratio(4) of 1.9;
-
Light oil reserve replacement(5) of 1,241 per cent;
- 107-per-cent increase in light oil reserves per share;
-
20-per-cent increase in net asset value(6) of 76 cents per share based on NPV before tax at 10 per cent;
- Proved plus probable reserves -- 78-per-cent increase in light oil reserves to
2,750 mstb:
-
39-per-cent increase light oil and associated gas reserves to 3,541,000 barrels of oil equivalent;
-
38-per-cent increase in PV10 before tax of $81.8-million;
-
Light oil reserve life index of 12.1 years (1);
-
8-per-cent reduction in light oil finding costs to $29.03 per barrel (2)(3);
-
Light oil recycle ratio(4) of 2.3;
-
Light oil reserve replacement(5) of 1,204 per cent;
-
77-per-cent increase in light oil reserves per share;
-
20-per-cent increase in net asset value(6) of 95 cents per share based on NPV before tax at 10 per cent.
Notes:
- Calculated using Invicta's forecasted 2013 average production rate of 625 barrels per day;
- $35.60 per thousand barrels of oil equivalent proven and $33.84 per thousand barrels of oil equivalent proven plus probable. Invicta's finding costs on a thousand-barrel-of-oil-equivalent basis increased over 2011 primarily due to revisions to associated gas reserves from lower gas oil sales ratios;
- Based on 2012 estimated capital expenditures of $15.7-million; $30-million change in proven future development costs; and $22.3-million change in proven plus probable future development costs;
- Operating netback/finding cost. Based on Invicta's forecasted operating netback of $65.43 per barrel. Recycle ratios calculated on a thousand-barrel-of-oil-equivalent basis are 1.4 proven and 1.5 proven plus probable and are based on a forecasted operating netback of $51.41 per boe;
- Based on estimated 2012 production of 109,000 barrels;
- Assumes $3.4-million of undeveloped land (51,900 net acres) and seismic value, $13.2-million of estimated net debt at Dec. 31, 2012, and 75.6 million basic outstanding shares.
Reserves
The tables provide summary information presented in the report
effective Dec. 31, 2012. The report evaluated the oil, NGL and
natural gas reserves attributable to the company's crude oil, natural
gas liquids and natural gas reserves effective Dec. 31, 2012.
Detailed reserve information will be presented in the statement of
reserves data and other oil and gas information section of the
company's annual information form scheduled to be filed on SEDAR on or
before April 15, 2013. Also due to rounding, certain columns may not
add exactly.
The net present value of future net revenue attributable to reserves is
stated without provision for interest costs and general and
administrative costs, but after providing for estimated royalties,
production costs, development costs, other income, future capital
expenditures and well abandonment costs for only those wells assigned
reserves by Fekete. It should not be assumed that the undiscounted or
discounted net present value of future net revenue attributable to
reserves estimated by Fekete represent the fair market value of those
reserves. Other assumptions and qualifications relating to costs,
prices for future production and other matters are summarized herein.
The recovery and reserve estimates of oil, NGL and natural gas reserves
provided herein are estimates only. Actual reserves may be greater
than or less than the estimates provided herein.
The report is based on certain factual data supplied by the company and
the company's opinion of reasonable practice in the industry. The
extent and character of ownership and all factual data pertaining to
petroleum properties and contracts (except for certain information
residing in the public domain) were supplied by the company to Fekete.
Fekete accepted these data as presented and neither title searches nor
field inspections were conducted.
The company's reserves are 80 per cent light oil and the gas reserves are for
the solution gas associated with the light oil wells. Invicta's
reserves for solution gas were revised by 3,683 million cubic feet primarily due to a
lower forecasted producing GOR (gas oil ratio). Given current market
conditions for natural gas this reduction has minimal impact on the
value of the company's reserves.
The Fekete price forecast is available on its website.
SUMMARY OF OIL AND GAS RESERVES -- FORECAST PRICES AND COSTS
Company interest reserves before royalty Company interest reserves after royalty
Light and Natural Light and Natural
medium crude Heavy gas Natural medium crude Heavy gas Natural
oil oil liquids gas oil oil liquids gas
Mbbl Mbbl Mbbl MMcf Mboe Mbbl Mbbl Mbbl MMcf Mboe
Proved
Developed producing 487.2 - 0.8 833.0 626.8 471.4 - 0.6 788.0 603.3
Developed non-producing - - - - - - - - - -
Undeveloped 1,915.2 - - 3,293.0 2,464.0 1,823.3 - - 3,144.0 2,347.3
------- -- --- ------- ------- ------- -- --- ------- -------
Total proved 2,402.4 - 0.8 4,126.0 3,090.9 2,294.7 - 0.6 3,932.0 2,950.6
Probable 346.9 - 0.2 619.0 450.2 332.0 - 0.1 589.0 430.3
------- -- --- ------- ------- ------- -- --- ------- -------
Total proved plus probable 2,749.3 - 1.0 4,745.0 3,541.1 2,626.7 - 0.7 4,521.0 3,380.9
------- -- --- ------- ------- ------- -- --- ------- -------
NET PRESENT VALUE OF FUTURE NET REVENUE -- FORECAST PRICES AND COSTS
BEFORE FUTURE INCOME TAX
Before future income tax expenses and discounted at
0% 5% 10%
(M$) (M$) (M$)
Proved
Developed producing $ 31,492 $ 26,959 $ 23,691
Developed non-producing - - -
Undeveloped 80,273 58,656 43,915
-------- -------- --------
Total proved 111,765 85,615 67,606
Probable 27,148 19,041 14,230
-------- -------- --------
Total proved plus probable $138,913 $104,656 $ 81,836
-------- -------- --------
We seek Safe Harbor.
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