Mr. Vance Querio reports
ORYX PETROLEUM ANNOUNCES ITS YEAR END 2016 RESERVES AND RESOURCES;
PROVED PLUS PROBABLE OIL RESERVES OF 202 MMBBL AND US$
1.0 BILLION(1)
IN RELATED AFTER-TAX NET PRESENT VALUE OF FUTURE NET REVENUE AS AT DECEMBER 31, 2016
Oryx Petroleum Corp. Ltd. today released its oil reserves and resources as at Dec. 31, 2016, as evaluated by Netherland, Sewell & Associates Inc., an independent oil and gas consulting firm, and as set forth in a report prepared in accordance with National Instrument 51-101 by NSAI dated Feb. 22, 2017. The reserves and resources disclosure coincides with the filing on SEDAR of a material change report, which includes additional information derived from the 2016 NSAI report.
Highlights of the report for Oryx Petroleum's gross (working interest) oil reserves and resources volumes, and future net revenue related to oil reserves and contingent oil resources subclassified as development pending in the Hawler licence area as at Dec. 31, 2016, as compared with estimates prepared by NSAI as at Dec. 31, 2015, include:
- Proved plus probable oil reserves of 202 million barrels, versus 238 million barrels as at Dec. 31, 2015:
- Downward revision of volumes attributable to the Demir Dagh Jurassic reservoir based on performance of the Demir Dagh-3 well in 2016;
- After-tax net present value of future net revenue related to proved plus probable oil reserves of $1-billion (U.S.) (1), versus $1.2-billion (U.S.) (2) as at Dec. 31, 2015, based on:
- Lower forecasted Brent crude oil prices and assumed export oil prices;
- Lower volumes attributable to the Demir Dagh Jurassic reservoir;
- Lower development costs due primarily to revisions to Demir Dagh Jurassic volumes, lower operating costs and revisions to development plans requiring fewer facilities;
- Best-estimate (2C) unrisked contingent oil resources of 146 million barrels as at Dec. 31, 2016, unchanged, versus estimates as at Dec. 31, 2015:
- Best-estimate (2C) risked contingent oil resources subclassified as development pending unchanged as at Dec. 31, 2016, with related after-tax risked net present value of future net revenue of $71-million (U.S.) (1) as at Dec. 31, 2016, versus $85-million (U.S.) (2) as at Dec. 31, 2015.
- Best-estimate unrisked prospective oil resources of 853 million barrels, versus 1,343 million barrels as at Dec. 31, 2015, reflecting abandonment of the Wasit licence area.
(1) These estimated values are calculated using a 10-per-cent discount rate and are valid as at Dec. 31, 2016. Estimated value of future net revenue does not represent fair market value. See the material change report for additional information regarding these estimated values.
(2) These estimated values are calculated using a 10-per-cent discount rate and are valid as at Dec. 31, 2015.
Chief executive officer's comment
Commenting today, Oryx Petroleum's chief executive officer, Vance Querio, stated:
"We are pleased to report our reserves and resources at year-end 2016 as evaluated by NSAI. Our proved plus probable reserve estimates and associated after-tax net present value of future net revenue have been impacted by a lower for longer oil price outlook, the downward revision of reserve volumes attributable to the Demir Dagh Jurassic reservoir and adjustments to development plans. In addition, the revised estimates reflect significantly lower capital investment requirements than estimated previously as a result of the removal of the relatively high development costs associated with Demir Dagh Jurassic volumes, reduced facilities requirements and lower operating costs. Our reserve and resource base remains sizable. We look forward to a more active development program in 2017 focused on the Zey Gawra field in the Hawler licence area and maturing our AGC Central exploration licence area in West Africa."
Summary reserves and resources
The attached table is a summary of NSAI's evaluation as at Dec. 31, 2016, with comparatives with NSAI's evaluation as at Dec. 31, 2015.
OIL RESERVES AND RESOURCES AND FUTURE NET REVENUE SUMMARY
Dec. 31, 2015 Dec. 31, 2016
2015 NSAI report 2016 NSAI report
Proved plus probable Proved plus probable
Gross (7) oil (working interest) Gross (7) oil (working interest)
Reserves Future net revenue (6) Reserves Future net revenue (6)
(mmbbl) (U.S. $ million) (mmbbl) (U.S. $ million)
Oil reserves (1)
Kurdistan region of
Iraq -- Hawler
Demir Dagh
Cretaceous 66 65
Jurassic 44 5
Zey Gawra
Cretaceous 73 76
Banan East
Cretaceous 31 31
Banan West
Cretaceous 24 25
--- ----- --- -----
Total (8) 238 1,217 202 1,014
=== ===== === =====
Dec. 31, 2015 Dec. 31, 2016
Best-estimate (2C) gross (7) oil Best-estimate (2C) gross (7) oil
(working interest) (working interest)
Unrisked Risked (9) Unrisked Risked (9)
Resources Resources Future net revenue (6) Resources Resources Future net revenue (6)
(mmbbl) (mmbbl) (U.S. $ million) (mmbbl) (mmbbl) (U.S. $ million)
Contingent oil
resources (2) --
development
pending (3)
Kurdistan region
of Iraq -- Hawler
Demir Dagh
Cretaceous 16 14 16 14
Banan East
Cretaceous 31 28 31 28
-- -- -- -- -- --
Total (8) 47 42 85 47 42 71
== == == == == ==
Dec. 31, 2015 Dec. 31, 2016
Best-estimate Best-estimate
Gross (7) oil (working interest) Gross (7) oil (working interest)
Unrisked Risked (9) Unrisked Risked (9)
(mmbbl) (mmbbl) (mmbbl) (mmbbl)
Contingent oil
resources (2) --
Development undefined (4)
Kurdistan region of Iraq --
Hawler
Demir Dagh
ertiary 6 3 6 3
Jurassic 42 31 42 31
Banan East
Jurassic 1 1 1 1
Banan West
Tertiary 17 9 17 9
Ain Al Safra
Jurassic 28 21 28 21
West Africa
Congo (Brazzaville) --
Haute Mer A
Elephant 6 1 6 1
----- -- --- --
Total (8) 100 66 100 66
===== == === ==
Unrisked Risked (9) Unrisked Risked (9)
(mmbbl) (mmbbl) (mmbbl) (mmbbl)
Prospective oil resources (5)
Iraq
Kurdistan region -- Hawler 111 5 111 5
Wasit province -- Wasit (11) 490 9 --- --
West Africa 742 18 742 18
----- -- --- --
Total (8) 1,343 33 853 23
===== == === ==
(1) The oil reserves data are based upon evaluations by NSAI, with effective dates as at Dec. 31,
2015, and Dec. 31, 2016, as indicated. Volumes are based on commercially recoverable volumes
within the life of the production-sharing contract.
(2) The contingent oil resources data are based upon evaluations by NSAI, and the classification
of such resources as contingent oil resources by NSAI, with effective dates as at Dec. 31, 2015,
and Dec. 31, 2016, as indicated. The figures shown are NSAI's best estimate using deterministic
methods. Once all contingencies have been successfully addressed, the probability that the
quantities of contingent oil resources actually recovered will equal or exceed the estimated
amounts is 50 per cent for the best estimate. Contingent oil resources estimates are volumetric
estimates prior to economic calculations.
(3) Classification of a project's maturity as development pending indicates that there is a high
chance of development (that is, probability that a known accumulation will be commercially
developed), where resolution of the final conditions for development is being actively pursued.
(4) Classification of a project's maturity as development undefined indicates that evaluation of
the project is incomplete, and there is continuing activity to resolve any risks or uncertainties
regarding commercial development of the project. An economic evaluation has not been performed by
NSAI on the contingent oil resources classified as development undefined.
(5) The prospective oil resources data are based upon evaluations by NSAI, and the classification
of such resources as prospective oil resources by NSAI, with effective dates as at Dec. 31, 2015,
and Dec. 31, 2016, as indicated. The figures shown are NSAI's best estimate, using a combination
of deterministic and probabilistic methods and are dependent on a petroleum discovery being made.
If a discovery is made and development is undertaken, the probability that the recoverable
volumes will equal or exceed the unrisked estimated amount is 50 per cent for the best estimate.
Prospective oil resources estimates are volumetric estimates prior to economic calculations.
(6) After-tax net present value of related future net revenue using forecast prices and costs
assumed by NSAI and a 10-per-cent discount rate as at Dec. 31, 2015, and Dec. 31, 2016, as
indicated. Gross proved plus probable oil reserves estimates and gross development pending best-
estimate (2C) contingent oil resource estimates used to calculate future net revenue are
estimated based on economically recoverable volumes within the development/exploitation period
specified in the production-sharing contract, risk exploration contract or fiscal regime
applicable to each licence area. The estimated values disclosed do not represent fair market
value.
(7) Use of the word gross to qualify a reference to reserves or resources means, in respect of
such reserves or resources, the total reserves or resources prior to the deductions specified in
the production-sharing contract, risk exploration contract or fiscal regime applicable to each
licence area.
(8) Individual numbers provided may not add to total due to rounding.
(9) These are risked contingent resources that have been risked for chance of development.
(10) These are risked prospective resources that have been risked for both chance of discovery
and chance of development. If a discovery is made, there is no certainty that it will be
developed, or, if it is developed, there is no certainty as to the timing of such development.
(11) The corporation determined in 2016 to treat the Wasit licence area as abandoned after
failure to secure required governmental approvals during the five years since execution of the
original contracts.
The following is a discussion of estimated volumes as at Dec. 31, 2015, and Dec. 31, 2016, for each of the corporation's licence areas.
Kurdistan region of Iraq -- Hawler licence area
Reserves and contingent resources
Demir Dagh
Estimated volumes at the Demir Dagh field in the Hawler licence area reflect data available as at Dec. 31, 2016, including:
- Drilling, testing and postdrill analysis of 10 wells (Demir Dagh-2 through Demir Dagh-11), eight of which were drilled to the Cretaceous reservoir and two of which tested multiple zones;
- Observation of well performance and recording of dynamic data (for example, production and pressure monitoring and interference testing) of six wells that have produced or are producing from the Cretaceous or Jurassic reservoirs;
- 3-D and three component (3C) seismic data.
Estimates of oil reserves attributable to the Demir Dagh Cretaceous reservoir are based on evaluation of the performance data from existing Demir Dagh producing wells but recognize that the development plan will comprise horizontal wellbores rather than vertical wellbores drilled to date. The horizontal wells in the Demir Dagh Cretaceous reservoir will be placed at strategic positions to minimize water production and take advantage of regional water movement.
Estimated proved plus probable gross (working interest) oil reserves attributable to the Demir Dagh Cretaceous reservoir are 65 million barrels as at Dec. 31, 2016, versus 66 million barrels as at Dec. 31, 2015.
Best-estimate (2C) unrisked gross (working interest) contingent oil resources attributable to the Demir Dagh Cretaceous reservoir are 16 million barrels as at Dec. 31, 2016, unchanged versus estimates as at Dec. 31, 2015. NSAI assigns a 90-per-cent chance of development for the Cretaceous reservoir contingent oil resources at the Demir Dagh field, unchanged versus the 2015 NSAI report, resulting in a risked estimate of 14 million barrels. These resources are classified by NSAI as development pending.
Estimated proved plus probable gross (working interest) oil reserves attributable to the Lower Jurassic Mus and Adaiyah reservoir are five million barrels as at Dec. 31, 2016, versus 44 million barrels as at Dec. 31, 2015. Estimates are based on the drilling results and postdrilling analysis of the Demir Dagh-2 and Demir Dagh-3 wells that tested the Jurassic intervals, and the well performance data of the Demir Dagh-3 well. The Demir Dagh-3 well was completed in the Jurassic reservoir in early 2016 and ceased production in late 2016 due to an abrupt increase in the water-oil ratio. As a consequence, original oil in place and reserves in the 2015 NSAI report attributable to the Lower Jurassic Mus and Adiyah reservoir have been revised downward in the 2016 NSAI report.
Estimated contingent oil resources volumes in the Lower Jurassic Butmah reservoir, the Lower Jurassic Naokelekan and Sargelu reservoirs, and the Tertiary Pila Spi reservoir remain unchanged versus Dec. 31, 2015, as no new data have been collected from such reservoirs in 2016.
NSAI assigns a 75-per-cent chance of development for both the Lower Jurassic Butmah and the Lower Jurassic Naokelekan, and Sargelu reservoirs at the Demir Dagh field, and a 50-per-cent chance of development for the Tertiary Pila Spi reservoir, unchanged versus the 2015 NSAI report. These resources are classified by NSAI as development undefined.
Zey Gawra
Best-estimate proved plus probable oil reserves attributable to the Zey Gawra Cretaceous reservoir increased to 76 million barrels as at Dec. 31, 2016, versus 72 million barrels as at Dec. 31, 2015. Estimates are based on available logging data from the ZAB-1 well drilled in the 1990s, and re-entered in 2003 and 2016, drilling, logging and testing data from the Zey Gawra-1 discovery well drilled in 2013, and preliminary testing data from the Zey Gawra-1 sidetrack well successfully completed in late 2016. The minor increase in reserves is a consequence of a revised development plan and production profile whereby slightly more volumes are economic.
Banan
Estimated volumes attributable to the Banan Cretaceous reservoir were based on:
- Data collected during the drilling and testing of the Banan-1 exploration well in early 2014 and during the drilling of the Banan appraisal well later in 2014;
-
Acquisition and initial processing of 3-D seismic data covering the portion of the Banan structure east of the Zab river;
- Drilling results, well performance and data accumulated with regard to the Cretaceous reservoir at the Demir Dagh field;
- Recognition that the development plan will consist of horizontal wellbores rather than vertical wellbores drilled to date.
The interpretation of data accumulated to date is that the Banan field is likely two fields separated by a north-south fault, roughly along the line of the Zab river.
Estimated proved plus probable gross (working interest) oil reserves attributable to the Banan East Cretaceous reservoir are 31 million barrels as at Dec. 31, 2016, unchanged versus estimates as at Dec. 31, 2015. Estimated proved plus probable gross (working interest) oil reserves attributable to the Banan West Cretaceous reservoir are 25 million barrels as at Dec. 31, 2016, largely unchanged versus 24 million barrels as at Dec. 31, 2015.
Best-estimate (2C) unrisked gross (working interest) contingent oil resources attributable to the Banan East Cretaceous reservoir are unchanged versus Dec. 31, 2015. NSAI assigns a 90-per-cent chance of development for such contingent oil resources estimated for the Banan East Cretaceous reservoir, unchanged versus the 2015 NSAI report. These resources are classified by NSAI as development pending.
Estimated contingent oil resources volumes in the Banan West Tertiary Pila Spi and Banan East Lower Jurassic Butmah reservoirs are unchanged as at Dec. 31, 2016, versus Dec. 31, 2015. NSAI assigns a 50-per-cent chance of development for the Banan West Tertiary Pila Spi and a 75-per-cent chance of development for the Banan East Lower Jurassic Butmah, unchanged versus the 2015 NSAI report. These resources are classified by NSAI as development undefined.
Ain Al Safra
Estimated unrisked and risked contingent oil resources attributable to the Ain Al Safra field, specifically the Lower Jurassic Alan, Mus and Adaiyah reservoirs, were unchanged at Dec. 31, 2016, versus Dec. 31, 2015. Estimates are based on the drilling and testing and postdrilling analysis of the Ain Al Safra-1 well drilled in 2013 and additional reservoir data accumulated during the drilling of the Ain Al Safra-2 appraisal well in 2014.
NSAI assigns a 75-per-cent chance of development for the Lower Jurassic Alan, Mus and Adaiyah reservoirs, unchanged versus the 2015 NSAI report. These resources are classified by NSAI as development undefined.
Prospective resources
Hawler
Estimated prospective oil resources attributable to the Hawler licence area as at Dec. 31, 2016, remained unchanged compared with estimates as at Dec. 31, 2015. Best-estimate risked gross (working interest) prospective oil resources as at Dec. 31, 2016, were five million barrels. Such value is risked for geologic chance of success and chance of development which factors are unchanged versus the 2015 NSAI report. Prospective oil resources attributable to the Zey Gawra Tertiary reservoir are now classified as light/medium oil as at Dec. 31, 2016, versus a classification as heavy oil as at Dec. 31, 2015. The change reflects results and data accumulated during the re-entry of the ZAB-1 well in late 2016.
Wasit province of Iraq
Best-estimate unrisked gross (working interest) prospective oil resources decreased to nil, versus 490 million barrels as at Dec. 31, 2015, due to the corporation's abandonment of the Wasit licence area in 2016. Best-estimate risked gross (working interest) prospective oil resources as at Dec. 31, 2016, decreased to nil, versus nine million barrels as at Dec. 31, 2015.
West Africa
Oryx Petroleum has interests in five licence areas in West Africa:
- An 80-per-cent working interests in each of the AGC Shallow and AGC Central licence areas (assuming the AGC exercises its back-in rights) in the AGC administrative area offshore Senegal and Guinea Bissau;
- A 20-per-cent working interest in the Haute Mer A licence area and a 30-per-cent working interest in the Haute Mer B licence area, in each case in offshore Congo (Brazzaville);
- A 38.67-per-cent working interest in the OML 141 licence area in Nigeria.
The corporation's activity in West Africa was limited in 2016. A seismic data acquisition campaign began in the AGC Central licence in late 2016 but was not completed until early 2017, and the results of processing and interpreting the data are not yet available.
Estimated contingent oil resources attributable to the Elephant discovery in the Haute Mer A licence area remain unchanged as at Dec. 31, 2016, versus Dec. 31, 2015. NSAI assigns a 15-per-cent chance of development for the N3 and N5 reservoirs in the Elephant discovery, unchanged versus the 2015 NSAI report. These resources are classified by NSAI as development unclarified.
Best-estimate unrisked gross (working interest) prospective oil resources attributable to the five licence areas in West Africa remain unchanged at 742 million barrels as at Dec. 31, 2016, versus Dec. 31, 2015, which includes 67 million barrels associated with the OML 141 licence area. The corporation intends to divest its interest in the OML 141 licensce area for nominal consideration in the upcoming months.
There were no changes to estimated prospective oil resources in the Haute Mer A, Haute Mer B, OML 141, AGC Shallow and AGC Central licence areas as at Dec. 31, 2016, versus Dec. 31, 2015. There were no changes to risking for geologic chance of success or chance of development in the AGC Shallow, AGC Central, OML 141, Haute Mer A or Haute Mer B licence areas.
After-tax net present values
Realized price and cost assumptions
The after-tax net present values of future net revenue estimated by NSAI as at Dec. 31, 2015, and 2016 utilize Brent crude oil prices shown in the attached table, which are based on the average of forecasts of Brent crude oil prepared by three Canadian independent consultants. Such prices are escalated at 2 per cent on Jan. 1 of each year after 2025 and 2027, respectively.
All volumes included in the after-tax net present values of future net revenue estimated in the 2015 NSAI report and the 2016 NSAI report are attributable to Oryx Petroleum's interests in the Hawler licence area in the Kurdistan region of Iraq.
All sales are assumed to be export sales in the 2016 NSAI report based on a pipeline export price. Assumed pipeline export prices in the 2016 NSAI report are determined in accordance with an agreement reached with the Ministry of Natural Resources of the Kurdistan region of Iraq in early 2016. Assumed pipeline export prices equal the Brent crude oil price less the $12-per-barrel agreed export tariff, plus the addition or deduction of a quality differential to the extent crude qualities differ from agreed specifications.
All sales are also assumed to be export sales in the 2015 NSAI report, but the crude oil sales prices assumed are the weighted average of export sales priced at pipeline and trucking prices. In the 2015 NSAI report, all sales in 2016 were assumed to be trucking sales. Beyond 2016, sales up to gross (100 per cent) 15,000 barrels per day are assumed to be trucking sales, and any sales above gross (100 per cent) 15,000 barrels per day are assumed to be pipeline sales. Such allocation reflected management's expectations regarding future sales as at Dec. 31, 2015. The trucking export price assumed in the 2015 NSAI report was determined by deducting $26 per barrel from the Brent crude oil price per the corporation's marketing agreement with a regional marketer that was in place at the time, plus the addition or deduction of a quality differential. Assumed pipeline export prices in the 2015 NSAI report deducted an assumed export tariff of $5 per barrel, plus the addition or deduction for quality.
Export tariffs in both the 2015 NSAI report and 2016 NSAI report are treated as non-recoverable. The quality differentials for API (American Petroleum Institute) gravity and sulphur content in the 2015 NSAI report and the 2016 NSAI report are based on Demir Dagh Cretaceous reservoir oil quality specifications, and anticipated quality specifications from the Zey Gawra Cretaceous, Demir Dagh Jurassic and Banan Cretaceous reservoirs at the time of the reports. The quality differentials assumed in each forecasted year are weighted averages reflecting the relative blend contributions assumed for each reservoir.
Assumed Brent crude oil price Assumed export oil price
(U.S. $/bbl) as at Dec, 31, (U.S. $/bbl) at Dec. 31,
2015 2016 2015 (1) 2016 (2)
2016 45.83 - 23.85 -
2017 56.73 56.67 39.06 46.39
2018 65.33 62.57 53.42 52.43
2019 72.90 67.13 65.87 56.10
2020 76.67 71.17 73.44 59.14
2021 80.17 75.24 78.38 63.61
2022 83.68 77.23 81.91 65.99
2023 87.34 79.22 84.76 67.87
2024 89.46 81.26 85.88 69.70
2025 91.10 83.34 86.45 71.55
2026 92.92 85.65 87.07 73.63
2027 94.78 87.32 87.10 75.12
(1) Represents a weighted average of trucking and pipeline prices for sales of proved plus
probable oil reserves. Export prices equal Brent crude oil price, less a pipeline tariff
($5 (U.S.) per barrel) or a trucking tariff ($26 (U.S.) per barrel), as applicable, plus/minus
any quality differential versus specifications agreed
(2) All export sales are assumed to be pipeline export sales. Export prices equal Brent crude
oil price less a $12-(U.S.)-barrel pipeline tariff, plus/minus any quality differential versus
specifications agreed.
Operating costs assumed in the 2015 NSAI report and the 2016 NSAI report are based on information from in-country operator expense records provided to NSAI by Oryx Petroleum and commercially available databases at the time of preparation of each report. Operating costs are escalated 2 per cent per year on Jan. 1 of each year through the lives of the applicable properties.
Capital costs assumed in the 2015 NSAI report and the 2016 NSAI report were provided to NSAI by Oryx Petroleum, and are based on authorizations for expenditures, field development plans, actual costs from recent activity and commercially available cost databases available at the time of preparation of each report. Capital costs are escalated 2 per cent per year to the date of expenditure.
Proved plus probable oil reserves
The after-tax net present value of future net revenue attributable to the corporation's gross (working interest) proved plus probable oil reserves as at Dec. 31, 2016, utilizing a 10-per-cent discount rate, is $1-billion (U.S.), versus $1.2-billion (U.S.) as at Dec. 31, 2015. The decrease reflects:
-
Lower assumed export oil prices due to lower Brent crude oil prices and higher assumed export pipeline tariffs;
- Lower oil reserves volumes resulting from downward revisions to estimates for the Demir Dagh Jurassic reservoir.
These negative factors were partially offset by:
- Lower per barrel operating costs than assumed in the 2015 NSAI report;
- Significantly lower development costs resulting from revised development plans that include less facilities requirements and lower costs than assumed in the 2015 NSAI report.
Best-estimate (2c) contingent oil resources
The 2016 NSAI report and the 2015 NSAI report contain only estimated after-tax risked net present values of future net revenue attributable to contingent oil resources classified in the development pending project maturity subclass, such resources attributable to the Demir Dagh and Banan Cretaceous reservoirs located in the Hawler licence area. The estimated after-tax risked net present values of the future net revenue attributable to best-estimate (2C) risked contingent oil resources in the development pending project maturity subclass, utilizing a 10-per-cent discount rate, is $71-million (U.S.) as at Dec. 31, 2016, versus $85-million (U.S.) as at Dec. 31, 2015. The change in the estimate reflects lower forecasted Brent crude oil prices and lower assumed export prices, partially offset by lower costs.
About Oryx Petroleum Corp. Ltd.
Oryx Petroleum is an international oil exploration, development and production company focused in Africa and the Middle East. Oryx Petroleum has interests in six licence areas, two of which have yielded oil discoveries. The corporation is the operator or technical partner in four of the six licence areas. One licence area is located in the Kurdistan region of Iraq, and five licence areas are located in West Africa in Nigeria, the AGC administrative area offshore Senegal and Guinea Bissau, and Congo (Brazzaville).
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.