CALGARY, Alberta, May 27, 2022 (GLOBE NEWSWIRE) -- Prospera Energy Inc. (PEI) (TSXV:PEI)(OTC:GXRFF)(FRA:0F6B) announces December 31, 2021 year-end reserves independently assessed by InSite Petroleum Consultants Ltd. (“InSite”). The restructured PEI conducted a full geological delineation substantiated by existing 3-D interpretation. The Insite report confirms PEI assessment of the significant oil in place of 387.9Mbbl (Table 8), mainly in core PEI assets (>42,000 acres) located in Southwest and West-Central Saskatchewan. The historical production has accounted for only 8.6% recovery of 33.2Mbbl from vertical wells. These wells still have significant remaining proven reserves of 3,880 Mbbl gross, 2,808 Mbbl net, and a reserve life index of 23-years.
However, these fields have had no modern drilling or recovery methods applied. Recognition of encouraging historical production response and recovery from vertical wells and the significant remaining recoverable reserves represents a substantial upside for PEI. Asset development strategy from re-entry horizontal wells can deliver meaningful long-term PEI shareholder value.
2021 Reserve Report Highlights:
Total proved plus probable (TPP) reserves increased 569 percent from 464Mbbl to 2,644Mbbl
Corresponding increase in NPV@10% before income taxes from a loss of -$3.4 million to a gain of $56.2 million.
The TPP reserve life index also lengthened from 10.1 to 22.8 years.
PEI elected to apply modest price of 70$/bbl for the estimation of NPV allowing for substantial NPV appreciation if oil price sustains.
NI 51-101 Table 2.1.1
The following table discloses, in the aggregate, the Corporation’s gross and net proved and probable reserves, estimated using forecast prices and costs by product type. “Forecast prices and costs” means future prices and costs in the InSite Report that are generally accepted as being a reasonable outlook of the future or fixed or currently determinable future prices or costs to which the Corporation is bound.
Prospera Energy Inc. Summary of Oil and Gas Reserves as of December 31, 2021
Reserves Category
Light and Medium Oil (Mbbl)
Heavy Oil (Mbbl)
Solution Gas (MMcf)
Gross
Net
Gross
Net
Gross
Net
Proved Developed Producing
34
31
624
577
243
156
Proved Developed Non-Producing
39
36
210
205
29
24
Proved Undeveloped
-
-
1,226
1,180
104
103
Total Proved
73
67
2,060
1,962
375
284
Total Probable
14
13
585
531
88
68
Total Proved + Probable
86
80
2,644
2,493
463
352
Gross reserves are the working interest share only. Net reserves are the working interest gross reserves plus all royalty interest reserves receivable less all royalty burdens payable. Conventional natural gas (solution) includes all gas produced in association with light, medium and heavy crude oil.
Remaining Reserves
Remaining reserves of oil and gas have been determined as of December 31, 2021. Property Gross gas reserves are for non-associated gas pools. Company WI and Net gas reserves are for solution gas associated with oil reserves. A summary of total company reserves follows:
Prospera Energy Inc.
Summary of Reserves as of December 31, 2021
Proved Developed Producing
Total Proved Plus Probable
Oil – Mbbl
Property Gross
1,096
3,880
Company WI
657
2,731
Company Net
608
2,572
Gas – MMcf
Property Gross
0
0
Company WI
243
463
Company Net
156
352
BOEs – MBOE
Property Gross
1,096
3,880
Company WI
698
2,808
Company Net
634
2,631
Product Prices
The InSite base product price forecast, effective January 1, 2022, was used for this evaluation. A copy of which is included in the InSite Report. To estimate actual received prices, adjustments were made to crude oil and by-products prices for quality and transportation tariffs. Similarly, adjustments were made to gas prices for heating value and transportation. It is assumed that the adjustment factors and increments will remain constant throughout the forecasts. Revenue data provided by the Company was used to quantify price adjustments. If such data was unavailable, typical values for the area were used to estimate price adjustments. Risks of political and economic uncertainties could affect future results and could cause results to differ materially from those expressed in this evaluation.
Economic Results
Summarized as follows is the NPV of the Corporation’s future net revenue attributable to the reserves categories previously tabulated, estimated using forecast prices and costs, before deducting future income tax expenses, and without discount and using discount rates of 5%, 10%, 15% and 20%. Future net revenue includes all resource income and is after capital investments, operating expenses, and royalties.
Prospera Energy Inc.
NPV of Future Net Revenue as of December 31, 2021
NPV before Income Taxes (M$C)
Proved Developed Producing
Total Proved
Proved Plus Probable
Undiscounted
0
%
-2,100
62,900
88,200
Discounted
5
%
-400
51,000
68,900
10
%
300
42,500
56,200
15
%
600
36,300
47,400
20
%
700
31,600
40,900
Future operating costs are based on historical data. Wherever unavailable, they were estimated from analogous operations in the vicinity of the properties. The inflation of capital and operating costs is assumed to be 2.0% per annum after 2022.
InSite has included cost estimates of well abandonment and reclamation for all existing wells, regardless of reserves assignment, and undeveloped locations assigned reserves. Estimates have been prepared based on historical costs and published guidance from provincial liability management or rating. It is understood that all abandonment and reclamation costs of wells and facilities have been accounted for by the Company.
After Tax Results
As mandated by NI 51-101, after tax results are shown in the various tables of the InSite Report. After-tax calculations at the company level incorporated tax legislation and tax pool details for the Company, complying with the guidelines and philosophy of NI 51-101 in all material aspects. All future capital cost estimates herein have been categorized by tax pool definitions and used to supplement the year-end tax pool information provided by the Company. The year-end tax pool, on December 31, 2020, as provided by the Company, is summarized below:
Canadian Oil and Gas Property Expense (COGPE) 7,259,636
Canadian Development Expense (CDE) 3,434,117
Capital Cost Allowance (CCA Class 8,10,13,41,45) 3,156
Non-Capital Losses (100%) 6,846,004
Qualification
To prepare their evaluation, a technical presentation of properties was made by the Company to InSite. Data required by them was sourced from the Company, industry references and regulatory bodies. Neither field inspection nor environmental review of these properties were conducted by InSite, nor deemed necessary. Generally accepted engineering methods were employed to estimate reserves and forecast production. The InSite Report follows the Practice Standards and Guidelines of the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and adheres in all material aspects to the business practices, evaluation procedures, and reserve definitions contained within NI 51-101 and the COGEH Handbook.
PEI’s 2021 year-end reserves information is under the Company’s issuer profile on SEDAR at www.sedar.com.
This news release contains forward-looking statements relating to the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will,” “may,” “should,” “anticipate,” “expects” and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, are forward looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
Although Prospera believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Prospera can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Prospera. As a result, Prospera cannot guarantee that any forward-looking statement will materialize, and the reader is cautioned not to place undue reliance on any forward- looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and Prospera does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
