Paramount Provides Update on Cavalier Energy Inc.: Probable Reserves Recognized for Hoole Project
10 1월 2013 - 10:14AM
Marketwired Canada
Paramount Resources Ltd. ("Paramount") (TSX:POU) is pleased to announce that its
wholly-owned subsidiary Cavalier Energy Inc. ("Cavalier") has received an
updated independent evaluation of the Grand Rapids formation in its 100 percent
owned in-situ oil sands leases in the Hoole area of Alberta (the "Hoole Lands").
The evaluation ascribed 93 million barrels of probable reserves with a net
present value (discounted at 10 percent) of $379 million to Cavalier's initial
10,000 barrel per day in-situ SAGD oil sands development covering approximately
two sections of the Hoole Lands (the "Hoole Project"). Over and above the
aforementioned reserves, the evaluation ascribed 719 million barrels of economic
contingent resources (best estimate) with a net present value (discounted at 10
percent) of $1.949 billion to the remaining approximate 54 sections of
Cavalier's Hoole Lands (the "Remaining Hoole Lands"). "The new estimates further
emphasize that the Hoole Lands are a significant asset and the recognition of
reserves is an important milestone for Cavalier," stated William Roach,
President and Chief Executive Officer of Cavalier.
The updated estimates and reclassification of Hoole Project volumes from
economic contingent resources to probable reserves follows Cavalier's November
2012 regulatory applications to the Energy Resources Conservation Board and
Alberta Environment and Sustainable Resource Development.
Subject to receipt of regulatory approvals, the Hoole Project schedule currently
anticipates first steam in 2015 and the first full year of production in 2016.
It is expected that the Hoole Lands could support a project of over 80,000
barrels per day by 2022.
"This is another positive step forward for Paramount and the Cavalier team,"
said Jim Riddell, President and Chief Operating Officer of Paramount.
Results of the updated evaluation of the Hoole Lands conducted by McDaniel &
Associates Consultants Ltd. ("McDaniel"), effective as of December 31, 2012, are
summarized below.
Hoole Project - Summary of Bitumen Reserves(1)
The evaluation ascribed total proved plus probable plus possible
reserves of 104 million barrels to the Hoole Project, implying a
recovery factor of approximately 65 percent in relation to the
assigned Discovered Exploitable Bitumen In Place(2) of 159
million barrels.
NPV of
Future
Net
Revenue(7)
(discounted
Reserves(6) at 10%)
------------------------------------------------------------------
(MMBbl) ($MM)
Total Proved(3) - -
Probable Undeveloped(4) 93 379
------------------------------------------------------------------
Total Proved Plus Probable 93 379
Possible Undeveloped(5) 11 146
------------------------------------------------------------------
Total Proved + Probable + Possible 104 525
------------------------------------------------------------------
------------------------------------------------------------------
(1) The estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to effects of
aggregation.
(2) Discovered Exploitable Bitumen In Place is the estimated volume of
bitumen, as of a given date, which is contained in a subsurface
stratigraphic interval of a known accumulation that meets or exceeds
certain reservoir characteristics, such as minimum continuous net pay,
porosity and mass bitumen content. For the Hoole Project, the presence
of these characteristics is considered necessary for the commercial
application of known recovery technologies. There is no certainty that
it will be commercially viable to produce any portion of the resources
from the Hoole Project.
(3) Proved reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved
reserves.
(4) Probable reserves are those additional reserves that are less certain to
be recovered than proved reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum of
the estimated proved plus probable reserves.
(5) Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is a 10 percent probability
that the quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
(6) Working interest volumes, before the deduction of royalties.
(7) NPV means net present value and represents Cavalier's share of future
net revenue, before the deduction of income tax, from reserves in the
Grand Rapids formation within the Hoole Project. The calculation
considers such items as revenues, royalties, operating costs,
abandonment costs and capital expenditures. Royalties have been
calculated based on Alberta's Royalty Framework applicable to oil sands
projects. The calculation does not consider financing costs and general
and administrative costs. NPVs were calculated assuming natural gas is
used as a fuel for steam generation. Revenues and expenditures were
calculated based on McDaniel's forecast prices and costs as of January
1, 2013. The estimated net present values disclosed in this press
release do not represent fair market value.
Remaining Hoole Lands - Summary of Bitumen Resources
NPV of
Future
Net
Economic Revenue(6)
Contingent (discounted
Classification/Level of Certainty DEBIP(4)Resources(5) at 10%)
----------------------------------------------------------------------------
(MMBbl) (MMBbl) ($MM)
High Estimate(1) 1,656 903 2,982
Best Estimate(2) 1,469 719 1,949
Low Estimate(3) 1,167 511 946
----------------------------------------------------------------------------
(1) High Estimate is considered to be an optimistic estimate of the quantity
of resource that will actually be recovered. It is unlikely that the
actual remaining quantities of resources recovered will meet or exceed
the high estimate. Those resources at the high end for the estimate
range have a lower degree of certainty (a 10 percent confidence level)
that the actual quantities recovered will equal or exceed the estimate.
(2) Best Estimate is considered to be the best estimate of the quantity that
will be actually recovered. It is equally likely that the actual
remaining quantities recovered will be greater or less than the best
estimate. Those resources that fall within the best estimate have a 50
percent confidence level that the actual quantities recovered will equal
or exceed the estimate.
(3) Low Estimate is considered to be a conservative estimate of the quantity
of resources that will actually be recovered. It is likely that the
actual remaining quantities recovered will exceed the low estimate.
Those resources at the low end of the estimate range have the highest
degree of certainty (a 90 percent confidence level) that the actual
quantities recovered will equal or exceed the estimate.
(4) Discovered Exploitable Bitumen In Place is the estimated volume of
bitumen, as of a given date, which is contained in a subsurface
stratigraphic interval of a known accumulation that meets or exceeds
certain reservoir characteristics, such as minimum continuous net pay,
porosity and mass bitumen content. For the Remaining Hoole Lands, the
presence of these characteristics is considered necessary for the
commercial application of known recovery technologies. There is no
certainty that it will be commercially viable to produce any portion of
the resources from the Remaining Hoole Lands.
(5) Contingent Resources are those quantities of bitumen estimated, as of a
given date, to be potentially recoverable from known accumulations using
established technology or technology under development, but are
classified as a resource rather than a reserve due to one or more
contingencies, such as the absence of regulatory applications, detailed
design estimates or near term development plans. There is no certainty
that it will be commercially viable to produce any portion of the
contingent resources. For the Remaining Hoole Lands, contingencies which
must be overcome to enable the reclassification of bitumen contingent
resources as reserves include the finalization of plans for the
development, submission of a regulatory application and management's
intent to proceed evidenced by a development plan with major capital
expenditures. Economic Contingent Resources are those contingent
resources that are economically recoverable based on specific forecasts
of commodity prices and costs (based on McDaniel's forecast prices and
costs as of January 1, 2013). Volumes presented are working interest,
before the deduction of royalties.
(6) NPV means net present value and represents Cavalier's share of future
net revenue, before the deduction of income tax, from the economic
contingent resources in the Grand Rapids formation within the Remaining
Hoole Lands. The calculation considers such items as revenues,
royalties, operating costs, abandonment costs and capital expenditures.
Royalties have been calculated based on Alberta's Royalty Framework
applicable to oil sands projects. The calculation does not consider
financing costs and general and administrative costs. NPVs were
calculated assuming natural gas is used as a fuel for steam generation.
Revenues and expenditures were calculated based on McDaniel's forecast
prices and costs as of January 1, 2013. The estimated net present values
disclosed in this press release do not represent fair market value.
The pricing assumptions used in the McDaniel evaluation can be found at
www.mcdan.com/pdf/20130101.pdf.
More information pertaining to Cavalier, including its latest corporate
presentation, is available at the newly launched Cavalier website at
www.cavalierenergy.com and may also be accessed via the Paramount website at
www.paramountres.com.
Paramount is a Canadian oil and natural gas exploration, development and
production company with operations focused in Western Canada. Paramount's Class
A Common Shares are listed on the Toronto Stock Exchange under the symbol "POU".
For further information on the Hoole Project specifically, or Cavalier in
general, please go to www.cavalierenergy.com or contact William Roach.
Advisory Regarding Forward-Looking Information:
This news release contains certain forward-looking information under applicable
securities legislation. Forward-looking information typically contains
statements with words such as "anticipate", "believe", "estimate", "expect",
"plan", "intend", "propose", or similar words suggesting future outcomes or an
outlook. Forward looking information in this news release includes, but is not
limited to: Estimated reserves and resources and the discounted net present
value of future net revenues from such reserves and resources (including the
forecast prices, costs and the timing of expected production volumes and future
development capital) and expected production volumes from the Hoole Lands and
the timing thereof.
Such forward looking information is based on a number of assumptions which may
prove to be incorrect. The following assumptions have been made, in addition to
any other assumptions identified in this document:
-- Future crude oil, bitumen and natural gas prices and general economic
and business conditions;
-- The ability to obtain required capital to finance Cavalier's
exploration, development and operations;
-- The ability to obtain equipment, services, supplies and personnel in a
timely manner to carry out its activities;
-- The ability of Cavalier to successfully market its production;
-- Estimates of input and labour costs for an oil sands project;
-- Access to capital markets and other sources of funding;
-- The ability to secure adequate product processing, transportation and
storage;
-- The ability to successfully apply oil sands technology and to capitalize
on improvements thereto;
-- The ability to achieve forecast production volumes, steam oil ratios,
and capital and operating costs consistent with expectations;
-- The timely receipt of required regulatory approvals and the scope of
such approvals;
-- Estimated timelines being met in respect of the development of the Hoole
Lands; and
-- Currency exchange and interest rates.
Although Paramount and Cavalier believe that the expectations reflected in such
forward-looking information are reasonable, undue reliance should not be placed
on them as neither Paramount nor Cavalier can give any assurance that such
expectations will prove to be correct. Forward-looking information is based on
current expectations, estimates and projections that involve a number of risks
and uncertainties which could cause actual results to differ materially from
those anticipated by Paramount and Cavalier and described in the forward-looking
information. These risks and uncertainties include, but are not limited to:
-- Fluctuations in crude oil, bitumen and natural gas prices, foreign
currency exchange rates and interest rates;
-- The uncertainty of estimates and projections relating to future revenue,
future production, costs and expenses and the timing thereof;
-- The ability to secure adequate product processing, transportation and
storage;
-- The uncertainty and risks of exploration, development, drilling and the
geology of bitumen;
-- Operational risks in exploring for, developing and producing petroleum,
and the timing thereof;
-- The ability to obtain equipment, services, supplies and personnel in a
timely manner;
-- Potential disruption or unexpected technical difficulties in designing,
developing and operating facilities;
-- The uncertainty of reserves and resources estimates;
-- The ability to obtain financing at an acceptable cost to meet current
and future obligations including costs of anticipated projects;
-- Potential lawsuits and regulatory actions;
-- Changes to the status or interpretation of laws, regulations or
policies;
-- Changes in environmental laws including emission reduction obligations;
-- The receipt, timing and scope of governmental or regulatory approvals;
-- Changes in general business and economic conditions;
-- Uncertainty regarding aboriginal land claims and co-existing with local
populations;
-- The effects of weather;
-- The timing and cost of future abandonment and reclamation activities;
-- Cleanup costs for business interruptions due to environmental damage and
contamination; and
-- The ability to enter into or continue leases.
The foregoing list of risks is not exhaustive. Additional information concerning
these and other factors which could impact Paramount and Cavalier are included
in Paramount's most recent Annual Information Form. Although Paramount believes
that the expectations reflected in such forward looking statements are
reasonable, undue reliance should not be placed on them as Paramount cannot give
any assurance that such expectations will prove to be correct. The
forward-looking statements in this news release are made as of the date hereof
and, except as required by applicable securities law, Paramount undertakes no
obligation to update publicly or revise such statements, whether as a result of
new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Paramount Resources Ltd.
J.H.T. (Jim) Riddell
President and Chief Operating Officer
403.290.3600
Paramount Resources Ltd.
B.K. (Bernie) Lee
Chief Financial Officer
403.290.3600
www.paramountres.com
Cavalier Energy Inc.
William Roach
President & Chief Executive Officer
403.268.3940
www.cavalierenergy.com
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