Striker Exploration Corp. Announces 2015 Year-End Reserves and Review of Strategic Alternatives
14.03.2016 | Marketwired
CALGARY, Mar 14, 2016 - Striker Exploration Corp. ("Striker" or the "Company") (TSX VENTURE:SKX) is pleased to provide a summary of its 2015 year-end reserves evaluation.The highlights and reserves summary below sets forth Striker's gross reserves as at December 31, 2015, as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") in an independent report (the "GLJ Report"). The figures in the following tables have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and the reserve definitions contained in NI 51-101. Additional reserve information as required under NI 51-101 will be included in the Company's annual information form which will be filed on SEDAR on or before April 29, 2016.
HIGHLIGHTS(1)
- Net asset value, including estimated year-end 2015 net debt ($8.1 million or $0.25 per basic share outstanding) and excluding undeveloped land, tax pools, seismic, reclamation liabilities, and other corporate attributes ("NAV"), was $1.60/share on a proved developed producing basis ("PDP") discounted at 10% ("NPV10") and $3.45/share on a total proved plus probable basis ("2P") NPV10;
- The Company's year-end 2015 PDP reserves were 4,220 Mboe (65% oil and liquids). Total proved ("1P") reserves were 6,443 Mboe and 2P reserves were 11,072 Mboe;
- PDP reserves represent approximately 65% of 1P reserves and approximately 38% of 2P reserves;
- Finding, development and acquisition ("FD&A") costs, including revisions and future development capital ("FDC"), were $23.63 per boe on a PDP basis, $14.85 for 1P reserves and $14.04 per boe for 2P reserves. The corresponding recycle ratios were 0.7, 1.1 and 1.2. Recycle ratios were calculated using the Company's average 2015 netback; and
- The Company's reserve life index is 4.5 years for PDP, 6.6 years for 1P and 11.3 years for 2P reserves based on December, 2015 average production.
2015 INDEPENDENT RESERVES EVALUATION
GLJ conducted an independent reserves evaluation effective December 31, 2015, which was prepared in accordance with definitions, standards and procedures contained in the COGE Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). GLJ evaluated 100% of the Company's reserves and has done so since the Company's inception (including all predecessor companies). The reserves evaluation was based on GLJ forecast pricing and foreign exchange rates at January 1, 2016 as outlined herein.
Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without the inclusion of any royalty interest) unless otherwise noted.
RESERVES SUMMARY
Summary of Gross Oil and Gas Reserves as of December 31, 2015(1), (2), (3), (4)
| Oil | Total Natural Gas | Natural Gas Liquids | Barrels of Oil Equivalent | |
| Gross | Gross | Gross | Gross | |
| (Mbbl) | (MMcf) | (Mbbl) | (Mboe) | |
| Proved | ||||
| Developed Producing | 2,291 | 8,967 | 434 | 4,220 |
| Developed Non-Producing | 46 | 358 | 13 | 118 |
| Undeveloped | 1,436 | 2,446 | 260 | 2,104 |
| Total Proved | 3,773 | 11,771 | 707 | 6,443 |
| Probable | 2,905 | 7,567 | 463 | 4,629 |
| Total Proved plus Probable | 6,679 | 19,338 | 1,170 | 11,072 |
Net Present Value Before Income Taxes Discounted at (% per Year) (M$)
| 0% | 5% | 10% | 15% | 20% | |
| Proved | |||||
| Developed Producing | 95,585 | 73,257 | 59,728 | 50,699 | 44,250 |
| Developed Non-Producing | 1,485 | 1,269 | 1,069 | 904 | 772 |
| Undeveloped | 37,515 | 26,582 | 18,818 | 13,494 | 9,800 |
| Total Proved | 134,585 | 101,108 | 79,615 | 65,098 | 54,823 |
| Probable | 116,524 | 64,664 | 39,790 | 26,315 | 18,299 |
| Total Proved plus Probable | 251,108 | 165,772 | 119,406 | 91,414 | 73,122 |
Notes:
| (1) | The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding. |
| (2) | Gross reserves means the total working interest (operating or non-operating) share of remaining recoverable reserves owned by Striker before deductions of royalties payable to others and without including any royalty interests owned by Striker. |
| (3) | Based on GLJ's January 1, 2016 escalated price forecast. See "Summary of Pricing and Inflation Rate Assumptions". |
| (4) | The net present value of future net revenue attributable to the Company's 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 and reclamation costs for only those wells assigned reserves by GLJ. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by GLJ 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 the Company's oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. |
NET ASSET VALUE(1)
| NPV5 (M$) | $/share(2) | NPV10 (M$) | $/share(2) | |||||
| Proved | ||||||||
| Developed Producing | 73,257 | 2.27 | 59,728 | 1.85 | ||||
| Developed Non-Producing | 1,269 | 0.04 | 1,069 | 0.03 | ||||
| Undeveloped | 26,582 | 0.82 | 18,818 | 0.59 | ||||
| Total Proved | 101,108 | 3.13 | 79,615 | 2.47 | ||||
| Probable | 64,664 | 2.01 | 39,790 | 1.23 | ||||
| Total Proved plus Probable | 165,772 | 5.14 | 119,406 | 3.70 | ||||
| Net Debt(3) | (8,100 | ) | (0.25 | ) | (8,100 | ) | (0.25 | ) |
| Net Asset Value | 157,672 | 4.89 | 111,306 | 3.45 |
Notes:
| (1) | All Net Asset Values cited above or in the highlights above are the resulting NPV per reserves category per basic share less net debt of $8.1 million or $0.25/share. |
| (2) | Basic shares outstanding of 32.24 million. All dilutive instruments currently out of the money. |
| (3) | Financial information is based on the Company's preliminary estimate of 2015 year-end results and is therefore subject to change. |
Summary of Pricing and Inflation Rate Assumptions - Forecast Prices and Costs
The forecast cost and price assumptions assume increases in wellhead selling prices and include inflation with respect to future operating and capital costs. Crude oil and natural gas benchmark reference pricing, inflation and exchange rates utilized by GLJ as at January 1, 2016 were as follows:
| Year | Exchange Rate (CAD/USD) | WTI Cushing Oklahoma 40 API (USD/bbl) | Canadian Light Sweet 40 API (CAD/bbl) | Canadian Medium 29 API (CAD/bbl) | Natural Gas AECO (CAD/mmbtu) | |
| 2016 | 0.725 | 44.00 | 55.86 | 50.80 | 2.76 | |
| 2017 | 0.750 | 52.00 | 64.00 | 59.52 | 3.27 | |
| 2018 | 0.775 | 58.00 | 68.39 | 63.60 | 3.45 | |
| 2019 | 0.800 | 64.00 | 73.75 | 68.59 | 3.63 | |
| 2020 | 0.825 | 70.00 | 78.79 | 73.27 | 3.81 | |
| 2021 | 0.850 | 75.00 | 82.35 | 76.59 | 3.90 | |
| 2022 | 0.850 | 80.00 | 88.24 | 82.06 | 4.10 | |
| 2023 | 0.850 | 85.00 | 94.12 | 87.53 | 4.30 | |
| 2024 | 0.850 | 87.88 | 96.48 | 89.73 | 4.50 | |
| 2025 | 0.850 | 89.63 | 98.41 | 91.52 | 4.60 | |
| 2026+ | 0.850 | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr |
Reconciliation of Company Gross Reserves By Principle Product Type(1), (2)
The following table sets forth the reconciliation of the Company's reserves at Forecast Prices and Costs:
| Light and Medium Oil | Heavy Oil | Natural Gas Liquids | ||||||||||||||||
| Factors | Gross Proved (Mbbl) | Gross Probable (Mbbl) | Gross Proved + Probable (Mbbl) | Gross Proved (Mbbl) | Gross Probable (Mbbl) | Gross Proved + Probable (Mbbl) | Gross Proved (Mbbl) | Gross Probable (Mbbl) | Gross Proved + Probable (Mbbl) | |||||||||
| December 31, 2014 | 3,524 | 2,082 | 5,607 | 54 | 36 | 90 | 324 | 209 | 532 | |||||||||
| Discoveries | - | - | - | - | - | - | - | - | - | |||||||||
| Extensions/Infill Drilling | 803 | 756 | 1,560 | - | - | - | 228 | 220 | 449 | |||||||||
| Improved Recovery | 38 | 14 | 52 | - | - | - | 7 | 3 | 10 | |||||||||
| Technical Revisions | (6 | ) | (239 | ) | (246 | ) | (23 | ) | (6 | ) | (28 | ) | 21 | (17 | ) | 4 | ||
| Acquisitions | 476 | 147 | 623 | - | - | - | 231 | 67 | 299 | |||||||||
| Dispositions | (66 | ) | (16 | ) | (82 | ) | - | - | - | (10 | ) | (15 | ) | (25 | ) | |||
| Economic Factors | (447 | ) | 131 | (316 | ) | (28 | ) | - | (28 | ) | (27 | ) | (5 | ) | (32 | ) | ||
| Production | (549 | ) | - | (549 | ) | (3 | ) | - | (3 | ) | (68 | ) | - | (68 | ) | |||
| December 31, 2015 | 3,772 | 2,875 | 6,648 | 1 | 30 | 31 | 707 | 463 | 1,170 | |||||||||
| Total Natural Gas | Barrels of Oil Equivalent | |||||||||||
| Factors | Gross Proved (Mmcf) | Gross Probable (Mmcf) | Gross Proved + Probable (Mmcf) | Gross Proved (Mmcf) | Gross Probable (Mmcf) | Gross Proved + Probable (Mmcf) | ||||||
| December 31, 2014 | 14,979 | 7,322 | 22,301 | 6,398 | 3,547 | 9,946 | ||||||
| Discoveries | - | - | - | - | - | - | ||||||
| Extensions/Infill Drilling | 1,598 | 1,543 | 3,141 | 1,298 | 1,234 | 2,532 | ||||||
| Improved Recovery | 51 | 22 | 73 | 54 | 21 | 75 | ||||||
| Technical Revisions | (1,044 | ) | (669 | ) | (1,713 | ) | (182 | ) | (373 | ) | (555 | ) |
| Acquisitions | 1,684 | 489 | 2,173 | 988 | 296 | 1,284 | ||||||
| Dispositions | (1,769 | ) | (854 | ) | (2,623 | ) | (371 | ) | (174 | ) | (544 | ) |
| Economic Factors | (1,477 | ) | (286 | ) | (1,763 | ) | (748 | ) | 78 | (670 | ) | |
| Production | (2,251 | ) | - | (2,251 | ) | (995 | ) | - | (995 | ) | ||
| December 31, 2015 | 11,771 | 7,567 | 19,338 | 6,443 | 4,629 | 11,072 | ||||||
Notes:
| (1) | The tables summarize the data contained in the GLJ Report and as a result may contain slightly different numbers due to rounding. |
| (2) | Total Natural Gas includes associated, non-associated and coal bed methane gas. |
Future Development Costs
The following table sets forth development costs deducted in the estimation of Striker's future net revenue attributable to the reserve categories noted below:
| Forecast Prices and Costs (M$) | |||
| Year | Proved Reserves | Proved plus Probable | |
| 2016 | 2,043 | 4,083 | |
| 2017 | 9,273 | 16,557 | |
| 2018 | 10,519 | 16,588 | |
| 2019 | 9,880 | 19,750 | |
| 2020 | 4,330 | 16,658 | |
| Thereafter | - | 169 | |
| Total Undiscounted | 36,045 | 73,805 | |
| Total Discounted at 10% | 28,172 | 56,368 | |
The future development costs are estimates of capital expenditures required in the future for Striker to convert proved undeveloped reserves and probable reserves to proved developed producing reserves. The undiscounted future development costs are $36.0 million for proved reserves and $73.8 million for proved plus probable reserves (in each case based on forecast prices and costs).
Finding, Development & Acquisition Costs(1), (2), (3), (4), (5), (6)
| FD&A Costs (M$) | |||
| Proved Producing Reserves | 2015 | 2014 | Two Year Average |
| Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
| Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
| Total change in FDC | - | - | - |
| Total FD&A capital including change in FDC | 26,612 | 122,460 | 149,072 |
| Total Reserve additions, including revisions (Mboe) | 1,126 | 4,426 | 5,552 |
| FD&A costs, including FDC ($/boe) | 23.63 | 27.67 | 26.85 |
| Recycle Ratio | 0.7 | 0.8 | |
| FD&A Costs (M$) | |||
| Total Proved Reserves | 2015 | 2014 | Two Year Average |
| Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
| Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
| Total change in FDC | 1,795 | 31,711 | 33,506 |
| Total FD&A capital including change in FDC | 28,407 | 154,171 | 182,578 |
| Total Reserve additions, including revisions (Mboe) | 1,915 | 6,038 | 7,953 |
| FD&A costs, including FDC ($/boe) | 14.83 | 25.53 | 22.96 |
| Recycle Ratio | 1.1 | 0.8 | |
| FD&A Costs (M$) | |||
| Proved plus Probable Reserves | 2015 | 2014 | Two Year Average |
| Exploration and Development Capital | 12,035 | 7,278 | 19,313 |
| Acquisitions, net of dispositions | 14,577 | 115,182 | 129,759 |
| Total change in FDC | 19,179 | 49,486 | 68,665 |
| Total FD&A capital including change in FDC | 45,791 | 171,946 | 217,737 |
| Total Reserve additions, including revisions (Mboe) | 3,261 | 9,338 | 12,599 |
| FD&A costs, including FDC ($/boe) | 14.04 | 18.41 | 17.28 |
| Recycle Ratio | 1.2 | 1.1 | |
Notes:
| (1) | Financial information is based on estimates and is unaudited. |
| (2) | While NI 51-101 requires that the effects of acquisitions and dispositions be excluded from the calculation of finding and development costs, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company's cost structure. Finding and development costs excluding acquisitions and dispositions have been presented below. |
| (3) | The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. |
| (4) | As Striker commenced operations with the recapitalization of Elkwater Resources Ltd. in July 2014, only two year average costs are available. |
| (5) | The acquisitions include the announced purchase price of acquisitions rather than the amounts allocated to property, plant and equipment and exploration and evaluation assets for accounting purposes. Capital expenditures include costs of land and seismic, but exclude capitalized general and administration costs. |
| (6) | Recycle Ratio is calculated by dividing the operating netback per boe by the FD&A for that period. |
REVIEW OF STRATEGIC ALTERNATIVES
The Company's Board of Directors has determined that it is timely, prudent and in the best interests of shareholders to initiate a formal process to explore strategic alternatives with a view to enhancing shareholder value. Such strategic alternatives may include, but are not limited to, a corporate sale, merger or other business combination, the sale of all or a material portion of Striker's assets, a reorganization, recapitalization or restructuring of Striker or any combination of the foregoing.
FirstEnergy Capital Corp. has been retained by Striker to act as its exclusive financial advisor in connection with this comprehensive review and analysis of strategic alternatives.
It is the Company's intention not to disclose developments with respect to the strategic review process until the board of directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. Striker cautions that there are no assurances or guarantees that the process will result in a transaction and that, if a transaction is undertaken, no assurances or guarantees may be given with respect to the type, terms or timing of such a transaction.
Striker will continue to focus on its near and long term business plan, centered around the development and de-risking of its existing Belly River acreage at Wilson Creek and Thorsby. Striker has maintained a strong balance sheet and enviable financial position during the current period of low commodity prices, and intends to continue to do so. Striker has approximately $8.0 million in net debt and more than $30.0 million of undrawn credit capacity. Year to date production has averaged 2,459 boepd based upon field estimates.
READER ADVISORY
Forward-Looking Statements. Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to future development costs associated with oil and gas reserves. Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Striker, including expectations and assumptions concerning the success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Striker's properties, the successful application of drilling, completion and seismic technology, prevailing weather and break-up conditions, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital, labour and services, the creditworthiness of industry partners and our ability to acquire additional assets.
Although Striker 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 Striker 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; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraint in the availability of services, commodity price and exchange rate fluctuations, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These and other risks are set out in more detail in Striker's Annual Information Form for the year ended December 31, 2014.
The forward-looking information contained in this press release is made as of the date hereof and Striker undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
Oil and Gas Metrics:
This press release contains a number of oil and gas metrics, including FD&A, recycle ratio and reserves life index, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.
Boe Disclosure.
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Finding, Development and Acquisition Costs:
Finding and development costs including acquisitions and dispositions have been presented herein. While NI 51-101 requires that the effects of acquisitions and dispositions be excluded, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company's ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company's cost structure. The Company's finding and development costs, excluding the effects of acquisitions and dispositions, for 2015 were $10.65/boe on a proved basis and $12.33/boe on a proved plus probable basis. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
Non-IFRS Measures.
This press release contains the term "net debt", which does not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable with the calculation of similar measures by other companies. Management believes "net debt" is a useful supplemental measure of the total amount of current and long-term debt of the Company. Additional information relating to non-IFRS measures can be found in the Company's most recent management's discussion and analysis MD&A, which may be accessed through the SEDAR website (www.sedar.com).
Contact
Striker Exploration Corp.
Doug Bailey, President and Chief Executive Officer
(403) 262-0242
Striker Exploration Corp.
Neil Burrows, Vice President, Finance and Chief Financial Officer
(403) 262-0242
