Progress Releases 2009 Year-end Reserves Information
Highlights - 2009 year-ending proved plus probable reserves were 155.1 mmboe with a reserve life index of 13 years based on fourth quarter 2009 production of 31,400 boe per day annualized; - Total reserve additions, net of revisions and inclusive of the acquisition of ProEx, were 51.2 mmboe proved and 76.7 mmboe proved plus probable; - Proved plus probable finding and development ("F&D") cost of $13.88 per boe including the change in future development capital ("FDC"); - Proved plus probable finding, development and acquisition ("FD&A") cost of $19.78 per boe including the change in FDC; - 35 percent of the Corporation's 2009 capital activities focused on the pursuit of Montney exploration and delineation drilling in the Foothills of northeast British Columbia. As a result of these efforts, 16.7 mmboe of proved plus probable reserves were booked to the Montney play at the end of 2009; - In the Town South project area, where the Company has initiated phase one of its Montney development program, 12.0 mmboe of proved plus probable reserves were booked. - Several additional Montney discoveries have been made on Progress lands in 2010. These discoveries remain unbooked as the completion timing after year-end does not allow recognition of the reserves in this report; - The Corporation's strong performance continued in the Gold Creek and Wapiti areas where 12.1 mmboe of proved plus probable reserves were added. Of these, 8.4 mmboe were in the form of 37.5 net future drilling locations where multiple stacked sands have been mapped over a continuous area. These locations represent approximately 15 percent of the total locations identified by Progress in the area.
In this news release, all estimates of natural gas and petroleum reserves and production are presented on a "company interest" basis (as defined below), unless expressly indicated that they have been presented on a "gross" or "net" basis. The Company's actual natural gas and petroleum reserves and future production will be greater than or less than the estimates provided in this news release. The estimated future net revenue from the production of the Company's natural gas and petroleum reserves does not represent the fair market value of the Company's reserves.
Supplemental Reserve Reconciliation Information - The opening balance is equal to the Trust's 2008 closing balance representing 62.8 mmboe of proved reserves and and 90.2 mmboe of proved plus probable reserves; - The closing balance for 2009 is 102.3 mmboe proved and 155.1 mmboe proved plus probable. Based on the 2008 year-end proforma reserves of each of the Trust and ProEx, this results in a three percent reduction in proved reserves and a two percent increase in proved plus probable reserves. - A portion of the reserves recognized in ProEx's 2008 closing balance were not carried forward in the reserves recognized as acquired by Progress. Approximately 9% of the closing proved plus probable balance was not carried forward in association with undeveloped drilling locations where the expected recovery was adjusted to be inline with the performance of offsetting producers or where the location was dropped entirely. The Corporation is unlikely to deploy capital to these dropped locations in the foreseeable future due to its depth of other opportunities and the current gas price environment. In addition, 8% of the closing proven plus probable balance was not carried forward in association with certain producing wells in the Julienne, Caribou and Green properties where production declines over the past 12 months have warranted adjustments from the original estimates. Replacement Costs (Unaudited) - FD&A cost of $27.09 per boe, proved and $19.78 per boe, proved plus probable, including the change in FDC; - F&D cost of $18.79 per boe proved and $13.88 per boe, proved plus probable, including the change in FDC; - The three year average F&D cost of $18.48 per boe, proved and $14.12 per boe, proved plus probable including the change in FDC. In addition to the detailed information disclosed in this news release more detailed information will be included in Progress' Annual Information Form ("AIF"). PRESENTATION OF PROGRESS' NATURAL GAS AND PETROLEUM RESERVES AND PRODUCTION INFORMATION
Disclosure of Information
In addition to the detailed information disclosed in this news release more detailed information on a gross basis (working interest before deduction of royalties without including any royalty interests) will be included in Company's Annual Information Form ("AIF") in addition to the full NI 51-101 disclosure for the year ended
The Company has adopted the standard of 6 mcf:1 boe when converting natural gas to boes. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Certain of the following definitions and guidelines have been prepared by the Standing Committee on Reserves Definitions of the CIM (Petroleum Society). Further information is contained in Section 5.4 of Volume 1 of the COGE Handbook (First Edition,
STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION PROGRESS ENERGY Resources Corp.
The following tables set forth certain information relating to Progress' crude oil, natural gas and natural gas liquid reserves and the net present value of future net revenues associated with such reserves as at
All future net revenues are stated prior to provision for interest, general and administrative expenses and after deduction of royalties and estimated future capital expenditures. Future net revenues have been presented on both a before and after tax basis.
It should not be assumed that the present worth of estimated future cash flow presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of Progress' crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquid reserves may be greater than or less than the estimates provided herein.
Summary of Oil and Gas Reserves and Net Present Values of Future Net Revenue As of December 31, 2009 Forecast Prices and Costs ------------------------------------------------------------------------- Light and Conventional Medium Oil Heavy Oil Natural Gas ----------------------------------------------------------- Company Net Company Net Company Net Reserve Interest Interest Interest Category (Mbbl) (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) ------------------------------------------------------------------------- Proved Developed producing 2,919 2,467 505 425 367,617 299,934 Developed non-producing 329 290 16 16 48,185 38,670 Undeveloped 335 287 0 0 129,060 106,269 ------------------------------------------------------------------------- Total proved 3,584 3,044 521 441 544,682 444,873 Probable 1,056 880 122 98 289,305 238,917 ------------------------------------------------------------------------- Total proved plus probable 4,640 3,924 643 540 834,167 683,790 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Natural Gas Liquids BOE --------------------------------------- Company Net Company Net Reserve Interest Interest Category (Mbbl) (Mbbl) (Mboe) (Mboe) ------------------------------------------------------------------------- Proved Developed producing 5,134 3,635 69,828 56,516 Developed non-producing 610 439 8,987 7,190 Undeveloped 1,625 1,211 23,470 19,210 ------------------------------------------------------------------------- Total proved 7,370 5,285 102,285 82,916 Probable 3,455 2,497 52,851 43,294 ------------------------------------------------------------------------- Total proved plus probable 10,825 7,782 155,136 126,210 ------------------------------------------------------------------------- "company interest" means, in relation to Progress' interest in production or reserves, its working interest (operating or non-operating) share before deduction of royalties, plus Progress' royalty interests in production or reserves. "Company interest" is not a term defined or recognized under NI 51-101 and does not have a standardized meaning under NI 51-101. Therefore, the "company interest" reserves of Progress may not be comparable to similar measures presented by other issuers, and investors are cautioned that "company interest" reserves should not be construed as an alternative to "gross" or "net" reserves calculated in accordance with NI 51-101. ------------------------------------------------------------------ Net Present Value of Future Net Revenue ------------------------------------------------------------------ Before Income Taxes Reserve Category Discounted at (%/year) ------------------------------------------------------------------ 0 5 10 15 20 ------------------------------------------------------------------ ($ thousands) Proved Developed Producing 1,886,143 1,339,129 1,062,863 892,160 775,422 Developed Non- Producing 243,262 166,916 124,935 99,106 81,849 Undeveloped 500,268 301,681 195,786 132,518 91,681 ------------------------------------------------------------------ Total Proved 2,609,672 1,807,726 1,383,584 1,123,784 948,953 Total Probable 1,709,762 840,024 502,137 335,649 240,287 ------------------------------------------------------------------ Total Proved Plus Probable 4,319,434 2,647,749 1,885,721 1,459,433 1,189,240 ------------------------------------------------------------------ ------------------------------------------------------------------------- Net Present Value of Future Net Revenue ------------------------------------------------------------------------- After Income Taxes BTNPV Reserve Disc Category Discounted at (%/year) 10% ------------------------------------------------------------------ 0 5 10 15 20 $/boe ------------------------------------------------------------------------- ($ thousands) Proved Developed Producing 1,848,370 1,335,370 1,061,973 891,929 775,358 18.81 Developed Non- Producing 182,446 142,511 114,447 94,330 79,565 17.38 Undeveloped 375,201 234,743 157,597 109,706 77,557 10.19 ------------------------------------------------------------------------- Total Proved 2,406,017 1,712,624 1,334,017 1,095,965 932,479 16.69 Total Probable 1,282,319 635,427 384,917 261,371 190,211 11.60 ------------------------------------------------------------------------- Total Proved Plus Probable 3,688,336 2,348,051 1,718,934 1,357,336 1,122,690 14.94 ------------------------------------------------------------------------- Note: May not add due to rounding Notes: (1) The estimated net present value of future net revenue is based on current legislation in place December 31, 2009. (2) Natural gas reserves are reported at a base pressure of 14.65 pounds per square inch and a base temperature of 60 degrees F. (3) Prices for oil F.O.B. Edmonton are based upon 40 degrees API oil having less than 0.4% sulphur. Prices for natural gas are based upon a base pressure of 14.65 pounds per square inch and base temperature of 60 degrees F. The wellhead oil prices were adjusted for quality and transportation based on historical actual prices. The natural gas prices were adjusted, where necessary, based on historical pricing based on heating values and the differing costs of service applied by various purchasers. The natural gas liquids prices were adjusted to reflect historical average prices received. (4) The forecast prices and cost case assumes no legislative or regulatory amendments and includes the effects of inflation. The estimated future net revenue to be derived from the production of the reserves includes an inflation rate of 2.0% per year, an exchange rate as listed below, and the following price forecasts supplied by GLJ, Progress' independent qualified reserves evaluator and are as noted below. Oil ------------------------------------------------- Edmonton Cromer WTI Par Price Medium Cushing 40 degrees 29 degrees Oklahoma API API Year (US$/bbl) (Cdn$/bbl) (Cdn$/bbl) ------------------------------------------------- Historical 2005 56.58 69.02 56.77 2006 66.22 73.21 62.26 2007 72.39 77.06 65.71 2008 99.64 102.89 93.10 2009 61.56 66.43 63.19 Forecast 2010 80.00 83.26 76.60 2011 83.00 86.42 78.64 2012 86.00 89.58 80.62 2013 89.00 92.74 82.54 2014 92.00 95.90 85.35 2015 93.84 97.84 87.07 2016 95.72 99.81 88.83 2017 97.64 101.83 90.63 2018 98.59 103.88 92.46 2019 101.58 105.98 94.32 Thereafter +2.0%/yr +2.0%/yr +2.0%/yr ------------------------------------------------- Natural Gas Liquids ------------------------------------------------------------------------- Edmonton Edmonton Edmonton Pentanes Inflation Exchange Propane Butane Plus Rates Rate Year (Cdn$/bbl) (Cdn$/bbl) (Cdn$/bbl) (%/Year) (US$/Cdn$) ------------------------------------------------------------------------- Historical 2005 43.04 51.80 69.57 2.2 0.826 2006 43.85 60.17 75.41 2.0 0.882 2007 49.56 61.78 77.38 2.2 0.935 2008 58.38 75.33 104.78 2.4 0.943 2009 37.58 47.31 67.99 0.3 0.880 Forecast 2010 52.46 64.11 84.93 2.0 .95 2011 54.45 66.54 88.15 2.0 .95 2012 56.43 68.98 91.37 2.0 .95 2013 58.42 71.41 94.59 2.0 .95 2014 60.42 73.84 97.82 2.0 .95 2015 61.64 75.33 99.79 2.0 .95 2016 62.88 76.85 101.81 2.0 .95 2017 64.15 78.41 103.86 2.0 .95 2018 65.45 79.99 105.96 2.0 .95 2019 68.77 81.60 108.10 2.0 .95 Thereafter +2.0%/yr +2.0%/yr +2.0%/yr 2.0 ------------------------------------------------------------------------- ------------------------------------------------------------------------- NYMEX Midwest AECO Sumas Futures @ Gas Spot Gas Contract Chicago Price Price Year (US$/MMBtu) (US$/MMBtu) (Cdn$/MMBtu) (US$/MMBtu) ------------------------------------------------------------------------- Historical 2005 9.00 8.24 8.58 7.13 2006 6.99 6.93 7.16 6.27 2007 7.12 6.83 6.65 6.52 2008 8.90 8.91 8.16 8.33 2009 4.16 4.11 4.20 3.89 Forecast 2010 6.00 6.10 5.96 5.60 2011 7.00 7.10 6.79 6.45 2012 7.10 7.20 6.89 6.55 2013 7.15 7.25 6.95 6.60 2014 7.35 7.45 7.05 6.80 2015 7.50 7.60 7.16 6.95 2016 7.75 7.85 7.42 7.20 2017 8.25 8.35 7.95 7.70 2018 8.79 8.89 8.52 8.24 2019 8.96 9.06 8.69 8.41 Thereafter +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr ------------------------------------------------------------------------- In 2009, Progress received a weighted average price of $59.78 per bbl for crude oil, $42.05 per bbl for NGL's and $4.13 per Mcf for natural gas. The undiscounted total future net revenue by reserves category as of December 31, 2009, using forecast prices and costs, is set forth below: ($ millions) ------------------------------------------------- Royalties, Mineral Operating Development Reserve Category Revenue Tax Costs Costs ------------------------------------------------------------------------- Forecast Prices and Costs Proved 5,122 912 1,240 319 Proved plus probable 8,203 1,441 1,881 510 ------------------------------------------------------------------------- ($ millions) ------------------------------------------------- Future Future Net Net Revenue Revenue Well Before After Abandonment Income Income Income Reserve Category Costs Taxes Taxes Taxes ------------------------------------------------------------------------- Forecast Prices and Costs Proved 42 2,610 204 2,406 Proved plus probable 52 4,319 631 3,688 ------------------------------------------------------------------------- The net present value of future net revenue before income taxes by reserves category and production group as of December 31, 2009, using forecast prices and costs and discounted at 10% per year, is set forth below: Future Net Revenue Before Income Taxes (discounted at 10%/year) ---------------------------------------- Reserve Category Production Group ($ thousands) (Per boe) ------------------------------------------------------------------------- Proved Light and medium crude oil(a) 68,834 26.58 Heavy oil 16,245 23.09 Natural gas(b) 1,296,503 16.32 Non-conventional Oil & Gas Activities 2,002 10.15 ------------------------------------------------------------------------- Total 1,383,584 16.69 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Proved Plus Light and medium crude oil(a) 81,109 24.41 Probable Heavy oil 18,348 21.42 Natural gas(b) 1,783,738 14.65 Non-conventional Oil & Gas Activities 2,526 10.40 ------------------------------------------------------------------------- Total 1,885,721 14.94 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Note: May not add due to rounding (a) Includes solution gas and other by-products (b) Includes by-products but excluding solution gas from oil wells Reconciliation of Total Company Interest Reserves by Principal Product Type Forecast Prices and Costs Natural Natural Gas Oil Gas Liquids BOE ------------------------------------------------------------------------- (mbbl) (MMcf) (mbbl) (mboe) ------------------------------------------------------------------------- Total Proved Opening Balance (December 31, 2008) 3,805 325,510 4,777 62,833 Technical Revisions 426 -5,397 556 83 Drilling Extensions 68 122,585 1,561 22,060 Infill Drilling 54 1,193 7 260 Acquisition 485 163,287 1,310 29,009 Dispositions 0 -1,393 -14 -246 Production -733 -60,924 -827 -11,714 Closing Balance (December 31, 2009) 4,105 544,862 7,370 102,285 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Proved Plus Probable Opening Balance (December 31, 2008) 5,039 470,687 6,715 90,201 Technical Revisions 178 -24,660 460 -3,472 Drilling Extensions 95 239,894 2,767 42,844 Infill Drilling 71 1,322 9 300 Acquisition 634 209,716 1,719 37,306 Dispositions 0 -1,868 -19 -330 Production -733 -60,933 -827 -11,714 Closing Balance (December 31, 2009) 5,283 834,167 10,825 155,136 ------------------------------------------------------------------------- Closing balances may be slightly higher than reported Company gross reserves due to the inclusion of recoverable royalties. Future Development Costs ($ millions) Forecast Prices and Costs ----------------------------------------------------- Proved Plus Probable Year Proved Reserves Reserves ----------------------------------------------------- 2010 93,073 123,322 2011 87,853 172,056 2012 47,670 91,043 2013 38,138 50,745 2014 18,748 23,040 ----------------------------------------------------- Total 318,676 510,457 ----------------------------------------------------- ----------------------------------------------------- Proved P+P Finding, Development Capital Reserve Proved Reserve P+P and Net Expenditures Additions Costs Additions Costs Acquisition Costs ($ million) (mmboe) ($/boe) (mmboe) ($/boe) ----------------------------------------------------- Total 2009 proved FD&A costs including change in FDC $ 1,386.3 51.2 $ 27.09 na na Total 2009 P+P FD&A including change in FDC $ 1,515.8 na na 76.7 $ 19.78 3-year average proved FD&A including change in FDC $ 2,017.0 83.2 $ 24.25 na na 3-year average P+P FD&A including change in FDC $ 2,189.0 na na 119.3 $ 18.34 Finding and Development Costs Total 2009 proved F&D costs including change in FDC $ 420.9 22.4 $ 18.79 na na Total 2009 P+P F&D including change in FDC $ 550.5 na na 39.7 $ 13.88 3-year average proved F&D including change in FDC $ 772.0 41.8 $ 18.48 na na 3-year average P+P F&D including change in FDC $ 943.0 na na 66.7 $ 14.12 Finding and development cost calculations and finding, development and acquisition cost calculations have been done in accordance with NI 51-101. 2010 Production Estimates Gold Creek is the only property that accounts for more than 20 percent of the total forecast production in 2010 and is identified in the following table. The following table indicates the Gross (working interest) average daily production for 2010 by area used in the GLJ report: Associated And Non- Natural Light and Associated Gas Medium Oil Heavy Oil Gas Liquids BOE Area (bbl/d) (bbl/d) (Mcf/d) (bbl/d) (Boe/d) ------------------------------------------------------------------------- Total Proved Gold Creek 369 0 46,407 1,538 9,641 Other 826 239 134,229 1,491 24,928 ------------------------------------------------------------------------- Total Proved Daily Production 1,195 239 180,636 3,029 34,569 ------------------------------------------------------------------------- Probable Gold Creek 7 0 1,663 70 355 Other 14 5 8,345 65 1,475 ------------------------------------------------------------------------- Total Probable Daily Production 21 5 10,007 136 1,830 ------------------------------------------------------------------------- Total Proved Plus Probable Gold Creek 376 0 48,070 1,608 9,996 Other 840 244 142,574 1,557 26,403 ------------------------------------------------------------------------- Total Proved Plus Probable Production 1,216 244 190,644 3,165 36,398 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Advisory on Forward Looking Statements
Certain information regarding Progress set forth in this news release contains future plans and operations, and other forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. Such statements represent Progress' internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital investment, anticipated future debt, revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Progress believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Progress' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Progress.
In particular, forward-looking statements included in this news release include, but are not limited to, the likelihood of Progress to deploy in the foreseeable future capital to portions of the reserves recognized as acquired by Progress; and future development costs. In addition, statements relating to "reserves" or "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the impact of general economic conditions; volatility in market prices for crude oil and natural gas; industry conditions; volatility of commodity prices; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition from other producers; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; stock market volatility; and the ability to access sufficient capital from internal and external sources.
With respect to forward-looking statements contained in this news release, Progress has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; north American sulphur prices; timing and amount of capital expenditures; future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking statements provided in this news release in order to provide Shareholders with a more complete perspective on Progress' future operations and such information may not be appropriate for other purposes. Progress' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this news release and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
Finding and Development Costs -----------------------------
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.
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For further information: Greg Kist, Vice President, Investor Relations and Marketing, Progress Energy Resources Corp., (403) 539-1809, ([email protected])
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