Iteration Energy Ltd. (ITX) Announces 2009 Finding and Development Costs of
$14.42/boe Proved and $15.00/boe Proved Plus Probable
The reserve information set forth in this press release is based on the Reserve Reports and is a summary of information to be included in the Statement of Reserves and Other Oil and Gas Information of Iteration for the year ended
In 2009 Iteration reduced capital spending and sold non-core gas assets to strengthen its balance sheet. Iteration's main focus for drilling in 2009 was to explore for and to develop light oil reserves. In the analysis of corporate finding and development costs, capital is based on estimated 2009 capital of
Highlights of the 2009 Reserve Reports are as follows:
- Total proved ("TP") reserves of 33.3 million boe(1) and proved plus
probable ("P+P") reserves of 50.9 million boe.
- Proved Finding & Development ( "F&D") costs of $14.42/boe (45%
light/medium oil) after revisions and including changes in future
capital
- Proved plus probable F&D costs of $15.00/boe (71% light/medium oil)
after revisions and including changes in future capital.
- Year over year improvement in reserve life index(2) of the total
proved reserves to 6.8 years (from 6.0 years) and of the proved plus
probable reserves to 10.4 years (from 8.7 years).
- 2009 net disposition metrics: total proved reserves sold for
$17.97/boe (91% gas and NGLs), and proved plus probable reserves sold
for $12.75/boe (91% gas and NGLs).
- An increase in oil and liquids content of the reserves to 32% of the
proved developed producing ("PDP"), 37% of the total proved and 36%
of the proved plus probable.
- Before tax NPV(10)(3)of the total proved reserves is $678 million and
NPV(10) of the proved plus probable reserves is $947 million, which
is equivalent to $3.21/share total proved and $4.49/share proved plus
probable, for the reserves values alone.
Note:
(1) "Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boes may be misleading, particularly if
used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic
feet of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead.
(2) Based on the preceding year Q4 average production rate. 2009
estimated at 13350 boed.
(3) NPV(10) means the net present value discounted at 10%. Calculations
are before tax and based on forecast prices and costs as at
January 1, 2010 by McDaniel and Associates Consultants Ltd. The price
forecast can be viewed on their website at www.mcdan.com. This price
forecast was applied both the McDaniel and to the GLJ evaluations.
Before tax NPV(10) is the net present value of the reserves only and
does not include any consideration for debt or for the value of the
company's 780,000 acres of undeveloped land.
Finding, Development and Acquisition Costs
The reserves and capital used in the computation of Finding, Development and Acquisition costs are summarized in the following table.
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Proved P+P
Forecast reserve Reserve
2009 Finding & Development Costs ("F&D") Total addi- Addi-
and Finding, Development & Net Capital tions tions
Acquisition ("FD&A") Costs ($ thousands) (mmboe) (mmboe)
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F&D exploration and development program
before revisions 62,000 1.998 3.649
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F&D exploration and development program
after revisions (a) 62,000 2.113 2.485
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Change in proved future development
capital (b) (31,529) - -
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Change in proved plus probable future
development capital (c) (24,720) - -
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Proved F&D including change in future
development capital (d) = (a+b) 30,472 2.113 -
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Proved plus probable F&D including
change in future development
capital (e) = (a+c) 37,281 - 2.485
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Net acquisition activity (f) (41,000) (2.281) (3.215)
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Total Proved 2009 FD&A costs including
future development capital (d+f) (10,529) (0.168) -
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Total P+P 2009 FD&A costs including
future development capital (e+f) (3,720) - (0.730)
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Exploration and Development capital in 2009 is estimated to be
- the Alberta drilling credit as it applies to the proved and probable
undeveloped reserves planned for development in 2010 and Q1 2011;
- the execution in 2009 of the drilling and waterflood development
program at Manyberries to convert proved and probable undeveloped
reserves to proved developed producing status;
- the reduction in future capital associated with dispositions.
The total proved reserve additions after revisions of 2.113 million boe (45% light/medium oil) were made at a capital cost, after changes in future capital, of
Net 2009 dispositions were comprised of total proved reserves of 2.281 million boe (91% gas and NGLs) and proved plus probable reserves of 3.215 million boe (91% gas and NGLs), which sold for
In summarizing overall Finding, Development and Acquisition costs to Iteration, the corporate additions did not exceed the dispositions in 2009, yielding an overall net reduction in total proved reserves of 0.168 million boe, for net proceeds of
Total future capital associated with corporate total proved reserves effective
Reserves
The following tables set forth the changes in Iterations reserves from
% Change
Year
December December over
31, 2009 31, 2008 Year
--------- ---------
Proved producing reserves (mboe) 24,163 29,950 -19%
Total proved reserves (mboe) 33,328 39,318 -15%
Proved plus probable reserves (mboe) 50,896 57,447 -11%
Iteration Gross Reserves December 31, 2009 Reconciliation Table (mBOE)
Im-
Infill proved
Opening Revi- Dis- Exten- Drill- Reco-
Balance sions covery sions ing very
------- ------- ------- ------- ------- -------
PDP 29,950 893 0 896 0 104
PNP 3,383 (207) 0 445 0 0
PUD 5,984 (570) 152 38 219 144
TP 39,318 115 152 1,378 219 248
PA 18,130 (1,280) 121 826 392 313
P+P 57,447 (1,164) 273 2,204 611 561
Acqui- Dispo- Produc- Closing
sition sition tion Balance
------- ------- ------- -------
PDP 4 (1,862) (5,822) 24,163
PNP 0 (179) 0 3,441
PUD 0 (244) 0 5,724
TP 4 (2,286) (5,822) 33,328
PA 1 (935) 0 17,568
P+P 6 (3,221) (5,822) 50,896
These changes in reserves are accounted for as follows:
The changes in PDP reserves were:
technical revisions +3%; additions +3%; dispositions -6%; and
production -19%, for a net year over year change of -19%.
The changes in total proved reserves were:
technical revisions +0%; additions +5%; dispositions -6%; production
-15%, for a net year over year change of -15%.
The changes in proved plus probable reserves were:
technical revisions -2%; additions +6%; dispositions; -6%;
production -10%, for to a net year over year change of -11%.
Although reserves are lower in 2009, light/medium oil increased by 5% year over year on a proved plus probable basis.
Summary of Gross Reserves
SUMMARY OF OIL AND GAS RESERVES
as of December 31, 2009
FORECAST PRICES AND COSTS
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RESERVES
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LIGHT AND NATURAL
MEDIUM OIL HEAVY OIL GAS
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Gross(1) Net(2) Gross Net Gross Net
RESERVES CATEGORY (mbbl) (mbbl) (mbbl) (mbbl) (mmcf) (mmcf)
------ ------ ------ ------ ------ ------
Proved
Developed
Producing 5,589 4,588 453 425 98,380 80,665
Developed
Non-Producing 406 323 55 48 16,393 13,289
Undeveloped 3,580 2,837 0 0 11,586 9,395
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Total Proved 9,576 7,748 508 473 126,359 103,349
Probable 4,735 3,682 332 298 68,013 54,753
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Total Proved Plus
Probable 14,311 11,430 840 771 194,372 158,102
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RESERVES
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NATURAL GAS
LIQUIDS TOTAL
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Gross Net Gross Net
RESERVES CATEGORY (mbbl) (mbbl) (MBoe) (MBoe)
------ ------ ------ ------
Proved
Developed
Producing 1,724 1,197 24,163 19,654
Developed
Non-Producing 249 173 3,441 2,759
Undeveloped 212 151 5,724 4,554
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Total Proved 2,185 1,522 33,328 26,967
Probable 1,165 817 17,568 13,923
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Total Proved Plus
Probable 3,350 2,339 50,896 40,890
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Note:
(1) Gross reserves are company working interest excluding royalty
interest
(2) Net reserves are company working interest including royalty interest
and net of all royalties.
Net Present Value of Future Revenue
Before Income Taxes
As at December 31, 2009
Discounted at (%/year)
(forecast prices and costs)
SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE
as at December 31, 2009
FORECAST PRICES AND COSTS
BEFORE INCOME TAXES DISCOUNTED AT
COMBINED (%/year)
0 5 10 15 20 Unit Value
Reserves Category (M$) (M$) (M$) (M$) (M$) ($/Boe)(1)
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Proved
Developed
Producing 733,919 589,792 495,762 429,669 380,709 25.22
Developed
Non-Producing 83,351 66,630 55,067 46,673 40,339 19.96
Undeveloped 224,448 165,605 126,680 99,610 79,993 27.82
Total Proved 1,041,719 822,027 677,509 575,952 501,040 25.12
Probable 613,573 384,338 269,010 201,834 158,663 19.32
Total Proved
Plus Probable 1,655,291 1,206,366 946,519 777,786 659,704 23.15
Note:
(1) Unit values are before income taxes, per Boe, discounted at 10%,
based on the Corporation's net present values divided by net
reserves.
Iteration
Iteration is an Alberta based corporation engaged in the business of exploring for and developing oil and natural gas reserves in Western
Advisory Regarding Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning reserves, production, and prices. Statements relating to "reserves" are 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 can profitably be produced in the future. Forward-looking statements and information are based on Iteration's current beliefs as well as assumptions made by and information currently available to Iteration concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Since forward-looking statements and information 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, the risks associated with the oil and gas industry in general, such as 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 reserves, production, costs and expenses, health, safety and environmental risks, commodity price and exchange rate fluctuations, marketing and transportation, loss of markets, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, ability to access sufficient capital from internal and external sources, failure to obtain required regulatory and other approvals, and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect Iteration's, operations or financial results are included in Iteration's Annual Information Form for the year ended
For further information: please see the Company website at www.iterationenergy.com or contact: Brian L. Illing, President and Chief Executive Officer, Tel: (403) 290-4867; Jane Mactaggart, Vice President Exploitation, Tel: (403) 290-4865
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