2P NPV Increased by 59% to $527 million
CALGARY, May 14, 2012 /CNW/ - Stream Oil & Gas Ltd. (TSX-V: SKO) ("Stream" or the "Company") is pleased to announce the results of its interim reserves independent reserves evaluation. Evaluations were conducted by Deloitte & Touche LLP ("AJM Deloitte"), Stream's independent reserve evaluators, in accordance with the provisions of National Instrument 51-101 ('NI51-101') and the Canadian Oil and Gas Evaluation Handbook ("COGEH").
The interim report provided significant increases to both volume and net present value ("NPV") of the reserves, attributed to the positive results of Stream's late 2011 development activities. Timing prevented the Company from reporting these results at its fiscal year end of November 30, 2011. Results include the Delvina gas field recompletion work, the Cakran-Mollaj oilfield jet pump program and other incremental geoscience works on Stream's fields. Highlights of the reserve evaluation include:
- Total proved (1P) oil reserves increased by 17% (from 14.5 MMboe in 2011 to 17.0 MMboe), and proved gas reserves increased nearly 250% to 12.7 BCF;
- Proved plus probable (2P) oil reserves increased by 32% (from 18.8 MMboe in 2011 to 24.8 MMboe), and proved plus probable gas reserves increased 400% to 24.7 BCF;
- Proved plus probable plus possible (3P) oil reserves increased by 8% (from 35.2 MMboe in 2011 to 37.9 MMBoe);
- Proved reserves comprise 69% of total proved plus probable reserves, demonstrating continuing conversion of probable into proved reserves; and
- Proved plus probable (2P) reserves value (NPV10 before tax) was $527 million, which represents a value increase of over 59% from fiscal year-end 2011.
"We're extremely pleased with the results of our revised reserves evaluation," said Dr. Sotirios Kapotas, President and CEO. "The increase in both volume and value clearly demonstrates the merits of our assets and our ability to add value through development operations. As we progress with our 2012 plans, we expect to capture further returns and add shareholder value through increased production, revenue and reserves."
Regulatory & Other Information
Stream's interim 2012 reserves estimates are based on conventional primary recovery methods only. Upside potential is recognised from:
- the application of provisions in Stream's Petroleum Agreements' for neutralizing the 10% mineral tax, currently estimated at nearly US$60 million (before corporate tax);
- a combination of infill drilling, waterflooding or other enhanced oil recovery ("EOR") techniques at Gorisht-Kocul, Ballsh-Hekal and Cakran-Mollaj oilfields;
- Delvina gas field full field horizontal well development potential;
- Contingent resource conversions.
The Company is not aware of any information pending from the date of this release to the effective date that would materially affect the valuation results. Stream's Reserve Committee and Board of Directors have approved the Reserve Report.
Stream's reserve data is subject to and should be read in conjunction with the entire Form 51-101F1 - Statement of Reserves Data and Other Oil and Gas Information. The Form 51-101F1, Form 51-101F2 - Report of Independent Qualified Reserves Evaluator and Form 51-101F3 - Report of Management and Directors on Oil and Gas Disclosure are expected to be filed with Canadian securities regulators on or before May 17, 2012, at which time these filings can be accessed electronically on Stream's website or on the SEDAR website at www.sedar.com.
Information in this news release respecting matters such as plans of development or exploration, reserves estimates, production estimates and targets, development costs, work programs and budgets constitute forward-looking information (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations. Such forward-looking information is based on certain assumptions, including the availability of funds for capital expenditures necessary to construct the infrastructure required for future development, a favorable political and economic operating environment, a consistent rate of well re-completions and costs, success rates, production performance and build-up periods for well re-completions that are consistent with or an improvement over historical levels.
The forward-looking statements contained herein are made as of the date of this release solely for the purpose of generally disclosing Stream's status of its reserve volumes and net present value of its reserves as at May 14, 2012. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such forward-looking information reflects management's current beliefs and are based on assumptions made by and information currently available to the Company, and involves known and unknown risks, uncertainties and other factors which may cause the actual costs and results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Such factors include, among others political and economic risks associated with foreign operations, general risks inherent in petroleum operations, risks associated with equipment procurement and equipment failure, availability of qualified personnel, risks associated with transportation, currency and exchange rate fluctuations and other general risks inherent in oil and gas operations.
It should be noted that estimated net present value of reserves (NPV10) do not represent fair market value. Contingent resources disclosed herein represent those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that it will be commercially viable to produce any portion of the resources.
Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs and timing of the Company's program or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required under applicable securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses production and reserve volumes on a barrel of oil equivalent (Boe) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe may be misleading particularly if used in isolation. A Boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based emerging oil and gas production, development and exploration company focused on the re-activation and re-development of three oilfields and a gas/condensate field in Albania. The Company's strategy is to use proven technology, incremental and enhanced oil recovery techniques to significantly increase production and reserves.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information:
Dr. Sotirios Kapotas President & Chief Executive Officer P: (403) 531-2358
James Hodgson, Chief Financial Officer P: (403) 531-2358