NPV $177 mil Wellstar Energy
NEWS RELEASE 13-04
WellStar Energy Corp. Announces NI 51-101 Compliant Report
on Target Oil & Gas Reserves with a $177 Million NPV10 and 9.98 Million Barrels of Oil
Vancouver, B.C., March 13, 2013 - WELLSTAR ENERGY CORP. (TSX-V: WSE.H) (“WellStar”, or the “Company”) is pleased to announce that Netherland, Sewell & Associates, Inc. (“Netherland Sewell”), a qualified reserves evaluator, has prepared a National Instrument 51-101 compliant report dated January 24, 2013 and prepared as of October 31, 2012 (the “Report”) estimating reserves and future net revenues for certain non-operated oil and gas properties consisting of approximately 18,271 gross (7,273 net) contiguous acres in Dunn County, North Dakota (the “Assets”).
Further to the Company’s press releases of October 24, 2012 and February 22, 2013, the Company has entered into a purchase and sale agreement relating to the acquisition of an interest in the Assets (the “Acquisition”). Closing of the Acquisition is subject to, among other things, the Company securing satisfactory financing and obtaining approval of the TSX Venture Exchange, including review of a title opinion with respect to the Assets. There can be no assurance that the Acquisition will be completed as proposed or at all and trading in the Company’s shares should be considered highly speculative.
The Report has been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and assuming development of the Assets in respect of which the estimate is made will occur, without regard to the likely availability to the Company of funding required for such development.
The Report estimates, as of October 31, 2012, the Company’s total proven reserves (P1) at 2,112.1 Mbbl (thousands of barrels) and 761.5 MMcf (millions of cubic feet) with future net revenues of US$49.0 million before income tax (net of all drilling and completion costs), discounted at 10% annually. In addition, the Report indicated probable reserves (P2) of 4,348.5 Mbbl and 1,200.6 MMcf with future net revenue of US$71.64 million net to the Company, discounted at 10% annually. The Company’s possible reserves (P3) for the Assets are estimated to be 3,516.8 Mbbl and 996.8 MMcf with future net revenue of US$56.55 million, discounted at 10% annually. In summary, the Report indicates total recoverable reserves (PI, P2 and P3) of 9,977.4 Mbbl and 2,958.9 MMcf with future net revenue of US$177.2 million net to the Company, discounted at 10% annually.
The estimated net reserves of the Assets and future net revenues before income tax (net of drilling and completion costs) to the Company (assuming completion of the Acquisition) based on the P1, P2 and P3 assumptions are highlighted in the table below:
Reserves Future Net Revenue Before Income Taxes (Millions US$)
Light/Medium Oil
(Mbbl) Gas
(MMcf) Discount Rate
Category Gross Net Gross Net 0% 5% 10% 15%
Proved Developed Producing 1,005.3 804.0 480.2 384.1 58.98 36.93 27.04 21.57
Proved Undeveloped 1635.2 1,308.2 471.7 377.4 67.62 37.33 21.97 13.10
Total Proved
2,640.5 2,112.1 951.9 761.5 126.59 74.26 49.00 34.67
Probable 5,419.7 4,348.5 1,497.0 1,200.6 239.36 125.10 71.64 42.48
Proved + Probable 8,060.2 6,460.7 2,448.9 1,962.1 365.96 199.36 120.64 77.14
Possible 4,374.2 3,516.8 1,240.8 996.8 217.32 102.64 56.55 33.55
Proved + Probable + Possible 12,434.4 9,977.4 3,689.7 2,958.9 583.28 302.00 177.20 110.69
The reserves shown above are estimates only and should not be construed as exact quantities. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable; probable reserves are those additional reserves which are less certain to be recovered than proved reserves. Possible reserves are those additional reserves which 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.
WellStar’s President, Andrew H. Rees stated, “We are very pleased to be able to announce the net present value (“NPV”) of the Company’s proposed acquisition assets as presented by Netherland Sewell. With a NPV of reserves at a10% discount rate of approximately US$177 million, management feels the market will now have the information necessary to value the Company and build comparables to its peers.”
A complete copy of the Report can be found on the Company’s website at www.wellstarenergy.com.
For further information please contact Andrew H Rees at (604) 669-6463.
ON BEHALF OF THE BOARD
(signed) “Andrew H. Rees”
Andrew H. Rees
President and Chief Executive Officer
Neither the 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.