CALGARY, Feb. 21, 2012 /CNW/ - Calvalley Petroleum Inc. ("Calvalley" or the "Company") announces the results of its December 31, 2011 independent engineering evaluation.
Calvalley is pleased to report, for the fourth consecutive year, an increase in proved developed producing reserves, a key indicator of cash flow generating capability. The Company's proved developed producing reserves increased 45 per cent to 5.5 million barrels at December 31, 2011 up from 3.8 million barrels in 2010.
In spite of the many challenges which impacted the Company's operating and capital programs throughout 2011, company interest proved reserves of crude oil of 14.7 million barrels declined less than 4 per cent from 15.3 million barrels in 2010. Similarly company interest proved plus probable reserves of crude oil of 29.3 million barrels declined approximately 7 per cent from 31.5 million barrels in 2010. Capital expenditures in 2011 were approximately US$16.5 million with only US$8 million related to drilling activities.
Calvalley's proved plus probable plus possible reserves of crude oil are 43.6 million barrels down slightly from 47.2 million barrels in 2010.
The total proved plus probable original oil in place estimate for Block 9 of 331 million barrels is 2 per cent lower than the estimate of 338 million barrels in 2010.
Company interest best estimate (2C) contingent resources at the end of 2011 include 3.8 million barrels of crude oil compared to 3.6 million barrels in 2010 and 41 bcf of natural gas compared to 47 bcf in 2010.
The company interest future development costs included in the evaluation of proved reserves are US$54 million representing US$5.88 per barrel. For proved plus probable reserves, future development costs included are US$97 million representing US$4.07 per barrel. Per barrel amounts are calculated as company interest future development costs divided by barrels of undeveloped recoverable reserves in each category.
Three year average finding and development costs ("F&D") before and after future development costs for proved reserves are US$8.37 per barrel and US$10.92 per barrel, respectively and based on proved plus probable reserves are US$6.75 per barrel and US$9.42 per barrel, respectively. Recycle ratios, based on a three year average operating netback of US$32.60, range from 3 to 5 according to the F&D metric selected.
Based on property gross total proved crude oil reserves of 29.4 million barrels and gross production capability of 7,000 bopd the reserve life index is 11.5 years. The Company's Production Sharing Agreement has an initial term that expires in the latter part of 2025 with an option to extend the term by five years.
The engineering evaluation was conducted by McDaniel & Associates Consultants Ltd. who prepared an independent engineering evaluation of the reserves attributable to the Company's 50% working interest in Block 9 in a report datedFebruary 16, 2012 with an effective date of December 31, 2011 (the "McDaniel Report") in accordance with National Instrument 51 101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook").
The following information is derived from the McDaniel Report.
Summary of Oil and Gas Reserves
| | | Light and Medium
Oil | | Heavy Oil | | Total Crude Oil |
| Reserves Category | | Company
(Mbbl) | | Net
(Mbbl) | | Company
(Mbbl) | | Net
(Mbbl) | | Company
(Mbbl) | | Net
(Mbbl) |
| Proved(1) | | | | | | | | | | | | |
| Developed Producing | | 4,618 | | 2,423 | | 846 | | 444 | | 5,464 | | 2,867 |
| Undeveloped | | 5,705 | | 2,506 | | 3,537 | | 1,649 | | 9,242 | | 4,155 |
| Total Proved | | 10,323 | | 4,929 | | 4,383 | | 2,093 | | 14,706 | | 7,022 |
| Probable(2) | | 12,254 | | 5,300 | | 2,315 | | 942 | | 14,569 | | 6,242 |
| Total Proved plus Probable | | 22,578 | | 10,230 | | 6,698 | | 3,035 | | 29,276 | | 13,265 |
| Possible(3) | | 11,985 | | 4,554 | | 2,354 | | 837 | | 14,339 | | 5,391 |
| Total | | 34,563 | | 14,784 | | 9,052 | | 3,872 | | 43,615 | | 18,656 |
| | | | | | | | | | | | | |
Notes:
(1) "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
(2) "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
(3) "Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a ten per cent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.
Summary of Net Present Value of Future Net Revenue
| | Before Future Income Tax Expenses Discounted at
(%/year) |
| Reserves Category | 0
(M$US) | | 5
(M$US) | | 10
(M$US) | | 15
(M$US) | | 20
(M$US) |
| Proved | | | | | | | |
| Developed Producing | 175,974 | | 154,249 | | 137,901 | | 125,212 | | 115,099 |
| Undeveloped | 290,223 | | 228,207 | | 184,962 | | 153,668 | | 130,293 |
| Total Proved | 466,197 | | 382,456 | | 322,863 | | 278,880 | | 245,392 |
| Probable | 475,302 | | 349,720 | | 267,489 | | 211,354 | | 171,611 |
| Total Proved plus Probable | 941,499 | | 732,176 | | 590,352 | | 490,234 | | 417,003 |
| Possible | 542,899 | | 354,851 | | 249,109 | | 185,113 | | 143,831 |
| Total | 1,484,398 | | 1,087,026 | | 839,462 | | 675,347 | | 560,833 |
| | | | | | | | |
| | After Future Income Tax Expenses Discounted at
(%/year) |
| Reserves Category | 0
(M$US) | | 5
(M$US) | | 10
(M$US) | | 15
(M$US) | | 20
(M$US) |
| Proved | | | | | | | | |
| Developed Producing | 127,602 | | 113,416 | | 102,630 | | 94,177 | | 87,379 |
| Undeveloped | 188,184 | | 147,760 | | 119,504 | | 99,024 | | 83,711 |
| Total Proved | 315,786 | | 261,175 | | 222,134 | | 193,201 | | 171,090 |
| Probable | 309,524 | | 227,302 | | 173,491 | | 136,776 | | 110,793 |
| Total Proved plus Probable | 625,309 | | 488,477 | | 395,626 | | 329,977 | | 281,883 |
| Possible | 352,491 | | 230,005 | | 161,041 | | 119,259 | | 92,290 |
| Total | 977,800 | | 718,482 | | 556,667 | | 449,236 | | 374,174 |
| | | | | | | | | | |
Notes:
(1) The McDaniel Report employed the following pricing assumptions for Brent Crude Oil as of January 1, 2012 in estimating the reserves data using forecast prices and costs: 2012 US$ 107.50; 2013 US$ 102.60; 2014 US$102.60; 2015 US$103.50; 2016 US$104.40; 2017 US$105.50; 2018 US$106.40.
(2) The weighted average realized sales price for Block 9 crude oil for the year ended December 31, 2011 was$108.39 per barrel.
Combining the current working capital fair value estimate of approximately US$ 82 million and the after tax value of reserves discounted at ten per cent, the calculated net asset value of the Company is approximately US$ 478 million on the basis of proved plus probable reserves (US$ 5.04 per basic share), US$ 304 million on the basis of total proved reserves (US$ 3.21 per basic share) and US$ 185 million on the basis of proved developed producing reserves (US$ 1.95 per basic share).
The Company currently has 94,821,439 basic shares outstanding.
About Calvalley