Trafina Reports News Trafina Reports 2011 Reserves and Expanded Strategic Review Process
CALGARY, ALBERTA--(Marketwire - March 30, 2012) -
Trafina Energy Ltd. (TSX VENTURE:TFA.A) ("Trafina" or the "Company") announces that its 2011 independent reserves evaluation has been prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") in a report dated March 28, 2012 and effective December 31, 2011 (the "McDaniel Report"). The net present value of the Company's proved plus probable reserves (discounted at 10 percent) was reduced by 25 percent as a result of lower gas prices, operating challenges at the Company's Rangeview/Divide properties in southwest Saskatchewan and the sale of several minor properties, offset slightly by the addition of the Company's McMullen property in northeast Alberta. Year-over-year proved plus probable oil reserves increased by 71 percent to 1,369 Mbbl as a result of the planned transitioning from a gas weighted to an oil weighted company. Proved plus probable oil reserves now represent 81 percent of the Company's total reserve base. Although the Company disposed of non-core capital intensive assets during 2011 in favour of focusing on its heavy oil play at McMullen, year-over-year total proved plus probable reserves remained fairly flat at 1,689 Mboe.
Strategic Review
The board of directors has directed management to expand its review of strategic alternatives in order to identify, examine and consider all options available to the Company, in order to prudently determine the optimal course of action for the Company and its shareholders including equity issuance, farm-outs, joint ventures, and a partial sell down of its McMullen project.
Summary of Year-End 2011 Reserves
In 2011 Trafina recorded proved plus probable reserves additions of 90 Mboe resulting from acquisitions, dispositions, drilling, technical revisions, including economic factors and net of production. The Company's December 31, 2011 reserves were evaluated in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities by McDaniel in the McDaniel Report.
Summary of Reserves
(based on forecast prices and costs)
| | | Light/Medium
Crude Oil & Liquids | | Heavy Oil | | Natural Gas | | Total |
| | | (Mbbl) | | (Mbbl) | | (MMcf) | | (Mboe) |
| Total Proved | | 218 | | 358 | | 1,155 | | 769 |
| Total Probable | | 275 | | 518 | | 762 | | 920 |
| Total Proved Plus Probable | | 493 | | 876 | | 1,917 | | 1,689 |
Summary of Net Present Values of Future Net Revenue
(based on forecast prices and costs) (before income tax) (M$)
| | | Discounted At |
| | | 0% | | 5% | | 10% | | 15% | | 20% |
| Total Proved | | 2,569 | | 2,081 | | 1,605 | | 1,163 | | 764 |
| Total Probable | | 18,131 | | 14,942 | | 12,410 | | 10,375 | | 8,720 |
| Total Proved Plus Probable | | 20,670 | | 17,023 | | 14,014 | | 11,537 | | 9,483 |
McDaniel Commodity Price Assumptions
| | | Light Sweet Oil
Edmonton Par
($CDN/bbl) | | Alberta Bow River Hardisty Crude
($CDN/bbl) | | AECO/NIT-Spot
($CDN/MMBTU) |
| 2012 | | 99.00 | | 82.00 | | 3.50 |
| 2013 | | 99.00 | | 82.00 | | 4.20 |
| 2014 | | 101.50 | | 84.10 | | 4.70 |
| 2015 | | 102.30 | | 84.70 | | 5.10 |
| 2016 | | 103.20 | | 85.50 | | 5.55 |
| 2017 | | 104.20 | | 88.30 | | 5.90 |
| 2018 | | 105.10 | | 87.10 | | 6.25 |
| 2019 | | 106.00 | | 87.80 | | 6.45 |
| 2020 | | 106.90 | | 88.60 | | 6.70 |
| 2021 | | 109.20 | | 90.40 | | 6.85 |
| Thereafter | | Approx +2%/yr | | Approx +2%/yr | | Approx +2%/yr |
| | | | | | | |
Trafina's proved plus probable reserve life index, based on fourth quarter 2011 average production, is 13.3 years.
Additional information relating to Trafina's operations in 2011 and its statement of reserves data (and related report of qualified reserve evaluators, management and board of Trafina) will be included in the Company's audited financial statements and accompanying management's discussion and analysis for the year ended December 31, 2011, and in its annual information form for the year ended December 31, 2011, respectively, which the Company expects will be filed on SEDAR on or about April 24, 2012.
McMullen Update
The Company is pleased with results to date at its McMullen property located in northeast Alberta. In 2011, the Company drilled, completed and placed on production four Wabasca heavy oil wells. Six months of field production coupled with extensive production data collected from adjacent wells directly north of the Company's property, has provided valuable information. Production and zonal characteristics suggest that further development using slant well drilling, as well as additional vertical test well locations, may significantly extend potential development of the Company's extensive land base westward. The Company has received approval to drill up to 24 slant wells and is expected to apply for an additional eight slant well locations shortly after breakup. Formation water production is normal and is part of the total production phase. Therefore, the Company has commenced application for a salt water disposal well with approval expected in approximately six to eight months. A Company-owned disposal well will dramatically reduce field operating costs. The Company has also commenced its application to the Alberta Crown for oil sands royalty rate reduction. Once approved, the Crown royalty rate as a percentage of oil sales is expected to be below five percent.
About Trafina
Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's core areas of operations are in the McMullen area of Alberta with other operated and non-operated production in Wetaskiwin. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A and warrants trade under the stock symbol TFA.WT.A.