Celtic Reports 2009 Operating Results Highlighted by Significant Increases in Production and Lower Finding Costs
2/18/2010 2:46:50 PM - Market Wire
CALGARY, ALBERTA, Feb 18, 2010 (Marketwire via COMTEX News Network) --
Celtic Exploration Ltd. ("Celtic" or the "Company") (TSX:CLT) has released its operating results for the three months and twelve months ended December 31, 2009. Summary of results are as follows:
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Three months ended Twelve months ended
December 31, December 31,
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2009 2008 Change 2009 2008 Change
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Production
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Oil (BBLS/d) 4,384 3,554 23% 3,687 3,404 8%
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Gas (MCF/D) 77,339 51,029 52% 63,028 46,000 37%
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Combined (BOE/D) 17,274 12,059 43% 14,192 11,071 28%
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Production per million shares
(BOE/D) 388 293 32% 327 276 18%
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Drilling activity
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Total wells 17 14 21% 55 54 2%
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Working interest wells 9.6 10.2 -6% 43.0 41.1 5%
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Success rate on working
interest wells 100% 100% - 91% 88% 3%
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Undeveloped land
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Gross acres 363,473 318,969 14%
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Net acres 294,700 246,629 19%
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Reserves
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Oil (MBBLs) 15,042 14,372 5%
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Gas (MMCF) 272,236 235,353 16%
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Combined (MBOE) 60,415 53,598 13%
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Finding, development &
acquisition cost (i)
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Proved ($/BOE) $12.89 $19.43 -34%
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Proved plus Probable ($/BOE) $9.84 $12.24 -20%
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Recycle ratio (P+P) (i) 2.5 x 2.9 x -14%
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(i) Finding, development and acquisition ("FD&A") cost and recycle ratio
relating to 2009 have been calculated using unaudited financial
information. FD&A calculations include future development capital
("FDC") expenditures that are required to develop reserves.
Highlights
- Drilled 55 (43.0 net working interest) wells during 2009 resulting in 50 (38.9 net) gas wells and 1 (0.3 net) oil well, for an overall success rate, based on net wells, of 91%;
- Increased average daily production by 28% to 14,192 BOE per day, up from 11,071 BOE per day in 2008 and achieved daily average production per million shares of 327 BOE per day, up 18% in 2009 compared to 276 BOE per day in the previous year;
- Increased proved plus probable reserves by 13% to 60.4 million BOE, up from 53.6 million BOE at December 31, 2008 and replaced 2009 production by a factor of 2.3 times;
- Reported FD&A cost (including FDC) of $9.84 per BOE resulting in a recycle ratio of 2.5 times based on proved plus probable reserves; and
- Accumulated additional undeveloped land in new resource play prospects targeting the Triassic Montney, Cretaceous Bluesky, Cretaceous Notikewin and Devonian Duvernay formations in west central Alberta;
Reserves
Celtic retains Sproule Associates Limited ("Sproule"), an independent qualified reserve evaluator to prepare a report on 100% of its oil and gas reserves. The Company has a Reserves Committee which oversees the selection, qualifications and reporting procedures of the independent engineering consultants.
Reserves as at December 31, 2009 were determined using the guidelines and definitions set out under National Instrument 51-101 ("NI 51-101"). At December 31, 2009, Celtic's proved plus probable reserves were 60.4 million BOE, up 13% from 53.6 million BOE at the end of 2008.
The Company increased the net present value of proved plus probable reserves, discounted at 10% before tax, to $1,011.9 million, up 14% from $891.0 million at December 31, 2008. The reserve life index was 9.6 years compared to 12.1 years at December 31, 2008. At December 31, 2009, the weighting of proved plus probable reserves was 25% oil and 75% gas.
The following table outlines a summary of the Company's reserves at December 31, 2009:
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Summary of Reserves
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Oil (MBBLs) Gas (MMCF) Combined (MBOE) FDC Costs (
00's)
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Proved Developed
Producing 6,426 101,854 23,402
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Proved Developed
Non-producing 511 8,638 1,951
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Proved Undeveloped 1,919 49,100 10,102
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Total Proved 8,856 159,592 35,455 90,473
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Probable Additional 6,186 112,644 24,960
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Total Proved plus
Probable 15,042 272,236 60,415 145,017
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FDC expenditures included in the reserve evaluation have been reduced by drilling royalty credits ("DRC's") earned and expected to be claimed in the respective future years. FDC included in the total proved reserve evaluation are expected to be spent as follows: $69.8 million in 2010, $19.8 million in 2011 and
.9 million in 2012 and thereafter. FDC included in the proved plus probable reserve evaluation are expected to be spent as follows: $92.3 million in 2010, $42.9 million in 2011 and $9.8 million in 2012 and thereafter.
The following table outlines the change in the Company's reserves year-over-year:
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Reserves
Reconcilliation
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Oil Oil Gas Gas Combined Combined
Total Proved + Total Proved + Total Proved +
Proved Probable Proved Probable Proved Probable
(MBBLs) (MBBLs) (MMCF) (MMCF) (MBOE) (MBOE)
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Balance, December 31,
2008 8,321 14,372 125,330 235,353 29,209 53,598
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Technical Revisions 56 (78) 5,628 2,683 994 369
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Extensions 853 1,024 29,296 37,726 5,736 7,312
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Infill Drilling 900 972 20,415 16,817 4,303 3,775
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Economic Factors 39 55 1,032 1,502 211 305
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Acquisitions 33 43 896 1,160 182 236
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Net Additions 1,881 2,016 57,267 59,888 11,426 11,997
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Production (1,346) (1,346) (23,005) (23,005) (5,180) (5,180)
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Balance, December 31,
2009 8,856 15,042 159,592 272,236 35,455 60,415
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Percentage Increase in
Reserves 6% 5% 27% 16% 21% 13%
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The average price of oil steadily increased in each of the years from 2005 to 2008; however, in 2009 oil prices were considerably lower than the previous year. Average annual natural gas prices at AECO-C from 2005 to 2008 have traded in a narrower range of $6.31 to $8.14 per GJ; however, in 2009, AECO-C averaged a much lower price of $3.97 per GJ.
The following table outlines forecasted future prices that Sproule has used in their evaluation of the Company's reserves at December 31, 2009:
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Future Commodity Price
Forecast
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WTI Cushing NYMEX HH AECO-C USD/CAD
Crude Oil Natural Gas Natural Gas Exchange
(US$/BBL) (US$/MMBTU) ($/GJ) (US$)
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2010 79.17 5.70 5.08 0.920
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2011 84.46 6.48 5.89 0.920
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2012 86.89 6.70 6.11 0.920
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2013 90.20 7.43 6.86 0.920
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2014 92.01 8.12 7.57 0.920
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Five Year Average 86.55 6.89 6.30 0.920
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Sproule is forecasting WTI oil prices to average US$86.55 per bbl over the next five years, 22% higher than the average price of US$71.21 per bbl over the past five years. For natural gas, AECO-C natural gas prices are forecasted to average $6.30 per GJ over the 2010 to 2014 period, a decrease of 4% from the average price of $6.59 per GJ during the 2005 to 2009 period.
The Company increased the net present value of proved plus probable reserves, discounted at 10% before tax, to $1,011.9 million, up 14% from $891.0 million at December 31, 2008.
The following table is a net present value summary (before tax) as at December 31, 2009:
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Net Present Value Summary
(before tax)
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Undiscounted NPV 5% BT NPV 10% BT NPV 15% BT
(
00's) (
00's) (
00's) (
00's)
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Proved Developed Producing 718,141 564,785 472,544 409,967
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Proved Developed Non-
producing 50,831 41,427 34,855 30,023
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Proved Undeveloped 257,241 184,143 140,790 111,997
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Total Proved 1,026,213 790,355 648,189 551,987
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Probable Additional 838,906 514,053 363,750 278,546
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Total Proved plus Probable 1,865,119 1,304,408 1,011,939 830,533
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The following table is a net present value summary (after tax) as at
December 31, 2009:
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Net Present Value Summary
(after tax)
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Undiscounted NPV 5% AT NPV 10% AT NPV 15% AT
(
00's) (
00's) (
00's) (
00's)
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Proved Developed Producing 640,524 508,759 429,060 374,694
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Proved Developed Non-
producing 37,734 30,476 25,418 21,705
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Proved Undeveloped 191,377 134,055 99,840 77,037
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Total Proved 869,635 673,290 554,318 473,436
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Probable Additional 627,164 381,958 268,232 203,669
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Total Proved plus Probable 1,496,799 1,055,248 822,550 677,105
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During 2009, the Company's capital expenditures (unaudited), net of dispositions, resulted in proved plus probable reserve additions of 12.0 million (23.5 million in 2008) BOE, resulting in FD&A costs of $9.84 ($12.24 in 2008) per BOE, including FDC costs. Proved reserve additions in 2009 were 11.4 million (12.2 million in 2008) BOE, resulting in FD&A costs of $12.89 ($19.43 in 2008) per BOE, including FDC costs.
The recycle ratio is a measure for evaluating the effectiveness of a company's re-investment program. The ratio measures the efficiency of capital investment. It accomplishes this by comparing the operating netback per BOE to that years' reserve FD&A cost per BOE. Since incorporation, Celtic has successfully achieved a recycle ratio of 2.3 times on a proved plus probable basis. In 2009, the recycle ratio was 2.5 times.
The following table provides detailed calculations relating to FD&A costs and recycle ratios for 2009 and 2008:
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Year ended Year ended
December 31, December 31, Year ended Cumulative
FD&A Costs: Proved 2009 (after 2009 (before December 31, since
Reserves DRC's) DRC's) 2008 incorporation
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Capital expenditures
(
00's)
(unaudited) 148,761 169,380 183,478 936,635
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Change in FDC costs
required to develop
reserves (
00's) (1,483) 11,270 54,106 90,473
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Total capital costs
(
00's) 147,278 180,650 237,584 1,027,108
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Reserve additions,
net (MBOE) 11,426 11,426 12,227 53,153
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FD&A cost, before
FDC ($/BOE) 13.02 14.82 15.01 17.62
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FD&A cost, including
FDC ($/BOE) 12.89 15.81 19.43 19.32
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Operating netback
($/BOE) (unaudited) 25.00 25.00 34.95 31.40
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Recycle ratio -
proved 1.9 x 1.6 x 1.8 x 1.6 x
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Year ended Year ended
December 31, December 31, Year ended Cumulative
FD&A Costs: P+P 2009 (after 2009 (before December 31, since
Reserves DRC's) DRC's) 2008 incorporation
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Capital expenditures
(
00's)
(unaudited) 148,761 169,380 183,478 936,635
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Change in FDC costs
required to develop
reserves (
00's) (30,697) (9,016) 103,608 145,017
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Total capital costs
(
00's) 118,064 160,364 287,086 1,081,652
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Reserve additions,
net (MBOE) 11,997 11,997 23,457 77,956
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FD&A cost, before
FDC ($/BOE) 12.40 14.12 7.82 12.01
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FD&A cost, including
FDC ($/BOE) 9.84 13.37 12.24 13.88
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Operating netback
($/BOE) (unaudited) 25.00 25.00 34.95 31.40
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Recycle ratio -
proved plus
probable 2.5 x 1.9 x 2.9 x 2.3 x
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Celtic's 2009 capital investment program resulted in net reserve additions that replaced 2009 production by a factor of 2.2 (3.0 in 2008) times on a proved basis and 2.3 (5.8 in 2008) times on a proved plus probable basis.
Common Share Information
The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. As at December 31, 2009, there were 44.6 million common shares outstanding. There were no preferred shares outstanding. As at December 31, 2009, directors, employees and certain consultants have been granted options to purchase 3.3 million common shares of the Company at an average exercise price of $13.90 per share. The Company's common shares trade on the Toronto Stock Exchange ("TSX") under the symbol "CLT".
Advisory Regarding Forward-Looking Statements
Certain information with respect to Celtic contained herein, including management's assessment of future plans and operations, contains forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond Celtic's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency exchange rate fluctuations, imprecision of reserve estimates, environmental risks, competition from other explorers, stock market volatility and ability to access sufficient capital. As a result, Celtic's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur. In addition, the reader is cautioned that historical results are not necessarily indicative of future performance.
Measurements
All dollar amounts are referenced in Canadian dollars, except when noted otherwise. Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs include condensate, propane, butane and ethane. References to gas in this discussion include natural gas and sulphur. Sulphur volumes have been converted to natural gas equivalence at one long ton per 10 thousand cubic feet.
SOURCE: Celtic Exploration Ltd.
Celtic Exploration Ltd. David J. Wilson President and Chief Executive Officer (403) 201-5340 Celtic Exploration Ltd. Sadiq H. Lalani Vice President, Finance and Chief Financial Officer (403) 215-5310 Celtic Exploration Ltd. Suite 500, 505 - 3rd Street SW Calgary, Alberta, Canada T2P 3E6 www.celticex.com
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