CALGARY, March 6, 2017 /CNW/ - Alvopetro Energy Ltd. (TSX-V:ALV) is pleased to announce our 2016 reserves.
The reserves data set forth below is based upon an independent reserve assessment and evaluation prepared by Sproule International Limited ("Sproule") dated March 6, 2017 with an effective date of December 31, 2016 (the "Sproule Report"). The Sproule Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook reserve definitions that are consistent with the standards of National Instrument 51-101 ("NI 51-101"). The Sproule Report was only an evaluation of our Bom Lugar and Jiribatuba mature fields, and the 182(B1) well on Block 182, and did not include our other exploration blocks or our Block 183, 197, or 198 discoveries.
Contingent Resources
In 2015, DeGoyler and MacNaughton ("D&M") completed an independent contingent resource report of our Caburé conventional natural gas pool (197(2) and 198(A1) wells) located on Blocks 197 and 198. The 2016 reserves summary below does not include the contingent resource assessments associated with the 2015 contingent resource report. Alvopetro holds a 100% interest in Blocks 197 and 198, and the contingent resources estimated in the D&M Report are assumed to be developed under unitization of Blocks 197, 198, 211 and 212. Under Brazilian and ANP regulation, petroleum accumulations straddling two or more licensed blocks must undergo unitization in order to promote efficient exploration and development of the accumulation. Participation interests, which represent the percentage share of ownership in each license block in the accumulation, have been assumed in the D&M Report for Blocks 197, 198, 211 and 212 based on the discovered non-associated gas initially-in-place (DPIIP) associated with each block. These assumptions do not reflect actual participation interests to be agreed upon by all parties with interests in Blocks 197, 198, 211 and 212.
Summary of Company Gross Contingent Resources
Development Pending Economic Contingent Resources |
2C "Best" |
1C "Low" |
Natural gas sales (MMcf) |
33,483 |
19,538 |
Condensate (Mbbl) |
234 |
138 |
Barrels of oil equivalent (Mboe) |
5,815 |
3,394 |
NPV10% Before Tax (US$ 000's) |
$91,337 |
$61,859 |
See "Contingent Resource Notes" |
In January 2017, our 198(A1) well, located on Block 198 in the Recôncavo basin in the State of Bahia, Brazil, was drilled to a total measured depth of 1,480 metres. Based on open-hole logs, the well encountered 31 metres of potential net natural gas pay in the Main Caruaçu Member, with an average 46% water saturation, and an average porosity of 11.4%, using an 8% porosity cut-off. The well also encountered 26 metres of potential net hydrocarbon pay in a series of thinner up-hole Pojuca sands, with an average 51% water saturation, and an average porosity of 14.3%, using an 8% porosity cut-off.
We perforated and completed the deepest sandstone interval, representing 7 metres of potential net pay. This average 12.0% porosity, low permeability interval flowed natural gas, on an unstimulated basis, at an average rate of 15,000 m3/d (0.5 MMcfpd or 89 boepd). The next interval to be tested is our primary target containing the highest quality reservoir in the column, with 21 metres of potential net pay, 11.5% average porosity and 15.4% maximum porosity.
Based on preliminary results from our 198(A1) well, Alvopetro's internal management estimates of the Contingent Recoverable Resources from our share of the Caburé Field are expected to be between the D&M 1C and 2C Contingent Recoverable Resources estimates. As removal of the contingencies associated with the 2015 D&M Report occurs, Alvopetro plans to complete an independent reserves assessment of the Caburé Field.
December 31, 2016 Reserves
Summary of Reserves (1), (2), (6)
Light and Medium Oil |
Light and Medium Oil |
||
Company Gross |
Company Net |
||
(Mstb) |
(Mstb) |
||
Proved |
|||
Proved Developed Producing |
12 |
11 |
|
Total Proved |
12 |
11 |
|
Probable |
699 |
658 |
|
Total Proved plus Probable |
712 |
669 |
|
Summary of Before Tax Net Present Value of Future Net Revenue - MUS$ (1), (2), (3), (4), (5)
Undiscounted |
5% |
10% |
15% |
20% |
||
Proved |
||||||
Proved Developed Producing |
-222 |
-151 |
-101 |
-66 |
-39 |
|
Total Proved |
-222 |
-151 |
-101 |
-66 |
-39 |
|
Probable |
18,726 |
13,735 |
10,402 |
8,102 |
6,461 |
|
Total Proved plus Probable |
18,504 |
13,584 |
10,300 |
8,036 |
6,422 |
|
Summary of After Tax Net Present Value of Future Net Revenue – MUS$ (1), (2), (3), (4), (5)
Undiscounted |
5% |
10% |
15% |
20% |
||
Proved |
||||||
Proved Developed Producing |
-222 |
-151 |
-101 |
-66 |
-39 |
|
Total Proved |
-222 |
-151 |
-101 |
-66 |
-39 |
|
Probable |
16,303 |
11,845 |
8,879 |
6,842 |
5,398 |
|
Total Proved plus Probable |
16,081 |
11,694 |
8,778 |
6,777 |
5,358 |
|
Notes: |
|
(1) |
The tables above are a summary of the reserves of Alvopetro and the net present value of future net revenue attributable to such reserves as evaluated in the Sproule Report based on forecast price and cost assumptions. The tables summarize the data contained in the Sproule Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly. |
(2) |
Company Gross reserves means the total working interest share of remaining recoverable reserves owned by Alvopetro before deductions of royalties payable to others and without including any royalty interests owned by Alvopetro. |
(3) |
Based on Sproule's December 31, 2016 escalated price forecast. |
(4) |
The net present value of future net revenue attributable to Alvopetro's reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well abandonment and reclamation costs for only those wells assigned reserves and material dedicated gathering systems and facilities. The net present values of future net revenue attributable to the Alvopetro's reserves estimated by Sproule do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. |
(5) |
MUS$ = 000's of U.S. dollars. |
(6) |
Mstb = thousand stock tank barrels. |
Future Development Costs
The table below sets out the total development costs deducted in the estimation in the Sproule Report of future net revenue attributable to proved reserves and proved plus probable reserves (using forecast prices and costs). Total development costs include capital costs for drilling, facilities, abandonment and reclamation.
Forecast Prices and Costs |
||||
MUS$(1) |
Proved Reserves |
Proved Plus Probable Reserves |
||
2017 |
- |
- |
||
2018 |
- |
7,482 |
||
2019 |
- |
- |
||
2020 |
- |
- |
||
2021 |
- |
- |
||
Remaining Years |
280 |
707 |
||
Total Undiscounted |
280 |
8,189 |
Notes: |
|
(1) |
MUS$ = 000's of U.S. dollars. |
Reconciliation of Alvopetro's Gross Reserves (Before Royalty) (1), (2), (3)
Gross Proved |
Gross Probable |
Gross Proved |
|
December 31, 2015 |
23.0 |
718.0 |
741.0 |
Technical Revisions |
10.8 |
7.3 |
18.1 |
Discoveries |
0.0 |
0.0 |
0.0 |
Economic Factors |
(6.3) |
(26.0) |
(32.3) |
Production |
(15.2) |
0.0 |
(15.2) |
December 31, 2016 |
12.3 |
699.3 |
711.6 |
Notes: |
|
(1) |
Gross Reserves means the Company's working interest reserves before calculation of royalties. |
(2) |
Based on the Sproule price forecast effective December 31, 2016. |
(3) |
Mstb = thousand stock tank barrels. |
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation
Contingent Resource Notes:
- Specific reference is made to Alvopetro's annual information form dated April 6, 2016 for the year ending December 31, 2015 filed on SEDAR (www.sedar.com) which includes the information and disclosures required by National Instrument 51-101 relating to our Contingent Resources.
- Contingent Resources are defined in the COGE Handbook as 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 are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. For various reasons, including lack of unitization agreement, lack of internal and government approved plans for development, lack of defined infrastructure and lack of an approved gas sales contact, there is uncertainty of the commerciality of these contingent resources, and as such, the contingent resources estimated herein cannot be classified as reserves. The specific outstanding contingencies applicable to the contingent resources disclosed herein are lack of a gas sales agreement, lack of unitization agreement, and lack of government approval of a plan for development.
- The Contingent Resources estimated in the D&M Report are classified as "economic contingent resources", which are those contingent resources that are currently economically recoverable. All such resources are further sub-classified with a project status of "development pending", meaning that resolution of the final conditions for development are being actively pursued.
- "Low estimate" (C1) is considered to be a conservative estimate of the quantity of resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those resources in the low estimate range have the highest degree of certainty - a 90% confidence level - that the actual quantities recovered will be equal or exceed the estimate. "Best estimate" (C2) is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will be equal or exceed the estimate.
- The recovery estimates of the Company's contingent resources provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. There is uncertainty that it will be commercially viable to produce any portion of the resources. Actual recovered resource may be greater than or less than the estimates provided herein.
- A net present value of future net revenue of contingent resources is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the company proceeding with the required investment. It includes contingent resources that are considered too uncertain with respect to the chance of development to be classified as reserves. There is uncertainty that the net present value of future net revenue will be realized.
Oil and Natural Gas Reserves. The disclosure in this news release summarizes certain information contained in the Sproule Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company's reserves as at December 31, 2016 will be contained in the Company's annual information form for the year ended December 31, 2016 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2017. All net present values in this press release are based estimates of future operating and capital costs and Sproule's forecast prices as of December 31, 2016. The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and consistent with NI 51‑101 and used by Sproule. The oil reserves are presented in thousands of barrels, at stock tank conditions.
Test Results. Any references in this news release to test results, production from testing and performance rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such well will continue production and decline thereafter. Test results are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.
Discovered Petroleum Initially-in-Place. DPIIP is defined as the quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. There is no certainty that it will be commercially viable to produce any portion of the resources.
BOE Disclosure. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Forward-Looking Statements and Cautionary Language. This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend" and other similar words or expressions are intended to identify forward-looking information. More particularly and without limitation, this news release contains forward-looking information concerning management's internal estimate of Contingent Resources and potential hydrocarbons, reserves, exploration and development prospects of Alvopetro and the expected timing and outcomes of certain of Alvopetro's testing and operational activities. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to expectations and assumptions concerning testing results on our 198(A1) well, completion of unitization with an adjacent owner, securing gas sales agreements, availability of capital, the success of future drilling and development activities, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed through the SEDAR website at www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Alvopetro Energy Ltd.'s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by applying innovation to underexploited opportunities. Our strategy is to focus on three core opportunities including lower risk development drilling on our mature fields, shallow conventional exploration, and the development of the significant hydrocarbon potential present in our deep Gomo tight-gas resource play. Our efforts in the near-term are concentrated on building a natural gas business by finalizing a unitization agreement and securing a gas sales contract.
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 news release.
SOURCE Alvopetro Energy Ltd.
Corey C. Ruttan, President, Chief Executive Officer and Director, Phone: 587.794.4213, Email: [email protected], www.alvopetro.com, TSX-V: ALV
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