VANCOUVER, BC, Oct. 23, 2023 /CNW/ - MCF Energy Ltd. (TSXV: MCF) (FRA: DC6) (OTCQX: MCFNF) ("MCF Energy" or the "Company") over the past 12-months, has demonstrated unwavering commitment to establishing a robust portfolio of natural gas weighted exploration prospects. The Company's strategic vision centers on harnessing the vast potential of European energy resources, contributing to regional energy security and sustainable economic growth.
Table 1: Reudnitz Discovery – Contingent Resources Estimate, for an effective date of December 31, 2022:
Note:
1. Gas Contingent Resources (Methane) are the volumes after the extraction of non-hydrocarbon gases (mainly Nitrogen).
Cautionary Note: There is uncertainty that it will be commercially viable to produce any portion of the resources. (CNW Group/MCF Energy Ltd.)
Table 2: Reudnitz Discovery – Prospective Resources Estimate, for an effective date of December 31, 2022:
Note:
1. The volumes reported are “un-risked” in the sense that no adjustment has been made for the risk that no discovery will be made or that any discovery would not be developed
2. Identification of Prospective Resources associated with a Prospect is not indicative of any certainty that the Prospect will be drilled, or will be drilled in a timely manner.
3. Prospective Resources should not be aggregated with each other, or with Reserves or Contingent Resources, because there are different levels of risk involved.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. (CNW Group/MCF Energy Ltd.)
Table 3: Reudnitz Discovery – Recoverable Helium Estimate Segment 1 (Discovered), for an effective date of December 31, 2022:
Note:
1. Helium volumes have been calculated by applying the Helium concentration in the raw gas volumes measured from samples obtained during well tests.
Cautionary Note: There is uncertainty that it will be commercially viable to produce any portion of the resources. (CNW Group/MCF Energy Ltd.)
Table 4: Reudnitz Discovery – Recoverable Helium Estimates Segments 2 & 3 (Undiscovered), for an effective date of December 31, 2022:
Note:
1. Helium volumes have been calculated by applying the Helium concentration in the raw gas volumes, as above.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. (CNW Group/MCF Energy Ltd.)
Table 5: Gross (100%) Prospective Resource Estimate for the entire prospect for an effective date of December 31, 2022:
Note:
1. The Welchau Prospect extends outside of the ADX-AT-II Concession into open acreage, the On Block estimates are based on the estimate of the volume within the Concession area.
2. Gross Prospective Resources are 100% of the volumes estimated to be recoverable from the Prospect in the event that a discovery is made and subsequently developed.
3. The volumes reported here are “un-risked” in the sense that no adjustment has been made for the risk that no discovery will be made or that any discovery would not be developed.
4. Identification of Prospective Resources associated with a Prospect is not indicative of any certainty that the Prospect will be drilled, or will be drilled in a timely manner.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. (CNW Group/MCF Energy Ltd.)
Aggregation Success: MCF Energy has achieved remarkable success in its European acquisition endeavours, potentially unlocking substantial natural gas focused resource across multiple prospects within its portfolio; most with accompanying and extensive 3D seismic surveys.
Concession Grants: Immediately impactful concession grants obtained in Germany by Genexco GmbH ("Genexco"), a wholly-owned subsidiary of MCF Energy:
The granting of the Lech East concession which covers almost 100 km2 offsetting the Lech concession where Genexco Gas GmbH will twin a 1983 gas and condensate discovery which flowed significant gas and condensate with its Kinsau 1A well described below.
The granting of the Erlenwiese concession in the Rhein Graben which covers 86 km2 and has several identified prospects to be matured in 2024. All the 2D seismic surveys have been acquired and a 3D seismic survey is being reviewed for acquisition. The proprietary AI and machine learning process will be applied to reduce prospect risk.
The application to German authorities to transfer the Velden – Teising licence to Genexco from Genexco Gas GmbH, a 20% owned affiliate of Genexco.
Operational Update:
Granting to ADX Energy Inc. ("ADX") an extension from September 30th to December 31st 2023 to drill the Welchau prospect in Austria. Delay caused by the final environmental permit, is expected by the operator ADX, to be granted around October 31st.
Filing for the Permit to Drill from the Bavarian Mining Authority for the Kinsau 1A re-drill of the Lech discovery well. Final Permit to Drill is expected to be granted in the fourth quarter of 2023.
Granting of the permit to re-work and test the Reudnitz Z2 MCF Energy horizontal well in the Reudnitz Gas field, 100% owned by MCF Energy. The reworking and testing operations are scheduled to begin at the end of October 2023.
Technological Advancements: The Company has invested in cutting-edge AI and machine learning tools enabling it to notably enhance its evaluation and interpretation efficiency. Extending well beyond traditional methodologies, MCF Energy will ensure this industry leading geological and geophysical analysis is applied to each of its prospects prior to the deployment of any material development capital.
Resource Assessment:
Based on its rigorous geological and geophysical assessments MCF Energy has confirmed the presence of significant quantities of petroleum and natural gas, indicating the potential for extensive petroleum and natural gas resources. The resources assigned are subject to significant risks. Please refer to the Advisories and Definitions sections at the end of this press release.
Gaffney Cline Associates Ltd. ("GCA") prepared a Resource Audit Report, for the Reudnitz Block, Germany, prepared in February, 2023:
Table 1: Reudnitz Discovery – Contingent Resources Estimate, for an effective date of December 31, 2022:
Note:
1. Gas Contingent Resources (Methane) are the volumes after the extraction of non-hydrocarbon gases (mainly Nitrogen).
Cautionary Note: There is uncertainty that it will be commercially viable to produce any portion of the resources.
Table 2: Reudnitz Discovery – Prospective Resources Estimate, for an effective date of December 31, 2022:
Note:
1. The volumes reported are "un-risked" in the sense that no adjustment has been made for the risk that no discovery will be made or that any discovery would not be developed
2. Identification of Prospective Resources associated with a Prospect is not indicative of any certainty that the Prospect will be drilled, or will be drilled in a timely manner.
3. Prospective Resources should not be aggregated with each other, or with Reserves or Contingent Resources, because there are different levels of risk involved.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Table 3: Reudnitz Discovery – Recoverable Helium Estimate Segment 1 (Discovered), for an effective date of December 31, 2022:
Note:
1. Helium volumes have been calculated by applying the Helium concentration in the raw gas volumes measured from samples obtained during well tests.
Cautionary Note: There is uncertainty that it will be commercially viable to produce any portion of the resources.
Table 4: Reudnitz Discovery – Recoverable Helium Estimates Segments 2 & 3 (Undiscovered), for an effective date of December 31, 2022:
Note:
1. Helium volumes have been calculated by applying the Helium concentration in the raw gas volumes, as above.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
The Reudnitz Discovery production development is based on a phased development plan, ultimately utilizing cryogenic separation technology for the separation of produced raw gas volumes. In Phase 1, geological and geophysical studies and a reservoir update, which is currently in progress. Cryotec Anlagenbau GmbH ("Cryotec") has completed the design stage of the Methane / Nitrogen separation system for gas well flows with Helium recovery. Project budget cost of the installation is expected to be approximately €4.2 MM (net price). Phase 2 includes the planning and acquisition of a 3D seismic survey, well planning, drilling and testing of an appraisal well and associated studies with an estimated cost (including contingency) of €9.2 MM. Re-work of the Reudnitz Z2 horizontal well is budgeted and should begin at the end of October, 2023.
GCA prepared a Resource Audit Report, for the Welchau Prospect, ADX-AT-II Concession, Austria prepared in December, 2022:
Table 5: Gross (100%) Prospective Resource Estimate for the entire prospect for an effective date of December 31, 2022:
Note:
1. The Welchau Prospect extends outside of the ADX-AT-II Concession into open acreage, the On Block estimates are based on the estimate of the volume within the Concession area.
2. Gross Prospective Resources are 100% of the volumes estimated to be recoverable from the Prospect in the event that a discovery is made and subsequently developed.
3. The volumes reported here are "un-risked" in the sense that no adjustment has been made for the risk that no discovery will be made or that any discovery would not be developed.
4. Identification of Prospective Resources associated with a Prospect is not indicative of any certainty that the Prospect will be drilled, or will be drilled in a timely manner.
Cautionary Note: There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
The ADX-AT-II Concession was granted in April, 2022, and has a 16-year duration. The only commitment associated with the Concession is drilling the Welchau-1 well. Planning for the well is advanced with an AFE for the well issued and a drilling rig contractor identified.
The Welchau-1 well is scheduled to be drilled in December of 2024, and the gross dry hole cost of the well is estimated at €3.81 MM, Success case is estimated at €4.3 MM, in the approved AFE. The well location has been identified and a land access agreement reached with the Austrian Forestry Ministry. Pipeline access is estimated at 18km from the location with standard well completion technology utilized. Pipeline costs have not been estimated. First commercial production estimated in late calendar 2024 or early 2025.
Regional Impact: These findings have the potential to transform the energy landscape in the European region, enhancing energy security and reducing dependence on imports.
Strategic Partnerships: The Company continues to forge strategic partnerships with local and international entities, fostering collaboration and knowledge sharing in the pursuit of European energy development.
Market Expansion: MCF Energy is actively expanding its market reach, working closely with regulatory bodies, governments, and industry stakeholders to develop mutually beneficial agreements and frameworks for the exploration of Europe's natural resources.
Sustainability Commitment: MCF Energy remains steadfast in its commitment to responsible and sustainable energy development, and an unwavering commitment to adhering to best practices in environmental stewardship and community engagement.
Mr. Jay Park, the Executive Chairman of MCF Energy, stated, "This operational update reflects our dedication to responsibly advancing Europe's energy independence and security goals. We are proud of our team's achievements and look forward to contributing to the energy security and prosperity of the region. Our vision is equally aligned with the global transition to cleaner energy sources, and we are committed to playing a pivotal role in this transition."
MCF Energy invites all stakeholders, including shareholders, employees, and the general public, to stay updated on the Company's progress and its role in Europe's energy future, through its corporate website and social media.
About MCF Energy
MCF Energy was established in 2022 by leading energy executives to strengthen Europe's energy security through responsible exploration and development of natural gas resources within the region. The Company has secured interests in several significant natural gas exploration projects in Austria and Germany with additional concession applications pending. MCF Energy is also evaluating additional opportunities throughout Europe. The Company's leaders have extensive experience in the European energy sector and are working to develop a cleaner, cheaper, and more secure natural gas industry as a transition to renewable energy sources. MCF Energy is a publicly traded company (TSX.V: MCF; FRA: DC6; OTCQX: MCFNF) and headquartered in Vancouver, British Columbia. For further information, please visit: www.mcfenergy.com.
Additional information on the Company is available at www.sedarplus.ca under the Company's profile.
Cautionary Statements:
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Advisories:
Forward-Looking Information
This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of our anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding the anticipated timing of the remaining regulatory approvals, development and drilling plans, potential growth, and the current operating plans with respect to the Company's right to assets in Germany and Austria as well as the source of funding the Company's capital spending. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.
The forward-looking information is based on certain key expectations and assumptions made by MCF Energy's management, including expectations and assumptions noted previously in this press release under oil and gas advisories, and in addition with respect to prevailing commodity prices which may differ materially from the price forecasts applicable at the time of the respective Resource Audits conducted by GCA, and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of future wells; resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, the successful application of a Cryogenic Process at Reudnitz, the ability to market natural gas successfully and MCF's ability to access capital. Although the Company 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 MCF Energy can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. MCF Energy's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
Oil & Gas Advisories
The resource estimates contained in this press release have been prepared in accordance with NI 51-101, and are dated as of December, 2022 (Welchau) and February, 2023 (Reudnitz) respectively and prepared by Gaffney Cline Associates Ltd. ("GCA").
The resource estimates of natural gas and natural gas liquids provided in this news release are estimates only, and there is no guarantee that the estimated resources will be recovered. Actual resources may eventually prove to be greater than, or less than, the estimates provided herein. It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the resources. There are numerous uncertainties inherent in estimating quantities of natural gas and natural gas liquids resources and the future cash flows attributed to such resources.
These risks and uncertainties include but are not limited to: (i) the fact that there is no certainty that the zones of interest will exist to the extent estimated or that the zones will be found to have natural gas with characteristics that meet or exceed the minimum criteria in terms of net pay thickness and/or porosity, or that the natural gas will be commercially recoverable to the extent estimated; (ii) the fact that there is no certainty that any portion of the contingent and prospective resources will be commercially viable to produce; (iii) the fact that the Company relies on consultants in Germany in order to execute on the development plan, and there are no guarantees that suitable and qualified drilling rig operators and personnel will be available; (iv) the lack of additional financing to fund the Company's development activities and continued operations; (v) the risks associated with obtaining approvals to access land to drill wells or install infrastructure and facilities in a reasonable time frame; the respective German and Austrian regulatory regimes are relatively stable but is marked with long approval processes relative to North American jurisdictions; (vi) the risks in acquiring or constructing adequate natural gas infrastructure to produce and sell natural gas, and whether capacity will be available in the existing main pipeline system at reasonable costs; (vii) the risk that there may not be a drilling rig available to drill the required wells, and the risk that if a rig mobilization is required from outside of Germany or Austria, that the costs may be prohibitive; (ix) risks inherent in the international oil and natural gas industry; fluctuations in foreign exchange and interest rates; (xi)the number of competitors in the oil and gas industry with greater technical, financial and operations resources and consultants; (xii) fluctuations in world prices and markets for oil and natural gas due to domestic, international, political, social, economic and environmental factors beyond the Company's control; (xiii) changes in government regulations affecting oil and natural gas operations; (xiv) potential liabilities for pollution or hazards against which the Company cannot adequately insure or which the Company may elect not to insure; (xv) contingencies affecting the classification as resources versus resources which relate to the following issues as detailed in the COGE Handbook: ownership considerations, drilling requirements, testing requirements, regulatory considerations, infrastructure and market considerations, timing of production and development, and economic requirements; (xvi) the fact that there is no certainty that any portion of the prospective resources will be discovered and if discovered, there is no certainty that it will be commercially viable to produce any portion of the resources; and (xvii) other factors beyond the Company's control.
Any reference in this press release to contingent resources and prospective resources are not, and should not be confused with oil and natural gas reserves.
Definitions:
Resources are defined in the Canadian Oil and Gas Evaluation Handbook (COGEH) Volume 1, section 5 as follows:
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied projects are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality.
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. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be sub classified based on project maturity and/or characterized by their economic status.
Not all technically feasible development plans will be commercial. The commercial viability of a development project is dependent on the forecast of fiscal conditions over the life of the project. For Contingent Resources, the risk component relating to the likelihood that an accumulation will be commercially developed is referred to as the "chance of development." For contingent resources, the chance of commerciality is equal to the chance of development.
Development Pending are contingencies that are being actively pursued; expect resolution in a reasonable time period; are directly influenced by the developer with both, internal approvals and commitment and development timing and; have a high chance of development (>80%).
Development on Hold are contingencies with major non-technical contingencies identified; have a reasonable chance of development (>50%); have contingencies that are beyond the control of the developer including but not limited to: external approvals, economic factors, market access, political factors and social license.
Development Unclarified are contingencies that have not been clearly defined; the project is currently under active evaluation; significant further appraisal may be required; progress is expected in a reasonable time period; chance of development is difficult to assess and could be a big range (20%-80%).
Development Not Viable are contingencies that have been identified; the project was evaluated and considered not viable or significant further appraisal may be required; progress is not expected in a reasonable time period and; has a low chance of development (<<50%).
Contingent Resources – Development Pending and –Development on Hold are considered economic, Contingent Resources –Development Unclarified have economics that are undetermined, and Contingent Resources –Development Not Viable are considered sub-economic.
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub classified based on project maturity.
Not all exploration projects will result in discoveries. The chance that an exploration project will result in the discovery of petroleum is referred to as the "chance of discovery." Thus, for an undiscovered accumulation, the chance of commerciality is the product of two risk components — the chance of discovery and the chance of development.
Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. Consequently, estimates of resources should generally be quoted as a range according to the level of confidence associated with the estimates. An understanding of statistical concepts and terminology is essential to understanding the confidence associated with resources definitions and categories. These concepts, which apply to all categories of resources, are outlined below. The range of uncertainty of estimated recoverable volumes may be represented by either deterministic scenarios or by a probability distribution. Resources should be provided as low, best, and high estimates as follows:
Low Estimate and/or 1C in the case of Contingent Resources: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate and/or 2C in the case of Contingent Resources: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
High Estimate and/or 3C in the case of Contingent Resources: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
This approach to describing uncertainty may be applied to reserves, contingent resources, and prospective resources. There may be significant risk that sub commercial and undiscovered accumulations will not achieve commercial production, however, it is useful to consider and identify the range of potentially recoverable quantities independently of such risk.
The main contingencies identified in the Reudnitz Resources Audit Report are the successful workover of existing well, the high concentration of non-hydrocarbon gases in the Upper Rotliegend reservoir which requires special treatment of the raw gas prior to sales. Recent studies indicate that cryogenic systems are capable of separating the gases allowing the production of the Methane and Helium from the raw gas stream.
Boe means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil equivalent. Mcfe means one thousand cubic feet of natural gas equivalent on the basis of 6 Mcfe: 1 barrel of oil. A boe conversion ratio of 6 Mcf: 1 Boe and 6 Mcfe: 1 bbl. are based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the price of crude compared to the price of natural gas at various times can be significantly different from the energy equivalence of 6 Mcf: 1 boe or 6 Mcfe: 1 bbl., using Boe's and Mcfe's may be misleading as an indication of value.
Abbreviations:
Bcf
billion cubic feet
Bcfe
billion cubic feet of natural gas equivalent
Bbl
barrels
Boe
barrels of oil equivalent
M
thousand
MM
million
MMbbls
million barrels of oil
MMBOE
million barrels of oil equivalent
Mcfe
thousand cubic feet of natural gas equivalent
MMcfe/d
million cubic feet equivalent per day
Tcf
trillion cubic feet
Km2
square kilometres
€
Euros
SOURCE MCF Energy Ltd.
Investor Relations, Jim Hill, CEO, Tel: (604) 609-6110, Email: [email protected]; Public Relations, Sarah Mawji, Email: [email protected]
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