- Published: 22 August 2012
- Written by Editor
DeeThree Exploration Ltd. Announces Material Alberta Bakken Reserves and Resource Evaluation
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
DEETHREE EXPLORATION LTD. ("DeeThree" or the "Company") (DTX.TO) (DTHRF) is pleased to announce the results of a reserves and resource evaluation on and limited to certain of DeeThree's Bakken assets in the Lethbridge area of Alberta as of July 31, 2012, prepared by the Company's independent reserve engineering firm, Sproule Associates Limited. The reports confirm an extensive oil resource play with significant reserve upside. Highlights of the reports include:
-- Total Contingent Oil and Prospective (Undiscovered) Original Oil in
Place of 479.3 MMbbl
-- Best estimate of Ultimate Potentially Recoverable Oil Resources of 57.5
MMbbl of oil
-- Contingent Oil Resources in place of 222.1 MMbbl with a best estimate of
recoverable resource of 21.8 MMbbl in addition to the reserves produced
and booked to date.
-- Prospective Oil Resources of 257.2 MMbbl with a best estimate of
recoverable resources of 30.9 MMbbl
-- Total Proved plus Probable reserves of 4.9MMboe (95% oil) booked as a
result of the first six well drilling program in 2012.
-- Average Proved plus Probable Reserves of 263 MBoe per well for the first
six wells drilled in 2012.
RESOURCE INFORMATION
In an effort to quantify the future reserve potential, DeeThree commissioned Sproule to conduct a resource evaluation for the Bakken assets in the Lethbridge area of Alberta, as of July 31, 2012.
The following table summarize DeeThree's results of the resource evaluation (excluding solution gas):
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Proved,
Probable
Proved plus plus
Probable Possible
DISCOVERED Proved (1P) (2P) (3P)
------------------------------------
Working
Interest (Mbbl) (Mbbl) (Mbbl)
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Production 100.00% 172 172 172
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Reserves 100.00% 2,035 4,660 6,524
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1C 2C 3C
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Oil Initlally In Place
("OIIP") - Gross 222,064 222,064 222,064
OIIP - Co. share 100.00% 222,064 222,064 222,064
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Contingent Resources 8,896 21,816 33,275
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Best High
UNDISCOVERED Low Estimate Estimate Estimate
------------------------------------
OIIP - Gross 257,231 257,231 257,231
OIIP - Co. share 100.00% 257,231 257,231 257,231
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Prospective Resources 12,862 30,868 46,302
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TOTAL DISCOVERED + UNDISCOVERED
OIIP - Gross 479,295 479,295 479,295
OIIP - Co. share 100.00% 479,295 479,295 479,295
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Ultimate Potentially Recoverable
Resources 23,965 57,515 86,273
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Notes:
1) The ultimate recoverable resources estimates in this table include
company share production, reserves, and un-risked contingent &
prospective resources.
2) Contingent resources have an associated chance of development (economic,
regulatory, market and facility, corporate commitment or political
risks). There is no certainty that any portion of the contingent
resources will be developed nor whether it will be commercially viable
to produce any portion of the resources.
3) Prospective resources have both an associated chance of discovery
(geological chance of success) and a chance of development. There is no
certainty that any portion of the prospective resources will be
discovered and developed nor whether it will be commercially viable to
produce any portion of the resources.
4) The Reserves are technical volumes and include produced oil volumes and
remaining oil reserves as reported in the July 31, 2012 reserve report.
Note the 3P reserves were not included in the July 31, 2012 reserve
report and were estimated for the purposes of the resource report. The
wedge between 3P and 2P was estimated as 40% of the 2P reserves for
1400m leg wells.
5) The resource estimates may differ materially upon consideration of
discovery and development risk and consideration of economics and
financing.
RESERVES INFORMATION
The reserves evaluation was limited to the reserves associated with the first six wells drilled by DeeThree in 2012 on its Alberta Bakken property. The following table represents the reserves associated with these six wells effective as at July 31, 2012 as evaluated by Sproule:
Crude Oil Solution Gas BOE(4)
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Gross(2) Net(3)Gross(2) Net(3) Gross(2) Net(3)
(mbbls) (mbbls) (mmcf) (mmcf) (mboe) (mboe)
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Proved
-------------------------
Developed producing 955.3 820.4 315 294 1007.8 869.4
Developed non-producing - - - - - -
Undeveloped 1080.0 947.0 356 333 1139.3 1002.5
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Total Proved(1) 2035.3 1767.4 670 627 2147.0 1871.9
Total Probable(1) 2625.0 2277.5 864 802 2769.1 2411.3
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Total proved plus
probable(1) 4660.3 4044.9 1535 1430 4916.1 4283.2
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Notes:
(1) Total values may not add due to rounding.
(2) "Gross" Company reserves are the Company's total working interest share
before the deduction of any royalties and without including any royalty
interests of the Company.
(3) "Net" reserves are the Company's working interest share after deduction
of royalties but including royalty interests of the Company.
(4) In the case of BOEs, using BOEs derived by converting gas to oil
equivalent in the ratio of six thousand cubic feet of gas to one barrel
of oil (6 MCF:1 bbl). See "Reader Advisory - BOE Presentation" and
"Reader Advisory - Information Regarding Disclosure on Oil and Gas
Reserves" below.
The following table summarizes the Net Present Value of the Company's share of reserves effective as at July 31, 2012.
Before Income Taxes Discounted At
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0% 10% 15%
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('000s) ($) ($) ($)
Proved
Developed producing 57,309 37,044 32,000
Undeveloped 31,354 7,306 1,605
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Total Proved(1)(2)(3) 88,663 44,350 33,605
Total Probable(1)(2)(3) 166,370 46,355 29,591
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Total Proved plus Probable(1)(2)(3) 255,033 90,704 63,196
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Notes:
(1) Total values may not add due to rounding.
(2) Forecast pricing used is based on Sproule published price forecasts
effective June 30, 2012.
(3) It should not be assumed that the net present values of future net
revenues estimated by Sproule represent fair market value of the
reserves. There is no assurance that the forecast price and cost
assumptions will be attained and variances could be material. See
"Reader Advisory - Information Regarding Disclosure on Oil and Gas
Reserves" below.
The reserves evaluation and resource evaluation were conducted by Sproule with reference to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") relying on the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions.
Reader Advisory
Forward-Looking Statements. Certain statements contained in this press release may constitute forward-looking statements. These statements relate to the reserves and resources attributable to certain of DeeThree's properties and the potential value of such reserves and resources. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. DeeThree believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by investors. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.
In particular, this press release contains forward-looking statements, pertaining to the following: projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves and/or resources, oil and natural gas production levels, capital expenditure programs, treatment under governmental regulatory and taxation regimes, expectations regarding DeeThree's ability to raise capital and to continually add to reserves through acquisitions and development, and projections of market prices and costs.
With respect to forward-looking statements contained in this press release, DeeThree has made assumptions regarding, among other things: the legislative and regulatory environments of the jurisdictions where DeeThree carries on business or has operations, the impact of increasing competition, and DeeThree's ability to obtain additional financing on satisfactory terms.
DeeThree's actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; uncertainties associated with estimating reserves and/or resources; uncertainties associated with DeeThree's ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel.
This forward-looking information represents DeeThree's views as of the date of this document and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. DeeThree has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. . Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
Information Regarding Disclosure on Oil and Gas Reserves. The reserves data set forth above is based upon an independent reserves assessment and evaluation prepared by Sproule with an effective date of July 31, 2012 (the "Sproule Report"). The presentation summarizes the Company's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Company's reserves using forecast prices and costs based on the Sproule Report. The Sproule Report has been prepared in accordance with the standards contained in the COGEH and the reserve definitions contained in NI 51-101. All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenues presented in the tables above represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. The reserve data provided in this release only represents a summary of the disclosure required under NI 51-101.
Information Regarding Disclosure on Oil and Gas Resources. Unless otherwise specified, all resource volumes in this news release (and all information derived there from) are based on "company gross volumes" (or working interest), before deductions of Crown and other royalties, using forecast prices and costs. The resource evaluation was prepared in accordance with the resource and reserves definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (COGEH) and was conducted by a qualified reserves evaluator (Sproule). This news release contains references to estimates of oil classified as contingent (part of discovered oil initially in place) and prospective (part of undiscovered oil initially in place) which are not, and should not be confused with oil and gas reserves. "Discovered Oil Initially In Place" ("DOIIP") is defined in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as the quality of hydrocarbons that are estimated to be in place within a known accumulation prior to production. DOIIP is divided into recoverable and unrecoverable portions, with the estimated future recoverable portion classified as reserves and contingent resources and the remainder as at evaluation date is by definition classified as unrecoverable. There is no certainty that it will be economically viable to produce any portion of the contingent resources. "Undiscovered Oil Initially In Place" ("UOIIP") are those quantities of hydrocarbons that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UOIIP is referred to as prospective resources, the remainder is unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to product any portion of the prospective resources. DeeThree's belief that it will establish significant additional reserves over time in the discussion of the results of the resource evaluation is a forward looking statement and is based on certain assumptions and is subject to certain risks, as discussed below under the heading "Forward Looking Statements"
BOE Presentation. References herein to "boe" mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
We seek Safe Harbor.
DeeThree Exploration Ltd.
Martin Cheyne
President and Chief Executive Officer
(403) 263-9130
