Briko Energy Announces its 2019 Year-End Reserves and Complementary Acquisition Update
April 1, 20206:30 AM Newsfile
Calgary, Alberta – Briko Energy Corp. (“Briko” or the “Corporation”) is pleased to announce its 2019 year-end reserves and Complementary Acquisition update. 2019 Reserve Highlights Proved (“1P”) reserves increased 6% to 2.4 million barrels of oil equivalent (“BOE”) at December 31, 2019 compared to 2.3 million BOE at December 31, 2018;Proved Developed Producing (“PDP) reserves of 1.6 million BOE at December 31, 2019 with a net present value of $14.4 million ($1.29 per share) at a 10% discount rate;Proved plus probable (“2P) reserves were unchanged at 3.8 million BOE at December 31, 2019 and December 31, 2018;Maintained conservative 1P reserve position that represents 65% of 2P reserves;Future development costs (“FDC”) requirement of only $0.1 million on a 1P basis and $17.1 million on a 2P basis; andLow annual production decline rates provided a strong reserves life index of 11 years based on 1P reserves and 15 years based on 2P reserves. 2019 Summary of Reserves The detailed reserves data set forth below are based on an independent reserves assessment and evaluation prepared by Deloitte LLP (“Deloitte”) with an effective date of December 31, 2019, which is contained in the report dated March 06, 2020 (the “Deloitte Report”). 2019 YE(1)2018 YE(2)2019YE & 2018YE ComparisonReserves Category(MBOE)NPV10% ($M)(MBOE)NPV10% ($M)Reserves (%)Proved Developed Producing1,582$14,4482,008$14,096(21%)Proved Non-producing865$1,760305$769184%Total Proved2,448$16,2082,313$14,8646%Total Proved plus Probable3,755$18,3043,777$19,247(1%) Note: (1) Deloitte Report effective as of December 31, 2019. (2) Deloitte Report effective as of December 31, 2018. Corporate Reserves The detailed reserves data set forth below are based on the Deloitte Report. The following presentation summarizes the Corporation’s crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Corporation’s reserves using forecast prices and costs as set out in the Deloitte Report. The Deloitte Report has been prepared in accordance with definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. The reserves evaluation was based on the consensus forecast escalated pricing and foreign exchange rates at December 31, 2019 (“Consensus Price”) as outlined in the table herein entitled “Price Forecast”. This Consensus Price forecast is the average of the escalated price forecasts of four independent reserve evaluators, namely Deloitte, GLJ Petroleum Consultants Ltd. (“GLJ”), McDaniel & Associates Consultants Ltd (“McDaniel”) and Sproule Associates Limited (“Sproule”). All evaluations and summaries of future net revenue are stated prior to provision for interest, debt service charges or general administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of 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 Briko’s 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 or less than the estimates provided herein. Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise. In addition to the detailed information disclosed in this press release, more detailed information will be included in the Corporation’s Annual Information Form (“AIF”) which will be filed on the Corporation’s profile at www.sedar.com on or before April 30, 2020. See “Forward Looking Information and Statements” for a statement of principal assumptions and risks that may apply. The preparation and audit of Briko’s 2019 annual financial statements is not yet complete, and accordingly, all financial amounts referred to in this press release are unaudited and represent management’s estimates. Readers are advised that these financial estimates may be subject to change. Year-end financial statements for 2019 will be released no later than April 30, 2020. Reserves Category(1)Light and Medium Crude OilNatural Gas LiquidsNon- Associated Natural Gas(2)Barrels of Oil Equivalent(3)(Mbbl)(Mbbl)(Mmcf)(Mboe)ProvedProved Developed Producing (“PDP”)4741515,7441,582Proved Non-producing (“PNP”)26734,601865Proved Developed (“PD”)50022410,3442,448Proved Undeveloped (“PUD”)––––Total Proved (“1P”)50022410,3442,448Probable758582,9521,308Total Proved plus Probable (“2P”)1,25828213,2963,755 Notes: (1) Reserves have been presented on a “gross” basis which is defined as Briko’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of the Corporation. (2) Includes solution gas. (3) Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. (4) Columns may not add due to rounding. Reserve Values The estimated before tax net present value (“NPV”) of future net revenue associated with Briko’s reserves effective December 31, 2019 and based on the Deloitte Report and the Consensus Price forecast are summarized in the following table: Reserves Category0%5%10%15%20%(M$)(M$)(M$)(M$)(M$)Proved Developed Producing25,68218,60514,44811,8009,996 Developed Non-Producing3,1112,3301,7601,3661,091 Undeveloped–––––Total Proved28,79320,93516,20813,16711,088Probable13,9485,8042,096301(590)Total Proved plus Probable42,74026,73918,30413,46810,497 Notes: (1) Based on Deloitte’s December 31, 2019 Consensus Price forecast. (2) The estimated future net revenues are stated prior to provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. (3) See the Corporation’s AIF, once filed, for the after-tax present values of future net revenue attributed to Briko’s reserves. (4) Columns may not add due to rounding. Price Forecast YearCanadian Light Sweet Crude(2) 40° API ($C/Bbl)Western Canada Select(3) 20.5° API ($C/Bbl)Alberta AECO-C ($C/Mcf) (5)Edmonton Pentanes Plus ($C/Bbl) (4,6)Edmonton Butane ($C/Bbl) (4,6)Edmonton Propane ($C/Bbl) (4,6)$US/$C Exchange Rate202071.5856.662.0574.2137.5624.040.76202175.3361.202.3278.1544.4128.750.77202277.5163.082.6080.4850.1933.140.78202379.7764.922.7482.7751.6734.160.79202481.6066.542.8284.6652.8835.000.79202583.4668.162.9186.5654.0935.850.79202685.3469.802.9788.4955.3336.710.79202787.1971.413.0390.4056.5337.550.79202888.9772.943.1092.2257.6938.370.79202990.7974.503.1694.0958.8739.190.79Escalation Rate of 2.0% Thereafter Notes: (1) This Consensus Price forecast is an average of four independent reserve evaluators’ forecasts at December 31, 2019 including Deloitte, GLJ, McDaniel and Sproule. (2) Edmonton city gate prices based on historical light oil par prices posted by the government of Alberta and Net Energy differential futures (40 Deg. API < 0.5% Sulphur). (3) Western Canada Select prices are forecasted at Hardisty WCS (4) Natural Gas Liquid prices are forecasted at Edmonton therefore an additional transportation cost must be included to plant gate sales point. (5) 1 Mcf is equivalent to 1 MMbtu. (6) NGL prices have been switched from a mix reference to a spec reference. Reserves Reconciliation The table below reconciles reserves volumes from opening balances at December 31, 2018 to closing balances at December 31, 2019. Technical revisions included positive revisions to the Associated and Non-Associated Gas category as the result of reduced operating costs and increased processing income. TOTAL PROVEDLight and Medium Crude Oil (Mbbl)Natural Gas Liquids (Mbbl)Associated and Non-Associated Gas (Mmcf)Oil Equivalent (Mboe)December 31, 20186132038,9842,313Production(59)(23)(953)(241)Technical Revisions(48)492,804469Extensions & Improved Recovery––––Exploration Discoveries––––Acquisition––––Dispositions––––Economic factors(7)(5)(491)(94)Infill Drilling––––December 31, 201950022410,3442,448TOTAL PROVED PLUS PROBABLELight and Medium Crude Oil (Mbbl)Natural Gas Liquids (Mbbl)Associated and Non-Associated Gas (Mmcf)Oil Equivalent (Mboe)December 31, 20181,42828212,4033,777Production(59)(23)(953)(241)Technical Revisions(91)272,419339Extensions & Improved Recovery––––Exploration Discoveries––––Acquisition––––Dispositions––––Economic factors(20)(4)(573)(120)Infill Drilling––––December 31, 20191,25828213,2963,755 Note: (1) Columns may not add due to rounding. Production and Capital Expenditures Due to the unscheduled shut in of non-operated natural gas production of approximately 100 boe/d on November 1, 2019, Briko’s production for the first quarter of 2020 is estimated to be in the range of 500-550 boe/d. As a result, and in conjunction with low production decline rates, average production for 2020 is expected to be in the range of 525 – 625 boe/d. The shut in natural gas production was back online in late March 2020. Briko has established a prudent capital expenditure program for 2020 and 2021 that is expected to focus on maintenance and optimization initiatives. This capital expenditure program is expected to be funded by internally generated cash flow. Future financing sources will be considered as the Corporation’s inventory of Cardium light oil drilling opportunities is pursued. Complementary Acquisition Update As previously announced on December 9, 2019, Briko executed a purchase and sale agreement (the “PSA”) to acquire complementary Cardium oil and natural gas assets in the Alberta foothills (the “Complementary Assets”) for a cash consideration of $1.8 million. The Corporation has determined that it will not proceed with the PSA and has terminated the agreement. Accordingly, the previously announced $1.5 million senior secured credit facility for the Complementary Asset acquisition is no longer required and amounts held in trust have been repaid in full. About Briko Energy Corp. Briko Energy Corp. is an Alberta Foothills Cardium light oil focused company with undeveloped land, crude oil and natural gas reserves and a production base with associated infrastructure. Corporate information can be found at: www.brikoenergy.com.