Saratoga Resources, Inc. (NYSE MKT: SARA; the “Company” or
“Saratoga”) today announced proved reserves as of close of business
December 31, 2013. Proved reserves at year end totaled 17.24
million barrels of oil equivalent (“MMBOE”), 53.6% oil, with a net
present value discounted at 10% (“PV10”) of $410.8 million, using
SEC pricing, adjusted for quality and location, or average realized
pricing of $108.64 per barrel of oil and $4.35 per thousand cubic
feet (“MCF”). This represents a marginal increase over the
Company’s year-end 2012 proved reserves of 17.23 MMBOE, of which
48.8% were oil.
Year-end 2013 reserves reflect changes from year-end 2012 as
follows: (i) a re-categorization of 2.44 MMBOE of proved reserves
to probable reserves, due to the Securities and Exchange Commission
(“SEC”) five-year proved undeveloped (“PUD”) reserves
re-categorization; (ii) 2013 production volumes of 663.1 thousand
barrels of oil (“MBO”) and 1,089.7 million cubic feet of gas
(“MMCF”); (iii) revisions of previous estimates reflecting a gain
of 353.5 MBO, offset by a loss of 3,372.8 MMCF, resulting in a net
loss of 208.6 thousand barrels of oil equivalent (“MBOE”); and (iv)
extensions, discoveries and other additions totaling 3,503.4 MBOE,
43.6% of which were oil. The new additions are the Panther and
Tiger Toux prospects, in Breton Sound, and the Moneypenny and
Thunderball prospects, in the Gulf of Mexico.
Proved reserves at year end were comprised of (i) proved
developed producing reserves of 2.2 MMBOE, 89.1% oil, with PV10 of
$126.2 million and a reserve life index of 15 years; (ii) proved
developed non-producing reserves of 2.2 MMBOE, 58.5% oil, with PV10
of $70.4 million; and (iii) proved undeveloped reserves of 12.8
MMBOE, 46.7% oil, with PV10 of $225.8 million.
In addition to Saratoga’s proved reserves, year-end 2013
probable reserves totaled 16.8 MMBOE, up 25.7% from 13.3 MMBOE at
year-end 2012, 40.9% oil, with PV10 of $306.5 million. Of these
probable reserves, 2.44 MMBOE are categorized as P90 probable
undeveloped reserves, meaning they are the result of
re-categorization of PUD reserves that do not meet the SEC rule of
being developed within a five-year time frame. These P90 probable
undeveloped reserves are 84.4% gas, with a PV10 of $26.1 million.
Possible reserves as of December 31, 2013 totaled 39.7 MMBOE, up
15.8% from 34.3 MMBOE at year-end 2012, 47.8% oil, with a PV10 of
$658.4 million.
Total reserves, including proved, probable and possible, as of
December 31, 2013 were 73.7 MMBOE, 47.6% oil, with a PV10 of $1.38
billion.
Management Comments
Mr. Andrew C. Clifford, Saratoga’s President, said, “We are
pleased that we managed to maintain our reserve totals at 2012
levels after production and despite the re-categorization of 2.44
MMBOE of proved undeveloped reserves due to the SEC five-year rule.
The proved reserves associated with our new state and federal
leases, acquired in 2013, more than adequately compensated for the
re-categorization of the proved reserves to P90 probable. The
re-categorization does not affect our prospect inventory or
resource potential. The re-categorization of proved undeveloped
reserves to probable is associated with leases held-by-production
and relate to predominantly natural gas projects that have been
moved back in our development plans, based on low natural gas
prices, behind more economically attractive oil predominant
projects. We are optimistic that these P90 probable reserves will
be reinstated to PUD in twelve months, although we will also be
subject to other reserve roll-offs at year-end 2014. More
satisfying to us is the 4.8% increase in proved oil versus gas
reserves, the 9.8% increase in PDP reserves, the 1.3% increase in
proved developed reserves, 25.7% increase in probable reserves,
15.8% increase in possible reserves and our year-end net asset
value per share in excess of $8 for proved reserves alone.”
About Saratoga Resources
Saratoga Resources is an independent exploration and production
company with offices in Houston, Texas and Covington, Louisiana.
Principal holdings cover 51,901 gross/net acres, mostly held by
production, located in the transitional coastline and protected
in-bay environment on parish and state leases of south Louisiana
and in the shallow Gulf of Mexico Shelf. Most of the company’s
large drilling inventory has multiple pay objectives that range
from as shallow as 1,000 feet to the ultra-deep prospects below
20,000 feet in water depths ranging from less than 10 feet to a
maximum of approximately 80 feet.
Oil and Gas Information
In estimating probable and possible reserves, it should be noted
that those reserve estimates inherently involve greater risk and
uncertainty than estimates of proved reserves. While analysis of
geoscience and engineering data provides reasonable certainty that
proved reserves can be economically producible from known
formations under existing conditions and within a reasonable time,
probable reserves involve less certainty with reserves supporting a
probable classification from a probabilistic analysis where those
reserves are “as likely as not to be recovered.” Possible reserves
involving even less certainty than probable reserves and possible
classification is supported when there is at least a 10%
probability that total quantities recovered equal or exceed proved
plus probable plus possible reserve estimates.
In a calculating net asset value per share we divide year-end
cash and PV10 of our proved reserves, net of year-end debt, by
total shares of common stock outstanding.
Forward-Looking Statements
This press release includes certain estimates and other
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, including, but not limited to,
statements regarding future ability to fund the company’s
development program, realize reserves, including production levels,
pricing and costs included in such reserve calculations, and
ultimate recategorization of P90 reserves as proved. Words such as
"expects”, "anticipates", "intends", "plans", "believes",
"assumes", "seeks", "estimates", "should", and variations of these
words and similar expressions, are intended to identify these
forward-looking statements. While we believe these statements are
accurate, forward-looking statements are inherently uncertain and
we cannot assure you that these expectations will occur and our
actual results may be significantly different. These statements by
the Company and its management are based on estimates, projections,
beliefs and assumptions of management and are not guarantees of
future performance. Important factors that could cause actual
results to differ from those in the forward-looking statements
include the factors described in the "Risk Factors" section of the
Company's filings with the Securities and Exchange Commission. The
Company disclaims any obligation to update or revise any
forward-looking statement based on the occurrence of future events,
the receipt of new information, or otherwise.
Saratoga Resources, Inc.Brad Holmes, Investor Relations,
713-654-4009orAndrew Clifford, President,
713-458-1560www.saratogaresources.com