(TSX-V: BBI) Blackbird Energy Inc.
(“
Blackbird” or the “
Company”) is
pleased to announce results from its independent year-end reserves
evaluation prepared by McDaniel & Associates Consultants Ltd.
(“
McDaniel”) as at an effective date of July 31,
2018 (the
“McDaniel Report”) and provide a brief
operational update. McDaniel prepared the evaluation in accordance
with the standards set out in National Instrument 51-101 of the
Canadian Securities Administrators and the Canadian Oil and Gas
Evaluation Handbook.
“This reserves evaluation is another exceptional
milestone for Blackbird as we continue to unlock the value of our
Pipestone/Elmworth Montney asset. With our next leg of development
focused entirely north of the Wapiti River on largely un-reserved
lands, we expect to be able to deliver significant reserves growth
subsequent to the tie-in of our northern development wells to the
Tidewater facility, which remains on schedule for a mid-2019
start-up.” said Garth Braun, President, CEO and Chairman of
Blackbird.
Highlights
- Increase of 126% in Proved Developed Producing
Reserves: Proved developed producing
(“PDP”) reserves were 3,175.9 Mboe at July 31,
2018, a 126% increase from July 31, 2017. The increase in PDP
reserves was primarily attributable to the inclusion of 4.8 net
additional wells in the McDaniel Report, bringing Blackbird’s total
productive well count to 8.8 net wells for the year ended July 31,
2018.
- Increase of 9% in Proved Plus Probable
Reserves: Proved plus probable (“2P”)
reserves were 59,096.7 Mboe at July 31, 2018, an 9% increase from
July 31, 2017.
- 2P NPV10 of $411.0 Million: The estimated net
present value of related future net revenue at July 31, 2018
(before taxes, discounted at 10%) was $44.9 million for Blackbird’s
PDP reserves ($15.1 million at July 31, 2017) and $411.0 million
($395.3 million at July 31, 2017) for its 2P reserves,
notwithstanding a lower natural gas price forecast for the July 31,
2018 reserves report.
- Moving to a Tighter Inter-well
Spacing: The McDaniel Report reflects an
inter-well spacing of 267 meters between wells in the same layer,
versus 400 meters between wells in the same layer in McDaniel’s
independent reserves evaluation as at July 31, 2017. The reduction
in inter-well spacing is attributable to increased supporting data
from analogue wells, and provides visibility to a potentially
significant increase to the ultimate drilling inventory across
Blackbird’s Pipestone/Elmworth Montney acreage.
- Successful Drilling of First Extended Reach
Horizontal: Blackbird is pleased to report that it has
successfully completed the drilling of its 102/2-27-71-07W6 Upper
Montney well, including a record lateral length of 2,956 meters in
22.9 days. The 102/2-27-71-07W6 is the Company’s first extended
reach horizontal and was drilled with an increased hole size to
accommodate larger production casing, which management expects will
provide for increased liquids rates.
- Spudding of Second Extended Reach Horizontal:
Blackbird spud its second extended reach Upper Montney well from
its 9-14 pad-site on September 8, 2018 using the same drill program
as its 102/2-27-71-07W6 well. In total, the Company plans to drill
and complete seven Montney wells on its lands north of the Wapiti
River by mid-2019.
Summary of Reserves
The following tables summarize the estimates of Blackbird’s
gross reserves at July 31, 2018 and July 31, 2017, as estimated by
McDaniel, Blackbird’s independent qualified reserves evaluators,
using the forecast price and cost assumptions in effect at the
applicable reserves evaluation date:
Summary of Gross Reserves(1) |
|
|
|
|
|
July 31, 2018 |
July 31, 2017 |
Change fromJuly 31,
2017 |
Reserves Category |
|
(Mboe) |
(Mboe) |
Proved Developed Producing |
|
3,175.9 |
1,407.0 |
126% |
Total Proved |
|
29,128.2 |
28,577.8 |
2% |
Probable |
|
29,968.5 |
25,794.9 |
16% |
Total Proved Plus Probable |
|
59,096.7 |
54,372.7 |
9% |
(1) Gross
reserves are working interest reserves before royalty
deductions. |
|
|
Summary of Reserves at July 31, 2018(1)(2) |
|
|
|
|
|
|
|
|
Oil |
|
Natural Gas |
|
Natural Gas Liquids(3) |
|
Total Oil Equivalent |
|
Gross |
Net |
|
Gross |
Net |
|
Gross |
Net |
|
Gross |
Net |
Reserves
Category |
(Mbbls) |
(Mbbls) |
|
(MMcf) |
(MMcf) |
|
(Mbbls) |
(Mbbls) |
|
(Mboe) |
(Mboe) |
Proved |
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing |
40.0 |
37.9 |
|
11,344.0 |
10,476.2 |
|
1,245.3 |
998.1 |
|
3,175.9 |
2,782.1 |
Developed
Non-Producing |
0.0 |
0.0 |
|
929.6 |
869.9 |
|
123.6 |
106.7 |
|
278.5 |
251.7 |
Undeveloped |
0.0 |
0.0 |
|
78,525.7 |
71,833.0 |
|
12,586.2 |
10,409.4 |
|
25,673.8 |
22,381.5 |
Total Proved |
40.0 |
37.9 |
|
90,799.3 |
83,179.0 |
|
13,955.0 |
11,514.2 |
|
29,128.2 |
25,415.3 |
Total
Probable |
12.6 |
11.1 |
|
92,108.8 |
82,486.0 |
|
14,604.4 |
11,051.9 |
|
29,968.5 |
24,810.7 |
Total
Proved Plus Probable |
52.6 |
49.0 |
|
182,908.1 |
165,665.0 |
|
28,559.5 |
22,566.2 |
|
59,096.7 |
50,226.0 |
(1)
“Gross” means Blackbird’s working interest (operating or
non-operating) share before the deduction of royalties and without
including any royalty interests of Blackbird. “Net” means
Blackbird’s working interest (operating or non-operating) share
after the deduction of royalty obligations, plus Blackbird’s
royalty interests in reserves. |
(2)
Numbers may not add due to rounding. |
(3)
Includes field condensate. |
Further information regarding the Company’s
reserves data, other oil and gas information, and business
activities as at and for the year ended July 31, 2018 will be
provided in Blackbird’s annual information form and statement of
reserves data and other oil and gas information under National
Instrument 51-101, for the year ended July 31, 2018, which will be
available on SEDAR at www.sedar.com and will be posted on the
Company’s website at www.blackbirdenergyinc.com in connection with
the release of Blackbird’s audited financial statements for the
year ended July 31, 2018.
Schachter Energy Conference – September
29th, 2018
Blackbird is pleased to announce it will be
attending the Schachter Energy Conference on Saturday September
29th, 2018 at the Telus Convention Centre in Calgary, Alberta.
Corporate materials related to the conference will be made
available on the Company’s website at www.blackbirdenergyinc.com
pursuant to the conference. Please refer to the following link for
conference details
www.schachterenergyreport.ca/conference-2018.
About BlackbirdBlackbird Energy Inc. is a highly
innovative oil and gas exploration and development company focused
on the condensate and liquids-rich Montney fairway at Elmworth,
near Grande Prairie, Alberta.
For more information, please view our Corporate
Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.Garth BraunChairman, CEO,
and President(403) 500-5550gbraun@blackbirdenergyinc.com
Allan DixonManager, Business Development(403)
699-9929 Ext. 103adixon@blackbirdenergyinc.com
Advisories
Advisories Regarding Oil & Gas Information
This news release contains the term barrels of
oil equivalent ("Boe"). Natural gas is converted to a Boe using six
thousand cubic feet of gas to one barrel of oil. Boes may be
misleading, particularly if used in isolation. The foregoing
conversion ratios are based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. As well, given that
the value ratio between product types based on the current price of
crude oil to natural gas is significantly different from the 6:1
energy equivalency ratio, using a conversion ratio on a 6:1 basis
may be misleading as an indication of value.
Other abbreviations used in the news release
include: “Mboe” which means thousand barrels of oil equivalent;
“Mbbl” which means thousand barrels, and “MMcf” which means million
cubic feet.
Forward-Looking Statements
This news release contains certain statements
("forward-looking statements") that constitute forward-looking
information within the meaning of applicable Canadian securities
laws. Forward-looking statements relate to future results or
events, are based upon internal plans, intentions, expectations and
beliefs, and are subject to risks and uncertainties that may cause
actual results or events to differ materially from those indicated
or suggested therein. All statements other than statements of
current or historical fact constitute forward-looking statements.
Forward-looking statements are typically, but not always,
identified by words such as "anticipate", "continue", "estimate",
"expect", "intend", "may", "will", "should", "believe", "plan",
"objective", "potential" and similar or other expressions
indicating or suggesting future results or events.
Forward-looking statements are not promises of
future outcomes. There can be no assurance that the results or
events indicated or suggested by the forward-looking statements, or
the plans, intentions, expectations or beliefs contained therein or
upon which they are based, are correct or will in fact occur or be
realized (or if they do, what benefits the Company may derive
therefrom).
In particular, but without limiting the
foregoing, this news release contains forward-looking statements
pertaining to: reserves, which are deemed to be forward-looking
information as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and can be
profitably produced in the future; the Company's drilling and
completion plans on its lands north of the Wapiti River; and
anticipated reserves growth.
With respect to the forward-looking statements
contained in this news release, Blackbird has assessed material
factors and made assumptions regarding, among other things: future
commodity prices and currency exchange rates, including consistency
of future oil, NGLs and natural gas prices with current commodity
price forecasts; the Company's continued ability to obtain
qualified staff and equipment in a timely and cost-efficient
manner; infrastructure and facility design concepts that have been
applied by the Company elsewhere in its Pipestone / Elmworth
Project may be successfully applied to the properties; the
predictability of future results based on past and current
experience; the predictability and consistency of the legislative
and regulatory regime governing royalties, taxes, environmental
matters and oil and gas operations, both provincially and
federally; the Company's ability to market production of oil, NGLs
and natural gas successfully to customers; the timing and success
of drilling and completion activities (and the extent to which the
results thereof meet expectations); the Company's future production
levels and amount of future capital investment, and their
consistency with the Company's current development plans and
budget; future capital expenditure requirements and the sufficiency
thereof to achieve the Company’s objectives; the successful
application of drilling and completion technology and processes;
the applicability of new technologies for recovery and production
of the Company's reserves and other resources, and their ability to
improve capital and operational efficiencies in the future; the
recoverability of the Company's reserves and other resources; the
Company’s ability to economically produce oil and gas from its
properties and the timing and cost to do so; the performance of
both new and existing wells; future cash flows from production;
future sources of funding for the Company's capital program; the
Company's future debt levels; geological and engineering estimates
in respect of the Company's reserves and other resources; the
accuracy of geological and geophysical data and the interpretation
thereof; the geography of the areas in which the Company conducts
exploration and development activities; the timely receipt of
required regulatory approvals;; the access, economic, regulatory
and physical limitations to which the Company may be subject from
time to time; the impact of competition on the Company; and the
Company's ability to obtain external financing when required and on
acceptable terms.
The forward-looking statements contained herein
reflect management's current views, but the assessments and
assumptions upon which they are based may prove to be incorrect.
Although Blackbird believes that its underlying assessments and
assumptions are reasonable based on currently available
information, undue reliance should not be placed on forward-looking
statements, which are inherently uncertain, depend upon the
accuracy of such assessments and assumptions, and are subject to
known and unknown risks, uncertainties and other factors, both
general and specific, many of which are beyond the Company's
control, that that may cause actual results or events to differ
materially from those indicated or suggested in the forward-looking
information and statements. Such risks, uncertainties and other
factors are discussed in the Company’s current annual information
form , annual and interim management’s discussion and analysis, and
other documents filed by it from time to time with securities
regulatory authorities in Canada, copies of which are available
electronically on SEDAR at www.sedar.com, and include, but are not
limited to: volatility in market prices and demand for oil, NGLs
and natural gas and hedging activities related thereto; general
economic, business and industry conditions; variance of the
Company's actual capital costs, operating costs and economic
returns from those anticipated; the ability to find, develop or
acquire additional reserves and the availability of the capital or
financing necessary to do so on satisfactory terms; risks related
to the exploration, development and production of oil and natural
gas reserves and resources; negative public perception of oil and
natural gas development and transportation, hydraulic fracturing
and fossil fuels; actions by governmental authorities, including
changes in government regulation, royalties and taxation; potential
legislative and regulatory changes; the rescission, or amendment to
the conditions of, groundwater licenses of the Company; management
of the Company's growth; the ability to successfully identify and
make attractive acquisitions, joint ventures or investments, or
successfully integrate future acquisitions or businesses; the
availability, cost or shortage of rigs, equipment, raw materials,
supplies or qualified personnel; adoption or modification of
climate change legislation by governments; the absence or loss of
key employees; uncertainty associated with estimates of oil, NGLs
and natural gas reserves and resources and the variance of such
estimates from actual future production; dependence upon
compressors, gathering lines, pipelines and other facilities,
certain of which the Company does not control; the ability to
satisfy obligations under the Company's firm commitment
transportation arrangements; the uncertainties related to the
Company's identified drilling locations; the high-risk nature of
successfully stimulating well productivity and drilling for and
producing oil, NGLs and natural gas; operating hazards and
uninsured risks; the possibility that the Company's drilling
activities may encounter sour gas; execution risks associated with
the Company's business plan; failure to acquire or develop
replacement reserves; the concentration of the Company's assets in
the Pipestone / Elmworth Project area; unforeseen title defects;
aboriginal claims; failure to accurately estimate abandonment and
reclamation costs; development and exploratory drilling efforts and
well operations may not be profitable or achieve the targeted
return; horizontal drilling and completion technique risks and
failure of drilling results to meet expectations for reserves or
production; limited intellectual property protection for operating
practices and dependence on employees and contractors; third-party
claims regarding the Company's right to use technology and
equipment; expiry of certain leases for the undeveloped leasehold
acreage in the near future; failure to realize the anticipated
benefits of acquisitions or dispositions; failure of properties
currently held or acquired in the future to produce as projected
and inability to accurately determine reserves and resource
potential, identify liabilities associated with acquired properties
or obtain protection from sellers against such liabilities; changes
in the application, interpretation and enforcement of applicable
laws and regulations; restrictions on drilling intended to protect
certain species of wildlife; potential conflicts of interests;
actual results differing materially from management estimates and
assumptions; seasonality of the Company's activities and the
Canadian oil and gas industry; alternatives to and changing demand
for petroleum products; extensive competition in the Company's
industry; lower oil, NGLs and natural gas prices and higher costs;
failure of 2D and 3D seismic data used by the Company to accurately
identify the presence of oil and natural gas; risks relating to
commodity price hedging instruments; terrorist attacks or armed
conflict; cyber security risks, loss of information and computer
systems; inability to dispose of non-strategic assets on attractive
terms; security deposits required under provincial liability
management programs; reassessment by taxing authorities of the
Company's prior transactions and filings; variations in foreign
exchange rates and interest rates; third-party credit risk
including risk associated with counterparties in risk management
activities related to commodity prices and foreign exchange rates;
sufficiency of insurance policies; potential litigation; variation
in future calculations of non-IFRS measures; sufficiency of
internal controls; breach of agreements by counterparties and
potential enforceability issues in contracts; impact of expansion
into new activities on risk exposure; inability of the Company to
respond quickly to competitive pressures; and the risks related to
the common shares and warrants that are publicly traded. This list
is not exhaustive.
The forward-looking statements contained in this
news release are made as of the date hereof and Blackbird assumes
no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable securities laws. All forward-looking
statements herein are expressly qualified by this advisory.
Reserves Advisories
The reserves estimates prepared herein have been
evaluated by an independent qualified reserves evaluator in
accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities and the Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook") and are effective as of July
31, 2018. Unless otherwise indicated, all reserves information has
been presented on a gross basis, which is the Company's working
interest share before deduction of royalties and without including
any royalty interests of the Company. The reserves have been
categorized in accordance with the reserves definitions set out in
the COGE Handbook. There is no guarantee that the estimated
reserves volumes will be recovered. Actual reserves may be greater
or less than those estimated, and the difference may be material.
The discounted and undiscounted estimates of net present value of
related future net revenues attributable to reserves do not
represent the fair market value of such reserves. For more
information on Blackbird's reserves, including the forecast prices
and cost assumptions applied applied by McDaniel in evaluating the
reserves, refer to the Company’s Statement of Reserves Data and
Other Oil and Gas Information as at and for the year ended July 31,
2018, which will be filed with applicable Canadian securities
regulators and available on SEDAR in the coming weeks.
Determination of reserves involves estimating
subsurface accumulations of oil, natural gas and natural gas
liquids that cannot be exactly measured. The preparation of
estimates is subject to an inherent degree of associated risk and
uncertainty, including factors that are beyond Blackbird's control.
The estimation and classification of reserves is a complex process
involving the application of professional judgment combined with
geological and engineering knowledge to assess whether specific
classification criteria have been satisfied. It requires
significant judgments based on available geological, geophysical,
engineering, and economic data as well as forecasts of commodity
prices and anticipated costs. As circumstances change and
additional data becomes available, whether through the results of
drilling, testing and production or from economic factors such as
changes in product prices or development and production costs,
reserves estimates also change. Revisions may be positive or
negative.
THE TSX VENTURE EXCHANGE INC. HAS
NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS
RELEASE. 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 press release.
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