Serinus Announces 2017 Year End Reserves
March 20 2018 - 7:11PM
Serinus Energy Inc. (“
Serinus”,
“
SEN” or the “
Company”) (TSX:SEN)
(WARSAW:SEN), announces the results of the 2017 year-end evaluation
of its oil and gas reserves. The evaluation was prepared by
the independent qualified reserves evaluator RPS Energy Canada Ltd.
(“
RPS”) in accordance with Canadian National
Instrument 51-101 – Standards of Disclosure for Oil and Gas
Activities, and includes the reserves and contingent resources in
Serinus’ Tunisian and Romanian properties.
Company Gross Reserves – Using Forecast
Prices
|
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
Oil/Liquids |
Gas |
BOE |
|
Oil/Liquids |
Gas |
BOE |
YoY Change |
|
|
(Mbbl) |
(MMcf) |
(Mboe) |
|
(Mbbl) |
(MMcf) |
(Mboe) |
(%) |
|
|
|
|
|
|
|
|
|
|
TUNISIA (Company Working
Interest) |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
438 |
1,028 |
609 |
|
1,068 |
1,985 |
1,399 |
-56 |
% |
|
Non-Producing |
692 |
1,544 |
949 |
|
481 |
1,961 |
808 |
18 |
% |
|
Undeveloped |
802 |
1,888 |
1,117 |
|
699 |
1,641 |
973 |
15 |
% |
Total Proved (1P) |
1,932 |
4,459 |
2,675 |
|
2,247 |
5,587 |
3,178 |
-16 |
% |
Probable |
5,044 |
11,670 |
6,989 |
|
5,169 |
14,455 |
7,578 |
-8 |
% |
Total Proved & Probable (2P) |
6,976 |
16,129 |
9,664 |
|
7,416 |
20,042 |
10,756 |
-10 |
% |
|
|
|
|
|
|
|
|
|
|
ROMANIA (Company Working
Interest) |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
- |
- |
- |
|
- |
- |
- |
N/A |
|
Non-Producing |
- |
- |
- |
|
- |
- |
- |
N/A |
|
Undeveloped |
12 |
6,111 |
1,031 |
|
- |
- |
- |
N/A |
Total Proved (1P) |
12 |
6,111 |
1,031 |
|
- |
- |
- |
N/A |
Probable |
27 |
8,686 |
1,475 |
|
- |
- |
- |
N/A |
Total Proved & Probable (2P) |
39 |
14,797 |
2,505 |
|
- |
- |
- |
N/A |
|
|
|
|
|
|
|
|
|
TOTAL COMPANY |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
438 |
1,028 |
609 |
|
1,068 |
1,985 |
1,399 |
-56 |
% |
|
Non-Producing |
692 |
1,544 |
949 |
|
481 |
1,961 |
808 |
18 |
% |
|
Undeveloped |
814 |
7,999 |
2,147 |
|
699 |
1,641 |
973 |
121 |
% |
Total Proved (1P) |
1,944 |
10,570 |
3,706 |
|
2,247 |
5,587 |
3,178 |
17 |
% |
Probable |
5,071 |
20,356 |
8,464 |
|
5,169 |
14,455 |
7,578 |
12 |
% |
Total Proved & Probable (2P) |
7,015 |
30,926 |
12,169 |
|
7,416 |
20,042 |
10,756 |
13 |
% |
|
Serinus encountered significant external and
operational challenges in 2017, although the petroleum industry in
general saw a recovery in relative oil prices towards the latter
half of the year. The price of Brent Crude started at just over
$56/bbl in early January, trading within a narrow band between
$53/bbl and $57/bbl until early March before becoming more volatile
with steep declines and recovery until the yearly low of $44.82/bbl
on June 21, 2017. Brent Crude prices then began to gradually
strengthen from June to the end of the year, reaching the yearly
high of $67.02 on December 21, 2017. Brent crude prices have
sustained levels above $62/bbl in 2018 to date, exceeding $70/bbl
for brief periods of trading.
Total corporate 1P and 2P reserves increased in
2017 from 2016 by 17% and 13%, respectively. Recovering
commodity prices were the dominant factor in 2017, especially in
the latter half. These increased reserves volumes are due to
the reclassification of a portion of the gas resources of the
Moftinu structure in Romania from Contingent Resources to Reserves,
offset by reserve reductions attributed to the Company’s Tunisia
properties. There were positive and negative revisions which are
discussed below.
Tunisia
In Tunisia, 1P reserves decreased by 16%, while
2P reserves decreased by 10%. The technical revisions to
reserves are:
- Positive revisions included:
- Removing SAB N1 workover and replacing with SAB N2, which has a
higher EUR at lower cost; and
- Improvement in SAB 11, WIN 13 and SAB NW1 production
performance; and
- Negative revisions included:
- Reclassifications of Ech Chouech and Sanghar from Reserves to
Contingent Resources;
- Decreased reserves due to reduced production performance at WIN
12bis; and
- Decreased reserves due to the removal of future development
plans for CS-5, CS Sil-10, CS Sil-1 & CS-8bis
Romania
In Romania, the Moftinu Structure was classified
as Reserves from its previous classification as contingent
resources. Some of the key assumptions of Romanian reserves
are:
- Total resources nearly doubled from
2016;
- Reclassification of A1, A2 and A3
sands to reserves from contingent resources;
- The 2017 YE reserves evaluation
assumes three additional/replacement development wells; (1003,
1004, 1007) to be drilled and placed on production in 2018, with
Moftinu-1006 to be drilled and placed on production in 2019;
- Almost no change to reserves as a result of the Moftinu-1001
uncontrolled well incident;
- ~27 Mboe of gas escaped during the event, or 0.52% of the
field’s total resources; and
- Replacing Moftinu-1001 with Moftinu-1007 had no material effect
on the reserves for the field.
Net Present Value of Future Net
Revenues– After Tax, Using Forecast Prices
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
|
0 |
% |
10 |
% |
15 |
% |
|
0 |
% |
10 |
% |
15 |
% |
YoY Change for PV10 |
|
|
(US$ millions) |
|
(US$ millions) |
|
|
|
|
|
|
|
TUNISIA |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
(7.7 |
) |
(2.4 |
) |
(1.0 |
) |
|
(18.4 |
) |
(2.8 |
) |
0.8 |
|
14 |
% |
|
Non-Producing |
(6.6 |
) |
3.6 |
|
5.4 |
|
|
0.7 |
|
4.7 |
|
4.9 |
|
-23 |
% |
|
Undeveloped |
9.3 |
|
4.3 |
|
2.5 |
|
|
9.9 |
|
2.3 |
|
0.4 |
|
87 |
% |
Total Proved (1P) |
(4.9 |
) |
5.5 |
|
6.9 |
|
|
(7.8 |
) |
4.2 |
|
6.1 |
|
31 |
% |
Probable |
86.3 |
|
62.0 |
|
43.7 |
|
|
115.7 |
|
70.3 |
|
49.9 |
|
-12 |
% |
Total Proved & Probable
(2P) |
81.4 |
|
67.5 |
|
50.6 |
|
|
107.9 |
|
74.5 |
|
56.0 |
|
-9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROMANIA |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
N/A |
|
Non-Producing |
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
N/A |
|
Undeveloped |
11.8 |
|
9.9 |
|
9.1 |
|
|
- |
|
- |
|
- |
|
N/A |
Total Proved (1P) |
11.8 |
|
9.9 |
|
9.1 |
|
|
- |
|
- |
|
- |
|
N/A |
Probable |
40.3 |
|
32.2 |
|
29.1 |
|
|
- |
|
- |
|
- |
|
N/A |
Total Proved & Probable
(2P) |
52.1 |
|
42.1 |
|
38.2 |
|
|
- |
|
- |
|
- |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPANY |
Proved |
|
|
|
|
|
|
|
|
|
Producing |
(7.7 |
) |
(2.4 |
) |
(1.0 |
) |
|
(18.4 |
) |
(2.8 |
) |
0.8 |
|
-14 |
% |
|
Non-Producing |
(6.6 |
) |
3.6 |
|
5.4 |
|
|
0.7 |
|
4.7 |
|
4.9 |
|
-23 |
% |
|
Undeveloped |
21.1 |
|
14.2 |
|
11.6 |
|
|
9.9 |
|
2.3 |
|
0.4 |
|
517 |
% |
Total Proved (1P) |
6.8 |
|
15.4 |
|
16.0 |
|
|
(7.8 |
) |
4.2 |
|
6.1 |
|
267 |
% |
Probable |
126.6 |
|
94.2 |
|
72.8 |
|
|
115.7 |
|
70.3 |
|
49.9 |
|
34 |
% |
Total Proved & Probable
(2P) |
133.4 |
|
109.6 |
|
88.8 |
|
|
107.9 |
|
74.5 |
|
56.0 |
|
47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net present values for Serinus’ Reserves
Increased by 267% and 47% for 1P and 2P Reserves,
respectively. The contributing factors to the $11.2 million
increase in the 1P PV10 valuation was the classification of Romania
Contingent Resources in 2016 to reserves in 2017 and a slight
increase in the valuation of Tunisian 1P Reserves.
Contingent Resources
In addition to the 1P and 2P Reserves assigned
to the Company’s properties in Tunisia and Romania, Contingent
Resources are also assigned to the Company’s properties,
The Tunisian contingent resources are in the
Development Pending sub-class and consist of the commercially
recoverable resources in the Ech Chouech and Sanghar fields, which
have been on production in the past using conventional primary
recovery technology, but are currently shut in due to political
uncertainties. The specific contingency which prevents these
resources from being classified as reserves is the Company decision
to not return the fields to production status at this time given
the political risks of social unrest in the area. Return to
production, and reclassification to reserves, is forecast to occur
in the 2019 or 2020 timeframe. The development costs to bring
these contingent resources on to production are US$0.8 million. The
Company has a 100% working interest in all properties attributed
with contingent resources.
The Romanian contingent resources are also in
the Development Pending sub-class and consist of the resources
behind pipe in three specific reservoir sand layers and which are
recoverable using conventional primary gas recovery technology. The
specific contingency which prevents these resources from being
classified as reserves is the Company decision to recomplete a
producing well to access recovery of gas resources from these
sands, which is forecast to occur during 2019 and 2020. The
development costs to bring these contingent resources on to
production are estimated at US$ 0.4 million, US$1.2 million and
US$1.55 million for the 1C, 2C, and 3C cases respectively.
Company Gross Risked Contingent – Using
Forecast Prices
|
TUNISIA - Contingent Resources (Company
Working Interest) |
|
Resource Volumes (risked) |
|
AT NPV (risked) |
|
|
|
Oil/Liquids |
Gas |
BOE |
|
0 |
% |
10 |
% |
15 |
% |
|
Chance of Development |
|
(Mbbl) |
(MMcf) |
(Mboe) |
|
(US$ millions) |
|
1C
Contingent Resources |
81.6 |
69 |
89.5 |
|
(6.5 |
) |
(4.1 |
) |
(3.3 |
) |
|
90 |
% |
2C
Contingent Resources |
217.4 |
192 |
250.0 |
|
(4.3 |
) |
(0.5 |
) |
0.1 |
|
|
90 |
% |
3C Contingent Resources |
351.5 |
328 |
405.7 |
|
(1.4 |
) |
2.2 |
|
2.1 |
|
|
90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROMANIA - Contingent Resources (Company
Working Interest) |
|
Resource Volumes (risked) |
|
AT NPV (risked) |
|
|
|
Oil/Liquids |
Gas |
BOE |
|
0 |
% |
10 |
% |
15 |
% |
|
Chance of Development |
|
(Mbbl) |
(MMcf) |
(Mboe) |
|
(US$ millions) |
|
1C
Contingent Resources |
3.3 |
1,626 |
274.4 |
|
5.7 |
|
4.8 |
|
4.4 |
|
|
90 |
% |
2C
Contingent Resources |
15.0 |
5,673 |
960.5 |
|
26.7 |
|
18.1 |
|
15.1 |
|
|
90 |
% |
3C Contingent Resources |
30.0 |
9,171 |
1,558.5 |
|
45.6 |
|
25.3 |
|
19.3 |
|
|
90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPANY |
|
Resource Volumes (risked) |
|
AT NPV (risked) |
|
|
|
Oil/Liquids |
Gas |
BOE |
|
0 |
% |
10 |
% |
15 |
% |
|
Chance of Development |
|
(Mbbl) |
(MMcf) |
(Mboe) |
|
(US$ millions) |
|
1C
Contingent Resources |
84.9 |
1,695 |
367.5 |
|
(0.8 |
) |
0.7 |
|
1.1 |
|
|
90 |
% |
2C
Contingent Resources |
232.3 |
5,865 |
1,209.8 |
|
22.3 |
|
17.6 |
|
15.2 |
|
|
90 |
% |
3C Contingent Resources |
381.4 |
9,499 |
1,964.6 |
|
44.3 |
|
27.5 |
|
21.4 |
|
|
90 |
% |
|
Notes to Contingent Resources Table:
- Contingent Resources are those quantities of petroleum
estimated, as of December 31, 2017 to be potentially recoverable
from known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
- There is uncertainty that is will be commercially viable to
produce any portion of the contingent resources.
Serinus will concentrate on the development of
the Moftinu Gas Development Project in Romania which is currently
under construction with anticipated first gas in late Q2
2018. The Company is also developing the drilling program for
the Moftinu-1007, the replacement well for Moftinu-1001 after the
recent well control incident and subsequent abandonment, as well as
the Moftinu-1003 and Moftinu-1004 wells. The drilling of these
wells should meet the work commitments for the extension of the
Satu Mare Concession obtained on October 28, 2016.
Reserve Evaluator Price
Forecasts
RPS used the following commodity price forecasts
in preparing its evaluation of Serinus’ oil and gas properties:
|
|
|
|
|
|
Tunisia Domestic Gas |
Romanian Gas Price |
|
Brent |
Sabria |
Chouech |
|
|
(US$/Bbl) |
(US$/Mcf) |
(US$/Mcf) |
(US$/MMBtu) |
2018 |
62.00 |
7.24 |
6.94 |
5.54 |
2019 |
62.00 |
7.24 |
6.94 |
5.54 |
2020 |
65.00 |
7.59 |
7.27 |
5.80 |
2021 |
69.00 |
8.06 |
7.72 |
6.16 |
2022 |
72.50 |
8.46 |
8.11 |
6.47 |
2023 |
75.50 |
8.81 |
8.45 |
6.74 |
2024 |
78.83 |
9.20 |
8.82 |
7.04 |
2025 |
80.41 |
9.39 |
9.00 |
7.18 |
2026 |
82.02 |
9.58 |
9.18 |
7.32 |
2027 |
83.66 |
9.77 |
9.36 |
7.47 |
2028 |
85.33 |
9.96 |
9.55 |
7.62 |
2029 |
87.04 |
10.16 |
9.74 |
7.77 |
2030 |
88.78 |
10.37 |
9.93 |
7.92 |
2031 |
90.55 |
10.57 |
10.13 |
8.08 |
2032 |
92.36 |
10.78 |
10.33 |
8.24 |
2033 |
94.21 |
11.00 |
10.54 |
8.41 |
2034 |
96.09 |
11.22 |
10.75 |
8.58 |
2035 |
98.02 |
11.44 |
10.97 |
8.75 |
2036 |
99.98 |
11.67 |
11.19 |
8.92 |
|
|
|
|
|
Abbreviations
bbl |
Barrel(s) |
bbl/d |
Barrels per day |
boe |
Barrels of Oil Equivalent |
boe/d |
Barrels of Oil Equivalent per day |
Mcf |
Thousand Cubic Feet |
Mcf/d |
Thousand Cubic Feet per day |
MMcf |
Million Cubic Feet |
MMcf/d |
Million Cubic Feet per day |
Mcfe |
Thousand Cubic Feet Equivalent |
Mcfe/d |
Thousand Cubic Feet Equivalent per day |
MMcfe |
Million Cubic Feet Equivalent |
MMcfe/d |
Million Cubic Feet Equivalent per day |
Mboe |
Thousand boe |
Bcf |
Billion Cubic Feet |
MMboe |
Million boe |
Mcm |
Thousand Cubic Metres |
UAH |
Ukrainian Hryvnia |
MMBtu |
Million British Thermal Units |
CAD |
Canadian Dollar |
USD |
U.S. Dollar |
Cautionary Statement:BOEs may
be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
All values of net present value of reserves and
contingent resources shown in this press release do not necessarily
represent fair market value.
Test results are not necessarily indicative of
long-term performance or of ultimate recovery. The test data
contained herein is considered preliminary until full pressure
transient analysis is complete.
About SerinusSerinus is an
international upstream oil and gas exploration and production
company that owns and operates projects in Tunisia and Romania.
For further information, please refer to the
Serinus website (www.serinusenergy.com) or contact the
following:
Serinus Energy
Inc.Calvin BrackmanVice President, External
Relations & StrategyTel.: +1-403-264-8877
cbrackman@serinusenergy.com |
Serinus Energy Inc.
Jeffrey AuldChief Executive OfficerTel.:
+1-403-264-8877 jauld@serinusenergy.com |
|
|
|
Translation: This news
release has been translated into Polish from the English
original.
Forward-looking Statements
This release may contain forward-looking statements made as
of the date of this announcement with respect to future activities
that either are not or may not be historical facts. Although the
Company believes that its expectations reflected in the
forward-looking statements are reasonable as of the date hereof,
any potential results suggested by such statements involve risk and
uncertainties and no assurance can be given that actual results
will be consistent with these forward-looking statements.
Various factors that could impair or prevent the Company from
completing the expected activities on its projects include that the
Company's projects experience technical and mechanical problems,
there are changes in product prices, failure to obtain regulatory
approvals, the state of the national or international monetary, oil
and gas, financial , political and economic markets in the
jurisdictions where the Company operates and other risks not
anticipated by the Company or disclosed in the Company's published
material. Since forward-looking statements address future events
and conditions, by their very nature, they involve inherent risks
and uncertainties and actual results may vary materially from those
expressed in the forward-looking statement. The Company undertakes
no obligation to revise or update any forward-looking statements in
this announcement to reflect events or circumstances after the date
of this announcement, unless required by law.
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