Bengal Energy Reports Significant Increases in Year End Fiscal 2014 Reserves and Value
May 20 2014 - 7:00AM
Marketwired Canada
Bengal Energy Ltd. (TSX:BNG) ("Bengal" or the "Company") is pleased to announce
significant increases in the net present value and volume of its reserves
following the completion of its fiscal 2014 year-end independent reserves report
(the "Report"). The Report is the result of an independent evaluation of the
Company's producing oil and gas properties by GLJ Petroleum Consultants Ltd.
("GLJ") of Calgary, Alberta effective March 31, 2014. The Company's reserves
were evaluated by GLJ in compliance with National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities ("NI 51-101") and in accordance with
the Canadian Oil and Gas Evaluation ("COGE") Handbook.
Reserves Highlights Include:
-- A 149% increase in the value(1) of Bengal's working interest ("WI")
proved plus probable ("2P") reserves at fiscal year-end 2014 to
approximately $101 million, compared to $41 million at year end 2013.
This 2014 2P value compares to the Company's enterprise value of $39.3
million(2) as at May 15, 2014;
-- Total proved ("1P") WI reserves of 1.7 MMBOE at March 31, 2014 has
increased by 122% and is equivalent to the prior years' total 2P
reserves;
-- 2P WI reserves of 3.8 MMBOE at March 31, 2014 is a 122% increase over
the prior year's 2P reserves of 1.7 MMBOE; and
-- Based on 1P and 2P reserve additions, respectively, the Company replaced
approximately 6.4 times and 13.2 times its annual production for the
year ended March 31, 2014.
(1) The Company Interest reserve values are based on pre-tax net present
value using GLJ's April 1, 2014 forecast pricing, discounted at 10%.
(2) Enterprise value is calculated as market cap plus total debt less cash,
and is based on a closing price of $0.55 per share on May 16, 2014, and
$8.75 million in total debt outstanding.
The significant and continuing growth in Bengal's reserve base is a direct
result of the drilling and development activities undertaken in the Company's
Cuisinier Field, and demonstrates the inherent value of this large, ultralight
oil weighted asset base. In addition, due to the report date of March 31, 2014,
the reserves attributed to the Company do not include the results from the four
successful wells drilled to date in the 2014 Phase One Cuisinier drilling
program, any production and reserves impact of which will be realized later in
calendar 2014 and be reflected in a subsequent reserves report.
"In light of the tremendous growth and value increase that we have announced
today, Bengal is very well positioned to continue growing our production, cash
flow and reserves for the benefit of our shareholders," said Chayan Chakrabarty,
Bengal's President and CEO. "Having much higher reserve volumes and values also
affords us greater flexibility to responsibly expand our borrowing base, and
underpin the continued development of these unique, world-class assets. We look
forward to keeping shareholders updated on our continuing progress and success,
and thank them for their ongoing support."
Reserves Summary:
The following tables provide a summary of Bengal's petroleum and natural gas
reserves as evaluated by GLJ effective March 31, 2014 in the Report using GLJ's
forecast prices, costs and foreign exchange rates as at March 31, 2014. It is
important to note that the recovery and reserves estimates provided herein are
estimates only. Actual reserves may be greater or less than the estimates
provided herein.
Total Corporate Reserves Summary (Australia + Canada):
LIGHT AND MEDIUM OIL NATURAL GAS
Reserves Category Gross (Mbbl) Net (Mbbl) Gross (MMcf) Net (MMcf)
----------------------------------------------------------------------------
Proved Developed
Producing 444 411 336 271
Non-Producing 14 13 - -
Proved Undeveloped 1,158 1,068 - -
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Total Proved 1,616 1,492 336 271
Probable 2,007 1,852 530 419
----------------------------------------------------------------------------
Total Proved Plus
Probable 3,624 3,344 867 690
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NATURAL GAS LIQUIDS TOTAL
Reserves Category Gross (Mbbl) Net (Mbbl) Gross (MBOE) Net (MBOE)
----------------------------------------------------------------------------
Proved Developed
Producing 4 2 504 458
Non-Producing - - 14 13
Proved Undeveloped - - 1,158 1,068
----------------------------------------------------------------------------
Total Proved 4 2 1,676 1,539
Probable 6 4 2,102 1,926
----------------------------------------------------------------------------
Total Proved Plus
Probable 10 6 3,778 3,465
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Notes:
(1) Estimates of reserves of natural gas include associated and non-
associated gas.
(2) "Gross Reserves" are Company's working interest reserves (operating and
non-operating) before the deduction of royalties and without including
any royalty interest of the Company.
(3) "Net Reserves" are Company's working interest reserves (operating and
non-operating) after deductions of royalty obligations plus the
Company's royalty interests.
(4) The numbers in this table may not add exactly due to rounding.
Total Corporate Net Present Value of Future Net Revenue:
After Tax Net Present
Before Tax Net Present Value Discounted Value Discounted at
at 10% 10%
figures in M$ March March % March 31, March 31, %
except % 31, 2014 31, 2013 Change 2014 2013 Change
--------------------------------------------------------------
Proved
Developed
Producing 24,067 8,268 191 23,781 8,268 188
Non-Producing 678 2,822 (76) 576 2,822 (80)
Proved
Undeveloped 20,784 6,947 199 14,530 6,947 109
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Total Proved 45,529 18,036 152 38,887 18,036 116
Probable 55,586 22,589 146 39,443 17,211 129
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Total Proved
Plus Probable 101,115 40,625 149 78,330 35,247 122
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Pricing Assumptions - Forecast Prices and Costs:
The following are select crude oil pricing, exchange rate and inflation rate
assumptions used by GLJ as of March 31, 2014 in estimating the reserves data in
the Report using forecast prices and costs. For the year-ended March 31, 2014,
Bengal's average realized sales prices for crude oil was US$ 113.71/bbl (CAD
$125.30/bbl).
ICE Brent Near Month
Futures Contract Crude
Oil North Sea Current NYMEX WTI Near Month Futures Contract Crude
Year USD/bbl Oil at Cushing Oklahoma
2014 $USD/bbl Current USD/bbl
----------------------------------------------------------------------------
2014 FY 107.54 97.79 97.79
2014 2H 107.50 97.50 97.50
2015 107.50 95.59 97.50
2016 105.00 93.71 97.50
2017 102.50 91.88 97.50
2018 102.50 90.07 97.50
2019 102.50 88.31 97.50
2020 102.50 87.50 98.54
2021 103.38 87.50 100.51
2022 105.45 87.50 102.52
2023 107.56 87.50 104.57
2024+ +2.0%/yr 87.50 +2.0%/yr
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Light Sweet Crude Oil
(40 API, 0.3%S)
Edmonton Current
Year CAD/bbl Inflation % Exchange Rate USD/CAD
----------------------------------------------------------------------------
2014 FY 102.04 1.8 0.9016
2014 2H 102.78 2.0 0.9000
2015 102.78 2.0 0.9000
2016 105.56 2.0 0.9000
2017 105.56 2.0 0.9000
2018 105.56 2.0 0.9000
2019 105.56 2.0 0.9000
2020 106.37 2.0 0.9000
2021 108.49 2.0 0.9000
2022 110.66 2.0 0.9000
2023 112.87 2.0 0.9000
2024+ +2.0%/yr 2.0 0.9000
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Reserves Committee:
The Company's Board of Directors has a Reserves Committee, comprising entirely
of independent board members, which reviews the qualifications and appointment
of the independent reserve evaluators and the procedures for providing
information to the evaluators. All booked reserves are based upon annual
evaluations by the independent qualified reserve evaluators in accordance with
the COGE Handbook. The evaluations are conducted from the fundamental geological
and engineering data. Both the Reserves Committee, chaired by Mr. Peter Gaffney,
as well as the full Board of Directors have reviewed the reserves information
and approved the reserves report.
About Bengal:
Bengal Energy Ltd. (TSX:BNG) is an international oil and gas exploration and
production company with producing and prospective light oil-weighted assets in
Australia and India. Bengal offers exposure to lower risk, current production
and cash flow, combined with longer-term high, potential impact exploration
projects. The Company's strategy is to achieve per share growth in cash flow,
production and reserves while establishing an attractive portfolio of future
drilling and exploration opportunities. Additional information is available on
our website at www.bengalenergy.ca.
Forward-Looking Statements
This news release contains certain forward-looking statements or information
("forward-looking statements") as defined by applicable securities laws that
involve substantial known and unknown risks and uncertainties, many of which are
beyond Bengal's control. These statements relate to future events or our future
performance. All statements other than statements of historical fact may be
forward looking statements. The use of any of the words "plan", "expect",
"prospective", "project", "intend", "believe", "should", "anticipate",
"estimate", or other similar words or statements that certain events "may" or
"will" occur are intended to identify forward-looking statements. The
projections, estimates and beliefs contained in such forward looking statements
are based on management's estimates, opinions, and assumptions at the time the
statements were made, including assumptions relating to: the size and volumes of
the Company's reserves; the impact of economic conditions in North America,
Australia, India and globally; industry conditions; changes in laws and
regulations including, without limitation, the adoption of new environmental
laws and regulations and changes in how they are interpreted and enforced;
increased competition; the availability of qualified operating or management
personnel; fluctuations in commodity prices, foreign exchange or interest rates;
stock market volatility and fluctuations in market valuations of companies with
respect to announced transactions and the final valuations thereof; results of
exploration and testing activities; field production rates and decline rates;
the ability to replace and expand oil and natural gas reserves through
acquisitions, development or exploration; and the ability to obtain required
approvals and extensions from regulatory authorities. We believe the
expectations reflected in those forward-looking statements are reasonable but,
no assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so,
what benefits that Bengal will derive from them. As such, undue reliance should
not be placed on forward-looking statements. The recovery and reserve estimates
of Bengal's reserves provided herein are estimates only and there is no
guarantee that the estimated reserves will be recovered.
The forward-looking statements contained herein are subject to numerous known
and unknown risks and uncertainties that may cause Bengal's actual financial
results, performance or achievement in future periods to differ materially from
those expressed in, or implied by, these forward-looking statements, including
but not limited to, risks associated with: risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation; capital expenditure costs; the failure to obtain required
regulatory approvals or extensions; failure to satisfy the conditions under
farm-in and joint venture agreements; failure to secure required equipment and
personnel; changes in general global economic conditions including, without
limitations, the economic conditions in North America, Australia, India;
increased competition; the availability of qualified operating or management
personnel; fluctuations in commodity prices, foreign exchange or interest rates;
changes in laws and regulations including, without limitation, the adoption of
new environmental and tax laws and regulations and changes in how they are
interpreted and enforced; the results of exploration and development drilling
and related activities; the ability to access sufficient capital from internal
and external sources; and stock market volatility. Readers are encouraged to
review the material risks discussed in Bengal's Annual Information Form under
the heading "Risk Factors" and in Bengal's annual MD&A under the heading "Risk
Factors". The Company cautions that the foregoing list of assumptions, risks and
uncertainties is not exhaustive. The forward-looking statements contained in
this news release speak only as of the date hereof and Bengal does not assume
any obligation to publicly update or revise them to reflect new events or
circumstances, except as may be require pursuant to applicable securities laws.
Barrels of Oil Equivalent
When converting natural gas to equivalent barrels of oil, Bengal uses the widely
recognized standard of 6 thousand cubic feet (mcf) to one barrel of oil (boe).
However, a boe 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. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly different from
the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
Internal estimates
Certain information contained herein are based on estimated values the Company
believes to be reasonable and are subject to the same limitations as discussed
under "Forward-looking Statements" above.
Oil and Gas Advisory
The reserves information contained in this press release has been prepared in
accordance with NI 51-101. Complete NI 51- 101 reserves disclosure will be
included in our Annual Information Form for the year ended March 31, 2014 which
is expected to be filed in late June 2014. Listed below are cautionary
statements applicable to our reserves information that are specifically required
by NI 51-101:
a. Individual properties may not reflect the same confidence level as
estimates of reserves for all properties due to the effects of
aggregation.
b. This news release contains estimates of the net present value of our
future net revenue from our reserves. Such amounts do not represent the
fair market value of our reserves.
c. Reserves included herein are stated on a Company Interest basis (before
royalty burdens and including royalty interests) unless noted otherwise
as well as on a gross and net basis as defined in NI 51-101. "Company
Interest" is not a term defined by NI 51-101 and as such the estimates
of Company Interest reserves herein may not be comparable to estimates
of "gross" reserves prepared in accordance with NI 51-101 or to other
issuers' estimates of Company Interest reserves.
Certain Defined Terms
Bbl - barrel Mcf - thousand cubic feet
Bbl/d - barrels per day Mcf/d - thousand cubic feet per day
Boe - barrels of oil equivalent MMbbl - million barrels
Boe/d - barrels of oil equivalent per MMBOE - 1 million barrels of oil
day equivalent
Mbbl - million barrels MMcf - million cubic feet
MBOE - million barrels of oil
equivalent
FOR FURTHER INFORMATION PLEASE CONTACT:
Bengal Energy Ltd.
Chayan Chakrabarty
President & Chief Executive Officer
(403) 205-2526
Bengal Energy Ltd.
Jerrad Blanchard
Chief Financial Officer
(403) 205-2526
investor.relations@bengalenergy.ca
www.bengalenergy.ca
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