Crown Point Announces Results for the Three Months and Year Ended
December 31, 2013
CALGARY, ALBERTA--(Marketwired - Apr 21, 2014) - Crown Point
Energy Inc. ("Crown Point" or the "Company") (TSX-VENTURE:CWV)
today announces its operating and financial results for the three
months and year ended December 31, 2013. Copies of the Company's
audited consolidated financial statements, Management's Discussion
and Analysis ("MD&A") and Annual Information Form (containing
the Company's National Instrument 51-101 - Standards of Disclosure
for Oil and Gas Activities ("NI 51-101") disclosure for the year
ended December 31, 2013) are being filed with Canadian securities
regulatory authorities and will be made available under the
Company's profile at www.sedar.com and on the Company's website at
www.crownpointenergy.com. All dollar figures are expressed in
United States dollars unless otherwise stated, and M$ means
thousands of U.S. dollars.
FINANCIAL AND OPERATING HIGHLIGHTS
Highlights for the year ended December 31, 2013 include:
- Cerro de Los Leones - 100% interest La Hoyada x-1 well drilled
and cased as a potential conventional Vaca Muerta oil well.
- Tierra del Fuego Concessions Extended - Approval of ten year
extensions to August, 2026 received.
- Ten Well Initial Tierra del Fuego Drilling Program - Drilling
operations expected to commence in late April 2014.
- Argentina New Gas Incentive Program - On March 30, 2014, Crown
Point submitted to the Argentine Government its formal proposal for
participation in the New Gas Incentive Program for smaller
companies announced in November 2013.
- Average Daily Sales Volumes: 1,797 BOEPD.
- Operating Netback per BOE: $13.93.
- Funds Flow From Operations: $7.5 million.
- Petro Plus Credits - The Company received proceeds of $6.0
million for the sale of Petroleo Plus Credits.
- Total Corporate Proved Reserves: 3.43 million BOE (gross
working interest).
- Total Proved plus Probable Reserves: 5.75 million BOE (gross
working interest).
FINANCIAL AND OPERATING RESULTS
Results for the three months and year ended December 31, 2013
include:
- Average Daily Sales Volumes: 1,667 BOEPD and 1,797 BOEPD for
the three months and year ended December 31, 2013, respectively, as
compared to 2,053 BOEPD for the four months ended December 31, 2012
and 727 BOEPD for the year ended August 31, 2012(1).
- Operating Netback per BOE: $14.16 and $13.93 for the three
months and year ended December 31, 2013, respectively, as compared
to $15.81 for the four months ended December 31, 2012 and $20.92
for the year ended August 31, 2012(1). As Tierra del Fuego volumes,
which include a large percentage of natural gas volumes that earn a
lower operating netback than oil sales volumes from the El Valle
area, are only included in the June 1 to August 31 portion of the
year ended August 31, 2012, the operating netback is higher for the
year ended August 31, 2012.
- Funds Flow From (Used In) Operations: $2.2 million and $7.5
million for the three months and year ended December 31, 2013,
respectively, compared to $2.5 million for the four months ended
December 31, 2012 and $(0.6) million for the year ended August 31,
2012(1).
Operating Netbacks - Total Company
|
|
Three months ended December 31, 2013 |
|
Year ended December 31, 2013 |
|
Four months ended December 31, 2012 |
|
Year ended August 31, 2012 |
Total sales volumes (BOE) |
|
|
153,327 |
|
|
655,788 |
|
|
250,411 |
|
|
266,215 |
Average daily sales volumes (BOEPD) |
|
|
1,667 |
|
|
1,797 |
|
|
2,053 |
|
|
727 |
Oil and gas revenue |
|
$ |
5,208,744 |
|
$ |
21,716,647 |
|
$ |
8,298,961 |
|
$ |
10,768,464 |
Royalties |
|
|
(921,206) |
|
|
(4,062,015) |
|
|
(1,474,906) |
|
|
(2,383,336) |
Operating costs |
|
|
(2,115,637) |
|
|
(8,522,994) |
|
|
2,865,659 |
|
|
2,816,568 |
Operating netback |
|
$ |
2,171,901 |
|
$ |
9,131,638 |
|
$ |
9,689,714 |
|
$ |
11,201,696 |
Per BOE |
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas revenue |
|
$ |
33.97 |
|
$ |
33.12 |
|
$ |
33.14 |
|
$ |
40.45 |
Royalties |
|
|
(6.01) |
|
|
(6.19) |
|
|
(5.89) |
|
|
(8.95) |
Operating costs |
|
|
(13.80) |
|
|
(13.00) |
|
|
(11.44) |
|
|
(10.58) |
Operating netback |
|
$ |
14.16 |
|
$ |
13.93 |
|
$ |
15.81 |
|
$ |
20.92 |
(1) |
Financial and operating results for the year ended August 31, 2012
only include results from the Tierra del Fuego area from May 28 to
August 31, 2012 as the Company's interests in the area were not
acquired until May 28, 2012. |
RESERVES
McDaniel & Associates Consultants Ltd. ("McDaniel"), an
independent qualified reserves evaluator, evaluated the oil and
natural gas reserves attributable to all of Crown Point's
properties as at December 31, 2013 based on forecast prices and
costs and in accordance with NI 51-101 and the Canadian Oil and Gas
Evaluation Handbook. McDaniel's evaluation also presents the
estimated net present value of future net revenue of Crown Point.
McDaniel's report dated March 7, 2014 on Crown Point's oil and gas
reserves as at December 31, 2013 is summarized below:
SUMMARY
OF RESERVES AS OF December 31, 2013 AS COMPARED TO December 31,
2012 |
(Forecast
Prices & Costs) |
Reserves Category |
Company Gross Oil and Liquids (Mbbls) |
% Change |
Company Gross Natural Gas (Mmcf) |
% Change |
|
December 2013 |
December 2012 |
|
December 2013 |
December 2012 |
|
Proved developed producing |
364 |
854 |
-57% |
7,646 |
8,575 |
-11% |
Proved developed non-producing |
202 |
265 |
-24% |
319 |
364 |
-12% |
Proved undeveloped |
265 |
417 |
-36% |
7,651 |
7,860 |
-3% |
Total proved |
830 |
1,535 |
-46% |
15,616 |
16,799 |
-7% |
Total probable |
783 |
1,250 |
-37% |
9,184 |
9,423 |
-3% |
Total proved plus probable |
1,613 |
2,785 |
-42% |
24,800 |
26,222 |
-5% |
Total possible |
924 |
992 |
-7% |
5,200 |
4,492 |
+16% |
Total proved plus probable plus possible |
2,537 |
3,778 |
-33% |
30,000 |
30,714 |
-2% |
|
|
|
|
|
|
|
Reserves Category |
Company Gross Total Reserves MBOE |
% Change |
|
December 2013 |
December2012 |
|
Proved developed producing |
1,638 |
2,283 |
-28% |
Proved developed non-producing |
255 |
325 |
-22% |
Proved undeveloped |
1,540 |
1,727 |
-11% |
Total proved |
3,433 |
4,334 |
-21% |
Total probable |
2,313 |
2,821 |
-18% |
Total proved plus probable |
5,746 |
7,155 |
-20% |
Total possible |
1,791 |
1,741 |
+3% |
Total proved plus probable plus possible |
7,537 |
8,897 |
-15% |
|
|
|
|
SUMMARY
OF NET PRESENT VALUE OF FUTURE NET REVENUE |
AS OF
December 31, 2013 |
(Forecast
Prices & Costs) |
|
Net Present Values of Future Net Revenue Before Income
Taxes Discounted at (%/year) |
Reserves Category |
0% M$ |
5% M$ |
10% M$ |
15% M$ |
20% M$ |
Proved developed producing |
14,376 |
13,519 |
12,770 |
12,110 |
11,524 |
Proved developed non-producing |
4,602 |
4,195 |
3,840 |
3,528 |
3,252 |
Proved undeveloped |
15,419 |
12,155 |
9,649 |
7,694 |
6,146 |
Total proved |
34,396 |
29,870 |
26,259 |
23,331 |
20,921 |
Total probable |
40,487 |
31,890 |
25,569 |
20,818 |
17,176 |
Total proved plus probable |
74,883 |
61,760 |
51,828 |
44,149 |
38,098 |
Total possible |
39,433 |
28,512 |
21,078 |
15,859 |
12,094 |
Total proved plus probable plus possible |
114,316 |
90,272 |
72,906 |
60,008 |
50,191 |
(1) |
"Possible reserves" are those additional reserves that are less
certain to be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or
exceed the sum of proved plus probable plus possible reserves. |
|
|
(2) |
The
estimated net present values of future net revenues disclosed do
not represent fair market value. |
Sales of oil and natural gas during the year ended December 31,
2013 were 655,788 BOE comprised of 200,053 bbls of oil and liquids
and 2.734 Bcf of natural gas.
Reserve volumes and net present values of Crown Point's reserves
were impacted by several factors. Crown Point's sales volumes for
the period were 655,788 BOE with sales revenue of $21,716,647.
Crown Point did not drill any wells during 2013 as it was awaiting
governmental approval for the extension of the Tierra del Fuego
("TDF") Concessions and preparing for the commencement of drilling
operations in TDF and at Cerro de Los Leones. Technical revisions
were primarily due to depleted reservoir pressure in the south east
area of El Valle resulting in a negative revision to primary oil
recovery on proved plus probable reserves of 729,000 barrels
comprised of a negative revision of 391,000 barrels of proved
reserves and of 338,000 barrels of probable reserves. Although
supported by higher commodity prices, increased operating costs at
El Valle and on the TDF Concessions, coupled with reserve
revisions, impacted net present values.
Further details of the evaluation of the Company's reserves as
at December 31, 2013 will be contained in the Company's NI 51-101
filings for the year ended December 31, 2013 included in the Annual
Information Form which will be filed with Canadian securities
regulatory authorities and will be made available under the
Company's profile at www.sedar.com and on the Company's website at
www.crownpointenergy.com.
OPERATIONS
TIERRA DEL FUEGO, ARGENTINA
The Company's 25.78% working interest in the TDF area of
Argentina covers approximately 489,000 acres (126,000 net acres) in
the Austral Basin and includes the Las Violetas, Angostura Sur and
Rio Cullen exploitation concessions. The primary term of all three
concessions expires in November 2026.
Crown Point's TDF Concessions are high quality natural gas
weighted assets possessing the capability to deliver increased
levels of production and reserves in an expected increasing natural
gas price market.
The Company signed a drilling contract with San Antonio
International to provide a drilling rig for our initial ten well
drilling program in Tierra del Fuego on February 27, 2014.
The drilling rig arrived in TDF in April with drilling
operations on the Las Violetas Exploitation Concession expected to
commence in late April. The term of the contract is one year with
provisions for extending the term.
The initial ten well program on the Las Violetas Exploitation
Concession will consist of eight development wells in the Los
Flamencos gas pool and two exploration wells, one on the Puesto
Quince prospect and another near the southern San Luis natural gas
pool. Site preparation and pre-drilling logistics have largely been
completed for this drilling program. All of the drilling locations
have been fully imaged with 3-D seismic. The Puesto Quince prospect
lies to the northeast of the Los Flamencos and Los Patos producing
pools and is adjacent to the Rio Chico gas pool. The feature has a
seismically mapped areal extent of approximately 50 km2. The San
Luis exploration prospect has been defined with 3-D seismic and is
located on a separate fault block near the San Luis gas pool which
to date has produced approximately 32 Bcf of natural gas.
Concurrent with the commencement of drilling operations, a
fracture stimulation program will be performed on four producing
wells in the Los Flamencos natural gas pool and one well in the San
Luis field. A similar program undertaken in 2010 significantly
improved deliverability from five wells in the Los Flamencos
pool.
NEW GAS INCENTIVE IMPACT ON CROWN POINT
In November 2013, the Company was informed that its application
for participation in the New Gas Incentive had been rejected
because the Government of Argentina had determined that the New Gas
Incentive would not apply to companies of Crown Point's size;
however on November 28, 2013 the government announced the
introduction of a new incentive program (the "Program"), designed
for companies with lower gas production rates.
The Program is similar to the New Gas Incentive in that it
compensates companies for increasing production above base
production levels. The Company submitted its application to
participate in the Program on March 30, 2014. As of the date
hereof, the Company's application has not been processed and
approved by the government. Additional details of the New Gas
Incentive and the Program will be disclosed in the Company's Annual
Information Form for the year ended December 31, 2013.
CERRO DE LOS LEONES, NEUQUEN BASIN, ARGENTINA
The Company's 100% interest in the Cerro de Los Leones
exploration concession covers approximately 306,646 acres in the
Mendoza portion of the Neuquén Basin.
The Company has completed the interpretation of seismic and has
identified two separate structural features, La Hoyada and La
Mocha.
On February 12, 2014 the Company announced that it has drilled,
logged, cased and rig released the La Hoyada x-1 exploration well
as a potential Vaca Muerta oil discovery. The La Hoyada x-1 well
was drilled to a total depth of 1,953 metres and encountered
persistent oil shows and gas while drilling through the Vaca Muerta
formation which consisted of 125 metres of shale and 84 metres of
imbedded fractured igneous intrusives.
Crown Point believes that the presence of the oil shows and
background gas demonstrates that the Vaca Muerta formation at Cerro
de Los Leones is mature and generating oil. Analogous wells in the
area indicate that the fractured intrusive igneous rocks in the
Vaca Muerta function as conventional fractured reservoirs sourcing
oil from the surrounding Vaca Muerta shale. Interpretation of
samples and logs indicate that 36 metres of the total 84 metres of
intrusives were highly fractured and had the best live oil shows
during drilling.
Similar igneous intrusives in the Mendoza portion of the
Northern Neuquén basin are recognized as significant hydrocarbon
reservoirs having produced over 26 MMbbls of oil to date from areas
surrounding Cerro de los Leones.
Additional secondary targets in the well include a 5 metre thick
fractured limestone layer at the bottom of the Chachao Formation
and several fractured igneous intrusives in the Agrio Formation all
with oil and gas shows and full gas chromatography.
Crown Point has sent the Vaca Muerta drilling samples for
laboratory analysis to obtain information on total organic content
and thermal maturity. The Company anticipates that it will commence
completion operations on the La Hoyada well in April 2014. If the
completion is successful, the Company plans to place the well on a
production test with the potential for further drilling at Cerro de
los Leones later in 2014.
A potential analogy to the La Hoyada well is the Vega del Sol
well x-1, located 4 kilometres to the northwest of La Hoyada. This
well was drilled in 1995 by YPF and encountered the Vaca Muerta 150
metres structurally lower than the La Hoyada well. It was completed
in intrusive igneous rocks penetrating the Chachao formation and
production tested at rates between 300 and 400 barrels of oil per
day. Due to problems with the well cementation program it was
subsequently suspended and abandoned by YPF.
Crown Point believes that this drilling result is confirmation
of the conventional and unconventional potential of the Vaca Muerta
formation on Crown Point's 100% interest in the 314,000 acre Cerro
de Los Leones Exploration Concession. Crown Point's geological
model at Cerro de Los Leones has indicated an area of 350km2 that
could lie in the oil generation window.
About Crown Point
Crown Point Energy Inc. is an international oil and gas
exploration and development company headquartered in Calgary,
Canada, incorporated in Canada, trading on the TSX Venture Exchange
and operating in South America. Crown Point's exploration and
development activities are focused in the Golfo San Jorge, Neuquén
and Austral basins in Argentina. Crown Point has a strategy that
focuses on establishing a portfolio of producing properties, plus
production enhancement and exploration opportunities to provide a
basis for future growth.
Advisory
Certain Oil and Gas Disclosures: Barrels of oil equivalent
(BOE) may be misleading, particularly if used in isolation. A boe
conversion ratio of six thousand cubic feet (6 Mcf) to one barrel
(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. In addition, given that the
value ratio based on the current price of crude oil in Argentina as
compared to the current price of natural gas in Argentina 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. "MBOE" means thousands of barrels of oil
equivalent. "BOEPD" means barrels of oil equivalent per day. "Mcf"
means thousand cubic feet. "Mmcf" means million cubic feet. "Bcf"
means billion cubic feet. "Mbbls" means thousands of
barrels.
Non-IFRS Measures: This press release discloses "funds flow
from operations" and "operating netbacks", which do not have
standardized meanings under International Financial Reporting
Standards ("IFRS") and as such may not be
comparable with the calculation of similar measures used by other
entities. Funds flow from operations should not be considered an
alternative to or more meaningful than, cash flow from operating
activities as determined in accordance with IFRS as an indicator of
the Company's performance. Management uses funds flow from
operations to analyze operating performance and considers funds
flow from operations to be a key measure as it demonstrates the
Company's ability to generate cash necessary to fund future capital
investment. A reconciliation of funds flow from operations to cash
flow from operating activities is presented in the MD&A under
"Non-IFRS Measures". Operating netbacks are calculated on a per
unit basis as oil, natural gas and natural gas liquids revenues
less royalties, transportation and operating costs. Management
believes this measure is a useful supplemental measures of the
Company's profitability relative to commodity prices. See
"Operating Netbacks - Total Company".
Forward looking information: Certain information set forth
in this document, including: our belief that the La Hoyada x-1 well
is a potential conventional Vaca Muerta oil well; our expectation
that drilling operations will commence at TDF in late April 2014;
our belief that our interests in the TDF area possess the
capability of delivering increased levels of production and
reserves in an expected increasing natural gas price market; our
expectation that drilling operations on the Las Violetas
Exploitation Concession will commence in late April; the details of
the initial ten well program on the Las Violetas Exploitation
Concession, including the type and location of wells to be drilled;
our intention to perform a fracture stimulation program on four
producing wells in the Los Flamencos natural gas pool and one well
in the San Luis field, and our expectations for results therefrom;
details regarding the proposed New Gas Incentive and Program and
our intention to participate in the Program; our belief that the
presence of the oil shows and background gas in the La Hoyada x-1
well demonstrates that the Vaca Muerta formation at Cerro de Los
Leones is mature and generating oil; our belief that analogous
wells in the area indicate that the fractured intrusive igneous
rocks in the Vaca Muerta function as conventional fractured
reservoirs sourcing oil from the surrounding Vaca Muerta shale; our
views regarding additional secondary targets in the La Hoyada x-1
well; our anticipation that we will commence completion operations
on the La Hoyada well in April 2014; our plan that if the
completion is successful, we will place the well on a production
test with the potential for further drilling at Cerro de los Leones
later in 2014; our belief that this drilling result is confirmation
of the conventional and unconventional potential of the Vaca Muerta
formation on our Cerro de Los Leones Exploration Concession; and
our belief that an area of 350km2 could lie in
the oil generation window on the Concession; is considered
forward-looking information, and necessarily involve risks and
uncertainties, certain of which are beyond Crown Point's
control.
Such risks include but are not limited to: risks associated
with oil and gas exploration, development, exploitation,
production, marketing and transportation; risks associated with
operating in Argentina, including risks of changing government
regulations (including the adoption of, amendments to, or the
cancellation of government incentive programs or other laws and
regulations relating to commodity prices, taxation, currency
controls and export restrictions, in each case that may adversely
impact Crown Point), expropriation/nationalization of assets, price
controls on commodity prices, inability to enforce contracts in
certain circumstances, the potential for a sovereign debt default
or a hyperinflationary economic environment, and other economic and
political risks; loss of markets and other economic and industry
conditions; volatility of commodity prices; currency fluctuations;
imprecision of reserve estimates; environmental risks; competition
from other producers; inability to retain drilling services;
incorrect assessment of value of acquisitions and failure to
realize the benefits therefrom; delays resulting from or inability
to obtain required regulatory approvals; the lack of availability
of qualified personnel or management; stock market volatility and
ability to access sufficient capital from internal and external
sources; and economic or industry condition changes.
Actual results, performance or achievements could differ
materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurance can be
given that any events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits that Crown Point will derive therefrom. In addition, the
information relating to reserves is deemed to be forward-looking
information, as such information involves the implied assessment,
based on certain estimates and assumptions, that the reserves
described can be economically produced in the future.
With respect to forward-looking information contained
herein, the Company has made assumptions regarding: the impact of
increasing competition; the general stability of the economic and
political environment in Argentina; the timely receipt of any
required regulatory approvals; the ability of the Company to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the costs of obtaining
equipment and personnel to complete the Company's capital
expenditure program; the ability of the operator of the projects
which the Company has an interest in to operate the field in a
safe, efficient and effective manner; the ability of the Company to
obtain financing on acceptable terms when and if needed; field
production rates and decline rates; the ability to replace and
expand oil and natural gas reserves through acquisition,
development and exploration activities; the timing and costs of
pipeline, storage and facility construction and expansion and the
ability of the Company to secure adequate product transportation;
future oil and natural gas prices; currency, exchange and interest
rates; the regulatory framework regarding royalties, commodity
price controls, import/export matters, taxes and environmental
matters in Argentina; and the ability of the Company to
successfully market its oil and natural gas products. Additional
information on these and other factors that could affect Crown
Point are included in reports on file with Canadian securities
regulatory authorities, including under the heading "Risk Factors"
in the Company's annual information form, and may be accessed
through the SEDAR website (www.sedar.com). Furthermore, the
forward-looking information contained in this document are made as
of the date of this document, and Crown Point does not undertake
any obligation to update publicly or to revise any of the included
forward looking information, whether as a result of new
information, future events or otherwise, except as may be expressly
required by applicable securities law.
Analogous Information: Certain information contained herein
is considered "analogous information" as defined in National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"). Such analogous
information has not been prepared in accordance with NI 51-101 and
the Canadian Oil and Gas Evaluation Handbook and Crown Point is
unable to confirm whether such estimates have been prepared by a
qualified reserves evaluator. In particular, this presentation
presents: cumulative production information for areas in close
proximity to areas in which the Company has an interest and results
from a well drilled by YPF in close proximity to the Company's La
Hoyada x-1 well. Such information is not intended to represent
projections of future results. Such information has been presented
to show the presence of oil and gas resources in areas analogous to
Crown Point's areas of interest. Such information is based on
independent public data and public information received from other
producers and Crown Point has no way of verifying the accuracy of
such information and cannot determine whether the source of the
information is independent. Such information has been presented to
help demonstrate the basis for Crown Point's business plans and
strategies. There is no certainty that such results will be
achieved by Crown Point and such information should not be
construed as an estimate of future reserves or resources or future
production levels.
Neither 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 news release.
Crown Point Energy Inc.Murray McCartneyPresident & CEO(403)
232-1150mmccartney@crownpointenergy.comCrown Point Energy
Inc.Arthur J.G. MaddenVice-President & CFO(403)
232-1150amadden@crownpointenergy.comCrown Point Energy Inc.Brian J.
MossExecutive Vice-President & COO(403)
232-1150bmoss@crownpointenergy.comwww.crownpointenergy.com
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