TSX-V: CWV: Crown Point Energy Inc. (“Crown
Point”, the
“Company”,
"
we" or "
our"
)
today announced certain reserve information for the year ended
December 31, 2021. All dollar figures are expressed in
United States dollars ("
USD" or
"
US$") unless otherwise stated, and
"
MMUS$" means millions of USD.
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, 2021 based on
forecast prices and costs and in accordance with National
Instrument 51-101 ("NI 51-101") and the Canadian
Oil and Gas Evaluation Handbook (the "COGE
Handbook"). McDaniel’s evaluation report (the
"McDaniel Report") also presents the estimated net
present value of future net revenue associated with Crown Point's
reserves. A summary of Crown Point’s crude oil, natural gas and
natural gas liquids reserves, as evaluated by McDaniel, and the
associated net present value of future net revenue associated
therewith as at December 31, 2021 is presented below.
The following table presents, in the aggregate,
the Company's gross and net proved and probable reserves, estimated
using forecast prices and costs, by product type and by barrel of
oil equivalent, as of December 31, 2021.
SUMMARY OF RESERVES AS OF DECEMBER 31,
2021(Forecast Prices & Costs)
|
Light and Medium Crude Oil |
Conventional Natural Gas |
Natural Gas Liquids |
Total Reserves |
|
(Mbbl) |
(MMcf) |
(Mbbl) |
MBOE |
Reserves Category(2) |
Gross |
Net |
Gross |
Net |
Gross |
Net |
Gross |
Net |
Proved: |
|
|
|
|
|
|
|
|
Developed Producing |
2,303 |
1,991 |
4,847 |
4,061 |
5 |
4 |
3,116 |
2,672 |
Developed Non-Producing |
1,018 |
885 |
303 |
254 |
0.3 |
0.3 |
1,069 |
928 |
Undeveloped |
600 |
522 |
- |
- |
- |
- |
600 |
522 |
Total
Proved |
3,921 |
3,399 |
5,151 |
4,314 |
5 |
4 |
4,785 |
4,122 |
Total Probable |
2,017 |
1,746 |
718 |
607 |
1 |
1 |
2,138 |
1,848 |
Total Proved plus
Probable |
5,938 |
5,144 |
5,869 |
4,921 |
6 |
5 |
6,922 |
5,969 |
The following table discloses, in the aggregate,
the net present value of the Company's future net revenue
attributable to the reserves categories in the table above,
estimated using forecast prices and costs, before deducting future
income tax expenses, and calculated without discount and using
discount rates of 5%, 10%, 15% and 20%.
SUMMARY OF NET PRESENT VALUE OF FUTURE
NET REVENUEAS OF DECEMBER 31,
2021(Forecast Prices & Costs)
|
Net Present Values of Future Net Revenue Before Income
Taxes(1) |
|
Discounted at (%/year) |
Reserves Category(2) |
0% |
5% |
10% |
15% |
20% |
|
MMUS$ |
MMUS$ |
MMUS$ |
MMUS$ |
MMUS$ |
Proved: |
|
|
|
|
|
Developed Producing |
17.8 |
17.0 |
15.9 |
14.8 |
13.8 |
Developed Non-Producing |
25.9 |
17.7 |
12.1 |
8.4 |
5.9 |
Undeveloped |
18.3 |
12.3 |
8.5 |
5.9 |
4.1 |
Total Proved |
62.0 |
47.0 |
36.5 |
29.1 |
23.9 |
Total Probable |
61.1 |
35.0 |
21.9 |
14.9 |
10.9 |
Total Proved plus
Probable |
123.1 |
82.0 |
58.4 |
44.0 |
34.8 |
(1) The estimated net
present values of future net revenues disclosed do not represent
fair market value.
(2) The definitions of
the various categories of reserves are those set out in NI 51-101
and the COGE Handbook.
The Company's proved plus probable
("2P") reserves (gross) as at December 31, 2021,
as evaluated by McDaniel, were 6,922 MBOE compared to 2,247 MBOE as
at December 31, 2020. The more than threefold increase
is attributable to: the acquisition in March 2021 of a 50% working
interest in the oil producing Chañares Herrados concession in
Mendoza Province and better than anticipated gas production from
the Tierra del Fuego concessions, which was partially offset by a
downward revision of San Martin oil reserves (2P: 96,000 barrels of
oil) due to the November 2021 onset of water production in the San
Martin a-1002 oil well and the absence of a drilling campaign to
replace 2021 oil and gas production.
The estimated before tax net present value of
the Company's 2P reserves as at December 31, 2021 (discounted at
10%) was $58.4 million, compared with $13.9 million as at December
31, 2020. The significant increase in the before tax net present
value is attributable to: the aforementioned acquisition of the
Chañares Herrados property, improved international oil prices and
improved gas prices in the domestic market in Argentina, which were
partially offset by the depletion of the Company's reserves due to
production, the downward revision of the San Martin oil reserves
and no reserves replacement due to the absence of a drilling
program in 2021.
Approximately 27% of the Company's before tax
net present value of 2P reserves (discounted at 10%) is categorized
as "developed producing" and the before tax net present value of
future net revenues associated with the Company's total proved
reserves (discounted at 10%) represents approximately 63% of the
Company's before tax net present value of future net revenues
associated with all of the Company's 2P reserves. Crude oil
accounts for approximately 86% of the Company's 2P reserves (gross)
as at December 31, 2021 compared with approximately 46% as at
December 31, 2020, whereas natural gas accounts for approximately
14% of the Company's 2P reserves (gross) as at December 31, 2021
compared with 54% as at December 31, 2020.
The following table sets forth, for each product
type, the pricing assumptions used by McDaniel in estimating the
reserves data disclosed herein as at December 31, 2021.
SUMMARY OF PRICING AND INFLATION RATE
ASSUMPTIONSAS OF DECEMBER 31, 2021 (Forecast
Prices & Costs)
Year |
|
Brent Crude Oil
Price(1)US$/bbl |
|
TDF Crude Oil
Price(1) US$/bbl |
|
TDF
NGL Price US$/bbl |
|
TDF(2)
Natural Gas
Price US$/Mcf |
|
Chañares Herrados Oil
Price(5) US$/bbl |
|
Inflation Rate(3) %
/ Year |
2022 |
|
75.0 |
|
66.0 |
|
38.0 |
|
2.93 |
|
55.9 |
|
2 |
2023 |
|
69.9 |
|
60.9 |
|
38.8 |
|
2.99 |
|
57.1 |
|
2 |
2024 |
|
67.6 |
|
58.6 |
|
39.5 |
|
3.05 |
|
58.2 |
|
2 |
2025 |
|
69.0 |
|
60.0 |
|
40.3 |
|
3.11 |
|
59.4 |
|
2 |
2026(4) |
|
70.4 |
|
61.4 |
|
41.1 |
|
3.17 |
|
60.5 |
|
2 |
2027 |
|
71.8 |
|
62.8 |
|
42.0 |
|
3.23 |
|
61.8 |
|
2 |
2028 |
|
73.2 |
|
64.2 |
|
42.8 |
|
3.30 |
|
63.0 |
|
2 |
2029 |
|
74.7 |
|
65.7 |
|
43.7 |
|
3.37 |
|
64.3 |
|
2 |
2030 |
|
76.2 |
|
67.2 |
|
44.5 |
|
3.43 |
|
65.5 |
|
2 |
2031 |
|
77.7 |
|
68.7 |
|
45.4 |
|
3.50 |
|
66.8 |
|
2 |
2032 |
|
79.2 |
|
70.2 |
|
46.3 |
|
3.57 |
|
68.2 |
|
2 |
2033 |
|
80.8 |
|
71.8 |
|
47.3 |
|
3.64 |
|
69.5 |
|
2 |
2034 |
|
82.4 |
|
73.4 |
|
48.2 |
|
3.72 |
|
70.9 |
|
2 |
2035 |
|
84.1 |
|
75.1 |
|
49.2 |
|
3.79 |
|
72.4 |
|
2 |
2036 |
|
85.8 |
|
76.8 |
|
50.1 |
|
3.87 |
|
73.8 |
|
2 |
(1) |
|
Forecast
pricing for Tierra del Fuego ("TDF") crude oil is
based on the forecast Brent crude oil benchmark reference pricing
published by McDaniel, less a discount of US$9.00 per
bbl. |
(2) |
|
Natural gas production from the TDF concessions is sold to
consumers in TDF as well as to mainland Argentina, all of which
receive different prices as set by sales agreements from time to
time. These forecast prices represent a blend of such prices. |
(3) |
|
Inflation rates used for forecasting costs. |
(4) |
|
The TDF concessions expire in August 2026 unless extended by
agreement with the Province of Tierra del Fuego. |
(5) |
|
Forecast pricing for Chañares Herrados (“CH”)
crude oil is based on the average realized domestic sales price in
Q4 2021 escalated at 2% per year thereafter. |
Further details of the evaluation of the
Company’s reserves as at December 31, 2021 will be contained in the
Company’s NI 51-101 filings for the year ended December 31, 2021,
which will be filed with Canadian securities regulatory authorities
in due course and will be made available under the Company’s
profile at www.sedar.com and on the Company’s website at
www.crownpointenergy.com.
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 with operations in Argentina. Crown Point's
exploration and development activities are focused in three
producing basins in Argentina, the Austral basin in the province of
Tierra del Fuego, and the Neuquén and Cuyo basins in the province
of Mendoza. 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.
Oil and Gas Advisories
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. “Mcf” means thousand cubic feet. “MMcf” means million
cubic feet. "bbl" means barrel. "Mbbl" means thousands of barrels.
"NGL" means natural gas liquids. "Q4" means the three
month period ended December 31.
The reserves estimates contained in this news
release represent our gross and net reserves as at December 31,
2021. Gross reserves are defined under NI 51-101 as our working
interest (operating or non-operating) share before deduction of
royalties and without including any of our royalty interests. Net
reserves are defined under NI 51-101 as our working interest
(operating or non-operating) share after deduction of royalty
obligations, plus our royalty interests in reserves. It should not
be assumed that the present worth of estimated future net revenues
presented in the tables above represents the fair market value of
the reserves. There is no assurance that the forecast price and
cost assumptions will be attained and variances could be material.
The recovery and reserves estimates of our crude oil, natural gas
liquids and natural gas reserves provided herein are estimates only
and there is no guarantee that the estimated reserves will be
recovered. Actual crude oil, natural gas and natural gas liquids
reserves may be greater than or less than the estimates provided
herein.
All future net revenues are estimated using
forecast prices arising from the anticipated development and
production of our reserves, net of the associated royalties,
operating costs, development costs, and abandonment and reclamation
costs and are stated prior to provision for interest and general
and administrative expenses. Future net revenues have been
presented on a before tax basis.
The estimates of reserves and future net revenue
for individual properties may not reflect the same confidence level
as estimates of reserves and future net revenue for all properties,
due to the effects of aggregation.
Forward Looking Statements
Certain information set forth in this document
is considered forward-looking information, and necessarily involves
risks and uncertainties, certain of which are beyond Crown Point’s
control. In addition, information relating to reserves is deemed to
be forward-looking information, as it involves the implied
assessment, based on certain estimates and assumptions, that the
reserves described can be economically produced in the future. Such
risks include but are not limited to: the risks that COVID-19 poses
to the oil and gas industry generally and our business in
particular; risks associated with oil and gas exploration,
development, exploitation, production, marketing and
transportation, including the risk that the infrastructure on which
we rely to produce, transport and sell our products breaks down and
requires parts that are not readily available or repairs that
cannot be made on a timely basis, and which impair our ability to
operate and/or sell our products; 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), risks that new government initiatives will not have the
consequences the Company believes (including the benefits to be
derived therefrom), expropriation/nationalization of assets, price
controls on commodity prices, inability to enforce contracts in
certain circumstances, the potential for a hyperinflationary
economic environment, the imposition of currency controls, risks
associated with a default on Argentine government debt, and other
economic and political risks; 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; inability to access sufficient
capital from internal and external sources; the need to shut-in,
flare and/or curtail production as a result of a lack of
infrastructure and/or damage to existing infrastructure; 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.
With respect to forward-looking information contained herein, the
Company has made assumptions regarding: the impact that COVID-19
will have on our operations and the length of time that such impact
will persist; 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;
the ability of the Company to service its debt repayments when
required; 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, transportation and facility repair,
construction and expansion and the ability of the Company to secure
adequate product transportation; future oil and natural gas prices;
costs of operational activities in Argentina; currency, exchange
and interest rates; the regulatory framework regarding royalties,
commodity price controls, currency 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 most recent 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.
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.
For inquiries please contact:
Brian Moss
President & CEO
Ph: (403) 232-1150
Crown Point Energy Inc.
bmoss@crownpointenergy.com
Marisa Tormakh
Vice-President, Finance & CFO
Ph: (403) 232-1150
Crown Point Energy Inc.
mtormakh@crownpointenergy.com
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