Excelsior Announces Independent Resource Estimates and 45% Increase in Contingent Resources at Hangingstone
June 25 2009 - 4:40PM
Marketwired Canada
Excelsior Energy Limited (TSX VENTURE:ELE) ("Excelsior" or "the Company") is
pleased to announce the completion of an updated independent evaluation of
bitumen resources on Excelsior's Hangingstone property ("Hangingstone" or
"Hangingstone Asset"), near Fort McMurray, Alberta. The report was prepared to
provide an independent assessment of the results of a 29 core well drilling
program at Hangingstone completed in March, 2009. The Company has now drilled a
total of 55 wells on the Hangingstone property where Excelsior has a 75% working
interest in 39 contiguous sections of oil sands rights. Excelsior's drilling
objectives in the 2008/2009 winter drilling program were to increase drilling
density in the COGD pilot project area and to further delineate a thick channel
sand system discovered by core wells in early 2008. The Company met all of its
objectives with excellent well results.
As with last year the resource estimates were prepared by independent petroleum
engineers McDaniel & Associates Consultants Limited ("McDaniel"). The McDaniel
report ("the Report") was prepared using assumptions and methodology guidelines
outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with
National Instrument 51-101. The effective date of the evaluation is July 1,
2009. The Report incorporates the McDaniel price deck as at April 1, 2009 in the
forecast price scenario.
"Excelsior is very pleased with the incremental 50 million barrel increase of
net Contingent Resources assigned at Hangingstone. The Company's performance and
results to date equates to a very attractive full-cycle finding cost of $0.30
per best estimate contingent barrel" commented David Winter, CEO and President
of Excelsior, "An extensive channel system has been delineated in the western
part of the property with excellent, thick continuous net pay which gives
Management the confidence to estimate potential productivity in excess of 50,000
barrels of bitumen per day from Hangingstone."
Discovered and Undiscovered Petroleum Initially-in-Place
McDaniel has recognized best estimate Discovered Petroleum Initially-in-Place of
1.808 billion barrels on the Hangingstone Asset in proximity to well control
(Excelsior working interest share before royalty) with a low estimate of 1.262
billion barrels and a high estimate of 2.361 billion barrels. The area included
in Discovered Petroleum Initially-in-Place assignments, based on well control,
amounts to approximately 24% of the gross Hangingstone lands. Generally,
McDaniel's methodology for the assignment of Discovered Petroleum
Initially-In-Place requires a minimum delineation density of one well per square
mile. Discovered Petroleum Initially-in-Place increased by 14% on a year over
year basis.
McDaniel has determined additional prospectivity in an Undiscovered Petroleum
Initially-in-Place assignment. The Report assigns 2.849 billion barrels of best
estimate Discovered and Undiscovered Petroleum Initially-in-Place to the
Hangingstone Asset (Excelsior working interest share before royalty) with a low
estimate of 2.137 billion barrels and a high estimate of 3.561 billion barrels.
Discovered and Undiscovered Petroleum Initially-in-Place declined 6% on a year
over year basis as the drilling results modified the mapping of undiscovered
petroleum.
Contingent Resources
The Report assigned Contingent Resources to the Hangingstone Property based on
the well delineation density achieved as of July 1, 2009. Best estimate
Contingent Resources were estimated at 172 MMbbls (Excelsior working interest
share before royalty); low estimate Contingent Resources were estimated at 127
MMbbls and high estimate Contingent Resources were estimated at 230 MMbbls. The
assigned Contingent Resources are further categorized as economic. Contingent
Resources have increased 45% on a year over year basis.
The Report estimated that Excelsior's best estimate Contingent Resources would
generate $2.205 billion of future net revenue after deduction of $3.299 billion
in future full-cycle capital requirements over a 30 year field life and
abandonment costs of $54.4 million resulting in a net present value before
income tax discounted at 10% ("NPV10") of $208 million. On a NPV10 unit basis
the report valued Excelsior's Contingent Resources at $1.21 per barrel.
McDaniel calculates Contingent Resources based on that portion of Discovered
Petroleum-Initially-in-Place that meets the requisite minimum qualitative and
quantitative criteria to be exploited using conventional SAGD technology. The
Contingent Resource volumes have not been classified as Reserves at this time
pending further delineation drilling, development planning and regulatory
applications.
Share Value based on Contingent Resource and Common Shares Outstanding
On a per share basis the estimated NPV10 for best estimate Contingent Resources
equates to $1.45 per Excelsior common share outstanding, the estimated NPV10 for
the high estimate Contingent Resources equates to $3.86 per Excelsior common
share outstanding. There are approximately 143 million Excelsior common shares
outstanding.
Prospective Resources
McDaniel also assigned Prospective Resources to Hangingstone. Best estimate
Prospective Resources were estimated at 75 MMbbls (Excelsior working interest
share before royalty); low estimate Prospective Resources were estimated at 49
MMbbls and high estimate Prospective Resources were estimated at 92 MMbbls.
Prospective Resources declined 13% on a year over year basis as resources
previously assigned as Prospective Resources were upgraded to Contingent
Resources based on the drilling results.
McDaniel calculates Prospective Resources based on that portion of Undiscovered
Petroleum-Initially-in-Place that is expected to meet the requisite minimum
qualitative and quantitative criteria to be exploited using conventional SAGD
technology. The Prospective Resource volumes have not been classified as
Contingent Resources at this time pending additional delineation drilling.
Summary Tables
----------------------------------------------------------------------------
Summary of Discovered and Undiscovered
Petroleum Initially-in-Place
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates - July 1, 2009
(Billions of barrels)
----------------------------------------------------------------------------
Low Best High
Estimate Estimate Estimate
----------------------------------------------------------------------------
Discovered Petroleum
Initially-in-Place 1.262 1.808 2.361
----------------------------------------------------------------------------
Discovered and Undiscovered
Petroleum Initially-in- Place 2.137 2.849 3.561
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Summary of Contingent and Prospective Resources
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates - July 1, 2009
(Millions of barrels)
----------------------------------------------------------------------------
Low Best High
Estimate Estimate Estimate
----------------------------------------------------------------------------
Contingent Resources 127 172 230
----------------------------------------------------------------------------
Prospective Resources 49 75 92
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Petroleum Initially-in-Place and Resource Volumes (Best Estimate)
Hangingstone, Excelsior Working Interest Share Before Royalty
Year over Year comparison
(Millions of barrels)
----------------------------------------------------------------------------
July 1, 2008 July 1, 2009 % Change
----------------------------------------------------------------------------
Discovered Petroleum 1,587 1,808 14%
Initially in-Place
----------------------------------------------------------------------------
Contingent Resources 119 172 45%
----------------------------------------------------------------------------
Discovered and Undiscovered 3,041 2,849 -6%
Petroleum Initially-in-place
----------------------------------------------------------------------------
Prospective Resources 86 75 -13%
----------------------------------------------------------------------------
Definitions:
1) Discovered Petroleum Initially-in-Place
- Defined as that quantity of petroleum that is estimated, as of a given date,
to be contained in known accumulations prior to production. The recoverable
portion of Discovered Petroleum Initially-in-Place includes production,
reserves, and contingent resources; the remainder of the volume is
unrecoverable.
2) Undiscovered Petroleum Initially-in-Place
- Defined as that quantity of petroleum that is estimated, on a given date, to
be contained in accumulations yet to be discovered. The recoverable portion of
Undiscovered Petroleum-Initially-in-Place is referred to as Prospective
Resources; the remainder is classified as unrecoverable.
3) Contingent Resource
- Defined as those quantities of petroleum estimated, as of a given date, 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. Economic contingent
resources are those contingent resources that are currently economically
recoverable.
4) Prospective Resource
- Defined as those quantities of petroleum estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations by application of future
development projects. Prospective resources have both an associated chance of
discovery and a chance of development.
5) Low Estimate
- Defined as a conservative estimate of the quantity that will actually be
recovered from the accumulation. If probabilistic methods are used, this term
reflects P90 confidence level.
6) Best Estimate
- Defined as the best estimate of the quantity that will actually be recovered
from the accumulation. If probabilistic methods are used this term is a measure
of central tendency of the uncertainty distribution (P50).
7) High Estimate
- Defined as an optimistic estimate of the quantity that will actually be
recovered from the accumulation. If probabilistic methods are used the term
reflects a P10 confidence level.
About Excelsior Energy
Excelsior is an early stage, oil sands company with 58 operated sections on two
contiguous blocks in the Hangingstone and West Surmont areas of the Athabasca
Oil Sands Region near Fort McMurray, Alberta. The Company has developed a
proprietary in situ combustion technology ("Combustion Overhead Gravity
Drainage" or "COGD") which has game-changing potential in the development and
recovery of heavy oil and bitumen. An application for an experimental pilot
project to field demonstrate the COGD technology will be submitted in at the end
of the second quarter of 2009 with a targeted start up in early 2011. In
addition the Company indirectly holds a 100% working interest in UK North Sea
Licences P1500 and P1691 covering four part-blocks through its 75% owned
subsidiary ENS Energy Ltd. Excelsior's strategy is to capture oil and gas
appraisal and development opportunities where we can leverage Management's
diverse international operating, heavy oil and field development expertise with
developing technologies to produce oil and gas.
Estimations of reserves and future net revenue discussed in this press release
constitute forward looking statements. See "Forward Looking Statements" below.
Forward Looking Statements
This press release contains forward-looking statements. Management's assessment
of future plans and operations, expected production levels, operating costs,
capital expenditures, the nature of capital expenditures, methods of financing
capital expenditures, future engineering reports and the timing of increases in
production may constitute forward-looking statements under applicable securities
laws and necessarily involve risks including, without limitation, risks
associated with oil and gas exploration, development, exploitation, production,
marketing and transportation, loss of markets, volatility of commodity prices,
currency fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, incorrect assessment of the value of acquisitions, failure to realize
the anticipated benefits of acquisitions, delays resulting from or inability to
obtain required regulatory approvals and ability to access sufficient capital
from internal and external sources. As a consequence, the Company's actual
results may differ materially from those expressed in, or implied by, the
forward-looking statements. Readers are cautioned that the foregoing list of
factors is not exhaustive. Additional information on these and other factors
that could effect the Company's operations and financial results are included in
reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com). Furthermore, the forward
looking statements contained in this press release are made as at the date of
this press release and the Company does not undertake any obligation to update
publicly or to revise any of the included forward looking statements, whether as
a result of new information, future events or otherwise, except as may be
required by applicable securities laws.
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