MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH) is pleased to
announce the results of the 2011 independent reserves evaluations for its United
States properties and one main fault block covered by the Lagia Development
Lease in Egypt.
2011 reserve highlights
-- Net present value (discounted 10% after tax - forecast prices) of $55.6
million ($0.25 per MENA share) attributed to its total proven + probable
oil reserves.
-- Net present value (discounted 10% after tax - forecast prices) of $16.3
million ($0.07 per MENA share) attributed to its total proven oil
reserves.
-- Net present value (discounted 10% after tax - forecast prices) of $163.4
million ($0.72 per MENA share) attributed to its total proven + probable
+ possible oil reserves.
-- Further to MENA's news release of January 30, 2012, the Petroservices
drilling rig has arrived in the Lagia oil field at the location of Lagia
6 well and is awaiting customs inspection and assembling to commence the
six well programme consisting of working over two existing wells, the
drilling of two development wells and drilling a further two appraisal
wells.
Reserves and future net revenue
The following is a summary of the oil reserves and the value of future net
revenue of MENA as evaluated by DeGolyer and MacNaughton Canada Limited ("D&M")
in respect of MENA's Lagia property and by Gustavson Associates in respect of
MENA's United States properties. The reserves information contained in this news
release is effective December 31, 2011 and was prepared by D&M on February 9,
2012 in respect of MENA's Lagia property and by Gustavson on February 13, 2012
in respect of MENA's United States properties. The reserves and resource
information contained in this news release has been prepared and presented in
accordance with National Instrument 51-101 Standards of Disclosure for Oil and
Gas Activities ("NI 51-101").
Oil reserves - based on forecast prices and costs
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Light and Medium
Oil - US Heavy Oil - Egypt
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Gross Net Gross Net
Reserves Category (Mbbls) (Mbbls) (Mbbls) (Mbbls)
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Proved
Developed Producing Egypt - - - -
Developed Producing U.S. - - - -
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Total - - - -
Developed Non-Producing Egypt - - - -
Developed Non-Producing U.S. - - - -
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Total - - - -
Undeveloped Egypt - - 1,149 596
Undeveloped U.S. 526 411 - -
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Total 526 411 1,149 596
Total Proved Egypt - - 1,149 596
Total Proved U.S. 526 411 - -
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Total Proved 526 411 1,149 596
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Probable
Egypt - - 2,899 1,251
U.S. 926 676 - -
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Total Probable 926 676 2,899 1,251
Proved plus Probable
Egypt - - 4,048 1,847
U.S. 1,452 1,086 - -
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Total Proved plus Probable 1,452 1,086 4,048 1,847
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Possible(1)
Egypt - - 6,411 2,464
U.S. 6,323 4,346 - -
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Total Possible 6,323 4,346 6,411 2,464
Proved plus Probable plus
Possible(1)
Egypt - - 10,459 4,311
U.S. 7,775 5,433 - -
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Total Proved plus Probable plus
possible 7,775 5,433 10,459 4,311
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Note:
(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 to exceed the sum of proved
plus probable plus possible reserves.
Net present values of future net revenue - based on forecast prices and
costs
After Income Taxes Discounted at Unit
(%/year)(1)(2)(3) Value
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0% 5% 10% 15% 20% 10%
Reserves Category (M$) (M$) (M$) (M$) (M$) (M$/Bbl)
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Proved
Developed Producing Egypt - - - - - -
Developed Producing U.S. - - - - - -
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Total - - - - - -
Developed Non-Producing
Egypt - - - - - -
Developed Non-Producing
U.S. - - - - - -
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Total - - - - - -
Undeveloped Egypt 13,611 8,687 5,338 3,045 1,468 8.95
Undeveloped U.S. 16,431 13,187 10,916 9,252 7,984 41.47
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Total 30,042 21,874 16,254 12,297 9,452 50.42
Total Proved Egypt 13,611 8,687 5,338 3,045 1,468 8.95
Total Proved U.S. 16,431 13,187 10,916 9,252 7,984 41.47
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Total Proved 30,042 21,874 16,254 12,297 9,452 50.42
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Probable
Egypt 51,680 35,945 25,988 19,428 14,938 20.78
U.S. 22,659 17,168 13,356 10,608 8,566 31.18
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Total Probable 74,339 53,113 39,344 30,036 23,504 51.96
Proved plus Probable
Egypt 65,291 44,632 31,326 22,473 16,406 16.96
U.S. 39,090 30,354 24,272 19,860 16,551 35.07
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Total Proved plus
Probable 104,381 74,986 55,598 42,333 32,957 52.03
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Possible(4)
Egypt 111,024 66,135 41,007 26,361 17,478 16.64
U.S. 143,599 96,449 66,784 47,445 34,446 24.25
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Total Possible 254,623 162,584 107,791 73,806 51,924 40.89
Proved plus Probable plus
Possible:(1)
Egypt 176,315 110,767 72,333 48,834 33,884 16.78
U.S. 182,689 126,803 91,056 67,304 50,996 26.41
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Total Proved plus
Probable plus Possible 359,004 237,570 163,389 116,138 84,880 43.19
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Notes:
(1) The after-tax net present value of our oil and gas properties reflects
the tax burden on the properties on a standalone basis. It does not
consider our tax situation or tax planning. It does not provide an
estimate of the value at the level of our business, which may be
significantly different. Our financial statements and the management's
discussion and analysis should be consulted for information at business
level.
(2) Pursuant to the Lagia Development Lease, the Egyptian General Petroleum
Corporation will pay our share of income taxes out of its share of the
profit oil and gas. As Egyptian income tax is factored into the royalty
deductions, income tax is deducted from all future net revenue amounts.
Accordingly, the net present value of future net revenue attributed to
the reserves categories referred to above with respect to Egypt are the
same both before and after deducting future income tax expenses for the
purposes of NI 51-101.
(3) All evaluations of future net revenue are after the deduction of
royalties, development costs, production costs and well abandonment
costs but before the consideration of indirect costs such as
administrative, overhead and other miscellaneous expenses. It should not
be assumed that the estimates of future net revenues presented in the
tables above represent the fair market value of the reserves.
(4) 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.
Oil and gas resource estimates
The following is a summary of the contingent resources as evaluated by D&M
in respect of MENA's Lagia property. These estimates are effective March 31,
2010 and were prepared on July 26, 2010.
Lagia Development Lease, Egypt
Low Estimate Best Estimate High Estimate
---------------------------------------------
Gross working interest
contingent oil resources, bbl
of oil 356,823 3,374,001 11,992,575
Notes:
(1) Recovery efficiency is applied to contingent resources in this table.
(2) Application of any risk factor to contingent resources quantities does
not equate contingent resources with reserves.
(3) There is no certainty that it will be commercially viable to produce any
portion of the contingent resources evaluated and described above.
The petroleum resources set out above are classified as "contingent resources".
Contingent resources are 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.
Contingencies may include factors such as economic, legal, environmental,
political, and regulatory matters or a lack of markets. It is also appropriate
to classify as contingent resources the estimated discovered recoverable
quantities associated with a project in the early evaluation stage. Contingent
resources are further classified in accordance with the level of certainty.
Contingent resources may also be sub-classified based on project maturity and/or
characterized by their economic status. Because of the lack of commerciality or
sufficient development drilling, the contingent resources estimated in the D&M
resource report cannot be classified as reserves. The contingent resources
estimated in the D&M resource report were assigned an economic status of
"undetermined". The principle contingencies identified in the D&M resource
report are that the project is at an early evaluation stage, and further
development is required. There is no certainty that it will be commercially
viable to produce any portion of the contingent resources.
United States properties
The following is a summary of the prospective resources as evaluated by
Gustavson in respect of MENA's United States properties. These estimates are
effective December 31, 2011 and were prepared on February 14, 2012.
Wasatch Platea Project, Utah
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Gross Net
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Low Best High Low Best High
Estimate Estimate Estimate Estimate Estimate Estimate
(Bcf) (Bcf) (Bcf) (Bcf) (Bcf) (Bcf)
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Wasatch Platea
Project (total) 61.7 130.4 334.7 50.7 107.1 274.8
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Lewis and Clark, Montana
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Reservoir Gross Net
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Low Best High Low Best High
Estimate Estimate Estimate Estimate Estimate Estimate
(MMbbl) (MMbbl) (MMbbl) (MMbbl) (MMbbl) (MMbbl)
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Lewis and Clark 1.7 10.5 22.0 1.1 7.0 14.6
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This news release contains estimates of prospective resources described above.
Prospective resources are 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. Prospective
resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and development
and may be subclassified based on project maturity. There is no certainty that
these prospective resources will be commercially viable to produce any portion
of the resources. These estimates of resources are generally quoted as a range
according to the level of confidence associated with the estimates.
Forward looking information
This news release contains forward-looking information relating to the Company's
reserves estimates and other statements that are not historical facts. Such
forward-looking information is subject to important risks, uncertainties and
assumptions. The results or events predicated in this forward-looking
information may differ materially from actual results or events. As a result,
you are cautioned not to place undue reliance on this forward-looking
information.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, the impact of increasing competition; the general
stability of the economic and political environments in which the Company
operates or owns interests; 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 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; field production rates and decline rates;
the ability to replace and expand oil and natural gas reserves through
acquisition, development of exploration; 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, taxes and environmental matters in the jurisdictions in which the
Company operates; and the ability of the Company to successfully market its oil
and natural gas products, and other similar matters. While the Company considers
these assumptions to be reasonable based on information currently available to
it, they may prove to be incorrect.
Forward looking-information is subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from what is
currently expected. These factors include risks associated with instability of
the economic and political environments in which the Company operates or owns
interests, 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, the inability to
settle the definitive terms of the farmout arrangements, 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, reliance on key personnel, regulatory risks
and delays, including risks relating to the acquisition of necessary licenses
and permits, environmental risks and insurance risks.
The estimates of reserves and resources in this news release constitute
forward-looking information which are subject to certain risks and
uncertainties, including those associated with the drilling and completion of
future wells, limited available geological data and uncertainties regarding the
actual production characteristics of, and recovery efficiencies associated with,
the reservoirs, all of which are being assumed. As estimates, there is no
guarantee that the estimated reserves and resources will be recovered or
produced. Actual reserves may be greater than or less than the estimates
provided in this news release.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. While the Company may elect
to, the Company is under no obligation and does not undertake to update this
information at any particular time, except as required by law.
Abbreviations
Bbl Barrel
Bcf Billion cubic feet
Mbbl Thousand barrels
MMbbl Million barrels
M$ Thousand United States dollars
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company focused on growing an
asset base of production, development and high impact exploration in the Middle
East and North Africa region. In Egypt, MENA owns and operates the development
lease for the Lagia oil field, a 32 square kilometre onshore block located on
the Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria, MENA owns
a 30% participating interest in Block 9 in Syria, a 10,032 square kilometre
onshore block prospective for crude oil, natural gas and condensate. In the
United States, MENA owns 6,242 gross acres (with an 81.2% average working
interest) in Northwestern Montana with light/medium oil reserves, and 36,201
gross acres (with a 99.5% average working interest) in East-Central Utah
prospective for both commercial gas sand and coal bed methane. MENA's shares
currently trade on the TSX Venture Exchange under the symbol "MNH".