Relentless Resources Ltd. (TSX VENTURE:RRL) ("Relentless" or the "Company")
announced today that the Company has entered into an asset exchange agreement
(the "Agreement") with an arm's length Calgary-based private oil and gas company
("Privateco") to assign all of the Company's petroleum and natural gas interests
in south-western Saskatchewan in exchange for Privateco's interests in producing
and undeveloped petroleum and natural gas properties located in various areas
throughout Alberta and a cash payment of $200,000.00 (the "Transaction"). The
Transaction is expected to close on or about June 20, 2013, with an effective
date of May 1, 2013, and is subject to regulatory and shareholder approvals.
The petroleum and natural gas assets contemplated for exchange under the
Agreement are all of Relentless' net interests in 3,002 net acres of petroleum
and natural gas rights located in the Loverna area of south-western Saskatchewan
(the "Relentless Assets"), and (i) all of Privateco's interests in 10,842 net
acres of petroleum and natural gas interests located in the Willesden Green area
of Alberta, (ii) all of Privateco's interests in 26,363 net acres of undeveloped
petroleum and natural gas interests located in the Gilby area of Alberta, (iii)
all of Privateco's interests in 4,798 net acres of undeveloped petroleum and
natural gas interests located in the Killam area of Alberta, (iv) all of
Privateco's interests in 4,000 net acres of undeveloped petroleum and natural
gas interests located in the Pine Creek area of Alberta, (v) all of Privateco's
interests in 3,200 net acres of undeveloped petroleum and natural gas interests
located in the Wembly area of Alberta, and (vi) all of Privateco's interests in
4,520, net acres of undeveloped petroleum and natural gas interests located in
various other areas of Alberta (collectively, the petroleum and natural gas
interests of Privateco are referred to as the "Privateco Assets"). The
Relentless Assets include 4 (3.02 net) producing oil and natural gas wells,
representing an average net April 2013 production rate of approximately 25
boes/d, while the Privateco Assets include 5.0 (3.91 net) producing oil and
natural gas wells and 8 suspended wells, representing an average net April 2013
production rate of approximately 50 boes/d, which includes 30 bbls/d of crude
oil production. All Privateco's oil and natural gas production comes from the
Willesden Green area of Alberta (the "Willesden Green Area").
The independent engineering firm of Insite Petroleum Consultants Ltd. ("Insite")
prepared a report (the "InSite Report") evaluating the crude oil, natural gas
and natural gas liquids ("NGLs") interests of Privateco in the Willesden Green
Area, with an effective date of December 31, 2012 and a preparation date of
March 8, 2013. The tables below summarize Privateco's crude oil, natural gas and
NGLs reserves in the Willesden Green Area and the net present value of future
net revenue attributable to such reserves, as evaluated by InSite, based on
forecast prices and costs assumptions. The information set forth below is
prepared in accordance with standards contained in the Canadian Oil and Gas
Evaluation Handbook prepared jointly by the Society of Petroleum Evaluation
Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy &
Petroleum (the "COGE Handbook") and the reserve definitions contained in
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities
("NI 51-101") adopted by the Canadian Securities Administrators and the COGE
Handbook.
The net present value of future net revenue attributable to Insite's reserves is
stated without provision for interest costs and general and administrative
costs, but after providing for estimated royalties, production costs,
development costs, other income, future capital expenditures, and well
abandonment costs for only those wells assigned reserves by InSite. It should
not be assumed that the undiscounted or discounted net present value of future
net revenue attributable to Insite's reserves estimated by InSite represent the
fair market value of those reserves. Other assumptions and qualifications
relating to costs, prices for future production and other matters are summarized
herein. Actual reserves may be greater than or less than the estimates provided
herein.
The following tables summarize the data contained in the InSite Report and as a
result may contain slightly different numbers than such report due to rounding.
Also due to rounding, certain columns may not add exactly. The InSite Report is
based on certain factual data supplied by Insite and InSite's opinion of
reasonable practice in the industry. InSite accepted this data as presented and
neither title searches nor field inspections were conducted by InSite.
Summary of Oil And Gas Reserves Based on Forecast Prices and Costs
As At December 31, 2012
Company Reserves
----------------------------------------------------
Light and Natural Gas
Medium Oil Heavy Oil Natural Gas Liquids
----------------------------------------------------
Gross Net Gross Net Gross Net Gross Net
Reserves Category Mbbl Mbbl Mbbl Mbbl MMcf MMcf Mbbl Mbbl
----------------------------------------------------------------------------
Proved
Developed Producing 31.8 28.7 0 0 60.3 50.6 2.4 1.6
Developed Non-
Producing 0 0 0 0 0 0 0 0
Undeveloped 0 0 0 0 0 0 0 0
----------------------------------------------------
Total Proved 31.8 28.7 0 0 60.3 50.6 2.4 1.6
Total Probable 13.7 12.1 0 0 29.9 24.5 1.2 0.7
----------------------------------------------------
Total Proved + Probable 45.5 40.8 0 0 90.2 75.1 3.6 2.3
----------------------------------------------------
----------------------------------------------------
Summary of Net Present Values Based on Forecast Prices and Costs
As At December 31, 2012
Net Present Values of Future Net Revenue
--------------------------------------------------
Before Income Tax
Discounted at
--------------------------------------------------
0%/yr 5%/yr. 10%/yr. 15%/yr. 20%/yr.
Reserves Category $M $M $M $M $M
--------------------------------------------------
Proved
Developed Producing 1,497.6 1,345.0 1,223.6 1,125.2 1,044.2
Developed Non-Producing 0 0 0 0 0
Undeveloped(2)(8) 0 0 0 0 0
--------------------------------------------------
Total Proved 1,497.6 1,345.0 1,223.6 1,125.2 1,044.2
Total Probable 751.7 616.5 517.9 444.0 387.0
--------------------------------------------------
Total Proved + Probable 2,249.3 1,961.5 1,741.5 1,569.2 1,431.2
--------------------------------------------------
--------------------------------------------------
InSite's escalated price forecast assumptions as of December 31, 2012 used in
the InSite Report are as follows:
----------------------------------------------------------------------------
WTI Cushing Edmonton Par Natural Gas NGLs Edmonton
Oklahoma Price 40 API AECO-C Price Propanes
Year (US$/bbl) (C$/bbl) (C$/mmbtu) (C$/bbl)
----------------------------------------------------------------------------
2013 92.00 90.00 3.34 36.00
----------------------------------------------------------------------------
2014 94.00 91.96 3.83 45.98
----------------------------------------------------------------------------
2015 96.00 93.92 4.33 56.35
----------------------------------------------------------------------------
2016 98.00 95.88 4.77 57.53
----------------------------------------------------------------------------
2017 100.00 97.84 5.11 58.70
----------------------------------------------------------------------------
2018 102.00 99.79 5.40 59.88
----------------------------------------------------------------------------
2019 104.04 101.79 5.64 61.07
----------------------------------------------------------------------------
2020 106.12 103.82 5.83 62.29
----------------------------------------------------------------------------
2021 108.24 105.90 5.95 63.54
----------------------------------------------------------------------------
2022 110.41 108.02 6.07 64.81
----------------------------------------------------------------------------
2023 112.62 110.18 6.19 66.11
----------------------------------------------------------------------------
2024 114.87 112.38 6.31 67.43
----------------------------------------------------------------------------
2025 117.17 114.63 6.44 68.78
----------------------------------------------------------------------------
2026 119.51 116.92 6.57 70.15
----------------------------------------------------------------------------
2027 121.90 119.26 6.70 71.56
----------------------------------------------------------------------------
2028 124.34 121.65 6.83 72.99
----------------------------------------------------------------------------
2029 126.82 124.08 6.97 74.45
----------------------------------------------------------------------------
2030 129.36 126.56 7.11 75.94
----------------------------------------------------------------------------
Thereafter Escalation rate of 2.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NGLs Edmonton NGLs Edmonton
Butanes Condensate Inflation Exchange
Year (C$/bbl) (C$/bbl) Rate ( %) Rate (US$/C$)
----------------------------------------------------------------------------
2013 76.50 97.20 2.0 1.000
----------------------------------------------------------------------------
2014 78.17 97.48 2.0 1.000
----------------------------------------------------------------------------
2015 79.83 99.55 2.0 1.000
----------------------------------------------------------------------------
2016 81.50 101.63 2.0 1.000
----------------------------------------------------------------------------
2017 83.16 103.71 2.0 1.000
----------------------------------------------------------------------------
2018 84.82 105.78 2.0 1.000
----------------------------------------------------------------------------
2019 86.52 107.89 2.0 1.000
----------------------------------------------------------------------------
2020 88.25 110.05 2.0 1.000
----------------------------------------------------------------------------
2021 90.01 112.25 2.0 1.000
----------------------------------------------------------------------------
2022 91.82 114.50 2.0 1.000
----------------------------------------------------------------------------
2023 93.65 116.79 2.0 1.000
----------------------------------------------------------------------------
2024 95.52 119.12 2.0 1.000
----------------------------------------------------------------------------
2025 97.44 121.51 2.0 1.000
----------------------------------------------------------------------------
2026 99.38 123.94 2.0 1.000
----------------------------------------------------------------------------
2027 101.37 126.42 2.0 1.000
----------------------------------------------------------------------------
2028 103.40 128.94 2.0 1.000
----------------------------------------------------------------------------
2029 105.47 131.52 2.0 1.000
----------------------------------------------------------------------------
2030 107.58 134.15 2.0 1.000
----------------------------------------------------------------------------
Thereafter Escalation rate of 2.0%
----------------------------------------------------------------------------
Sproule Associates Limited, independent petroleum consultants, Calgary, Alberta
("Sproule"), evaluated the Relentless Assets in a report as at December 31,
2012, with a preparation date of March 28, 2013 (the "Sproule Report"). The
tables below summarize the crude oil, NGLs and natural gas reserves of the
Relentless Assets and the net present values of future net revenue for these
reserves using forecast prices and costs. The Sproule Report has been prepared
in accordance with the standards contained in the COGE Handbook and the reserve
definitions contained in NI 51-101 and the COGE Handbook. The net present value
of future net revenue attributable to the Company's reserves is stated without
provision for interest costs and general and administrative costs, but after
providing for estimated royalties, production costs, development costs, other
income, future capital expenditures, and well abandonment costs for only those
wells assigned reserves by Sproule. It should not be assumed that the estimates
of future net revenues presented in the tables below represent the fair market
value of the reserves. There is no assurance that the forecast prices and costs
assumptions will be attained and variances could be material. The recovery and
reserve estimates of the Company's crude oil, NGLs 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 NGLs reserves may
be greater than or less than the estimates provided herein. Readers should note
that the totals in the following tables may not add due to rounding.
Summary of Oil And Gas Reserves Based on Forecast Prices and Costs
As At December 31, 2012
Natural Gas
(non-associated,
Light and associated & Natural Gas
Medium Oil Heavy Oil solution gas) Liquids
---------------------------------------------------------------
Company Company Company Company Company Company Company Company
Reserve Gross Net Gross Net Gross Net Gross Net
Category (Mbbl) (Mbbl) (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl)
----------------------------------------------------------------------------
PROVED
Developed
Producing 41.4 38.8 0.0 0.0 0 0 0 0
Developed
Non-
producing 0.4 0.4 0.0 0.0 57 54 0 0
Undeveloped 0.0 0.0 0.0 0.0 0 0 0 0
TOTAL PROVED 41.8 39.2 0.0 0.0 57 54 0 0
Total
Probable 16.0 15.0 0.0 0.0 21 20 0 0
Total Proved
Plus
Probable 57.8 54.2 0.0 0.0 78 74 0 0
Net Present Values Of Future Net
Revenue as at December 31, 2012
Before Incomes Taxes Discounted At
(%/Year)
(Forecast Costs And Prices)
------------------------------------
Reserves 0% 5% 10% 15% 20%
Category M$ M$ M$ M$ M$
----------------------------------------------------------------------------
PROVED
----------------------------------------------------------------------------
Developed
Producing 1,989 1,730 1,534 1,381 1,259
Developed Non-
producing 48 16 (5) (19) (29)
Undeveloped 0 0 0 0 0
Total Proved 2,037 1,746 1,528 1,362 1,230
Total Probable 968 692 522 412 337
Total Proved
Plus Probable 3,005 2,438 2,051 1,774 1,567
The escalated price forecast assumptions as of December 31, 2012 used in the
Sproule Report are as follows:
Light Crude Oil Heavy & Medium Oil
------------------------------------------- ---------------------
------------------------------------------- ---------------------
- Prices in Canadian Dollars -
1 Synthetic
WTI Edmonton Crude Oil Cromer Hardisty Hardisty
Cushing Par Price Edmonton LSB Heavy Lloydblend
Oklahoma 40 API 34 API 35 API 12 API 20.5 API
Year $US/Bbl $/Bbl $/Bbl $/Bbl $/Bbl $/Bbl
----- -------- -------- -------- -------- -------- --------
2013 89.63 84.55 90.55 81.55 61.72 69.33
2014 89.93 89.84 95.84 86.84 66.48 74.57
2015 88.29 88.21 94.21 85.21 65.27 73.21
2016 95.52 95.43 101.43 92.43 72.53 80.17
2017 96.96 96.87 102.87 93.87 73.62 81.37
2018 98.41 98.32 104.32 95.32 74.72 82.59
2019 99.89 99.79 105.79 96.79 75.84 83.83
2020 101.38 101.29 107.29 98.29 76.98 85.08
2021 102.91 102.81 108.81 99.81 78.14 86.36
2022 104.45 104.35 110.35 101.35 79.31 87.66
2023 106.02 105.92 111.92 102.92 80.50 88.97
-------------------------------
-------------------------------
Western 2
Canada Hardisty Energy
Select Cromer Bow Cost Cost
(WCS) Medium River Cold Lake InflationInflation Exchange
20.5 API 29.3 API 24.9 API Blend 22.6 Rate Rate Rate
Year $/Bbl $/Bbl $/Bbl API $/Bbl %/Yr %/Yr $US/$Cdn
----- -------- -------- -------- -------- -------- -------- --------
2013 69.33 77.79 70.18 68.49 -1.8% 1.5 1.001
2014 74.57 82.66 75.47 73.67 0.3% 1.5 1.001
2015 73.21 81.15 74.09 72.33 -1.8% 1.5 1.001
2016 80.17 88.75 81.12 79.21 8.2% 1.5 1.001
2017 81.37 90.09 82.34 80.40 1.5% 1.5 1.001
2018 82.59 91.44 83.57 81.60 1.5% 1.5 1.001
2019 83.83 92.81 84.82 82.83 1.5% 1.5 1.001
2020 85.08 94.20 86.10 84.07 1.5% 1.5 1.001
2021 86.36 95.61 87.39 85.33 1.5% 1.5 1.001
2022 87.66 97.05 88.70 86.61 1.5% 1.5 1.001
2023 88.97 98.50 90.03 87.91 1.5% 1.5 1.001
Escalation Rate of 1.5% Thereafter
1. 40 Deg API, 0.4% sulphur
2. Based on WTI
Escalation Rate of 1.5% Thereafter
1.
2.
The Transaction will enhance the Company's presence in Alberta area by
increasing the number of producing wells to 42 gross (7.45 net) wells and expand
its land base to 54,878 net acres.
No finder's fee is payable in connection with the Transaction. The Transaction
is subject to industry standard closing conditions, including regulatory
approval. In addition, the disposition of the Relentless Assets to Privateco is
considered a "reviewable disposition" under the policies of the TSX Venture
Exchange (the "TSXV"), requiring the approval of a majority of the
"disinterested" shareholders of Relentless. Unless such requirement is waived by
the TSXV, the divestment of the Relentless Assets pursuant to the Agreement is
subject to the approval of the shareholders of Relentless. Accordingly, the
consent of a majority of Relentless' shareholders in respect of the Agreement,
and specifically, the divestment of the Relentless Assets, is required as a
condition of the acceptance of such transactions by the TSXV. Relentless intends
to seek the written consent of its shareholders on or before June 20, 2013,
failing which Relentless intends to convene a special meeting of shareholders,
at which shareholder approval will be sought for the Agreement and the
divestment of the Relentless Assets thereunder. The board of directors of
Relentless has determined that the Transactions contemplated under the Agreement
are in the best interest of its shareholders, has unanimously approved the
Agreement and Transactions, and recommends that the shareholders execute the
written consents approving such matters. Any shareholder of Relentless wishing
to obtain and execute the written consent should contact Relentless as set out
below.
About Relentless Resources Ltd.
Relentless is a Calgary based emerging oil and natural gas company, engaged in
the exploration, development, acquisition and production of natural gas and
light gravity crude oil reserves in Alberta and Saskatchewan. Relentless' common
shares trade on the TSX Venture Exchange under the symbol RRL.
Relentless' primary corporate objective is to achieve non-dilutive growth and
enhance shareholder value through internal prospect development, strategic
production acquisitions and prudent financial management.
For further information regarding this Press Release, or if you are a
shareholder of Relentless, and you desire to obtain and execute the written
consent in connection with the Transaction, please contact:
www.relentless-resources.com.
Reader Advisory
Certain information in this Press Release is forward-looking within the meaning
of certain securities laws, and is subject to important risks, uncertainties and
assumptions. This forward-looking information includes, among other things,
information with respect to Relentless' beliefs, plans, expectations,
anticipations, estimates and intentions, including the completion of Relentless'
exchange of certain petroleum and natural gas interests, the success of future
drilling and development activities, the performance of existing wells, the
performance of new wells, general economic conditions, availability of required
equipment and services and prevailing commodity prices. The words "may",
"could", "should", "would", "suspect", "outlook", "believe", "anticipate",
"estimate", "expect", "intend", "plan", "target" and similar words and
expressions are used to identify forward-looking information. The
forward-looking information in this Press Release describes Relentless'
expectations as of the date of this Press Release.
Material factors which could cause actual results or events to differ materially
from such forward-looking information include, among others, the failure to
obtain shareholder or regulatory approvals, risks arising from general economic
conditions and adverse industry events, risks arising from operations generally,
changes in plans with respect to exploration or development projects or capital
expenditures; the uncertainty of reserve estimates; the uncertainty of estimates
and projections relating to production, costs and expenses, and health, safety
and environmental risks), commodity price and exchange rate fluctuations;
reliance on contractual rights such as licenses and leases in the conduct of its
business, reliance on third parties, reliance on key personnel, possible failure
of the business model or business plan or the inability to implement the
business model or business plan as planned, competition, environmental matters,
and insurance or lack thereof.
Relentless cautions that the foregoing list of material factors is not
exhaustive, is subject to change and there can be no assurance that such
assumptions will reflect the actual outcome of such items or factors. When
relying on Relentless forward-looking information to make decisions, investors
and others should carefully consider the foregoing factors and other
uncertainties and potential events. Relentless has assumed a certain
progression, which may not be realized. It has also assumed that the material
factors referred to in the previous paragraph will not cause such
forward-looking information to differ materially from actual results or events.
The forward-looking statements contained in this press release are made as of
the date hereof and the Company undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6
mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil.
Boes may be misleading, particularly if used in isolation. A boe conversion
ratio of 6 mcf:1 bbl (barrel) 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Relentless Resources Ltd.
Dan Wilson
President & CEO
(403) 532 - 4466 ext. 227 or Mobile: (403) 874 - 9862
(403) 303 - 2503 (FAX)
dwilson@relentless-resources.com
www.relentless-resources.com
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